Yahoo Finance BJ's Restaurants Inc (BJRI) (Q1 2024) Earnings Call Transcript Highlights: Navigating ...
Revenue: $337 million, down 1.2% year-over-year.
Comparable Restaurant Sales: Decreased by 1.7%.
Restaurant-Level Cash Flow Margin: 15%, up 240 basis points from previous year.
Adjusted EBITDA: $29.4 million, representing 8.7% of sales.
Net Income: $7.7 million.
Diluted Net Income Per Share: $0.32.
Cost of Sales: 25.2% of revenue, improved by 140 basis points year-over-year.
Labor and Benefits Expenses: 37.1% of sales, 50 basis points better than last year.
Occupancy and Operating Expenses: 22.8% of sales, 40 basis points improvement from previous year.
General and Administrative Expenses: $23 million, including one-time charges.
Net Debt: Approximately $39 million.
Capital Expenditures: $22 million, down $5 million from last year.
New Restaurant Openings: One new location in Brookfield, Wisconsin.
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
BJ's Restaurants Inc (NASDAQ:BJRI) reported improving restaurant-level margins and overall EBITDA growth despite challenging weather conditions.
Comparable restaurant sales improved throughout the quarter, with a notable recovery from a 5% decline to a 1.7% decline by the end of the quarter.
The company successfully executed cost-saving initiatives, contributing to a 240 basis point increase in restaurant margins to 15%.
BJ's Restaurants Inc (NASDAQ:BJRI) opened a new restaurant in Wisconsin, indicating strong expansion potential and the broad appeal of the BJ's concept.
The company is implementing a new service model to improve throughput and guest experience, expected to roll out in Q2 and Q3.
Negative Points
Initial comparable restaurant sales were down approximately 5% six weeks into Q1 due to adverse winter weather impacts.
The company anticipates ongoing sales choppiness through the first half of 2024 as it laps the final aspects of COVID revenge dining.
There were one-time G&A costs that impacted financial results, although adjusted EBITDA was still up from the previous year.
BJ's Restaurants Inc (NASDAQ:BJRI) faces challenges in driving consistent traffic, with a need to balance pricing and value to attract customers.
The company noted some commodity inflation and operational inefficiencies that could affect margins if not managed effectively.
Q & A Highlights
Q: Can you elaborate on the factors contributing to the strong margin performance this quarter? A: Thomas Houdek, CFO, highlighted that the margin performance was driven by a combination of sales recovery, lower-than-expected commodity costs, and efficient labor scheduling. Additionally, reduced repair and maintenance expenses and refined third-party delivery promotions contributed to the strong results.
Q: Are there further improvements planned for labor scheduling? A: Thomas Houdek, CFO, mentioned ongoing refinements to the AI-based sales forecasting tool used for labor scheduling, which continues to improve operational efficiency. Greg Levin, CEO, added that they are focusing on optimizing in and out times and improving efficiency during shoulder periods, which should further benefit labor costs.
Q: What is the long-term goal for restaurant-level margins, considering post-COVID structural changes? A: Greg Levin, CEO, explained that the goal is to first return to 2019 margin levels and then aim higher. He noted that the current model allows for about 50% flow-through on additional sales, which should help improve margins over time. He also mentioned that third-party delivery charges now permanently impact margins by about 130 basis points compared to pre-COVID levels.
Q: How is BJ's addressing the cautious consumer spending environment? A: Greg Levin, CEO, stated that BJ's is focusing on maintaining traffic through balanced pricing strategies and promoting value offerings like special daily deals. They are also enhancing their loyalty program to engage customers with personalized offers, aiming to cater to both value-conscious and experiential diners.
Q: Can you provide an update on the late-night daypart performance? A: Thomas Houdek, CFO, reported that the late-night daypart continues to perform well, showing positive comp sales and traffic. The focus on enhancing the bar area in remodels and new prototypes is expected to further boost this daypart's growth.
Q: What are the expectations for the celebration season in Q2, and how are you preparing? A: Greg Levin, CEO, expressed optimism about the upcoming celebration season, noting that past events have shown strong turnout. The company is focusing on operational efficiencies to handle increased traffic, aiming to maximize sales during these peak periods.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
