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BJ's Restaurants Expands in Toledo, Focuses on Top-Line Growth

Zacks Equity Research

BJ's Restaurants, Inc. BJRI announced that it launched a restaurant in Toledo, OH. Located at Franklin Park Mall, the restaurant can roughly make room for 230 guests and features wide-ranging menu.

Notably, this marks the company’s 1st restaurant in Toledo and 13th one in Ohio. In conjunction with this, it announced that it will open the next restaurant this month at Sterling Heights, MI.

Although a while ago the company decided to put off openings, it did not completely refrain from it. In fact, by unit expansion, it can fend off competition from big-scale fast-casual chains.

Notably, shares of BJ’s Restaurants have gained 2.7% in the past year, outperforming the industry’s 19.7% rally.

Expansion & Other Sales-Building Efforts Bode Well

BJ’s Restaurants continues to target seven to nine restaurant openings in 2019. Currently, the company owns and operates 202 casual dining restaurants in most states of America. Its moderate ambition of unit expansion would provide some margin momentum and maximize free cash flow.

Meanwhile, BJ’s Restaurants implemented several major sales-building initiatives, which have contributed positively to results over the past few quarters. In 2017, the restaurant crew mastered advanced cooking methods and became skillful in taking orders via hand-held ordering tablets. In fact, the results of these initiatives have been positive so far.

Notably, in the fourth quarter of 2018, off-premise sales increased to 9.5% of the company’s revenues, indicating an all-time high level. Further, BJ’s Restaurants expects this channel to grow by at least 50% over the next several years.

Our Take

We believe that the addition of the recent restaurant will help the company to strengthen top-line growth. In 2018, its total revenues grew 8.3% to $1.1 billion, backed by increased guest traffic and comps.

The restaurant opening will also help BJ’s Restaurants navigate well in a competitive environment. As it is, the company is plagued with competition from a saturated domestic restaurant market. While several other restaurateurs, including Yum! Brands YUM, McDonald’s MCD and Domino’s Pizza DPZ, are capitalizing on the emerging market potential, BJ’s Restaurants seems to be slow on this front.

BJ’s Restaurant currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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BJ's Restaurants, Inc. (BJRI) : Free Stock Analysis Report
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