UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q  

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 28, 2021March 29, 2022

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______________ to ______  

Commission file number 0-21423

BJ’S RESTAURANTS, INC.

(Exact name of registrant as specified in its charter)  

 

California

33-0485615

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

 

7755 Center Avenue, Suite 300

Huntington Beach, California 92647

(714) 500-2400

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

 

Trading

Symbol

 

Name of each exchange on which registered

Common Stock, No Par Value

 

BJRI

 

NASDAQ Global Select Market

(Address, including zip code, and telephone number, including

area code, of registrant’s principal executive offices)

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes No

 

Indicate by check mark whether the registrant has submitted electronically every interactive data file required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company, or an emerging growth company. See definition of “accelerated filer,” “large accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes    No     

 

As of OctoberApril 29, 2021,2022, there were 23,303,69423,438,991 shares of Common Stock of the Registrant outstanding.

 


 

BJ’S RESTAURANTS, INC.

TABLE OF CONTENTS

 

 

 

 

 

Page

PART I.

 

FINANCIAL INFORMATION

 

 

 

 

 

Item 1.

 

Consolidated Financial Statements

 

 

 

 

 

 

 

Consolidated Balance Sheets –
   September 28, 2021March 29, 2022 (Unaudited) and December 29, 202028, 2021

1

 

 

 

 

 

 

Unaudited Consolidated Statements of Operations –
   Thirteen and Thirty-Nine Weeks Ended September 28,March 29, 2022 and March 30, 2021 and September 29, 2020

2

 

 

 

Unaudited Consolidated Statements of Shareholders’ Equity –
   Thirteen and Thirty-Nine Weeks Ended September 28,March 29, 2022 and March 30, 2021 and September 29, 2020

3

 

 

 

Unaudited Consolidated Statements of Cash Flows –
   Thirteen and Thirty-Nine Weeks Ended September 28,March 29, 2022 and March 30, 2021 and September 29, 2020

4

 

 

 

 

 

 

Notes to Unaudited Consolidated Financial Statements

6

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

1311

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

2117

 

 

 

 

Item 4.

 

Controls and Procedures

2217

 

 

 

 

 

 

 

 

PART II.

 

OTHER INFORMATION

 

 

 

 

 

Item 1.

 

Legal Proceedings

2319

 

 

 

 

Item 1A.

 

Risk Factors

2319

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

2319

 

 

 

 

Item 6.

 

Exhibits

2420

 

 

 

 

 

 

 

 

 

 

SIGNATURES

2521

 

 

 


 

 

PART I. FINANCIAL INFORMATION

 

Item 1. CONSOLIDATED FINANCIAL STATEMENTS

 

BJ’S RESTAURANTS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

September 28, 2021

 

 

December 29, 2020

 

 

March 29, 2022

 

 

December 28, 2021

 

 

(unaudited)

 

 

 

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

59,815

 

 

$

51,664

 

 

$

27,201

 

 

$

38,527

 

Accounts and other receivables, net

 

 

24,433

 

 

 

23,630

 

 

 

24,108

 

 

 

29,055

 

Inventories, net

 

 

11,215

 

 

 

10,671

 

 

 

11,391

 

 

 

11,579

 

Prepaid expenses and other current assets

 

 

6,389

 

 

 

9,325

 

 

 

10,890

 

 

 

11,654

 

Total current assets

 

 

101,852

 

 

 

95,290

 

 

 

73,590

 

 

 

90,815

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

501,211

 

 

 

534,841

 

 

 

498,789

 

 

 

506,111

 

Operating lease assets

 

 

371,272

 

 

 

375,557

 

 

 

362,872

 

 

 

365,244

 

Goodwill

 

 

4,673

 

 

 

4,673

 

 

 

4,673

 

 

 

4,673

 

Deferred income taxes

 

 

19,366

 

 

 

6,227

 

 

 

35,217

 

 

 

24,902

 

Other assets, net

 

 

42,787

 

 

 

42,836

 

 

 

