BJ’s Restaurants Missed Revenue Expectations in Q4 2023, but Sees Improvements in Profitability
American restaurant chain BJ’s Restaurants (NASDAQ:BJRI) reported disappointing Q4 FY2023 results with a 6% year-on-year decline in revenue to $323.6 million, missing analysts' estimates. However, the company managed to improve its profitability, with a GAAP profit of $0.34 per share compared to $0.07 per share in the same quarter last year.
Key Highlights for BJ's (BJRI) Q4 FY2023:
- Revenue: $323.6 million, falling short of analyst estimates of $329.4 million, resulting in a 1.7% miss.
- EPS: $0.34, exceeding analyst estimates of $0.27 by 24.6%.
- Gross Margin (GAAP): 14.4%, up from 12.9% in the same quarter last year.
- Same-Store Sales increased by 0.6% year on year.
- Market Capitalization: $806.8 million.
BJ's CEO and President, Greg Levin, commented on the results, stating, “BJ's solid fourth-quarter results demonstrate the operational excellence being delivered in our restaurants and the significant progress we are making with productivity and margin enhancement initiatives.”
BJ’s Restaurants, founded in 1978 in California, is known for its classic American dishes with a contemporary twist. The chain offers a sit-down dining experience with table service, providing a warm hospitality and welcoming ambiance suitable for family gatherings, special occasions, or simply unwinding.
Sales Growth and Competitive Advantage:
Being larger than most restaurant chains, BJ's benefits from economies of scale, giving it a competitive edge over its smaller competitors.
The company has achieved a weaker annualized revenue growth rate of 3.5% over the last four years, compared to 2019 (to normalize for COVID-19 impacts). However, BJ's has managed to open new restaurants and increase sales at existing dining locations.
Q4 Revenue Miss and Future Outlook:
BJ's struggled to meet Wall Street's estimates in Q4, reporting a 6% year-on-year revenue decline, generating $323.6 million in revenue. However, analysts expect sales to grow by 4.9% over the next 12 months, indicating a positive outlook and a potential acceleration from this quarter.
Same-Store Sales:
BJ's has consistently outperformed the broader restaurant sector in terms of demand over the past eight quarters, with an average growth rate of 9.5% year on year. The company's positive same-store sales growth indicates its ability to attract more diners and increase sales.
However, in the latest quarter, BJ's same-store sales remained flat, signaling a meaningful deceleration from the 6.6% year-on-year increase achieved 12 months ago. Observers will closely monitor BJ's performance to see if it can regain its growth momentum.
Key Takeaways from Q4 Results:
BJ's managed to surpass analysts' expectations for EPS and slightly outperformed estimates for gross margin. However, the company's revenue fell short due to lower-than-expected same-store sales growth (0.6% versus estimates of 2.0%).
Looking ahead, BJ's provided favorable capex guidance for 2024, anticipating investments of $70 million instead of the estimated $94 million. This aligns with the company's plans outlined during its November 2023 Investor Day. Overall, the quarter was deemed decent but mixed, indicating that BJ's remains on track with its strategic objectives.
The stock is currently trading flat at $35.47 per share following the earnings report.
Analyst comment
This news can be evaluated as neutral. BJ’s Restaurants missed revenue expectations in Q4 FY2023, but made a higher profit per share than the previous year. Same-store sales were flat, showing a deceleration in growth. Looking ahead, the company’s capex guidance for 2024 is favorable. As an analyst, it is expected that the market will remain relatively stable for BJ’s Restaurants.
