BJ's Restaurants, Inc. BJRI reported third-quarter fiscal 2021 results, wherein both earnings and revenues missed the Zacks Consensus Estimate after beating the same in the preceding two quarters.

The company commenced the fiscal third quarter on an encouraging note. However, in the later part of the quarter, sales were impacted by the spread of the Delta variant of coronavirus. Resurgence in coronavirus cases led to staffing related problems, reduced dining room capacities, and limited menus and hours in certain locations. In the quarter under review, comparable restaurant sales were down by approximately 0.5% compared with 2019 levels.

Greg Levin, president and chief financial officer, BJ's Restaurants, said, “Looking forward, as our staffing levels improve, we expect sales to benefit as we seat more tables, expand back to pre-pandemic hours, and return all of our restaurants to full menus by early November. We continue to operate with an offensive mindset focused on top line growth, while managing through the industry labor, inflation and supply chain challenges triggered by the pandemic to provide leverageable opportunities to grow the BJ’s business profitably.”

Earnings & Revenues

In the quarter under review, the company reported an adjusted loss per share of 13 cents, which compared unfavorably with the Zacks Consensus Estimate of earnings of 8 cents. In the prior-year quarter, the company had reported an adjusted loss of 44 cents per share.

Meanwhile, total revenues of $282.2 million missed the Zacks Consensus Estimate of $292 million. However, the top line improved 41.9% on a year-over-year basis. Comparable restaurant sales during the fiscal third quarter surged 41.8% against a decline of 30.2% in the year-ago quarter.

BJ's Restaurants, Inc. Price, Consensus and EPS Surprise

BJ's Restaurants, Inc. price-consensus-eps-surprise-chart | BJ's Restaurants, Inc. Quote

Expenses & Operating Margins

During the fiscal third quarter, labor costs, as a percentage of sales, came in at 37.2%, down 30 basis points (bps) year over year. Occupancy and operating costs (as a percentage of sales) came in at 24.4% compared with 28.4% in the year-ago quarter. General and administrative expenses (as a percentage of sales) decreased 160 bps year over year to 6.1% in the quarter.

Restaurant-level operating margin came in at 11.2% compared with 9.5% in the year-ago quarter.

Store Count

As of Sep 28, 2021, BJ’s Restaurants owned and operated 209 casual dining restaurants (in 29 states), out of which, one was temporarily closed due to the COVID-19 crisis. This year, the company opened two new restaurants in Merrillville, IN and Lansing, MI.

Going forward, it plans to open eight to 10 restaurants in fiscal 2022. The company remains steadfast in its commitment to expand presence to at least 425 restaurants domestically.

Balance Sheet

As of Sep 28, 2021, cash and cash equivalents totaled $59.8 million compared with $51.6 million on Dec 29, 2020. Total debt as of Sep 28, 2021, amounted to $71.8 million compared with $116.8 at the end of Dec 29, 2020.

The company currently has a Zacks Rank #4 (Sell).

Key Picks

Some better-ranked stocks in the same space include Denny's Corporation DENN, FAT Brands Inc. FAT and Darden Restaurants, Inc. DRI. Denny's sports a Zacks Rank #1 (Strong Buy), while FAT Brands and Darden carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Denny's has a three-five year earnings per share growth rate of 9%.

FAT Brands 2022 earnings are expected to soar 206.7%.

Darden has a trailing four-quarter earnings surprise of 15.3%, on average.

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