44,919

 

 

 

43,421

 

Total assets

 

$

1,041,161

 

 

$

1,059,424

 

 

$

1,020,060

 

 

$

1,035,166

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

40,950

 

 

$

37,770

 

 

$

49,076

 

 

$

48,840

 

Accrued expenses

 

 

94,835

 

 

 

103,320

 

 

 

97,038

 

 

 

112,354

 

Current operating lease obligations

 

 

38,976

 

 

 

36,809

 

 

 

39,575

 

 

 

39,240

 

Total current liabilities

 

 

174,761

 

 

 

177,899

 

 

 

185,689

 

 

 

200,434

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term operating lease obligations

 

 

444,425

 

 

 

456,869

 

 

 

431,332

 

 

 

436,016

 

Long-term debt

 

 

71,800

 

 

 

116,800

 

 

 

50,000

 

 

 

50,000

 

Other liabilities

 

 

14,713

 

 

 

14,068

 

 

 

15,377

 

 

 

14,945

 

Total liabilities

 

 

705,699

 

 

 

765,636

 

 

 

682,398

 

 

 

701,395

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, 5,000 shares authorized, NaN issued or outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, no par value, 125,000 shares authorized and 23,296 and 22,318 shares issued and outstanding as of September 28, 2021 and December 29, 2020, respectively

 

 

 

 

 

 

Common stock, no par value, 125,000 shares authorized and 23,416 and 23,304 shares issued and outstanding as of March 29, 2022 and December 28, 2021, respectively

 

 

 

 

 

 

Capital surplus

 

 

69,980

 

 

 

71,722

 

 

 

69,326

 

 

 

72,513

 

Retained earnings

 

 

265,482

 

 

 

222,066

 

 

 

268,336

 

 

 

261,258

 

Total shareholders’ equity

 

 

335,462

 

 

 

293,788

 

 

 

337,662

 

 

 

333,771

 

Total liabilities and shareholders’ equity

 

$

1,041,161

 

 

$

1,059,424

 

 

$

1,020,060

 

 

$

1,035,166

 

 

See accompanying notes to unaudited consolidated financial statements.


BJ’S RESTAURANTS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 

 

 

For the Thirteen Weeks Ended

 

 

For the Thirty-Nine Weeks Ended

 

 

 

September 28, 2021

 

 

September 29,

 2020

 

 

September 28, 2021

 

 

September 29,

 2020

 

Revenues

 

$

282,180

 

 

$

198,887

 

 

$

795,770

 

 

$

581,506

 

Restaurant operating costs (excluding depreciation and amortization):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales (1)

 

 

76,647

 

 

 

48,938

 

 

 

208,382

 

 

 

144,732

 

Labor and benefits

 

 

105,023

 

 

 

74,576

 

 

 

290,921

 

 

 

229,929

 

Occupancy and operating (1)

 

 

68,876

 

 

 

56,401

 

 

 

196,271

 

 

 

163,513

 

General and administrative

 

 

17,293

 

 

 

15,250

 

 

 

49,586

 

 

 

41,330

 

Depreciation and amortization

 

 

18,224

 

 

 

18,037

 

 

 

54,660

 

 

 

54,735

 

Restaurant opening

 

 

375

 

 

 

128

 

 

 

1,224

 

 

 

823

 

Loss on disposal and impairment of assets

 

 

2,700

 

 

 

177

 

 

 

3,225

 

 

 

14,502

 

Gain on lease transactions, net

 

 

 

 

 

(1,940

)

 

 

 

 

 

(1,940

)

Total costs and expenses

 

 

289,138

 

 

 

211,567

 

 

 

804,269

 

 

 

647,624

 

Loss from operations

 

 

(6,958

)

 

 

(12,680

)

 

 

(8,499

)

 

 

(66,118

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(1,047

)

 

 

(1,639

)

 

 

(4,043

)

 

 

(5,052

)

Gain from legal settlements

 

 

 

 

 

2,284

 

 

 

 

 

