An activist investor is pushing BJ's to sell itself

Pleasant Lake Partners said the chain is underperforming but would make an attractive acquisition target.
BJ's share price is down about 40% since its 2021 high. | Photo: Shutterstock

An activist investor is pushing BJ’s Restaurants to sell itself, arguing that the casual-dining chain is underperforming but would be an attractive target for buyers.

In an SEC filing last month, Rincon, Puerto Rico-based Pleasant Lake Partners revealed a 9.5% stake in the 216-unit chain. The equity firm founded by Jonathan Lennon has a focus on media, telecom, consumer and tech companies, according to its LinkedIn profile, and has $763 million in assets under management.

The firm said in its filing that conversations with BJ’s management left it unconvinced that a “standalone strategy” would deliver the best returns for shareholders. Instead, it’s encouraging the chain to pursue a sale, noting that BJ’s would be “attractive and highly accretive to multiple viable buyers.”

Founded in 1978, Huntington Beach, Calif.-based BJ’s is known for its broad menu, craft beer and its trademark Pizookie desserts. It was slow to bounce back from the pandemic in part due to its high concentration in California, where COVID-19 restrictions lingered until mid-2021. In 2022, BJ’s began rolling out a number of cost-cutting initiatives aimed at improving its restaurant-level margins, including trimming its menu by 10%. It said those efforts were on track to save it $30 million last year. 

But Pleasant Lake maintained that BJ’s cost structure remains an issue. In the third quarter, the chain posted a net loss of $3.8 million, a 131% decrease from the prior year, and its earnings per share were negative 0.16, a 128% decline. Its share price has also dropped by about 40% from its post-COVID high of $61 in March 2021. The company is currently valued at $825 million. It owns and operates all of its restaurants.

BJ’s had not responded to a request for comment as of publication time. The company will report its 2023 earnings Wednesday afternoon.

It is now at least the second casual-dining chain to be facing pressure from an activist investor. Last year, well-known activist Starboard Value began pushing for changes at Outback Steakhouse parent Bloomin’ Brands.

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