Financing

BJ's to trim menu by 10% as part of cost-cutting efforts

One of the industry's biggest menus is getting smaller, but executives said they don't foresee it hurting sales.
BJ's exterior
BJ's believes a series of cost-cutting efforts can help it save $25 million a year. / Photograph: Shutterstock

The famously large menu at BJ’s Restaurants is about to get a little smaller.

The 216-unit casual-dining chain said last week that it will cut its bill of fare by 10% in July and will look at removing more items later this year.

It’s part of BJ’s ongoing plan to lower costs amid inflation. Other efforts include switching from precooked to raw chicken wings and using AI to help forecast sales. The combined changes are expected to save $25 million a year and add 200 basis points to its margins. 

BJ’s is currently paying 30% more for both food and labor compared to 2019. Executives believe shrinking the menu can help offset those costs without hurting sales. It will drop low-frequency items and has also been testing different menu layouts to see how they impact customers’ choices. 

“Based on our testing to date, it looks like we’re able to pretty closely hold on to our current average check and our trend,” said CEO Greg Levin, according to a transcript on financial services site Sentieo. He did not specify which items are set to be permanently 86'd. 

BJ’s menu currently has about 140 items across a range of cuisines, including pizza, pasta, burgers and tacos. “We're not looking over time to get down to 60 items or 70 items,” said Levin, who views the chain’s broad menu as a competitive advantage. But it will continue to “prune where it’s appropriate.” 

That will mean fewer SKUs, which can save money. More importantly, it will improve operations, reducing prep time and making the menu easier to execute, Levin said.

“We’d rather serve a little bit less items but make sure every single item is perfect,” he said. “Time is really the goal there.”

Smaller menus have been a big trend in recent years. Many restaurants that trimmed their menus early in the pandemic discovered they liked the efficiency and haven’t looked back. BJ’s itself downsized early in the pandemic but returned to its full bill of fare in late 2021.

For the fourth quarter ended Jan. 3, BJ’s same-store sales rose 6.6% year over year, which included a 2.5% traffic increase; the rest of the growth came from average check. 

Same-store sales have increased further to start off 2023, peaking at over 20% in January as the chain lapped the omicron wave of last year. Executives expect comps for the quarter to level off in the high single digits. 

Restaurant-level operating margins improved to 12.9% in the period, from 10.1% a year ago.

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