 

2,284

 

Other income, net

 

 

446

 

 

 

624

 

 

 

748

 

 

 

580

 

Total other (expense) income

 

 

(601

)

 

 

1,269

 

 

 

(3,295

)

 

 

(2,188

)

Loss before income taxes

 

 

(7,559

)

 

 

(11,411

)

 

 

(11,794

)

 

 

(68,306

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

 

(5,383

)

 

 

(4,827

)

 

 

(12,846

)

 

 

(28,505

)

Net (loss) income

 

$

(2,176

)

 

$

(6,584

)

 

$

1,052

 

 

$

(39,801

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.09

)

 

$

(0.30

)

 

$

0.05

 

 

$

(1.92

)

Diluted

 

$

(0.09

)

 

$

(0.30

)

 

$

0.04

 

 

$

(1.92

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

23,290

 

 

 

22,280

 

 

 

23,154

 

 

 

20,777

 

Diluted

 

 

23,290

 

 

 

22,280

 

 

 

24,054

 

 

 

20,777

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

There were 0 related party costs included in cost of sales for the thirteen weeks ended September 29, 2020 or September 28, 2021, or for the thirty-nine weeks ended September 28, 2021. Related party costs included in cost of sales are $28,070 for the thirty-nine weeks ended September 29, 2020. There were 0 related party costs included in occupancy and operating for the thirteen weeks ended September 29, 2020 or September 28, 2021, or for the thirty-nine weeks ended September 28, 2021. Related party costs included in occupancy and operating are $4,058 for the thirty-nine weeks ended September 29, 2020. See Note 6 for further information.

 

 

For the Thirteen Weeks Ended

 

 

 

March 29, 2022

 

 

March 30, 2021

 

Revenues

 

$

298,729

 

 

$

223,307

 

Restaurant operating costs (excluding depreciation and amortization):

 

 

 

 

 

 

 

 

Cost of sales

 

 

81,466

 

 

 

56,149

 

Labor and benefits

 

 

116,286

 

 

 

81,680

 

Occupancy and operating

 

 

71,701

 

 

 

59,828

 

General and administrative

 

 

18,253

 

 

 

15,261

 

Depreciation and amortization

 

 

17,976

 

 

 

18,203

 

Restaurant opening

 

 

583

 

 

 

128

 

Loss on disposal and impairment of assets

 

 

157

 

 

 

273

 

Total costs and expenses

 

 

306,422

 

 

 

231,522

 

Loss from operations

 

 

(7,693

)

 

 

(8,215

)

 

 

 

 

 

 

 

 

 

Other (expense) income:

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(634

)

 

 

(1,402

)

Other (expense) income, net

 

 

(388

)

 

 

310

 

Total other expense

 

 

(1,022

)

 

 

(1,092

)

Loss before income taxes

 

 

(8,715

)

 

 

(9,307

)

 

 

 

 

 

 

 

 

 

Income tax benefit

 

 

(10,175

)

 

 

(6,166

)

Net income (loss)

 

$

1,460

 

 

$

(3,141

)

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.06

 

 

$

(0.14

)

Diluted

 

$

0.06

 

 

$

(0.14

)

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

23,377

 

 

 

22,926

 

Diluted

 

 

23,716

 

 

 

22,926

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to unaudited consolidated financial statements.



 

BJ’S RESTAURANTS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands)

 

 

For the Thirteen Weeks Ended

 

 

For the Thirteen Weeks Ended

 

 

Common Stock

 

 

Capital

 

 

Retained

 

 

 

 

 

 

Common Stock

 

 

Capital

 

 

Retained

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Surplus

 

 

Earnings

 

 

Total

 

 

Shares

 

 

Amount

 

 

Surplus

 

 

Earnings

 

 

Total

 

Balance, June 30, 2020

 

 

22,261

 

 

$

 

 

$

68,218

 

 

$

244,376

 

 

$

312,594

 

Issuance of common stock and warrant, net

 

 

 

 

 

(17

)

