BJ's Restaurants Management Discusses Q3 2013 Results - Earnings Call Transcript - disposable bbq grill near me

Restaurants in Beijing (Nasdaq: BJRI) Q3 2013 monthly income requirements ETExecutivesGregory A at zero o'clock P.M. on October 24, 2013.Trojan -Chief executive, president and directorGregory S., director of corporate relations.Levin -Chief financial officer, chief accounting officer, brian J., executive vice president and secretary analyst.Bittner -Oppenheimer companyInc.John S Research DepartmentGlass -Morgan Stanley, Research DepartmentTarantino -Robert W.Baird & Co.Jeffrey Andrew Bernstein-Barclays Capital ResearchStephens Inc.Nicole Miller Reagan's Research DepartmentPiper Jaffray, research on DivisionAnton banner-Sharon Capital Partners, LLC, Research DepartmentWilliam BlairL.C.Jeffrey D Research DepartmentFarmer -Research Department of Wells Fargo Securities Co., Ltd.Wedbush Securities.Good afternoon, ladies and gentlemen, thank you for your support.Welcome to BJ's, Inc.Third Quarter 2013 Results Conference Call [operator note] today, Thursday, October 24, 2013, the meeting is being recorded.Now I want to give the meeting to Greg Troy, President and CEO.Sir, please proceed.Gregory A.Thank you, operator. Good afternoon, everyone.Welcome to BJ's 2013 investor conference call in the third quarter, and we also broadcast it live online.I'm Greg Trojan, BJ's executive director;I'm on the phone today with our CFO Greg Levin;Greg Lind, our chief development officer;And Wayne Jones, chief operating officer of our restaurant.After the stock market closed today, we released our financial results for the third quarter of fiscal 2013, which ended on Tuesday, October 1, 2013.You can also check the full text of our earnings release on our website.bjsrestaurants.com.Our agenda for today will start with chief financial officer Greg Levin, who will provide some of our comments on the financial review for the quarter and the rest of 2013.These are preliminary comments from 2014.I will then outline our future business and strategy;After that, we will open our hearts to questions.But before we start preparing to speak, our director of corporate relations, Dianne Scott, will provide our standard warning disclosure on forwarding --Look at the report.So Dianne, please go ahead.Thanks, Greg.Our comments on today's conference call will includeStatement in the sense of the Private Securities Litigation Reform Act of 1995.Forward-Forward-looking statements involve known and unknown risks, uncertainties and other factors that may lead to significant differences in the Company's actual results, performance or achievements from any future results, performance or achievement expressed or implied in the forward-Look at the report.Investors were warned,The outlook statement does not guarantee future performance and should not rely too much on it.Our forward-It is not until today, October 24, 2013, that the looking statement speaks.We have no obligation to update or modify any forwarding publicly-Or make any other forward-looking statement-Forward-looking statements, whether due to new information, future events or other reasons, unless required by the Securities Law.Investors are accused of fully discussing the risks and uncertainties associated with the forwardThe outlook statement contained in the company's submission to the Securities and Exchange Commission.Gregory S.Diane, thank you.Yes, as we noted in today's press release, the overall sales environment in the casual catering industry remains a very challenging issue.Knapp's leisure and catering industry Data Manual-Track and Black Box have negative comparable restaurant sales in July, August and September.Our sales have more or less followed this model, although our sales are not as strong as we expected, we are satisfied with our restaurant team's performance in cost management and providing quality service to our guests.Our income has increased by about 7.4% to $188.$2 million, $175.2 million in the same period last year.This increase was due to an increase of about 11% in the total operating week, partially offset by a reduction in our average weekly sales by about 3 times.2%.Sales of our comparable restaurants fell by 2.2%, in contrast, positive 2.The third quarter of last year was 3%.So in 2-Our comparable restaurant sales are roughly flat on an annual basis.Our 2.Comparable sales fell 2% in the third quarter, mainly due to menu pricing, which brought about 2% of revenue, offset by a decrease in guest traffic.As you may recall, during the call last quarter, we noticed a negative 2% trend in our comp sales in the weeks leading up to July.This sales trend continued for the rest of July until August and September.From a quarterly perspective, August is our softest month.Recently, our similar restaurant sales have improved and I will comment on this in the near future.A few things have affected our comp sales this quarter compared to last year.From a marketing point of view, in the third quarter of last year, we held one of the strongest promotions of the year, and we both held 2 Can Dine pizza special in August and September.This year, we did the same promotions in September and October.Instead, in the past third quarter, we launched a seasonal barbecue service that started in July and lasted until August.As part of the BBQ service we had a 2 can BBQ platter and while it was welcomed by our guests, its incident rate compared to our traditional 2 deep plate pizzasAlso in the third quarter of last year, we launched our loyalty program and the new fall menu in July, which includes our new seriesPizza at the end of September.Although both initiatives affected our cost structure last year, they did help drive sales as they provided a promotional tool that made BJ the first choice for consumers.As we mentioned in today's press release, we are interested in reducing our focus on new menu development this year so that we can digest past plans in operation, and invest in improving menu and kitchen operations to improve our future capabilities.So our fall menu update will be available in the medium termGreg Troy will comment soon on November.In addition to the impact of calendar changes around our promotions and new menu launches, we continue to see that our comp sales are affected by three other factors: the unusual nature of the new competitive invasionSome of the sales foodies at the new BJ restaurant, as we fill the gaps in certain trade areas to protect and strengthen our overall position in these markets;And the mathematical impact of the extended honeymoon sales period on some of our stronger new restaurants when they first entered the comp base 18 months after opening.During the quarter, our comp sales base had 116 restaurants, 41 of which accounted for 35% of our comp sales base, one or more of these factors have had some adverse effects on our overall comp sales calculation for the quarter.A competitive invasion is a reality in the restaurant industry, and it is not uncommon for some diners to fill the market.The good news is that all of these affected restaurants are solid, long termOur performance.Our own cannibalism, while reducing our comp sales to a certain extent, has produced some new restaurants that will drive strong returns in addition to the cannibalism impact.In the past, we saw that sales were more stable and finally showed some sales recovery.Therefore, we believe that patience and confidence are important to cycle through these