BJs Restaurants, Inc. Analyst Presentation Safe Harbor Certain - - PowerPoint PPT Presentation

BJ’s Restaurants, Inc. – Analyst Presentation September 2019

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

• pened 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 compliance with the Patient Protection and Affordable Care Act on

• ur 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, Texas and Florida where a substantial number of our current 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, (xxi) any failure of our information technology or security breaches with respect to our electronic systems and data, and (xxii) 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.

3

BJ’s Restaurants Overview

207 restaurants in 28 states

• 202 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 $5.5 million
• Industry-leading guest traffic
• Per person average spend of $17

4

Track Record of Delivering Best-in-Class Growth

SALES, EBITDA & EPS MORE THAN DOUBLED IN YEARS

8

2010 2011 2012 2013 2014 2015 2016 2017 2018

System Sales

System Sales Growth

10.2%

8-yr. CAGR Rank

(out of 9 CD peers $1BN+ in sales)

#2

EBITDA

• Dil. EPS

$64 $0.82 $140 $2.35 $514 $1,117

($ in millions except per share data)

5

Key Investment Highlights

Significant Runway For Growth

1

Culture of Discipline, Hospitality and Service

6

Category-Leading Restaurant Productivity

• $5.5mm system-wide AUV
• Industry leader in guests per sq. ft.
• Strong four-wall restaurant margins

2

• Many new markets seeded for

growth, and potential for 425+ restaurants in the U.S.

Strong Restaurant Returns

• Trailing Twelve Months through

May 2019, BJ’s restaurants averaged cash-on-cash returns of 22%, spanning 2004 vintages to current

• BJ’s is led by executives with

decades of combined experience

• Management team proven they can

grow new restaurants with quality

Consistent and Reliable Financial Performance

• Consistently grown sales and

EBITDA

• Performance outpaces peers across

many key indicators (i.e., Knapp- Track, BlackBox, etc.) 5

Best-in-Class Management

4

• Retention rates better than the

industry

• Project Q to drive efficiencies
• Gold Standard Kitchen Systems

3

6

Why Guests Choose BJ’s

BREADTH OF APPEAL STRONG VALUE PROPOSITION UNMATCHED EXECUTION RELEVANT FOOD, DRINKS & ATMOSPHERE

GUESTS

7

“Premium Casual” Experience at “Mass Market” Price

$13 $14 $15 $15 $16 $17 $17 $19 $22 $23 $23 $27 $33

8

$2.4 $2.9 $3.0 $3.0 $3.4 $3.6 $4.3 $4.3 $4.8 $5.2 $5.5 $8.3 $10.7

Industry Leader in Average Unit Sales

($ in millions)

9

Broad Consumer Appeal for All Dayparts

26% of Sales from Off-Peak Meal Periods Gross Margin on Pizza & Alcohol: ~80%+

System Mix Daypart Mix

10

Our Focus

Continue Sales Momentum Enhance our Culture New Restaurant Growth Leverage Margins & Drive ROIC

11

Ongoing Sales Building Initiatives

12

Sales Building Initiatives

• EnLIGHT

ened sandwich & salad

• fferings
• New lunch items
• Nearly doubled

level of promotional spend since 2015

• Significant price

investment in new Happy Hour

• Daily Brewhouse

Specials

Investment in Value

• Delivery
• Mobile app usage
• Catering and

large party menu

Off-Premise Opportunities

• Slow Roast ovens

for new center of the plate entrees and sandwiches

• EnLIGHT

ened item expansion around lower calorie and super foods

• New small bite

appetizers and add-ons

• Pizookie

franchise expansion

Food Innovation

• 2018 rollout of

revised program

• Simpler and

easier to use program for our guests

• Next phase:

segment marketing to loyalty guests based on behavior

Loyalty

• Enhanced

Scheduling process

• Handheld server

tablets

• Gold Standard

Kitchen Systems - Prep/Line hour integration

• NPS system and

increased investment in mystery shopper program

Operational Improvements

• 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)

Awareness through Better Marketing

13

Sales Initiatives Driving Outperformance to Black Box

BJ’s vs. Industry: Sales (Comparable Restaurant Gap to Black Box) BJ’s vs. Industry: Traffic (Comparable Restaurant Gap to Black Box)

0.8%

• 0.5%

1.2% 1.3% 3.9% 4.8% 5.3% 2.0% 1.8% 2.1%

Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19

SSS: (1.3%) (1.4%) (1.7%) 1.6% 4.2% 5.6% 6.9% 4.5% 2.0% 2.0%

• 0.8%
• 2.1%

1.3% 2.3% 2.6% 4.3% 3.3% 1.7% 2.8% 1.5%

Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19

Traffic: (4.2%) (4.2%) (3.1%) 0.7% 0.4% 2.5% 2.6% 1.1% 0.7% (1.0%)

CONSECUTIVE QUARTERS BEATING THE INDUSTRY IN BOTH SALES & TRAFFIC

8

14

Slow Roast Ovens Driving Average Check

Launched new Slow Roast initiative in Q2’17 to further differentiate food quality