 

 

 

 

 

 

 

 

(17

)

Issuance of restricted stock units

 

 

40

 

 

 

1,736

 

 

 

(1,844

)

 

 

 

 

 

(108

)

Repurchase, retirement and reclassification of common stock

 

 

 

 

 

(1,719

)

 

 

 

 

 

1,719

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

3,019

 

 

 

 

 

 

3,019

 

Adjustment to dividends previously accrued

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

7

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(6,584

)

 

 

(6,584

)

Balance, September 29, 2020

 

 

22,301

 

 

$

 

 

$

69,393

 

 

$

239,518

 

 

$

308,911

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 29, 2021

 

 

23,267

 

 

$

 

 

$

68,713

 

 

$

266,421

 

 

$

335,134

 

Balance, December 29, 2020

 

 

22,318

 

 

$

 

 

$

71,722

 

 

$

222,066

 

 

$

293,788

 

Exercise of stock options

 

 

94

 

 

 

5,192

 

 

 

(1,582

)

 

 

 

 

 

3,610

 

Issuance of common stock

 

 

704

 

 

 

28,957

 

 

 

 

 

 

 

 

 

28,957

 

Issuance of restricted stock units

 

 

29

 

 

 

1,233

 

 

 

(1,233

)

 

 

 

 

 

 

 

 

103

 

 

 

4,915

 

 

 

(5,366

)

 

 

 

 

 

(451

)

Reclassification of common stock

 

 

 

 

 

(1,233

)

 

 

 

 

 

1,233

 

 

 

 

 

 

 

 

 

(39,064

)

 

 

 

 

 

39,064

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,500

 

 

 

 

 

 

2,500

 

 

 

 

 

 

 

 

 

2,515

 

 

 

 

 

 

2,515

 

Adjustment to dividends previously accrued

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

5

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(2,176

)

 

 

(2,176

)

 

 

 

 

 

 

 

 

 

 

 

(3,141

)

 

 

(3,141

)

Balance, September 28, 2021

 

 

23,296

 

 

$

 

 

$

69,980

 

 

$

265,482

 

 

$

335,462

 

Balance, March 30, 2021

 

 

23,219

 

 

$

 

 

$

67,289

 

 

$

257,994

 

 

$

325,283

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Thirty-Nine Weeks Ended

 

 

Common Stock

 

 

Capital

 

 

Retained

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Surplus

 

 

Earnings

 

 

Total

 

Balance, December 31, 2019

 

 

19,149

 

 

$

 

 

$

67,062

 

 

$

223,225

 

 

$

290,287

 

Issuance of common stock and warrant, net

 

 

3,500

 

 

 

63,985

 

 

 

3,394

 

 

 

 

 

 

67,379

 

Issuance of restricted stock units

 

 

147

 

 

 

7,081

 

 

 

(7,894

)

 

 

 

 

 

(813

)

Repurchase, retirement and reclassification of common stock

 

 

(495

)

 

 

(71,066

)

 

 

 

 

 

56,052

 

 

 

(15,014

)

Stock-based compensation

 

 

 

 

 

 

 

 

6,831

 

 

 

 

 

 

6,831

 

Adjustment to dividends previously accrued

 

 

 

 

 

 

 

 

 

 

 

42

 

 

 

42

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(39,801

)

 

 

(39,801

)

Balance, September 29, 2020

 

 

22,301

 

 

$

 

 

$

69,393

 

 

$

239,518

 

 

$

308,911

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 29, 2020

 

 

22,318

 

 

$

 

 

$

71,722

 

 

$

222,066

 

 

$

293,788

 

Exercise of stock options

 

 

122

 

 

 

6,394

 

 

 

(1,883

)

 

 

 

 

 

4,511

 

Issuance of common stock, net

 

 

704

 

 

 

28,907

 

 

 

 

 

 

 

 

 

28,907

 

Balance, December 28, 2021

 

 

23,304

 

 

$

 

 

$

72,513

 

 

$

261,258

 

