Casual restaurant chain BJ’s Restaurants Inc., the largest public company based in Huntington Beach and one of the city’s largest office tenants, has struck a deal to keep its headquarters in Surf City.
The company, with a $900 million market value, recently disclosed it decided to stay at the One Pacific Plaza office complex next to the San Diego (405) Freeway and the Bella Terra shopping center.
The headquarters, which the company refers to as its “restaurant support center” is about 56,000 square feet. It was there under a lease that expired at the end of August, but had a five-year renewal option.
It recently exercised the option, it said in its latest annual report filed late last month.
“We are currently negotiating the specific terms of the renewal with the landlord,” the company said.
Data of real estate market tracker CoStar Group Inc. indicates the terms of the new lease have been finalized and the renewal is now complete, allowing the company to continue occupying five floors of the 7755 Center Ave. tower at the three-building complex.
Terms of the lease haven’t been disclosed; the tenant is represented by Chon Kantikovit with the local office of Cushman & Wakefield. The Newport Beach office of CBRE Group Inc. oversees leasing at the complex for the landlord
One Pacific Plaza is owned by an affiliate of Parsippany, N.J.-based Prudential Real Estate Investors, which paid a reported $95 million for it in 2014.
The 383,000-square-foot office campus also houses the local offices of Woodland Hills-based Health Net Inc. and a variety of banking and medical-related tenants. It’s more than 90% leased, CoStar records show.
Slimmer Stores
While BJ’s office space appears to be about the same size as before, the same can’t be said for its next round of restaurant development.
The average interior square footage of the restaurants—BJ’s had 197 locations at the end of February, 63 of them in California—was about 8,100 square feet. All but two are on leased properties.
Now, though, “our current prototype is approximately 7,400 square feet,” the company said in the annual report.
BJ’s has a targeted gross construction cost of about $4 million for each new location before any tenant allowances.
It’s planning to open four to six locations this year. Last year it opened 10, only six of which received tenant improvement allowances from landlords, and the average allowance “was approximately $110 per square foot,” BJ’s annual report said.
The slower pace of openings is by design, and due in part to rising construction and employee costs, according to Chief Executive Greg Trojan.
“We continue to believe that the external environment, despite the recent sales trends improvements, calls for maintaining operating focus on our existing restaurant base,” Trojan said during the company’s call with analysts last month.
BJ’s believes that “slowing down expansion in the face of a tighter and more expensive construction environment in the midst of an incredibly tight restaurant labor market continues to make a lot of sense,” Trojan said.
“That said, we remain encouraged by the performance of our new 2017 restaurant openings and look forward to opening many more BJ’s when the external environment improves.”
The company announced it first opening of the year last week. The Warwick, R.I. location is in the state’s second-largest city.
The spot runs 7,500 square feet and seats about 230 guests. It’s the first location in Rhode Island for BJ’s.
Most of the company’s restaurants already operate near peak occupancy during lunch and dinner, so a good portion of any year-over-year revenue growth is likely to come from having a larger restaurants base, the company said.
It took in about $1.03 billion in sales last year, up about 4% year-over-year. But February’s same-store sales fell 0.8%.
Restaurants’ average sales are about $672 per square foot, according to data of eMarketer Inc.
BJ’s annual report notes that restaurants generate “relatively high customer traffic per square foot compared to many other casual dining concepts.”
The company got its start in 1978 in Orange County, initially featuring “Chicago style deep-dish pizza with a unique California twist” before moving on to a concept with one of the largest menus of any casual-dining restaurant chain.
It also offers an extensive line of bar items. BJ’s proprietary craft beers represented about 7% of restaurant sales during fiscal 2017. All beer sales made up 11% of revenue.
Its Brea location, opened in 1996, was the first company restaurant to emphasize its own beers in a food-and-brewery format.
