BJ's Restaurants Beats Industry Leader Starbucks to the Punch

Mobile order-ahead has begun at BJ's.

Jun 24, 2014 at 1:15PM


Source:  Wikimedia Commons.

Look who stepped ahead of the line! While Starbucks (NASDAQ:SBUX) has been busy patting itself on its back for being the industry leader in mobile payments, BJ's Restaurants (NASDAQ:BJRI) took a larger step. Both companies just recently announced that they are joining the mobile-ordering frenzy, but BJ's Restaurants' nimble-sized chain allowed it to launch before Starbucks even rolled out its pilot program.

"Dine-in order ahead"
On June 10, BJ's Restaurants announced the launch of its new mobile application. With your smartphone, you can not only pay your check, you can also do app-ahead seating (instead of call-ahead) and even order your food in advance so you don't have to wait. It's called "Dine-In Order Ahead." As a bonus, this feature allows you to get seated ahead of any waiting list.

It's designed to save guests both time and money -- not to mention that it's a neat concept -- and also makes the operations of BJ's Restaurants more efficient. The secret to profits in the restaurant business, especially during busy times, is getting the customers back out the door when they're done and turning tables. Time saved for guests results in more money for BJ's Restaurants' top and bottom lines.

Source:  Wikimedia Commons.

Starbucks is on deck
Starbucks hopes to launch its own option later next year if its pilot in the months ahead goes well. Of course, Starbucks is not a full-service restaurant like BJ's, but the have-it-ready-when-you-arrive concept is similar. Place your order in advance, maybe even on the way there (hopefully while somebody else is driving), and your indulgence will await you when you arrive. In both instances you can bypass the line: For Starbucks you skip the line behind the register; for BJ's, you jump ahead of the line waiting to be seated. 

Starbucks has thousands of locations, so the complexities and logistics will take longer to iron out. Already, 14% of its domestic transactions involve the use of mobile devices, mostly smartphones. Starbucks recently posted its 17th quarter in a row of domestic same-store sales growth above 5% so it needs to make sure this transition is smooth. BJ's Restaurants hasn't been as fortunate on growth lately, and it may be feeling more urgency for the quicker change its small size allows.

A million hours
BJ's Restaurants has been suffering from same-store sales drops and net income blows for several quarters now. This move is obviously an attempt to reverse that trend. BJ's Restaurants stated in the press release: "BJ's app sets a new standard for how restaurants use technology to empower their guests and improve the overall dining experience."

CEO Greg Trojan stated, "Through the features and benefits of the app, we're dedicated to saving our guests more than one million hours." He's hoping that this new feature will allow the restaurant chain to appeal to people in a rush. Examples include the lunchtime work crowd, moms with impatient kids, or "a group of friends grabbing drinks and appetizers before a concert or a big game."

Undoubtedly, pre-order service for people in a rush, especially in the mornings, will appeal to Starbucks' customers too.

Source:  Wikimedia Commons.

Trust us, it will work
As evidence that it will work, BJ's Restaurants offered the following piece of trivia. According to the company, BJ's has "the second highest sales volume and 20 percent more transactions per square foot than any other casual dining chain." This is despite the recent slowdown in terms of growth.

Still, that's an impressive statistic that shows that BJ's Restaurants knows what it's doing. It seems that something like this can only help further transaction count and sales volume. Who knows, it may bring the company to No. 1 in highest sales volume for a casual restaurant.

Foolish takeaway
It will be interesting to get the preliminary results for the app with BJ's Restaurants' next earnings results, which should be out in early August. Keep in mind that this chain is rather tiny, at only 151 restaurants, with most of those concentrated in only three states. It has vast expansion opportunity. Fools should consider following BJ's Restaurants closely for the long term. If this technology jump-starts same-store sales again, it would mean a blueprint that is growing again and would possibly allow management to focus on unit expansion -- meaning BJ's could become a Wall Street darling for years to come.

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Nickey Friedman has no position in any stocks mentioned. The Motley Fool recommends BJ's Restaurants and Starbucks. The Motley Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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