BJs RESTAURANTS INC Q3 FY2024 earnings call

• Brad Richmond highlighted the third quarter's positive traffic and outpacing of the competitive set with promotions, while noting the need for better margin flow-through. He emphasized financial discipline, capital deployment as value-creating investments, and the remodel program's results.
• Lyle Tick discussed team strengths, the ability to win across multiple occasions, the need to rationalize promotions, and focus areas including clarifying the brand, driving authority, delivering great hospitality, and keeping the brand fresh.
• Tom Houdek detailed Q3 results, sales drivers, margin details, balance sheet status, and the impact of the Pizookie Meal Deal, noting expectations for Q4 margins and G&A levels.

For the third quarter, BJ's generated sales of $325.7 million, a 2.2% increase year-over-year. Comparable restaurant sales rose 1.7%, driven by 1.3% traffic growth, the best traffic quarter since 2018 excluding COVID recovery quarters. Restaurant level cash-flow margin was 11.7% in Q3, adjusted EBITDA was $18.5 million (5.7% of sales). The Pizookie Meal Deal launched in September has been driving traffic, with comparable restaurant sales up over 4% in the first four weeks of Q4.

• Expect restaurant-level margins in the mid to high 14% range for Q4.
• G&A is expected to be around $21 million in Q4.
• Continued focus on share repurchases as part of capital allocation to return cash to shareholders while making value-creating investments.

Q: Brian Bittner asked about margin underperformance in Q3 and Q4 outlook.

A: Lyle Tick said higher promotional activity, supply chain cost increases, and labor inefficiency were drivers. Brad Richmond added the Pizookie Meal Deal is traffic-generating but needed to address less effective promotions.

Q: Alex Slagle asked about capital allocation and new units.

A: Brad Richmond mentioned same-restaurant sales as a key growth opportunity, with new units showing encouraging results but needing fine-tuning. Tom Houdek noted new units in California and Texas are performing well, and remodels and share repurchases are part of capital allocation.

Q: Jeffrey Bernstein asked about cash usage, pricing power, and CEO transition.

A: Tom Houdek discussed pricing and check components, and Brad Richmond talked about the Board's role and Lyle's addition to the team.

Q: Brian Mullan asked about menu simplification and brand awareness.

A: Brad Richmond and Lyle Tick discussed menu architecture and simplification efforts, and Lyle mentioned BJ's brand awareness gaps and opportunities in media markets.

Q: Nick Setyan asked about promotional cadence and menu focus.

A: Lyle Tick said the Pizookie Meal Deal is encouraged but promotional cadence is still in flux, with focus on value and everyday approachability.

Q: Sharon Zackfia asked about menu portfolio recalibrations.

A: Brad Richmond said few underperforming restaurants, but they are studying and may close laggards if needed.

Q: Todd Brooks asked about marketing spend and Q4 check expectations.

A: Tom Houdek discussed marketing spend at 1.9% of sales and expected check to be in the 1% area in Q4.