Oppenheimer 18 th Annual Consumer Conference. June 2018

Transcription

1 Oppenheimer 18 th Annual Consumer Conference June 2018

2 Safe Harbor Certain statements in the following presentation and all other statements that are not purely historical constitute forward-looking statements for purposes of the Securities Act of 1933 and the Securities and Exchange Act of 1934, as amended, and are intended to be covered by the safe harbors created thereby. Such statements include, but are not limited to, those regarding expected comparable restaurant sales and margin growth in future periods, total potential domestic capacity, the success of various sales-building and productivity initiatives, future guest traffic trends, construction cost savings initiatives and the number and timing of new restaurants expected to be opened in future periods. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results to be materially different from those projected or anticipated. Factors that might cause such differences include, but are not limited to: (i) our ability to manage an increasing number of new restaurant openings, (ii) construction delays, (iii) labor shortages, (iv) increase in minimum wage and other employment related costs, including the potential impact of the Patient Protection and Affordable Care Act on our operations, (v) the effect of credit and equity market disruptions on our ability to finance our continued expansion on acceptable terms, (vi) food quality and health concerns, (vii) factors that impact California, where 63 of our current 200 restaurants are located, (viii) restaurant and brewery industry competition, (ix) impact of certain brewery business considerations, including without limitation, dependence upon suppliers, third party contractors and related hazards, (x) consumer spending trends in general for casual dining occasions, (xi) potential uninsured losses and liabilities due to limitations on insurance coverage, (xii) fluctuating commodity costs and availability of food in general and certain raw materials related to the brewing of our craft beers and energy, (xiii) trademark and service-mark risks, (xiv) government regulations and licensing costs, (xv) beer and liquor regulations, (xvi) loss of key personnel, (xvii) inability to secure acceptable sites, (xviii) legal proceedings, (xix) other general economic and regulatory conditions and requirements, (xx) the success of our key sales-building and related operational initiatives, and (xxi) numerous other matters discussed in the Company s filings with the Securities and Exchange Commission, including its recent reports on Forms 10-K, 10-Q and 8-K. The forward-looking statements contained in this presentation are based on current assumptions and expectations and, BJ s Restaurants, Inc. undertakes no obligation to update or alter its forward-looking statements whether as a result of new information, future events or otherwise. 2

3 BJ s Restaurants Overview 200 restaurants in 27 states 195 large-format restaurants (7,000-10,000 sq. ft.) 4 small-format restaurants (2,000-4,000 sq. ft.) 1 R&D test restaurant (6,000 interior sq. ft.) Our restaurants feature: Broad, diversified menu for any dining occasion Signature menu items including deep dish pizza, craft beer and our famous pizookie dessert Contemporary, high quality, casual plus positioning Our restaurants generate: Industry-leading average unit volumes of approximately $5.5 million Industry-leading guest traffic Per Person Average of $

4 Key Investment Highlights Significant Runway For Growth Many new markets seeded for growth, and potential for 425+ restaurants in the U.S. Category-Leading Restaurant Productivity $5.5mm system-wide AUV BJ s leads the industry with 48 guests per square foot Top tier four-wall restaurant margins Consistent and Reliable Financial Performance Consistently grown sales and EBITDA Performance outpaces peers across many key indicators (i.e., Knapp- Track, BlackBox, etc.) Best in Class Management BJ s is led by executives with decades of combined experience Management team proven they can grow new restaurants with quality Strong Restaurant Returns Trailing Twelve Months through April 3, 2018, BJ s restaurants averaged cash-on-cash returns of 25%, spanning 2004 vintages to current Industry Leading Retention Retention rates better than the industry for both hourly and manager levels 4

5 Key Drivers of the BJ s Concept Breadth of Appeal Price Value We Are Contemporary Strong Culture Menu variety Four-wall versatility Restaurants within a restaurant Local vibe; eschews chain-like atmosphere Approachability Occasion and day part flexibility Happy hour and late night Every day dining to special occasions Quality is our compass Among the highest quality food in casual-dining Linen napkins, quality silverware, and glassware Higher quality finishes and build $20 to $25 experience for a $16 average guest check Higher energy ambience Best in class bar statement Flat screens Signature Menu items Award winning deep dish pizza Our famous Pizookie dessert Craft beer prowess Leading Better for You offerings Gold standard of operational excellence Disciplined execution and accountability Community support Culture of sales building first and foremost 5

6 OFFERED AT A COMPELLING VALUE Premium Casual Experience at Mass Market Price $32 $26 $21 $22 $22 $23 $13 $13 $14 $15 $15 $16 $17 $18 $18 Note: Represents average check data. Source: Public Company Filings as of FY2017 and Technomic. 6

7 INDUSTRY-LEADING VOLUMES Industry Leader in Average Unit Sales $10.6 $8.1 ($Millions) Source: Public Company filings as of FY2017 and Technomic. 7

8 Broad Consumer Appeal for All Dayparts Approximate gross margin on pizza/alcohol beverages: 80%+ 26% of sales from off-peak meal periods 8

9 Our Focus Continue Sales Momentum Leverage Margins & Drive ROIC Enhance our Culture Execute Capacity Growth 9

10 Ongoing Sales Building Initiatives 10

11 Five Primary Sources of Current Sales Momentum Food Multi-year investment in improving value Off-premise opportunities Loyalty Driving awareness through brand loyalty Slow Roast ovens for new center of the plate entrees and sandwiches Enlightened item expansion around lower calorie and super foods New small bite appetizers and addons Line up of chicken sandwiches 2014 enlightened, sandwich & salad New lunch items in grilled cheese & piadinas Nearly doubled level of promotional spend since 2015 Significant price investment in happy hour and Daily Brewhouse Specials Delivery Mobile app usage Catering and large party menu Feb 1, 2018 rollout of revised program Increase in loyalty transactions since revised program rolled out Simpler and easier to use program for our guests Next phase is to improve segment marketing to loyalty guests based on behavior Focus on target (millennial parents) Consistent messaging; closer to core Social, digital, noteworthy events Promotions with a purpose to lower overall spend (Pi- Day, free mini-pizza delivery day) 11

