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Operations

BJ’s hedge against dining-room closings

The casual restaurant chain is also bolstering its defenses against Mother Nature.
BJ’s Restaurants dining rooms
Photograph: Shutterstock

When California ordered restaurants to reclose their dining rooms two weeks ago, BJ’s Restaurants might’ve been forgiven for going all Gordon Ramsay on its home state. The chain’s recovery from the state-mandated shutdowns of March and April was well underway, with about 197 of its 208 units offering dine-in service again. Sales per restaurant were approaching $80,000 per week, and stores were profitable again. The worst appeared to be over.

Then came the setback in California, where Huntington Beach-based BJ’s has its strongest presence. The number of branches where customers could eat and drink indoors fell to about 146—70% of the system, compared with 95% before the re-closings. Average weekly sales per unit dropped systemwide to the low to mid-$60,000 range. BJ’s has said that stores hit the breakeven point at about $65,000.

Profitability wasn’t helped by having to dispose of $1.2 million in draft beer that spoiled because of the California shutdown and capacity reductions elsewhere.

The change was so abrupt that CEO Greg Trojan characterizes the new West Coast reality as a whole new chapter in BJ’s comeback story.

But there’s a happy ending of sorts, or at least a less troubling one than the situation might have delivered, according to Trojan. The chain had already started to outfit its units with outdoor dining wherever a landlord and available space would permit it. “Our operating team undertook this endeavor with incredible entrepreneurial enthusiasm, and, as a result, last week we drove approximately $26,000 per restaurant in incremental sales,” the CEO told investors on July 23.

Currently, 155 stores are sporting either full-fledged patios, tented outdoor dining areas or a combination of the two. The strategy has not only proven a hedge against dining room closures in California, but has also enabled BJ’s to offer more seats in markets that have capped indoor capacities. The exterior areas add an average of about 45 seats, according to Trojan.

BJ’s certainly isn’t alone in embracing patios and catering-style tents to provide on-premise service in markets where dine-in service is limited or banned. About 28% of independent restaurant operators are planning to add a patio area or expand their current al fresco areas, according to a survey conducted by Rewards Network.

But BJ’s has an advantage in that the bulk of its units are located in California, Texas and Florida.

Still, the casual chain isn’t completely trusting of Mother Nature. In units that are retrofitted with an actual patio, as opposed to a tent, the exterior seating sections are built with “harder lids and so forth” so they can be “used a little bit more year round,” said BJ’s President Greg Trojan.

The question of how long outdoor dining can be sustained will soon be on the minds of many operators outside of the Sunbelt. The Farmers’ Almanac, a long-range forecaster that many swear by, is predicting “yet another freezing, frigid, and frosty winter for two-thirds of the country,” in the words of Editor Peter Geiger.

Chicago has finessed the situation by defining outdoor dining to include seating areas adjacent to garage-type doors and walls of windows that can be reopened.

New York City, where on-premise dining is limited to outdoor service, has yet to provide enough leeway for a similar hedge against bad weather. Yet its rules have been adjusted to permit sidewalk service through October.

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