 

$

333,771

 

Issuance of restricted stock units

 

 

152

 

 

 

7,049

 

 

 

(7,514

)

 

 

 

 

 

(465

)

 

 

112

 

 

 

5,615

 

 

 

(5,975

)

 

 

 

 

 

(360

)

Reclassification of common stock

 

 

 

 

 

(42,350

)

 

 

 

 

 

42,350

 

 

 

 

 

 

 

 

 

(5,615

)

 

 

 

 

 

5,615

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

7,655

 

 

 

 

 

 

7,655

 

 

 

 

 

 

 

 

 

2,788

 

 

 

 

 

 

2,788

 

Adjustment to dividends previously accrued

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

14

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

3

 

Net income

 

 

 

 

 

 

 

 

 

 

 

1,052

 

 

 

1,052

 

 

 

 

 

 

 

 

 

 

 

 

1,460

 

 

 

1,460

 

Balance, September 28, 2021

 

 

23,296

 

 

$

 

 

$

69,980

 

 

$

265,482

 

 

$

335,462

 

Balance, March 29, 2022

 

 

23,416

 

 

$

 

 

$

69,326

 

 

$

268,336

 

 

$

337,662

 

 

See accompanying notes to unaudited consolidated financial statements.


BJ’S RESTAURANTS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

For the Thirty-Nine Weeks Ended

 

 

For the Thirteen Weeks Ended

 

 

September 28, 2021

 

 

September 29, 2020

 

 

March 29, 2022

 

 

March 30, 2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

1,052

 

 

$

(39,801

)

 

$

1,460

 

 

$

(3,141

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

54,660

 

 

 

54,735

 

 

 

17,976

 

 

 

18,203

 

Non-cash lease expense

 

 

23,383

 

 

 

21,660

 

 

 

8,230

 

 

 

7,606

 

Amortization of financing costs

 

 

429

 

 

 

85

 

 

 

54

 

 

 

137

 

Deferred income taxes

 

 

(13,139

)

 

 

(28,729

)

 

 

(10,315

)

 

 

(6,299

)

Stock-based compensation expense

 

 

7,432

 

 

 

6,802

 

 

 

2,712

 

 

 

2,419

 

Loss on disposal and impairment of assets

 

 

3,225

 

 

 

14,502

 

 

 

157

 

 

 

273

 

Gain on lease transactions, net

 

 

 

 

 

(1,940

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts and other receivables

 

 

1,297

 

 

 

9,729

 

 

 

6,277

 

 

 

(172

)

Inventories, net

 

 

(172

)

 

 

606

 

 

 

334

 

 

 

392

 

Prepaid expenses and other current assets

 

 

2,750

 

 

 

4,197

 

 

 

526

 

 

 

543

 

Other assets, net

 

 

(1,359

)

 

 

(3,006

)

 

 

(2,181

)

 

 

484

 

Accounts payable

 

 

5,976

 

 

 

19,343

 

 

 

130

 

 

 

6,078

 

Accrued expenses

 

 

(7,595

)

 

 

(12,210

)

 

 

(15,271

)

 

 

(1,453

)

Operating lease obligations

 

 

(32,342

)

 

 

(10,759

)

 

 

(9,912

)

 

 

(10,844

)

Other liabilities

 

 

645

 

 

 

1,008

 

 

 

432

 

 

 

(14

)

Net cash provided by operating activities

 

 

46,242

 

 

 

36,222

 

 

 

609

 

 

 

14,212

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(25,166

)

 

 

(31,985

)

 

 

(12,096

)

 

 

(6,877

)

Proceeds from sale of assets

 

 

21

 

 

 

3,810

 

 

 

566

 

 

 

 

Net cash used in investing activities

 

 

(25,145

)

 

 

(28,175

)

 

 

(11,530

)

 

 

(6,877

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings on line of credit

 

 

913,000

 

 

 

892,300

 

 

 

170,000

 

 

 

442,200

 

Payments on line of credit

 

 

(958,000

)