influences.Geographically, our comparable restaurant sales in California are slightly below our company's average for the quarter.First of all, as I have discussed, most of our cannibalism is happening in California.Second, throughout the United States, we have seen a greater invasion of competition than in the past.S.Especially in our core market in California.Now, it's probably just because we're already in most of the mature trade zones in California and have been in those for a while.So we see more of this new competitive invasion than our other new markets.About our profit and loss, our restaurant-Horizontal margins reflect the expected declineTake advantage of the impact in negative comparable restaurant sales.While our restaurant operators do a great job of controlling everything they can control, the fact is that in the restaurant industry, BJ may do more in our relatively large kitchen-In general, there is a certain fixed cost for large menus, large kitchens and restaurant facilities, which are not available, unfortunately,Take advantage of the negative effects of restaurant sales.While you want to optimize your variable costs as much as possible, you don't want to come at the expense of limiting sales building.At BJ's, we always consciously decided to work in our restaurant, selling first and then taking care of our guests.Our sales cost is £ 24.Compared with the third quarter of last year, sales of 8% increased by about 10 basis points, and in turn increased by about 40 basis points from the second quarter.This increase was mainly due to changes in our menu mix as we promoted our BBQ menu in July and August and we also launched two higher menusSeasonal beer prices for the third quarter: our fresh beerThe beer festival IPA in August, the beer festival beer in September.This resulted in beer sales costs being slightly higher than in the previous quarter due to some additional shipping charges.The labor force in the third quarter was 35.7%, up 70 basis points from the third quarter of last year.While we were able to respond effectively to a weak sales environment by doing our best to adjust our hourly shift schedule, we canceledUse our fixed management of wages, taxes and expenses.In fact, despite negative sales trends in restaurants, the hourly labor force grew by only about 10 basis points in the quarter.Our operating expenses are 23.The third quarter was 2%, an increase of 130 basis points over the third quarter of last year.Of the 130 basis points increased over the previous year, about 80 basis points were related to an increase in marketing spending, and the remaining 50 basis points were relatedMake full use of our sales results.Specifically, we spent about $4 on marketing.1 million, come in at about 2.2% of sales.By contrast, about $2.Marketing spending last year was 5 million or 1.4% of sales.In the third quarter of this year, our marketing costs include additional TV tests of about $675,000, which took place in the medium term.We also added a year of promotion in Septemberover-On the basis of the year, which is currently about 1.4% of our total sales are discounted compared to about 0.9% of total sales in the third quarter of last year.While there has been a significant increase in discount activities compared to last year, we believe this is still far behind our typical mass leisure competition.In addition to the marketing expenses I just mentioned, our operators continue to control operating costs in our business.In fact, if you exclude marketing expenses for these two years from operating occupancy, we averaged about $22,300 per operating week for the quarter compared to $22,400 last year.So it's down about $100.Our general and administrative expenses for the second quarter were about $11.4 million or 6% of sales.G & A is about $1.Due to lower equity pay and reduced accrued and incentive pay based on performance to date, it was 5 million less than expected.Depreciation and amortization are about $12.5 million or 6.Based on our recent trends in depreciation and amortization, 6% of sales and an average of around £ 7,000 per week.Our actual tax rate for the third quarter was very low, about 4%.This is mainly due to our recognition of the WOTC tax credit of 2012 and below.than-Expected pre-tax income.With respect to the WOTC tax credit that many of you may know, which was suspended throughout 2012 and then retroactively restored as part of the US Taxpayer Relief Act.So in the past third quarter, we have received a total of 2012 WOTC credit.Now, before I transfer the call to Greg Troy, let me take a few minutes to provide some forwardingLook for comments for the remainder of 2013, as well as some preliminary comments from 2014.All of these comments are affected by the risks and uncertainties associated with the forwardAs discussed in our submission to SEC.Based on the sustained downturn in the economy and the industry data we see today, we expect that at least at the end of this year, the most likely early next year, the Leisure Catering industry will still face challenges in general.However, as I mentioned earlier, our recent sales trends in comparable restaurants have improved.By the first three weeks of October, our comparable restaurant sales had declined slightly to a negative of 0.5% or so.More importantly, we have seen this improvement trend, although the menu price in October is less than the whole year.Our current menu price is a little over 1%.So in the first three weeks of October, we saw about 200-basis-Our guest traffic has improved compared to the third quarter.I would like to remind you that this is only in the first 3 weeks of October and it is difficult to determine the trend of the restaurant business after a few weeks.In addition, our most effective sales time in the fourth quarter began on December, because--October is a slow period for us.In the fourth quarter, I expect about 1,875 restaurant weeks and we are not going to charge any menu price on the menu in November.Our menu price will be slightly higher than 1% this quarter.I expect our sales costs to remain at the 24% cap, very consistent with what we see in q3.As I mentioned earlier, the labor force is significantly affected by the increase or decrease in comparable sales.While our team has done a solid job [ph] in the current environment, adapting their hourly Labor plan to our new productivity system, in this soft but unstable environment, it is difficult to estimate the total labor force as a percentage of sales.So, based on current comparable restaurant sales trends and the growth we have experienced in terms of workers' pay and some higher food taxes, the labor force in the third quarter is likely to be within 35%.Again, this is based on our current sales trends.We will make sure that, frankly, our workforce is set up to take care of our guests, because the bottom line is delicious food and quality service and hospitality will ultimately improve top sales.We have said it many times.Guests view our brand through our team members who take care of them every day.Therefore, we must and we will stick to our Labor line so that we can continue to provide quality service to our guests rather than making rash Labor decisions that will damage our future brand.In the fourth quarter, we plan to spend about $4.Our operating and check-in costs will include a 6 million marketing fee.That includes another $650,000 in TV testing.To get everyone to know about our TV test, it aired for two weeks in