Huntington Beach-based BJ’s Restaurants Inc. is expanding as other chains retrench.
The pizza and brewery chain said it plans to open 10 to 11 restaurants in 2010, taking advantage of low rates for real estate.
That’s on top of the 10 restaurants it opened in California and Texas in 2009 during the worst of the downturn.
The expansion is a gamble, according to market watchers.
Casual dining restaurants such as BJ’s have been especially hard hit during the downturn as consumers cut back on eating out or trade down to fast food.
Many national casual dining chains, including Kansas-based Applebee’s IP LLC and Florida-based Darden Restaurants Inc., which operates Olive Garden, Red Lobster and other chains, have curtailed expansion in response to the economic downturn.
A number of Orange County-based restaurant chains also have spent the year re-evaluating their development plans.
Cypress-based Real Mex Restaurants Inc., which operates Acapulco, Chevys Fresh Mex, El Torito Grill and other chains, and Irvine-based Claim Jumper Restaurants LLC have halted plans for new restaurants until after 2011.
“A lot of our competitors have curtailed their new restaurant development programs significantly,” said Jerry Deitchle, chief executive at BJ’s. “It benefits us greatly as we gain more market share and seek out opportunities left open for us now.”
The tough economy is helping BJ’s open restaurants for less, saving money on space and development costs, with about $200,000 to $250,000 of savings per restaurant.
“There is certainly not a lack of sites in general to support our longer-term expansion plan,” Deitchle said.
BJ’s, which serves deep-dish pizza, pasta, salads, steak and sandwiches, has been seeking out established retail centers for future locations.
“Our development pipeline remains in excellent shape,” said Greg Lynds, chief development officer.
The company has seen some of its strongest restaurant sales during the past few years in Texas, according to Deitchle. Much of its current 2010 expansion plan is concentrated in California and Texas.
“We still have plenty of growth opportunities remaining in our core California and Texas markets,” Lynds said.
BJ’s now has restaurants on the West Coast and in Nevada, Arizona, Colorado, Oklahoma, Texas, Louisiana, Indiana, Ohio, Kentucky and Florida.
The company isn’t ruling out expansion into other states but is being cautious.
“In my 30-plus years of working in the chain retail and restaurant business, I have found that when the (company) embarks on expansion plans outside its original home core market that’s usually the most difficult feat to accomplish,” Deitchle said.
BJ’s has fared relatively well in the down economy.
Sales at BJ’s restaurants open at least a year were down 1.6 % in the third quarter from a year earlier, according to Deitchle.
In comparison, the causal dining industry reported same-store sales down nearly 6% for the same period, according to Knapp-Track, a unit of Malcolm M. Knapp Inc. that tracks restaurant sales and guest counts.
BJ’s saw total third-quarter revenue rose 8.6% to $103.9 million, largely due to expansions.
Its profit was up 55% to $3.2 million.
“Recession or no recession, BJ’s is going to keep moving forward,” Deitchle said.