 

 

(908,500

)

 

 

(170,000

)

 

 

(442,200

)

Payments of debt issuance costs

 

 

(315

)

 

 

(735

)

 

 

(3

)

 

 

(315

)

Proceeds from issuance of common stock, net

 

 

28,907

 

 

 

67,379

 

 

 

 

 

 

28,957

 

Taxes paid on vested stock units under employee plans

 

 

(938

)

 

 

(813

)

 

 

(360

)

 

 

(924

)

Proceeds from exercise of stock options

 

 

4,511

 

 

 

 

 

 

 

 

 

3,610

 

Cash dividends accrued under stock compensation plans

 

 

(111

)

 

 

(134

)

 

 

(42

)

 

 

(80

)

Repurchases of common stock

 

 

 

 

 

(15,014

)

Net cash (used in) provided by financing activities

 

 

(12,946

)

 

 

34,483

 

 

 

(405

)

 

 

31,248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

8,151

 

 

 

42,530

 

Net (decrease) increase in cash and cash equivalents

 

 

(11,326

)

 

 

38,583

 

Cash and cash equivalents, beginning of period

 

 

51,664

 

 

 

22,394

 

 

 

38,527

 

 

 

51,664

 

Cash and cash equivalents, end of period

 

$

59,815

 

 

$

64,924

 

 

$

27,201

 

 

$

90,247

 

 

See accompanying notes to unaudited consolidated financial statements.


BJ’S RESTAURANTS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

For the Thirty-Nine Weeks Ended

 

 

For the Thirteen Weeks Ended

 

 

September 28, 2021

 

 

September 29, 2020

 

 

March 29, 2022

 

 

March 30, 2021

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

386

 

 

$

1,311

 

 

$

266

 

 

$

4

 

Cash paid for interest, net of capitalized interest

 

$

3,207

 

 

$

4,643

 

 

$

360

 

 

$

1,459

 

Cash paid for operating lease obligations

 

$

53,743

 

 

$

42,511

 

 

$

16,635

 

 

$

17,285

 

Supplemental disclosure of non-cash operating, investing and financing activities:

Supplemental disclosure of non-cash operating, investing and financing activities:

 

 

 

 

 

Supplemental disclosure of non-cash operating, investing and financing activities:

 

 

 

 

 

Operating lease assets obtained in exchange for operating lease obligations

 

$

19,965

 

 

$

17,488

 

 

$

7,278

 

 

$

3,946

 

Tenant improvement allowance receivable

 

$

2,100

 

 

$

1,496

 

 

$

1,601

 

 

$

4,163

 

Property and equipment acquired and included in accounts payable

 

$

1,844

 

 

$

2,695

 

 

$

8,327

 

 

$

2,295

 

Stock-based compensation capitalized

 

$

223

 

 

$

29

 

 

$

76

 

 

$

96

 

 

See accompanying notes to unaudited consolidated financial statements.


BJ’S RESTAURANTS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the accounts of BJ’s Restaurants, Inc. (referred to herein as the “Company,” “we,” “us” and “our”) and our wholly owned subsidiaries. The consolidated financial statements presented herein include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of our financial condition, results of operations, shareholders’ equity and cash flows for the period.periods presented. Our consolidated financial statements and accompanying notes have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and footnote disclosures normally included in consolidated financial statements in accordance with U.S. GAAP have been omitted pursuant to the U.S. Securities and Exchange Commission (“SEC”) rules.

The preparation of financial statements in conformity with U.S. GAAP requires us to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates. Our operating results for the thirty-ninethirteen weeks ended September 28, 2021March 29, 2022 may not be indicative of operating results for the entire year.

A description of our accounting policies and other financial information is included in our audited consolidated financial statements filed with the SEC on Form 10-K for the fiscal year ended December 29, 2020.28, 2021. The disclosures included in our accompanying interim consolidated financial statements and footnotes should be read in conjunction with our consolidated financial statements and notes thereto included in the Annual Report on Form 10-K and our other reports filed from time to time with the Securities and Exchange Commission.