September, covering about 75 restaurants.Then we got dark for two weeks and then in the first two weeks of October we played a second wave of TV commercials for the same 75 restaurants.So the total cost of our TV is about $1.3 million, half of which were spent in the third quarter and the other half in the fourth quarter.So, including marketing costs, I expect our total operating occupancy to be around $25,500 to $26,000 per week, of which about $2,400 per week is marketing related.Obviously, operating occupancy costs will change based on the percentage of top comparable sales, as we have seen this quarter.Therefore, I think it is better to consider the operating occupancy cost in terms of cost.per-Week-based compared to trying to model as a percentage of sales.Our absolute G & A spending in the fourth quarter should be around $13 million, which includes equity compensation.I would like to remind you that G & A may vary from quarter to quarterto-Quarterly travel and other related costs due to the number of managers in our senior management training program, due to new restaurant opening hours, incentive pay accrued items and other factors.I expect the cost to be around $3 before opening.5 million, we expect to open 6 restaurants in the fourth quarter, in addition, we see some carry-over costs for the restaurants that opened at the end of the third quarter.I also expect some pre-opening ramps for restaurants that will open early next year.Currently, we expect the income tax rate for the remainder of 2013 to be around 27% and the outstanding diluted shares to be around $29 million.Regarding our liquidity, our cash and investment in the third quarter was slightly higher than $37 million.The amount of credit we did not have financial support was $75 million, which did not expire until January 2017.So far, our total capital expenditure is about $93 million, and we continue to anticipate that this year's total capital expenditure will be between $0.115 billion and $0.12 billion, we plan to receive TI allowance and benefits from after-sales leaseback of $15 million.As a result, our planned net capital expenditure is currently expected to be within $0.105 billion.We expect to fund our expansion and capital expenditures from cash and investment on our balance sheet, operating cash flow and the benefits of tenant improvement allowances and after-sales leaseback transactions.We are currently working on our 2004 financial plan, and we will submit final approval to the board here on December.So while we currently have no approved plans to review in the investment community, let me provide you with some initial management expectations for next year.With regard to profit margins and inflation costs for next year, it is still difficult for us to comment with high certainty, as our supply chain is currently negotiating on many of our key commodities.Based on our latest information, this is still very preliminary as we are continuing negotiations with suppliers and we currently expect that the total cost of our basket of goods will increase by about 1% to 2% next year.While we will do our best to take advantage of the mix of marketing and operations plans, as well as prudent menu price adjustments and menu portfolio management to cope with this input cost pressure.However, there is no guarantee that we can do so effectively.We also have to focus on the menu pricing actions of our competitors, including the intense promotional environment.We are currently expecting a new menu in next February.There will be a new format for this new menu, which we believe will make it easier for our guests to order and will include a range of new menu items in the $10 range.While we have not yet determined the amount of pricing we may take on this new menu, I expect it to be in the range of around 2%.We do have a menu price of over 1% and will be available by the end of next January.On the labor issue next year, California, which we currently run 63 restaurants, will become a 2-The minimum wage has been gradually raised since July 1, 2014.California's minimum wage will rise from $8 an hour to $9 an hour.We estimate that from the dollar perspective, we have increased our menu pricing nationwide by about 1% and will pay for that.If we choose, we can also choose to price in our California restaurants, which is equivalent to the California menu price up about 2%.Again, these are only estimates.From this perspective, the city of San Jose, California has enacted a living wage regulation that will take effect from this year to raise the minimum wage in the city to $10 an hour.We currently operate 2 restaurants in San Jose.The first restaurant opened in 2003, and the second restaurant we opened earlier this year was opened at the end of September.To compensate for the increased hourly rate, we took some menu prices ahead of time in the existing restaurants in San Jose, and in addition, when we opened the new San Jose restaurant in September, the menu price was also higher.At present, both restaurants are very good for us.Our first San Jose restaurant in comp base has seen a growth in comp sales on the 2 Th.The range for this year is 5%.Regarding our operating costs next year, like the labor force, we see an increase in our general liability and other insurance programs.I do expect some of us to face some normal inflationary pressures.-Other operating occupancy fees.At the same time, we do have a cost-A savings plan is under way.We believe that over time, we can reduce the cost of operating the weekly.Our goal is to provide some funding for incremental marketing spending to continue to raise our awareness with consumers.After we finish our plan for next year, I will be able to share our overall cost savings target of 2014.This cost savings does not include any incremental expenditures that we may see in marketing.While we haven't finalized our marketing plan for fiscal 2014 yet, I expect our marketing spending to be somewhere in fiscal 2.2% to 2.4% of the sales range.In G & A, our ongoing goal is to gain leverage as we continue to grow.So the only way we can do this is to make sure that our G & A costs don't grow at A rate higher than the top growth.Therefore, the growth rate of our 2014G & A cost should be lower than the expected growth rate of our total revenue, which will include the expected increase of 12% of the total Restaurant Business Week, plus the increase in restaurant sales.Our expected income tax rate for 2014 should be between 29% and 30%, and we continue to anticipate that 2014 of diluted stocks may be at the middle and upper levels of $29 million.As for next year's income, I will make mistakes on the conservative side.We expect our business week to grow by about 12%, which is based on the target of 17 to 19 new restaurants next year.We expect our menu price to be around 2% for fiscal 2014.However, from a macro perspective, it is difficult to accurately predict the flow of guests next year.Therefore, it is difficult to predict the overall comparable restaurant sales.As a management team, we will definitely strive to achieve at least modest positive comparable restaurant sales with 2014 of sales.Finally, one of our goals is to keep our 19% to 20% 4-Wall operating cash flow.While I know we didn't reach this target this quarter, negative comparable restaurant sales have fallenTaking advantage of the fixed costs inherent in the restaurant business, I firmly believe that we will return to this level as we continue to expand