What happened
Shares of BJ's Restaurants (BJRI 0.75%) climbed as much as 12% early Friday, according to data provided by S&P Global Market Intelligence, before settling to trade up 9% as of 1 p.m. ET after the restaurant chain announced stronger-than-expected second-quarter 2023 results.
BJ's quarterly revenue climbed 6.1% year over year to $349.7 million -- roughly in line with expectations -- helped by a 1.3% increase in total restaurant opening weeks and a 4.7% boost in comparable restaurant sales. On the bottom line, net income soared to $11.9 million, or $0.50 per share, up from $0.3 million, or $0.01 per share in the same year-ago period and well above the $0.33 per share most analysts were modeling.
So what
Digging deeper into BJ's results, restaurant-level operating margin improved 260 basis points year over year to a healthy 14.5%, while adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) grew 35.9% to $31.8 million.
"Our strong second-quarter results demonstrate the continued momentum building our business from the growth and productivity initiatives we began implementing last year," stated BJ's Restaurants CEO Greg Levin. He added that the company surpassed its original annual cost savings target of $25 million during the quarter and expects to realize "additional margin enhancement opportunities" in the coming quarters.
Now what
BJ's restaurants is on schedule to open five new restaurants in 2023, including one relocation next month. The company also accelerated its remodel plan to target remodels of 35 to 40 restaurants this year -- 20 of which have already been completed -- after seeing "the encouraging results and financial return profile these remodeled restaurants have delivered to date." Over the longer term, BJ's continues to target growing to at least 425 locations, nearly double its current total restaurant count of 216 as of the end of the second quarter.
In the end, investors are rightly excited by the progress BJ's is showing through steady location expansion and remodels of existing locations. Shares of this budding restaurant stock are understandably rallying in response.
