Shares of BJ's Restaurants, Inc. BJRI have gained 28.9% in the past three months compared with the industry’s 10% growth. The company has been benefitting from solid Pizookie Meal Deal performance and loyalty program membership expansion. Also, the focus on cost-saving and margin expansion plans bodes well. However, increased food cost inflation and uncertainty regarding discretionary spending are concerning.

BJRI's Growth Catalysts

BJ’s Restaurants has implemented several sales-building initiatives to drive growth. During the third quarter of fiscal 2024, the company witnessed incremental guest traffic due to the Pizookie Pass and the Pizookie Meal Deal. These two traffic-driving initiatives aided the fiscal-quarter top line, with the Pizookie Pass and the loyalty program membership expansion driving its sales leverage. Furthermore, the Pizookie Meal Deal built momentum for comps growth during the quarter, wherein September comps reached 3.8%. BJ’s Restaurants now aims to focus on its $13 Pizookie Meal Deal available Monday through Friday, which continues to drive sales and profits across the dayparts.

BJ’s is refining its brand identity to reinforce its positioning as a national brewhouse, aiming to differentiate itself from generalist casual dining competitors. Initiatives include enhancing operational efficiency, reducing unnecessary complexity and leveraging data for labor optimization.

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The company is also focused on keeping its assets fresh through remodels, contributing positively to guest experience and satisfaction. The remodeling program has shown promising results, and the company is refining its market penetration strategy to improve the success rate of new locations.

BJRI has adopted a rigorous approach to financial policies, ensuring all capital investments create value. In the third quarter of 2024, the company rolled out a specialized disposables distributor for which it will begin to realize the full savings in the fourth quarter of 2024. BJ’s Restaurants achieved strong efficiency gains over the prior year from its cost savings initiative and is expecting further improvements in the remainder of fiscal 2024.

Concerns for BJRI

Macroeconomic challenges, including inflation and fluctuating consumer spending, remain a concern for the company.

During the third quarter of fiscal 2024, the company witnessed food cost inflation of about 3% year over year. The costs of certain key ingredients, including avocados, ground beef and bone-in wings, were up from the prior year and sequentially. During the first nine months of fiscal 2024, general and administrative expenses expanded 40 basis points as a percentage of revenues to 6.4%. An uptick in labor costs is likely to linger in the remainder of fiscal 2024, accompanied by other uncertain macroeconomic conditions.

BJRI’s Zacks Rank & Key Picks

BJ’s Restaurants currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Retail-Wholesale sector have been discussed below.

Deckers Outdoor Corporation DECK currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

DECK has a trailing four-quarter earnings surprise of 41.1%, on average. The stock has gained 8.2% in the past six months. The Zacks Consensus Estimate for DECK’s fiscal 2025 sales and EPS indicates growth of 13.6% and 12.6%, respectively, from the year-ago period’s levels.

Brinker International, Inc. EAT presently flaunts a Zacks Rank of 1. EAT has a trailing four-quarter earnings surprise of 12.1%, on average. The stock has surged 84.7% in the past six months.

The consensus estimate for EAT’s fiscal 2025 sales and EPS indicates growth of 7.9% and 34.6%, respectively, from the year-ago period’s levels.

Sprouts Farmers Market, Inc. SFM currently sports a Zacks Rank of 1. SFM has a trailing four-quarter earnings surprise of 15.3%, on average. The stock has risen 95.9% in the past six months.

The Zacks Consensus Estimate for SFM’s 2024 sales and EPS indicates a rise of 12.2% and 29.6%, respectively, from the year-ago period’s levels.

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