• New menu items: Prime Rib, Double Bone-in Pork Chop,

Turkey Dip Sandwich, Prime Rib Dip Sandwich and Slow Roasted Turkey Club

• Upgraded existing items: Baby Back Pork Ribs, BBQ Pulled

Pork Sandwich, Meatballs

• Added Tri Tip Sirloin in Q2’19 including Tri Tip combos

Augments existing pizza oven and broilers Simplicity of item execution consistent with Project Q efficiency goals

Slow Roast Incidence (per 100 checks)

14.0 15.3 14.6 13.7 18.6 25.7

Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19

15

Off-Premise Continues to Drive Incremental Sales

• Off-Premise sales have increased

from 5.6% of sales in 2016 to 10% YTD 2019

• Selling BJ’s Beer and wine to go

(where permissible)

• Implementing new Catering and

Large Party packages in Q3’19

6.0% 5.8% 6.6% 7.1% 7.5% 7.7% 8.7% 9.5% 10.1% 9.8%

Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19

Off-Premise (Delivery & Take Out as % of Total Sales)

2017: 6.4% 2018: 8.4% YTD’19: 10.0%

16

Loyalty Delivering Promising Results

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 email marketing yields more engagement
• Enrollment +35% since revised program launched

17

Culture

18

Gold Standard of Operational Excellence

19

Our Culture and Our People Drive Our Success

20

Development

21

Significant Opportunity for Domestic Growth

207 510 555 560 733 858 1,248 1,693

RESTAURANT POTENTIAL IN THE U.S. & GROWTH JOURNEY ONLY BEGINNING

425+

22

Just Getting Started in the Northeast & Midwest

• FY 2019

Target: 7 New Restaurants (5 opened as of August 27, 2019)

3 4 3 3 5 22 6 62 11 3 5 34 2 1 6 5 2 5 3 4 2 2 1 2 1 1

1

2 6 2 63 5 22 6 1 3 3 6 3 5 2 2 3 4 6 34 1 1 4 3 3 13 2 1 1

2017 2018 YTD’19 AL MD CT IN (2) MI IN MD NY MI MI OH NJ OH RI OH SC VA

Where BJ’s is Expanding

23

Targeted Unit Economics

Sq Footage 7,400 Seats 230 Tables 69 Gross Cost $5.1 TI Allowance ($0.5) Net Cost $4.6 Targeted Average Mature Statistics AUV $4.5 - $5.5 RLCF $ $0.9 - $1.1 RLCF % 18% - 20% Cash on Cash Return 18% - 25%

($ in millions)

24

Charlottesville, VA – (7,400 sq. ft.)

25

Proto 2020

26

Beer Display Board

27

Margin Initiatives & Financial Strength

28

Project Q – Improving our Way of Doing Business

Continuous process of reducing costs

• Eliminating unnecessary kitchen complexity
• Reducing prep labor and peak cook times
• Improving cost of sales
• Improving guest throughput

Key 2019 initiatives include:

• T

esting menu reductions, particularly at lower volume restaurants

• Improving kitchen operations with Gold Standard

Kitchen Systems

• Focusing restaurant initiatives to drive margin

improvement across labor, food cost and operating and occupancy costs

29

Kitchen Improvements:

• Organizing walk-ins and dry storage
• Prepping all items into line ready pans
• Organizing prep zones and schedules
• Balancing of line cook prep and

dedicated prep cooks

• Resetting cook line and prep line at the

close of business for the next day

• Faster and more accurate daily prep list

Goal: To make our kitchens easier places to work and produce high quality food Benefits:  Increasing kitchen labor productivity  Lowering food waste  Improving food safety

Gold Standard Kitchen Systems

30

Balance sheet as of July 2, 2019

• Cash and investments of $23 million
• Total assets of $1,056 million
• Funded debt of $100 million, or

0.7x debt/EBITDA (LTM as of Q2’19)

• Stockholders’ equity of $324 million

Strong cash flow from operations

• 2018 cash flow from operations of $133 million

Available credit line

• $250 million ($100 million funded)

Share repurchase program provides flexibility to optimize shareholder value

• Repurchased $409 million of shares since April

2014

• $91 million remaining under existing $500

million repurchase authorization

Quarterly cash dividend currently at $0.12 per share

• Increased 9% in November 2018

Strong & Flexible Balance Sheet and Capital Structure

31

DRIVING SHAREHOLDER RETURNS WHILE MAINTAINING A CONSERVATIVE BALANCE SHEET & LEVERAGE

Balanced Capital Allocation

($ in millions)

32

Additional Information

33

Net Income to Adjusted EBITDA Reconciliation

($ in 000s)

Fiscal 2018 Fiscal 2010 Fiscal Year Ended Fiscal Year Ended 1-Jan-19 28-Dec-10 Net Income $50,810 $23,162 Interest expense, net 4,838 (34) Income tax expense (benefit) 1,187 7,638 Depreciation and amortization 70,439 28,878 Stock-based compensation expense 8,256 4,005 Other expense (income), net 735 (612) Loss on disposal and impairment of assets 4,048 1,164 Adjusted EBITDA $140,313 $64,201

THANK YOU