COVID-19 Pandemic Update

The COVID-19 pandemic has adversely affected, and is expected to continue to adversely affect, our operations and financial results for the foreseeable future. Currently, national, state and local jurisdictions have removed their capacity restrictions on businesses and therefore our restaurants are serving customers (referred to as “guests”) in our dining rooms without social distancing requirements. However, it is possible additional outbreaks could require us to reduce our capacity, implement social distancing, or further suspend our in-restaurant dining operations. In addition, our restaurant performance could be adversely affected if we are required by law to have customersguests present evidence of vaccination or negative tests.tests in a significant number of jurisdictions. There is also no guarantee that state and local jurisdictions that ease restrictions will not later reverse or roll-back the restrictions, as many have done in the past. Additionally, ourour restaurant operations have been and could continue to be disrupted by employee (referred to as “team member”) staffing issues because of illness, exclusion, fear of contracting COVID-19 or caring for family members due to COVID-19, legal requirements for employeeteam member vaccinations or COVID testing, lack of labor supply, competitive labor pressures, or for other reasons. Furthermore, we remain in regular contact with our major suppliers and while to date we have not experienced significantmaterial disruptions in our supply chain due to COVID-19, we could see significantmaterial future disruptions should the impacts of COVID-19 continue. For more information regarding the risks to our business relating to the COVID-19 pandemic, see “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 29, 2020.

Recently Adopted Accounting Standards

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740). The amendments in this update are intended to simplify the accounting for income taxes by removing certain exceptions in the existing guidance and simplify areas such as franchise taxes, recognition of deferred taxes for goodwill, separate entity financial statements, and interim recognition of enactment of tax laws or tax rate changes. We adopted ASU 2019-12 on December 30, 2020, the first day of fiscal28, 2021. The adoption of this standard did not have a material impact on our consolidated financial statements or related disclosures.

 

2.  REVENUE RECOGNITION

Our revenues are comprised of food and beverage sales from our restaurants. Revenues from restaurant sales are recognized when payment is tendered. Amounts paid with a credit card are recorded in accounts and other receivables until payment is collected from the credit card processor. We sell gift cards which do not have an expiration date and we do not deduct non-usage fees from outstanding gift card balances. Gift card sales are recorded as a liability and recognized as revenues upon redemption in our restaurants. Based on historical redemption rates, a portion of our gift card sales are not expected to be redeemed and will beare recognized as gift card “breakage” over time. Estimated gift card breakage is recorded as revenue and recognized in proportion to our historical redemption pattern, unless there is a legal obligation to remit the unredeemed gift cards to government authorities. The estimated gift card breakage is based on when the likelihood of redemption becomes remote, which has typically been 24 months after the original gift card issuance date.


Our “BJ’s Premier Rewards Plus” customer loyalty program enables participants to earn points for qualifying purchases that can be redeemed for food and beverages in the future. We allocate the transaction price between the goods delivered and the future goods that will be delivered, on a relative standalone selling price basis, and defer the revenues allocated to the points, less expected expirations, until such points are redeemed.


 

The liability related to our gift card and loyalty program, included in “Accrued expenses” on our Consolidated Balance Sheets is as follows (in thousands):

 

 

September 28, 2021

 

 

December 29, 2020

 

 

March 29, 2022

 

 

December 28, 2021

 

Gift card liability

 

$

13,359

 

 

$

17,274

 

 

$

15,078

 

 

$

19,499

 

Deferred loyalty revenue

 

$

4,231

 

 

$

6,121

 

 

$

3,848

 

 

$

3,949

 

 

Revenue recognized for the redemption of gift cards and loyalty rewards deferred at the beginning of each respective fiscal year is as follows (in thousands):

 

 

For the Thirteen Weeks Ended

 

 

For the Thirty-Nine Weeks Ended

 

For the Thirteen Weeks Ended

 

 

September 28, 2021

 

 

September 29,

 2020

 