across the country.Q3 is always one of our toughest quarters.This is often our quarter with the lowest average weekly sales and due to the expiration of some utility rates and half-year commodity contracts, our cost is also the highest, in addition, for those new restaurants, the opening cost and associated inefficiency of the new restaurant.However, the foundation we build is strong and stronger.Although we are not satisfied with the current sales, using this time to digest our past plans, we are ready for the new menu introduction later this year and early next year, enables us to effectively expand our sales in a productive and efficient manner.In addition, taking the time to identify some important opportunities to reduce costs and operational occupancy costs will only increase shareholder value over time and allow us to communicate BJ's story more effectively.Now, let me give it to Greg Troy.Greg?Gregory A.Thanks, Greg.So it is clear that we are not happy with the comp sales of negative 2% in the quarter, although our performance is slightly better than the average of industry peers in the third quarter, with higher profit margins this year, we know BJ has a chance to do better.Despite the challenges of the consumer economy and the challenges of the leisure and catering industry, we feel that there are many opportunities to drive sales forward.But before I talk about these questions, let me take a few minutes to answer a few questions you might be asking in this weak sales environment.These questions are, are there any problems with our concept?Or, do we run restaurants on lower performance standards, in some way leading to our slowdown?Let me first solve this operational effectiveness problem through some relevant data.Key indicators, we are paying attention every day.Our two best measures for guest satisfaction today are our gold standard service score, which is derived from the third standardParty mystery store and the amount of food we give away to our gueststhan-Great food and service.Our GSS score, we call it 100.Point scale, rose 31 basis points in the third quarter, Rose 69 basis points this year.Keep in mind that our GSS score has been at its highest level in history since the beginning.Due to service issues, the number of food and drinks we presented to our guests dropped by 14 basis points this quarter, 14 basis points compared to a year ago, and 19 basis points for the whole year.We also track the average total time guests need to complete the BJ experience.There has been an improvement this time, which means a reduction of about 4%--4.This quarter was 5%, about 2% for the whole year.Due to the new program for BB-training, our food cost control was about 13 basis points higher in the third quarter than the theoretical deviation-For the barbecue promotion, but we did better this year.Our labor efficiency has also improved this year.In the face of negative traffic trends, it is very difficult for our key labor productivity indicators-items per working hour-to stay the same in both the quarter and year.Although food costs and labor efficiency are not guestsIn the face of indicators, these indicators are important indicators of the overall performance of the restaurant, so our steady improvement shows our overall implementation.So even though we have never declared a victory over these key operational indicators, and we know we can continue to improve, I clearly see that our operators continue to provide excellent service to our guests.The decline in operating performance did not slow down our sales.For those who think there are other inherent weaknesses or problems with our concept, first of all, I would suggest visiting one of our restaurants and remembering some key facts about our concept.According to a survey conducted by RBC [ph] earlier this year, our sales per square foot ranked second in the established chain of casual dining.Keep in mind, however, that our average sales are less than many.So, measured by guest traffic per square foot, our transaction productivity is more than 20% higher than our next highest competitor.Remember that our comp sales have increased by 15% over the past 5 years, while according to Knapp-Tracking, down 7%, during which time our average number of restaurants grew from 5.2 million to 5 per restaurant.8 million per restaurantAnother important measure of our concept health is the strength of our newly opened restaurant.So far, we are very satisfied with our class 2013.We expect our new restaurant opening week sales to be completed at a strong level over the past few years.We just opened a few weeks ago in Corpus Christi, Texas, with an average of over $180,000 a week.We opened a store in the backyard of Huntington Beach.-Last month, in Orange, California, revenue exceeded $150,000 a week.Therefore, we believe that BJ will continue to provide the most impressive products and operating models for consumers.We are now climbing comp sales at a steeper pace than most concepts and have set industry standards for guest traffic per square foot.As Greg Levin mentioned, our comp sales algorithm has also been challenged by our own devouring, a greater degree of competitive intrusion, and the new restaurants we enter the comp base, their honeymoon level is still high.Our core restaurants are not affected by these factors, many of which are 7-, 8-and 9-The position of the year ago is a positive competition this year.Still, both myself and my team members at BJ know that re-creating top momentum is our top priority.To do this, the biggest thing we do to drive sales is to create more in our restaurants that I call quality capabilities.We need to be able to serve more guests faster and increase the level of quality that is better than we are today.People who have been following BJ for years know that our comp restaurant sales are driven by increasing effective capacity in two ways --of-Our house and kitchen.Deuce [ph] Seating, better workforce deployment, workflow balance, our technology investment, design changes in our kitchen all improve our ability to serve more guests.As we enhance BJ's experience, we push the check of both prices, and we push the event to happen by significantly expanding the number of menu items, which is a very effective formula.But as a result, many of our kitchens are running, or close to their highest ability to perform at speed and above all at the level of quality we ask for ourselves.So a key unlock for us is to create more efficient production capacity behind our house.This will enable us to do something important with our menu.The first is the ability to create, execute compelling time-limited offers, and create more uniqueness and desire-Capable things like our pizzeria can improve the quality of our daily food and add valueTrend items in the middle of our menu.As you know, over the last few years we have done the end of the menu barbell very effectively.Our snacks and snacks, our special lunch at one end, and our superiorsThe high-end Center of tablet protein, both very, very successful.At the same time, we spent less time innovating our core menu items.In addition, they absorb the price along the way, which does not mean the level of value.