All expenses-paid trips to Hawaii, Mexico and other international destinations for top-performing store managers aren’t the only factor helping BJ’s Restaurants Inc. (Nasdaq: BJRI) stand out as an employer in the service industry.
The Huntington Beach-based casual dining chain now touts a new employee perk up its sleeve: Daily Pay, a New York-based tech firm with Orange County ties whose software lets an employer’s team members immediately access their funds after a shift (see story, page 99).
BJ’s implemented Daily Pay in April of this year, coinciding with a major hiring push.
BJ’s, OC’s fourth-largest restaurant chain with $1.1 billion in 2021 systemwide sales, is the first national chain to implement the Daily Pay system companywide, it says.
While the company announced the partnership at a timely moment of rising inflation and gas prices, officials said the current macroeconomic environment did not play a role in the company’s introduction of the new pay system.
“Anytime you can provide improved convenience for consumers [or] employees, you’ve got a winning product. It doesn’t matter on the macroeconomic conditions,” BJ’s Chief Executive Greg Levin told the Business Journal.
425 Store Goal
The Daily Pay deal is one part of the company’s aggressive multiyear initiative to grow its revenue to $2 billion, while doubling its current restaurant count, now totaling 214 in 29 states, to around 425 locations.
The company last quarter added 6,000 new hourly employees to its workforce, bringing its total headcount to over 22,000. Its staff levels are now back to what it was pre-pandemic.
Last quarter was also its best-ever in terms of sales, with $330 million in revenue.
At press time, shares in BJ’s were around $25 apiece and a $600 million market cap.
Cost Pressure
Retaining and recruiting more employees with unique systems like Daily Pay is key to attracting talent to new restaurants, company officials said.
However, the company’s recent 6,000-count hiring push came with a price. While second-quarter revenue of $330 million beat out analysts’ consensus estimate of $328 million, the chain’s earnings of 10 cents per share missed the Zacks consensus estimate of 23 cents.
“Hiring 6,000 team members puts a lot of pressure on hourly labor because you have a lot of training dollars in there,” Levin said.
Training and overtime hours were up last quarter due to the influx of new team members, but the company expects to see that gradually improving, Levin told analysts last month.
Inflation and supply chain troubles, which many businesses have been working to overcome, are also eating into the company’s profits.
To combat cost increases, the company is raising menu prices, rather than opting for cheaper ingredients or cutting down portion sizes.
“We give large portions and we’re going to stay with that,” Levin said.
The company is also considering creating new items that don’t face as much inflationary pressure.
Takeout, Catering
Increasing profitability at existing BJ’s locations is integral to the company’s $2 billion in revenue plan.
To do that, BJ’s will focus on growing its off-premise sales, which include takeout orders as well as the chain’s “tiny” catering business.
“We think there’s a huge opportunity there,” Levin said.
He described industry-wide off-premise trends as “sticky,” despite their origins during the pandemic.
The company currently generates about $20,000 a week in off-premise sales per restaurant.
The goal, Levin said, is to grow that number to $30,000 to $35,000 a week.
Indulging Guests
Inflation has many consumers pinching pennies, but BJ’s has seen its customers doing the opposite. The company last quarter didn’t see any uptick in usage for its value menu, officials told analysts.
“Guests right now really want to indulge a little bit more,” Levin said. “After two years of on-and-off lockdowns, people are excited to get out.”
Despite guests’ penchant for indulgence, this quarter may see a downturn in BJ’s
attendance. The company’s seasonal trend
pegs third quarter as its low point, as consumers return to back-to-school routines and have less reasons to celebrate. The chain’s seasonal high point is its second quarter, when customers have occasions like Mother’s Day, Father’s Day, prom and graduation to celebrate.
Consumer research by the company found that while some saw BJ’s as a typical, casual restaurant, others saw the chain as an “escape from the everyday mundaneness,” Senior VP, Marketing Heidi Rogers told the Business Journal.
The company’s research found that consumers viewed BJ’s as a place that “isn’t uppity, but premium,” she said.
“It’s a surprisingly good value for the experience, energy and quality of the food,” Levin added.
