U.S. Markets open in 5 hrs 38 mins

BJ's Expands in the West

Zacks Equity Research

In a bid to expand its presence in the domestic market, casual dining restaurant operator, BJ's Restaurants, Inc. (BJRI), recently unveiled a new outlet in Eugene, Ore. The opening marks the fifth of the company’s targeted 17 new openings in 2013.

The site of the new opening previously housed a small format BJ's Pizza and Grill(R) restaurant. The company replaced it with a larger-format BJ's Restaurant & Brewhouse(R).

The new BJ's unit, located in the Valley River Center shopping mall, is spread across approximately 8,500 square feet and can accommodate around 270 diners at a time.

The new restaurant has come up in Eugene, where BJ's has already generated a certain amount of customer loyalty. Thus, we believe that the company will benefit immensely from its spacious new unit and contemporary ambience, thus adding to its sales.

Apart from this new unit, BJ's operates two other restaurants in Oregon. As per the National Restaurant Association, the state’s restaurants are expected to record $6.5 billion in sales in 2013.Thus Oregon’s restaurant industry has a key role in augmenting state revenues.

We noticed that BJ’s has mainly expanded in its existing markets in California and Texas in the last three years citing plenty of growth opportunities. The company currently has 61 restaurants in California, while Texas boasts 28 units.

Now, the Zacks Rank #2 (Buy) company is considering other potential new markets for entry in 2013 and 2014 to realize untapped opportunities. According to management, in the long run, there exists the possibility of opening at least 425 outlets across the U.S. With capacity growth, BJ's will gain scale advantage, which will help generate cost efficiency in the future.

Other players in the same industry that look attractive at current levels include Brinker International Inc. (EAT), CEC Entertainment Inc. (CEC), AFC Enterprises Inc. (AFCE). While Brinker and CEC Entertainment both carry a Zacks Rank #1 (Strong Buy), AFC Enterprises carries a Zacks Rank #2 (Buy).

Read the Full Research Report on BJRI

Read the Full Research Report on EAT

Read the Full Research Report on CEC

Read the Full Research Report on AFCE

Zacks Investment Research

More From Zacks.com