-In the middle of the menu, the value we want to provide is as strong.Therefore, our menu development focus is on the middle price of the menu below $10, smaller in size, lower in heat, bolder and moretrend flavors.Frankly, this year we can address the slowdown in sales by adding more menus to the menu ---I should say more menu items.But in the long run, we have made the right decision to focus first on taking a deep breath, reducing the complexity of the kitchen and creating the production capacity we need, and prepare for exciting additions and promotions in the future.The menu we launched in November included the launch of a smaller range of grilled top burgers, and due to our project Q program, we will have a net reduction of 24 items, about 15%, and equally important, more than 50 changes have been added to our preparation, formulation and ingredients process, which will add speed, quality and throughput to our kitchen.Perhaps the best example of the complex chain we are doing is putting our Deep Pan Pizza back in the pan.Because we thought the pizza showed our product better, we made a change to put the pizza on the plate.Well, it seems our guests don't agree, actually it takes longer for our chef to take the pie out of the pan and slow down our service.We have reduced the number of cut onions from 9 to 4.These changes may seem ordinary, but when you extract them from the amount we do at 143 restaurants a day, they make a lot of sense.Our new burger collection will be sold as BJ's Beer Burger, a great example of more new and interesting flavors you'll see early next year, in smaller but rich portions, the heat is lower and the price is less than $10.Our other capacity increase plan is to increase the speed of the BJ experience.In addition to our kitchen plan this month, we will start testing to connect guest mobile and desktop devices to our current restaurant technology to enable our guests to speed up their meals if they wish, can also experience.While it is too early to announce the readiness for a full launch, we are committed to using technology to improve our guest experience.This speed will result in a higher table top turn and gain a valuable, larger mass capacity.So when we work hard in these key kitchens and in front --of-The House capacity plan, we have been working equally hard on the demand generation of the equation.The three key levers we have here are the effective media consumption mix, our loyalty program and the foundation of all our marketing, brand information and positioning.We continue to test and learn on media spending, and recently completed the second wave of TV in the California and Texas markets.These tests continue to show that, in some of our markets, television will continue to develop into useful awareness drivers.Our loyalty promotions continue to work well.We have just achieved our goal.We are confident that this will drive sales and help us understand which promotions have the best balance between traffic and discounts.Finally, I am very satisfied with the progress of our information delivery and positioning work, and you will start to see the creative output of this work in the first quarter of next year.This is an important platform to tell the story of BJ about our amazing tastes, food quality and amazing value under one roof.We will do this by adding a more modern look and feel to our media, our views, and a more fun, approachable personalityof-Sell materials, even our menu itself.So although salesConstruction is our top priority, our work in the middle of the P & L cost structure, and our design and construction team's efforts to build restaurants at a lower level of capital investment, also bear important fruits.We expect to open 17 to 19 restaurants next year, 2/3 of which may adopt our new design method, which will save us $1 million per restaurant.Our work in the middle of P & L has identified millions of dollars in annualized savings.Both are key steps in driving us to grow with higher returns, enabling us to achieve growth and ROIC at a balanced level and ultimately achieve strong returns.So before we answer your question, I will summarize the following: Although we are disappointed that the sales of comparable restaurants are weaker than we want, I believe, we are not only making the right efforts to restore momentum.We have made good progress in launching another building module needed for the industry to sustain a larger sales premium.I know very well what our chances are and we have been trying and chasing them as fast as we can.These sales challenges are not new to BJ.Our 5-During the Great Recession, the annual running time of the cumulative 15% companies began to decline slightly, but we did not panic.We have developed a course to expand capacity and menu breadth and have started a breakthrough performance for many years.We are committed to using the same leverage with the same powerful results.We will continue to attack, and in the end, we will not change anything in this concept, but improvements in the basic formula make BJ so successful.It is offering the highest quality food and drinks in our category with amazing value, attracting a very diverse group of guests who use BJ in a variety of different dining occasions, by opening successful restaurants in new and existing markets, we deliberately expanded our footprint.Remember, we only have 143 restaurants and our footprint will double over the next 5 years.Thank you for attending our conference call today.Operator, please open the line if you have any questions.Question-and-Answer the session operator [operator description] our first question is from Brian BitTorrent, Oppenheimer & Co.Brian J.Bittner -Oppenheimer companyInc.The research department you said earlier about how certain stores are actively competing.I know you're old.Can you add a little more?Exactly, what stores are actively competing, starting with stores over 5 and over 2?Gregory S.LevinBrian, I don't know if we specifically say which restaurants are performing positively.The fact that we are talking about is, I believe, there are 116 restaurants in our comp sales base.Of the 116 restaurants in our comp sales base, 41 are either affected by diners because we opened a new restaurant, competing for an invasion or a class in 2011, now some of them are classes in 2012, depending on the restaurants that enter our comp base.So, apart from that, we have about 75 restaurants that we consider to be an unaffected restaurant where we can't identify a competitive invasion or diners.These restaurants are still good for us.I think when you know we're negative 2, look at it as a whole.2%. those restaurants seem to have closed down.I think these 75 restaurants are a bit negative and this is a mix of these, which means there are some in California, some in Texas and some in Arizona.There is nothing special about these 75 restaurants.Brian J.Bittner -Oppenheimer companyInc.Okay, research.But is that the same?