12 Sales Initiatives Driving Outperformance to Black Box SSS: (1.3%) (1.4%) (1.7%) 1.6% 4.2% Traffic: (4.2%) (4.2%) (3.1%) 0.7% 0.4% 12

13 Slow Roast Ovens Driving Average Check Controlled vapor ovens allow for slow cooking of high quality proteins Items include prime rib, slow roasted ribs, double bone-in pork chop, prime rib pulled pork and turkey dip sandwiches Augments existing pizza oven and broilers Simplicity of item execution consistent with Project Q efficiency goals $26.95 prime rib offering available for dinner on Friday and Saturday evenings and all day on Sunday Item became a top-3 best selling entrée in its first week on the menu Driving Sunday to become best sales day of the week 13

14 Sides and Snacks Driving Incidence Rates Capitalize on trend towards smaller tasting experiences Increase appetizer incidence Opportunity to upsell and expand incidence with Premium Sides Premium Sides seeing increased sales momentum On trend sides can be subbed with current offerings or ordered by guests as small appetizer 14

15 Daily Brewhouse Specials and Happy Hour Driving Weekday Sales Brewhouse Specials: Driving frequency and value Particular focus on highlighting iconic BJ s menu items, such as pizza and pizookie Drive check through incremental purchases and trade up from higher priced items like Ribs and alcohol add on Creating special occasions every day of the week Happy Hour Revamp: Lower prices introduced in Q focusing price certainty over dollar discounts Greater food variety Drving mid afternoon and late night guest traffic and incidence 15

16 Off-Premise Continues to Drive Incremental Sales Off-Premise initiative started Q Initial launch at 61 locations in 9 states has grown to 183 restaurants by end of Q Off-Premise sales have increased from 5.6% of sales in FY 2016 to 7.4% as of Q Selling BJ s Beer and Wine to go (where permissible) Implemented new catering and large party packages 16

17 Loyalty is Driving Engagement Loyalty customers driving sales, traffic and average check far in excess of non-loyalty customers Customers earn points on every dollar spent 100 Points = $10 Reward Free Pizookie upon registration Free Birthday Pizookie Exclusive Deals & Offers Improved guest segmentation for target marketing 1:1 guest marketing based on dining behavior Loyalty marketing yields more engagement Enrollments +23% since revised program launched 17

18 Culture 18

19 Commitment to Gold Standard of Operational Excellence 19

20 Development 20

21 Significant Opportunity for Domestic Growth 1,782 1,254 1,187 (1) Note: Store counts represent company-owned and franchised domestic restaurant locations from most recent company filings and investor presentations. BJRI represents YTD restaurant store count. (1) As of 12/25/16 per FY K. 21

22 Significantly Underpenetrated in the Northeast and Midwest FY 2018: 4-6 New Restaurants (3 opened as of June 11, 2018)

23 New Prototype Now a Proven Format $ in millions TARGET AVERAGE UNIT LEVEL ECONOMICS Current Sq Footage 8,500 7,400 Seats Tables Gross Cost $5.1 $4.2 TI Allowance ($0.5) ($0.5) Net Cost $4.6 $3.7 Targeted Average Mature Statistics AUV $5.0 - $6.5 $4.5 - $5.5 RLCF $ $1.0 - $1.3 $0.8 - $1.1 RLCF % 19% - 20% 18% - 20% Cash on Cash Return ~ 25% ~ 25% 23

24 Charlottesville, VA (7,400 sq. ft.) 24

25 Best in Class 3 X 75 Screen Bar Design 25

26 Beer Display Board 26

27 Margin Initiatives and Financial Targets 27

28 Project Q Improving our Way of Doing Business Continuous process of reducing costs in restaurants and across the system Eliminate unnecessary kitchen complexity Reduce prep labor and peak cook times Improve cost of sales Improve guest throughput Key 2018 savings initiatives will include: Driving labor efficiencies through increased use of enhanced scheduling system Optimal Labor Scheduler Testing menu reductions, particularly at lower volume restaurants Improved sourcing and pack size changes to lower food costs Focus restaurant initiative to drive margin improvement across labor, food cost and operating and occupancy costs 28

29 Strong and Flexible Balance Sheet and Capital Structure Balance sheet as of March 31, 2018 Cash and investments of $28.7 million Total assets of $687.0 million Funded debt of $158.5 million, or 1.3x debt/ebitda (LTM as of 1Q 2018) Stockholders equity of $267.3 million Strong cash flow from operations Share repurchase program provides flexibility to optimize shareholder value Repurchased $363 million of shares since April 2014 $37.0 million remaining under existing $400 million repurchase authorization Initiated regular quarterly cash dividend of $0.11 per share in 4Q cash flow from operations of $107.0 million Available credit line $250 million (for LCs and backstop liquidity) 29

30 2018 Outlook (1) New openings 4-6 Operating weeks ~3.5% Commodity basket 0.5% -1.0% Cost of sales Mid 25% range Labor ~36% Operating/Occupancy ~21% Marketing General and administrative 2.0% of sales ~$61 million Tax rate ~10% Share count ~22 million 2018 Cap Ex ~$50 - $55 million (1) As disclosed April 26,