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BJ's Restaurants, Inc. Message Board

  • tototooo tototooo Oct 25, 2012 4:19 PM Flag

    uh oh....

    Sure am glad I don't own this high multiple thing...

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    • a confluence of negatives this morning....Cowan downgraded...William Blair downgraded...the entire industry downgraded....uncertain near term sales as traffic to the restaurant has hit a wall and future sales forcasts are in doubt and and growth is doubtful....

      • 2 Replies to scovey2
      • To me the problem with a lot of these chain "concepts" and extrapolating their growth is that they start out in the absolute best financial and cultural niche markets, which distorts the true picture. BJ's is great in Stockton and West Covina and in certain parts of Texas. But then they try to move where they don't belong in the sense that their "concept" doesn't work as well for the tastes of the local population and (usually) where rent and building costs are a lot higher. They think this gives them status. Meanwhile, the people in the original markets get tired of the "concept" and move on. Pretty soon you are left with a tremendous amount of sunk and fixed costs and highly limited innovation possibilities to make up for lost ground. This is the difference between a restaurant stock and say a retail store like Costco or Price Smart. The former group is much more boom and bust. The latter is steadier--not as spectacular but everyone will continue to go to Costco. It doesn't need a "video experience" or "signature desserts" to stay in business.

      • should probably trade around 15X low 20's I'd guess. Personally, I think this is a bad model. Footprint is way to big for a chain, creating high fixed cost base. As the concept matures, it will be hard to cover the costs with any kind of a return....But that is probably a couple of years out...

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