-In conjunction with the same comment that another Greg said, there are some stores that are actively competing --to-date?Maybe I'm confused.I thought you said there would be some units during your honeymoon, an old shop aged 8, 9 and 1to-The date is certain.Gregory A.TrojanYes, those--What we are saying is that restaurants that are not affected by diners, competitive invasion and honeymoon are doing well this year.Brian J.Bittner -Oppenheimer companyInc.Okay, research.So October seems--The trend is a little better now.How about September?Because you said August was your worst month.I mean, are you seeing a quick change in October?September than the entire quarter of comp--quarterly comp?Gregory S.As I mentioned, August is the worst from this perspective.September began to get better, but the difference between September and October was day and night.Brian J.Bittner -Oppenheimer companyInc.Day and night Research division between September and October?Gregory S.LevinYes.September is still a tough quarter for us.We --Let's put it this way. we don't end with negative 2.2%, minus 5% for 1 month, flat for next month, so all 3 cycles are at this low levelsingle-digit negative.The next question comes from the John Grasse series at Morgan Stanley.John S.Glass -Morgan Stanley, Greg, research. you're talking about your industry.Leading sales and high volume per restaurant, I think in reality you may be in a very low pay environment all the time.I would --it's probably --That's a good assumption, at least.What can you talk about--Remind us, perhaps, what is the goal in terms of the new breakeven point for comps that you are trying to fight for, because it has to be lower than before?In the simplification process that you are talking about, where are you, cutting different things, preparing different kitchens?Where are we in the process?Gregory A.Good question, John.The --Well, let me say that at the beginning, we will never give up the point that our company can't come back ---Premium deals, more--The premium is higher than it is today, just as I am very passionate about what we do in terms of sales.It looks like, unfortunately, comp sales don't--Not a straight line, right.We had to take a little deep breath.-More in terms of capacity, but I think some of the issues we solved in the middle of the menu are better in terms of valuefor-Your product is doing very well for us and I think we can do something there that will have a significant impact.This quick opportunity is a great opportunity for us.Overall, we have not slowed down, but we have never been so fast.My personal point of view is that with the development and growth of fast leisure as an alternative way, we should not only look at our market share from the perspective of leisure catering, but also from the perspective of all catering, especially fast leisure and leisure.Overall, I feel that casual dining is losing its share of fast Leisure-One of the reasons is speed.Given the complexity of our menu, this is not our advantage.I think there are some real sales advantages if we can successfully solve this problem and improve it.So this is the sales side of your question.I think the other part of the problem is--I don't want to say anything here, but, where do we improve our efficiency so that we can reduce our pay break-even and where can we maintain or improve our margins?I think we have made good progress in this regard.I think --you look at --It's hard to see in this comp environment, but the work we do in terms of labor efficiency, I think, our opportunities in terms of operating costs.We think we're in a very--This is a very different place in terms of pay break-even.Greg, I think we talked a little bit on the last call.I think we have made progress, but we must continue to work in the middle of the cost of profit and loss.I think we saw some good opportunities there.John S.Glass -Morgan Stanley, Research Department--Then remind me what number do you think you can target?Or, I think, if you stick to it, do you think you can get the cost leverage on 1% to 2% comp?Or, given the inflationary pressures in this industry, is this never possible?Gregory S.LevinI thinks there is a shortJohn, just because of some other things we see in the P & L, there is a chance to make some profit in lines 1% to 2%.I think we will start talking about the number 2%.We should be able to maintain our position there, if not to get some extensions when I consider what we are currently implementing.So I think before we talked about BJ need a place close to 4%, I mean, 3.5% to 4%, you look at some of the costs we put into this business, whether they are just things in terms of operational occupancy.When we went through it, Greg Troy, if you 've ever heard of it, called the Q project, and everything we did there, it's also starting to look at something that guests have a little more --Faced with that, it means that if we start changing some menu items, the way we try to rationalize some of them, we may not need much plate that we are currently using.So there's some savings there.We are concerned with the utilities on the demand side and the supply side of the utilities.There is a lot of stuff about the operational footprint we are pursuing, and frankly, it will help us make some progress on lower pay.Gregory A.TrojanI means that the other thing I would add is that when we reduce the cost of capital expenditure on the front end of the business, mainly by reducing the right--In our new restaurant, but in the past few years we have spent a lot of capital, which has a very solid return on improvement, take this concept to the high end of casual dining.We don't have to spend at the same price as we have done the job, which is a heavy burden on our current restaurant base.So our Depreciation and amortization put some pressure on our margins and we are working hard and should ---This will provide some leverage for the future.John S.Glass -Morgan Stanley, Research Department, last question, I will leave it, can you introduce yourselfGiven that your income base has fallen significantly this year, the fund will grow next year?It sounds like you still have some challenges in the short term.Can you --and this part --I guess the implicit question is, given these challenges, why do you need to grow at the rate you are growing?Gregory S.LevinIn about selfI believe we can provide the funds.-Obviously, our cash flow and earnings are not where we want to go this year, you can start thinking about it from next year and what we do there. In December, the cost of our investment was about 2/3 of our restaurant, which would be $1 million less.So if we build, just walk in the middle, 18 restaurants, 12 of which come in for $1 million.That's $12 million in cash flow.In addition, we have a goal of reducing the traditional 8,500-square-Western restaurant.So I think we are in a good position and actually our TI is up to 2014.We don't have any debt with funds.We have $75 million in credit.So, overall, from today on, I am very happy with our balance sheet.And then I know--I'm sorry, John. you asked us that our business will continue to grow.Wherever we continue to open up BJ, it does a great job.This is a concept of working in Tallahassee, Florida;Corpus Christi;Irving, California;To Dallas, Texas.Miami, Florida.I mean, the opportunity is still huge in the white space outside.When we talk about growth, our goal is to achieve growth at a controlled rate.So we think 12% is a controllable speed.I think if we were to sit at 18% or 19%, maybe we would have some different views on the growth rate.The next question comes from the lines of David Tarantino and Robert W.Baird.David E.Tarantino -Robert W.Baird & Co.Greg, I just wanted to follow up on the last point.I think, from the menu and operational point of view, you have a lot of things to do on the initiative, which leads to the question of whether you can better slow down growth, let the system digest some of these initiatives and restore momentum on an existing basis rather than trying to grow so quickly.So, has the company considered this idea?Or, why don't you try to slow down temporarily and focus on making the existing base better?Gregory A.TrojanI will solve this problem.It's --Hey, look, if we feel something is wrong or broken, we have to work it out if you want, I see everything we are doing as an opportunity to have a solid foundation.As Greg mentioned, I looked at the performance of our new restaurant this year and they continued to do well.If I start to see our new beginning-It will stop us, but we don't see it.As long as there is the quality of the real estate, we continue to do well there, and I think we want to continue to take advantage of these opportunities and we are creating huge returns for our shareholders.David E.Tarantino -Robert W.Baird & Co.I think we merged the research department.