BJ's Restaurants ramps up its 'beer club' and development of a virtual concept

The beer subscription will be expanded to all of California, while management gauges the feasibility of a secondary brand called Slow Roast.

With sales climbing back to the near-normal levels of the fall, BJ’s Restaurants is intensifying its exploration of new ventures, including its subscription “beer club” and a virtual concept called Slow Roast.

The beer club, where “members” pay $30 for access to limited-edition beers and a variety of freebies, is currently in eight restaurants in northern California. The program will be rolled out to most of the chain’s restaurants throughout the state, the brand’s largest market by far, in the next few months, revealed CEO Greg Trojan.

BJ’s is also evaluating the possibility of expanding the club into other states, he added.

Trojan also detailed plans during BJ’s fourth-quarter analyst call to gauge the viability of Slow Roast. The virtual concept features the slow-roasted proteins that have been a signature of BJ’s since it revamped its kitchens and added new ovens several years ago.

“We will continue to closely monitor this test to ensure we continue to build sales and profits, but early results are promising,” Trojan said.

Management is also focused on rebuilding margins, said President and CFO Greg Levin. The chain’s off-premise business, currently averaging $28,000 in sales per restaurant, is more profitable because a server typically isn’t part of that transaction. The brand has also significantly reduced its menu, and “we continue to see less hourly labor being used in the back of the house, just because of less menu items,” Levin said.

The efforts reflect management’s conviction that detrimental conditions imposed by the pandemic are waning and longer-range planning is feasible again.  

“We are not standing still and playing defense only,” said Trojan. “We’re spending time and making investments to make our concept’s differentiation and competitive advantage as we emerge from this pandemic.”

While the beer club is a first of sorts for big casual chains, many of the major players in the segment are experimenting with virtual brands. The converts include Chili’s (with It’s Just Wings), Outback Steakhouse (Tender Shack) and Applebee’s (Neighborhood Wings).

Trojan said that BJ’s is taking a different approach with its entrant, which is currently operating out of eight of the mother chain’s restaurants.

BJ’s is “engineering it from the kitchen -- starting with the kitchen more than almost starting with the guest,” said Trojan. “And by that I mean, we're minimizing disruption in the kitchen first, and seeing if that will sell, versus [what] we think is the optimal guest menu.”

That approach, he stressed, will lessen the chances of over-taxing kitchens with a sort of venture that has yet to prove its staying power.

“Our point of view is, look, we're not going to do this if we start impacting kitchens in a way that's disproportionate to the volume,” Trojan continued. “We’ll see what kind of sales we drive with that constraint in place first.

Management is looking down the road after emerging from a rough sales stretch that began with the re-closing of dining rooms in many markets, including all of California, post-Thanksgiving. Restaurants there were directed in mid-December to suspend outdoor table service as well as indoor seating, leaving BJ’s 100% dependent on to-go sales.

BJ’s average unit sales slipped to $60,000 per week in December, after topping $83,000 in October.

With an emphasis on catering, takeout and delivery, BJ’s rebuilt its per-unit sales to an average of $66,000 per week. States began to ease indoor and outdoor dining restrictions as the wave of new coronavirus infections peaked. During the just-completed week, BJ’s sales hit $74,000, Trojan said. He also indicated that about $28,000 of that amount came from takeout and delivery business, or double the brand’s off-premise volume in pre-pandemic times.

Th was achieved despite indoor dining rooms being 100% closed throughout California. Systemwide, 54% of BJ’s dining rooms were in use at the end of January.

Overall for the quarter ended Dec. 29, BJ’s posted a net loss of $18.1 million, compared with a year-earlier profit of $14.5 million, on revenues of $197 million, a 32.3% decline.

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