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BJ's nears break-even point, even at 25% capacity

Stores in Texas have generated $20,500 in weekly on-premise sales, even with three of every four seats out of use.
Photograph: Shutterstock

BJ’s Restaurants open in Texas have captured $20,500 in on-premise sales since 25% of their dining rooms were allowed to open on May 1, without a decline in takeout and delivery, bringing reopened units there to the cusp of breaking even, management said Thursday.

With units averaging $31,800 in weekly off-premise business, the figures suggest Texas stores are now generating about $52,000 over a seven-day stretch. CEO Greg Trojan told financial analysts that stores will generate enough cash to cover their operating costs at a weekly volume of about $65,000.

He did not reveal sales figures for restaurants that have reopened in states such as Georgia, where eating places have been permitted to resume dine-in service at 50% of their pre-COVID-19 capacities.

At a 25% capacity, margins are under pressure, Trojan said. Operating at that level “may put some near-term pressure as the cost involved in safely opening are significant,” he explained. “However, we're confident we will see steady improvement as effective capacities grow to 50% and beyond.”

About 65 of BJ’s 209 restaurants have resumed dine-in service. Four stores remained closed. The remainder are offering takeout and delivery.

Operations have been changed appreciably because of safety considerations and new market realities, Trojan said.

The menu was cut back from 145 items to about 85 options to maintain output and quality with a reduced staff, he explained. As dining rooms reopen, the menu will likely be kept at that size to facilitate execution and speed table turns.

Labor per store has been reduced to about five managers. The company furloughed 16,000 hourly workers after dining rooms were ordered closed by state authorities.

A new growler to-go program, using disposable growlers, has been a hit, Trojan said. The beer is priced at $12 for one of the 64-ounce jugs.

The chain is also selling to-go six-packs of canned beer and bottles of wine starting at $10.

The offer of beverages has helped in tripling BJ’s off-premise sales since early March, the CEO said.

Restaurants with reopened dining rooms are encouraging patrons to download menus on their phones, an alternative to using disposable bills of fare or laminated ones that need to be sanitized after every use, as mandated by most states that have permitted table service to resume.

Encouraging them to order off the digital menus also facilitates the order’s relay to the kitchen and settling the check, Trojan added.

Chain executives noted that they’ve closed on the sale of $70 million in common stock to Act III Holdings, the investment fund of former Panera Bread CEO Ron Shaich, and T. Rowe Price. The purchase of roughly 3.5 million shares gives the partners about a 19% stake in BJ’s, according to figures in securities filings.

BJ’s executives underscored Shaich’s experiences in building takeout and delivery sales at Panera, a pioneer of off-premise service.

BJ’s cash burn rate has dropped by half, to about $2.5 million per week, as a result of surging off-premise sales and the reopening of restaurants. Trojan said he expects that number to continue dropping as more dining rooms come online.

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