-Maybe I should rebuild the framework, and I think, the question I want to ask is that growth inhibits your ability to have a positive impact on the existing foundation while managing both, I think?Gregory A.TrojanI think --I heard your voice there too, let me talk more straight.It's a good question, but I don't think so.-We have a team of experienced members of the operations team who are primarily responsible for opening these restaurants.If I feel it will distract us from the culinary development team, the marketing team and the development team-Again, I have different views on these opportunities, but they are ---Our current speed of opening has not disappeared from the work we do in sales.David E.Tarantino -Robert W.Baird & Co.The research department was established.That's helpful.One more problem, I think you mentioned that the value in the middle of the menu is not as strong as it needs, you are working on this, so, just curious to know how you came to this conclusion, maybe if you can elaborate on how you will attack this conclusion in the future.Gregory A.TrojanYes.The --if I just --Let me talk more specifically about what we mean in the middle of the menu, because we're actually talking about categories like burgers, main course salads, sandwiches, etc, maybe pasta.You see, we know that earlier this year we have mentioned that a lot of the innovations and work on the menu are on the other side of the menu, and we need some refreshing new news, first of all.Look, we just-A comparison is under way to see what we do in the market and a competitive price comparison in the market we are in-In contrast, we believe that the value we offer is different from the value we wish to provide in these categories.So I use the beer burger example, but I think they are really poster kids and you will see more in these other categories if you want.It's --I believe--Not all, but there's a number.-We have more and more guests.Contrary to hay days in their early 80 s and 90 s, this is not how much food you can put at a certain price point.Of course, now people are interested in eating less in some cases, so they will cherish a lower price point--But this does not affect its unique taste.So that's what we do.-In terms of providing more options in the field to achieve value, better-for-You eat the lighter at the same time.The next question comes from Jeffrey Bernstein at Barclays.Jeffrey Andrew BernsteinThere are several problems with Barclays Capital Research.First of all, we discussed the gap that has narrowed with the industry in the last few quarters, and you mentioned that when you digest operational changes, part of the reason may be the lack of new products, but you also mentioned the discount and the intense promotion environment.I just wanted to know where you saw it.-Which part or which part of the menu do you think is the biggest weakness?Or what has changed in the last few quarters?Competitors--Or something that is highly competitive takes the biggest share in the following areas.-Relative to your menu?Gregory S.This is Greg Levin.This is an interesting question.I don't know if we have all the details.I think when we go through and try to look at your daily section.We look at business on weekdays and business on weekends.As we mentioned before, lunch is still a challenge for us.I think, as Greg Troy mentioned, a little bit of the impact of quick Leisure seems to be there.I know that when we look at the nature of our competition and the cannibalism that happens in some of our restaurants and the invasion of competition, a lot of what we see is some quick concept of leisure, these concepts appear in many areas of our past.So we tend to see a little bit.So far when you go through our menu categories, overall I don't necessarily see a drop in one category with another.When we look at it, our accident rate, this is every--The items ordered by each guest are still around 1.9 to 2.So from the guest's point of view, we don't necessarily see a big change in the accident rate.Really, once again, looking at the numbers, looking at the summer, it seems more like the lunch business we do ---Nick for dinner.The competitive invasion seems to be more about the fast casual aspect of our business.Personally, I also think that in July, August and September, the marketing calendar we talked about didn't give us the boost we were looking forward to, some barbecues were dining with two people, it's a bit like a summer swamp.From the point of view of celebration, there is no reason to go out for dinner as I thought.Jeffrey Andrew BernsteinBarclays Capital, Research Division, and then 14 years of marketing, I think, you're talking about a low of 2%.I just want to know if it gets to the desired effect is to push sales or drive traffic, are you worried that you will push traffic to the store as you said, this may already have some capacity or throughput issues that may be marketing rather than marketing causing problems, but marketing may be--If your store is not able to handle it, you are really marketing effectively, which can exacerbate the problem.Gregory S.LevinWe stopped to understand the problem a little.I don't think --I mean, what you're talking about is going to be a leak we're talking about, or because of marketing information, people come to our restaurant and go "the line is too long" and they go somewhere elseThat's what you asked?Jeffrey Andrew BernsteinBarclay Capital, Research Division, just like marketing's goal is to drive traffic to your store, you seem to think it's useful to you, but you also talk about the speed of your service being the problem.You have a throughput problem that brings traffic to your store when you have a throughput problem.Gregory A.TrojanOkay.It's --I think, what--What we want to say is, look, we can-We have no capacity to limit--And--In many different days, in many different parts of our business, there is room to do more business, but we--What has traditionally been and will continue to work on is innovation around the menu, right.So the constraint is, we--That said, our kitchen capacity is a bit limited, and what we don't want to do before we create the capacity for the processing menu is to add a new menu item to that menu.So this is not true.