BJ's Restaurants, Inc. Q2 FY2025 earnings call

Key Points

• Q2 was a strong quarter with 2.9% comparable sales growth driven by 3.3% traffic growth. Restaurant-level cash flow margins were 17% (+150 basis points YOY) and adjusted EBITDA margins were 11.5% (+120 basis points YOY).
• Strategic priorities include team member experience, handcrafted food/beverages, WOW hospitality, and keeping atmosphere fresh. The Pizookie Meal Deal, Platter, Snickers Pizookie, etc., drove traffic.
• Operational progress: POS/KDS system improvements, DineTime integration, Ferry Express Pay, and outlier management.
• Upcoming initiatives: Focus on team member experience (easier work and training), menu revamp including pizza platform, craft beer, and shareables; ABLM test in 22 restaurants expanding to 20% of restaurants in Q4; 13 remodels done with 7-10 planned, and prototype design for atmosphere.

In Q2, BJ's Restaurants generated $366 million in sales, a 4.5% increase year-over-year. Comparable sales growth was 2.9% driven by 3.3% traffic growth. Restaurant-level cash flow margins were 17%, representing a 150 basis points year-over-year improvement. Restaurant-level operating profit increased to 15% at $62.1 million, the most profitable quarter ever. Cost of sales was 24.8%, 90 basis points favorable year-over-year. Labor and benefit expenses were 35.4% of sales, 70 basis points favorable year-over-year. Net debt ended Q2 at $34.5 million with cash and equivalents of $26 million.

Forward-Looking Statements

• Expect annual comp sales of approximately 2%. Raised the low end of earnings expectations by $1 million, expecting restaurant level operating profit of $211 million to $219 million and adjusted EBITDA of $132 million to $140 million.
• Capital expenditures are expected to be $65 million to $75 million, and share repurchases are in the range of $45 million to $55 million.
• Tariff situation is expected to create a headwind of approximately 30 basis points in the second half of the year, with the remainder of the cost basket normalizing.

Risks

• Tariff headwind in the second half of the year.
• Fluctuations in cost of goods, including beef and seafood.
• Competitive landscape changes that could impact market share.

Q: Alex Slagle on value proposition and PMD A: Lyle discusses building the Pizookie Meal Deal (PMD) platform, including upgrades like adding soup/salad to the meal and a new Smash Burger on the PMD menu.

Q: Jon Tower on training and ABLM A: Lyle talks about a training redesign launching in October and the ABLM test focusing on improving pace, recommend, and hospitality scores.

Q: Jeffrey Bernstein on fourth quarter compare A: Lyle mentions building the PMD platform, strategic initiatives like the new pizza, craft beer pour, sampler, and Monkey Bread Pizookie.

Q: Todd Brooks on new pizza platform A: Lyle states pizza mix improved in test markets with sales, traffic, and profitability up.

Q: Brian Mullan on off-premise and PMD evolution A: Lyle addresses off-premise friction, missing/accuracy issues, and menu optimization for off-premise, and notes PMD is focused on weekdays.

Q: Sharon Zackfia on alcohol mix and Beer Club A: Lyle talks about hard root beer, margaritas, and evaluating the Beer Club outside California.