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A New BJ's Restaurant in Colorado

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Orange County, CA-based casual dining restaurant operator, BJ's Restaurants, Inc. (BJRI), recently unveiled its fifth outlet in Fort Collins, CO. The opening marks the fourth of the company’s targeted 17 new openings in 2013.

The new BJ's Restaurants, located in Fort Collins’ Front Range Village Shopping Center, is spread across approximately 8,000 square feet and accommodates around 265 customers. We expect the variety of menu offered at the new unit and contemporary ambience to attract a strong guest base, going forward.

Fort Collins is a Home Rule Municipality of Larimer County, CO. The city has an established restaurant industry and boasts some of the major restaurateurs, such as McDonald’s Corp. (MCD), Red Robin Gourmet Burgers Inc. (RRGB) and Burger King Worldwide, Inc. (BKW).

We have noticed that BJ’s Restaurants 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 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.

BJ’s Restaurants is one of the few casual dining chains that have been expanding in an uncertain economy. With the resurgence of consumer confidence, management accelerated its unit openings. In June, the company will re-open a new restaurant in Eugene, OR. after shifting its existing small format restaurants Pizza and Grill to a larger Brewhouse unit.

Colorado is a relatively newer market with just four of BJ’s Restaurants. According to the National Restaurant Association, the restaurant industry in Colorado plays a pivotal role in the state’s revenues. According to this research site, the state’s restaurants are expected to record $9.5 billion in sales in 2013.

While the above data sounds encouraging, there is a disadvantage as well. As the Zacks Rank #4 (Sell) company is venturing into the new under-served market, it will face higher pre-opening costs in these areas.

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