-We are not saying that we cannot receive more guests in the restaurant.What we're talking about is-As we continue to work and develop our capabilities in the kitchen, this will enable us to create more menu news than we do today, which will drive traffic.Jeffrey Andrew BernsteinThe research department knows about Barclays Capital.Finally, 17 to 19 next year, can you break it down from new and existing aspects? Just wanted to estimate how many others you might eat compared to your new market, and maybe you would estimate by quarter how that would be?Gregory S.LevinI does not know if we have these details.We did say --I'm looking at something here.I'm not sure we have--To be honest, I don't think there will be too many cannibals next year, just looking through.I mean, we're going to build Orlando.We're going to build more in Florida, but California is a bigger area in terms of diners.We just don't have a line in California.Jeffrey Andrew BernsteinThis is roughly the case with Barclays Capital, the quarterly research arm...Gregory S.LevinWhat, Quarter--We will continue to study the details.I will plan 2 in the first quarter and then we will try to balance the whole quarter after the first quarter and not go back-end-Just like we did this year.Our next question is from Will Slabaugh from Stephens.Will Slabaugh -Stephens Inc.I want to ask you a question-In the middle of the menu you mentioned earlier.Are you worried when you add some of these lowercost items on --You said you would actually lower the average fare and some people might trade from more premium items to one of the items you said?Would you agree, assuming so?Gregory A.Look, this is a good question.We won't know until we do it, but it's not a choice not to do it.Our first priority is driving.If the result is--My feeling is that even if the focus of these items is to add more items below the $10 price point, you will be worried that the guest check will be lower.Whatever we do-Even if we do promotions, our guests will order extra beer or dessert or pizza when they haven't had it before.And they --Incredibly, we see that the frequency of the guest's behavior does not change much on the guest's check.So that would be my expectation, and of course, our goal is to provide better value without significantly reducing guest checks, and our guests are more satisfied with the value.Gregory S.LevinYes.I think, will, when we did this in the past, we would be rolling out snacks in small clips.Frankly, we are concerned about what impact this will have on the sale of appetizers, will it devour the average check? We think this is a supplement.In this regard.When we launch our lunch specials, it will eventually generate what we call more revenue, or more revenue.Become more guests to enter our restaurant, compared to the price drop when we put these lunch specials together with some other menu items in 2009.I think we look at this in the same way, in a sense, we are providing a new product with great value and great innovation, this product can increase the frequency of our restaurant and guests, and then allow them to trade items with some others.Will Slabaugh -Stephens Inc.The research department found you.Looking ahead to the profit level of the restaurant, you talked about keeping the profit to the target of next year.I'm trying to balance that, and it sounds like if we consider conservative moderate positive competition next year and take into account the comp break-even point we just mentioned, it might be hard to do 1% to 2%.Can you help me arrange it reasonably when I investigate next year?Gregory S.This is a good question.I think next year, at least in the first half of this year, this issue will be a challenge for marketing spending.If we take marketing to second, third and fourth quarters instead of 180 resistance and 60 basis points-Frankly, this is the type of sales we're going to get from marketing, and I think the issue with Jeff Bernstein is a little earlier, and we think that's the right thing to do, especially when we roll out the new menu format, we want to let the guest know that.So I think when I go through it, from a profit perspective, there will be more challenges in the first half of next year.But I do think that what we are implementing, the labor dispatch system, the commodity market next year, obviously not everything is locked in.But I think some of these things also help balance the profit and loss, some of the costs-The savings that our supply chain team is taking have given us a bit of wind in some of these areas.Frankly, if we don't see a significant increase in guest traffic based on the following types, then downwind is needed to cover additional marketing costs-Some of the macro environment.Will Slabaugh -Stephens Inc.The research department got it.In the last quarter.to-Date Review, you mentioned that there is day and night, can you help us with anything from September to October?Gregory S.LevinYou knows that there may be some greetings to the way our two parties work this year.As we mentioned, we have run it from September to October.This promotion is often based on its own.As we said, last year was August to September.So we put it in.We also had the TV that started in September, so we had the TV for two weeks in September, and then we got dark.Then we stayed here for two weeks in October.We also have Dodgers in the playoffs.What I want to say is that there is something that can help the Southern California market.I do think to some extent what we have heard is that the casual dining in October is a little bit better overall.What we like most is that we see an improvement in the downward trend in menu prices.This means that we see a bigger impact on the number of guests, which is really what we are most concerned about for us.The next question is the lines of Nicole Miller and Piper Jaffray.Nicole Miller ReaganPiper Jaffray, Research Department, can you give us some ideas about the basic compensation for x diners?Gregory S.LevinNicole, I don't have that in front of me.I guess what I'm saying is that if you take that 41 out of about 116 restaurants on comp base, the remaining 75, just slightly down, below minus 0.5% or so in Q3.Nicole Miller ReaganPiper Jaffray, research DivisionOkay.To say for sure--I'm trying to respond to your comments, not a lot of developments in California next year.Therefore, in which quarter you will see people eating in the circle, we should see an increase of 150 basis points, and some people will roll in the process of eating people.Gregory S.LevinI doesn't know if I have something like this in front of me, Nicole, because not only are diners a competitive invasion of new restaurants that open at different times.Really talking about [illegible] there.So, I guess, it's not as black and white as you 'd like it to be.Nicole Miller ReaganPiper Jaffray, it's good to study DivisionThat.And it won't be static at some point.So, more importantly, when you run a lap at a different opening time, it should be a step forward next year.Gregory S.This is correct.Nicole Miller ReaganPiper Jaffray, research DivisionOkay.Then comps, can you give us an idea about October, November and last December, what is the best, what is the worst month, and therefore, can we put the October comp in some context of our prediction?Gregory S.No, no.-Nicole, I have only quarterly pay in front of me.Actually, I haven't been there for a month.I want to say that I tend to say that the schedule for December is better for us than last year.But I guess, December is.-Frankly, when we do hay this quarter.The next question comes from the collaboration between Tony Brenner and Roth Capital Partners.Anton Brenner -There are two issues with Roth Capital Partners, LLC, Research DivisionI.First of all, really, I don't understand the middle of the menu.You have recently added some high-end centers, and in the past there were not enough delegates for BJ.You mentioned just now that the small mouth is an add-on-on for you.So I was wondering where these 24 obsolete menu items came from.Hope you don't eat too little pizza?Gregory A.TrojanNo.We protect Pizookie, trust me.But Tony, in fact,-