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BJ's Brings in Pepsi, House of Blues Veteran

Zacks Equity Research

BJ's Restaurants Inc. (BJRI) recently revealed that it has appointed Gregory A. Trojan for the position of president and director, effective December 3, 2012. Trojan will also become the chief executive officer (CEO) of the company replacing current president, director and CEO, Gerald W. Deitchle, who will bow out from the post of CEO effective February 1, 2013. However, Deitchle will continue to serve as the chairman of the company's board of directors.  

The upcoming CEO, Trojan, has donned many important roles in his career. A number of leadership positions held at renowned organizations vouch for his expertise. Previously, he was the CEO at Guitar Center Holdings Inc. – a renowned retailer of music products – from November 2010. He joined Guitar Center as the president and chief operating officer as well as a director in October 2007.

Prior to that, Trojan held the post of CEO at House of Blues Entertainment Inc. – an operator of restaurant and music venues, concerts and media properties, from 1996 to 2006. Prior to his tenure at House of Blues, Trojan acted as the CEO of the California Pizza Kitchen restaurant chain for two years when it was owned by PepsiCo Inc. (PEP), He also held a number of other positions within PepsiCo during his 1990–1996 term. Apart from these roles, he has been a board member in Domino's Pizza Inc. (DPZ) since March 2010.  

With his vast know-how in the restaurant and retail industry, we expect Trojan to provide meaningful support to BJ's Restaurants’ aggressive expansion plan.

As a point of reference, former CEO, Deitchle has been the driving force behind increasing BJ's Restaurants' total revenues and cash flow (from operating activities) from a respective $129 million and $16 million in 2004 to an estimated $700 million and $100 million in 2012.

However, we remain cautious on the stock at the current level based on its third quarter top- and bottom- line miss as well as the decelerating growth in comps and margins. Hence, Trojan’s new pursuit will be a bit challenging especially amid a sluggish business environment and an element of uncertainty lingers till we find some concrete evidence of better execution at the company.

BJ's Restaurants owns and operates 127 locations at the end of the third quarter. BJ's Restaurants currently carries a Zacks #5 Rank, implying a short-term Strong Sell rating on the stock. We are maintaining our long-term Neutral recommendation on the stock.

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