Can Mobile Paying Save BJ's Restaurants?

It can be very annoying when you're at a restaurant, you're finished, and you want to leave but you're waiting forever to get your check and then to pay. A sudden trend seems to have emerged among the beer-and-burger casual-dining chains in which they have added mobile tablet-paying options at the table. Chili's of Brinker International (NYSE: EAT  ) and Applebee's of DineEquity (NYSE: DIN  ) are on this bandwagon. Now that BJ's Restaurants (NASDAQ: BJRI  )  has also jumped on board, it seems that they all have something else in common with one another as well.


Source: BJ's Restaurants.

The not-so-heady results
On Feb. 19, BJ's Restaurants reported fiscal fourth-quarter results. Revenue rose 8.1% to $199.8 million. Same-store sales slipped 2.7%. Adjusted non-GAAP net income plunged 78% to $1.7 million or $0.06 per diluted share.

BJ's Restaurants used every excuse under the sun (or lack of sun) for the shortfall. The company blamed the weak holiday shopping season, the calendar, "industrywide traffic trends," "macro-economic trends," "promotional environment," and the "impact of weather on certain of our markets." It's hard to say how much weather had to do with it, since the chain primarily operates in California, Florida, and Texas, and these places didn't exactly see a lot of snow over the October to December time frame.

However, we kind of already knew all this from the report three months earlier. Back in November, CFO Gregory Levin stated, "We expect the casual dining industry in general to remain challenging through at least the end of this year and most likely into early next year."

Source: BJ's Restaurants

Pay me now
Again from the past report, CEO Greg Trojan warned of "certain capacity constraints, particularly in our restaurant kitchens." It's interesting to note that BJ's Restaurants has addressed this problem in two ways. First, it launched a new menu. Hopefully it's easier on the kitchen this time. If you're ever popped into a BJ's Restaurant before, you've probably noticed that the menu is so long and overwhelming that it reads like a book. It's little wonder that it's a challenge for the kitchen.

Second, the company has been testing a mobile "pay at the table" app that allows customers to use their smartphones or tablets to pay their bills. It sounds like a cool idea. Customers can pay and leave more quickly, which makes them happy, and BJ's Restaurants can turn the tables more quickly, which makes waiting guests happier and gives the company the ability to potentially increase its sales faster.

BJ's Restaurants even plans to allow an option where you can order your food ahead of time using your mobile device. How cool is that? You can literally have your beer and appetizer waiting for you when you get seated. Once again, happy customers and higher sales. The company isn't making any money while it's waiting for you to order at the table.

Going mobile
It seems like mobile is the new trend in response to weakness in sales. Perhaps necessity really is the mother of invention. Back in December, DineEquity announced that 1,800 of its Applebee's will get over 100,000 tablets. DineEquity had just reported results that included a same-store sales jump of 3.6% for its IHOP concept, but its Applebee's concept lagged behind with a 0.4% slip back. DineEquity plans to complete this rollout by the end of this year.

Meanwhile, Brinker International has been rolling out similar tablets across its Chili's chain. Brinker International calls them "tabletop media." So far, 400 restaurants out of over 1,500 have the new technology, which allows guests to pay and make "add on" orders. This has all happened at around the same time that Brinker International has been seeing weakness in same-store sales as well, although it blames the weather.

Foolish final thoughts
It will be interesting to see the effects of mobile on Brinker International, DineEquity, and BJ's Restaurants. Fools should consider waiting on the sidelines to see the effects of mobile on BJ's Restaurants' top and bottom lines. With all of the excuses given by the company, mobile will need to have a major impact. Currently, analysts project 2015 EPS of $0.89 per share for the company, which puts its P/E in the upper 30s. It seems a bit pricy for now considering the concerning results.

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Read/Post Comments (2) | Recommend This Article (2)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 06, 2014, at 8:12 PM, djones44 wrote:

    A more proactive approach to innovation for BJ's might be to embrace the Internet itself, not just payment options. Off the shelf devices like Poorts carry the full weight of Google behind them and threaten basic tablets with obsolescence.

  • Report this Comment On April 17, 2014, at 1:15 PM, tekhedd wrote:

    Um, reading just the headline, the answer is an extremely obvious "No." :) But trendiness is an important aspect of success in this business so they're probably on the right track, if it doesn't eat too much out of the bottom line.

    IMO, their very "safe" beer (and menu) is no match for the local stuff, but it's definitely in the pocket for the "in the center of a giant shopping center, far from downtown" market they appear to be targeting. Achieves a moderate level of trendiness but the overall experience is just decent. Is their target market "areas where the local competition is depressingly bad"?

    If they're not making fat profits then there's something seriously wrong.

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