 

September 28, 2021

 

 

September 29,

 2020

 

March 29, 2022

 

 

March 30, 2021

 

Revenue recognized from gift card liability

 

$

1,305

 

 

$

1,097

 

 

$

8,049

 

 

$

9,786

 

$

6,680

 

 

$

4,900

 

Revenue recognized from customer loyalty program

 

$

1,014

 

 

$

2,965

 

 

$

7,940

 

 

$

8,254

 

$

4,105

 

 

$

5,548

 

 

3.  LEASES

We determine if a contract contains a lease at inception. Our material operating leases consist of restaurant locations and office space. U.S. GAAP requires that our leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date, and the lease term used in the evaluation includes the non-cancellable period for which we have the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option would result in an economic penalty. All of our restaurant leases and office space are classified as operating leases. We do not have any finance leases.

Lease costs included in “Occupancy & operating” on the Consolidated Statements of Operations consisted of the following (in thousands):

 

 

For the Thirteen Weeks Ended

 

 

For the Thirty-Nine Weeks Ended

 

 

For the Thirteen Weeks Ended

 

 

September 28, 2021

 

 

September 29,

 2020

 

 

September 28, 2021

 

 

September 29,

 2020

 

 

March 29, 2022

 

 

March 30, 2021

 

Lease cost

 

$

14,615

 

 

$

13,820

 

 

$

43,202

 

 

$

41,461

 

 

$

14,835

 

 

$

14,209

 

Variable lease cost

 

 

544

 

 

 

93

 

 

 

1,146

 

 

 

68

 

 

 

708

 

 

 

133

 

Total lease costs

 

$

15,159

 

 

$

13,913

 

 

$

44,348

 

 

$

41,529

 

 

$

15,543

 

 

$

14,342

 

In response to the impact of the COVID-19 pandemic on our operations, from April 1, 2020 to June 30, 2020, we suspended the payment of rent and did not make lease payments under our existing lease agreements for the majority of our leases. During the suspension of payments, we continued to recognize expenses and liabilities for lease obligations and corresponding lease assets on the balance sheet in accordance with ASU 2016-02, Leases (Topic 842).

We negotiated restructuring of lease payments and rent concessions for the majority of our leases. The negotiated concessions primarily take the form of rent deferrals (full or partial) or abatements. In accordance with the relief issued in April 2020 by the FASB titled ASC Topic 842 and ASC Topic 840, Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic, we did not recognize contractual rent concessions as a lease contract modification when the total payments required by the modified contract were substantially the same or less than the total payments required by the original contract. Lease concessions that provided a substantial increase in the rights of the lessor or our obligations under the lease were accounted for as lease modifications in accordance with ASC Topic 842.

 

4.  LONG-TERM DEBT

 

Line of Credit

On January 15,November 3, 2021, we entered into Amendment No. 2 and Waiver to Thirda Fourth Amended and Restated Credit Agreement (“Credit Facility”) with Bank of America, N.A. (“BofA”) and, JPMorgan Chase Bank, N.A., and certain other parties to reduceamend and restate our revolving line of credit (the “Line of Credit”)


by $20 million to $215 million,improve the pricing, extend the maturity date, change the interest reference rate, eliminate certain pricing,financial covenants and modify applicableconditions, and reset other financial covenants and/or reset select covenant levels. starting with the fourth quarter of 2021.

Our Credit Facility matures on November 18, 2022,3, 2026, and provides us with revolving loan commitments totaling $215 million, which may be increased up to $315 million, of which $50 million may be used for the issuance of letters of credit. Availability under the Credit Facility is reduced by outstanding letters of credit, which are used to support our self-insurance programs. As of September 28, 2021,On March 29, 2022, there were borrowings of $71.8$50.0 million and letters of credit totaling approximately $18.8$17.2 million outstanding, under the Credit Facility. Available borrowings under the Credit Facility were $124.4leaving $147.8 million as of September 28, 2021.available to borrow.

Borrowings under the Line of Credit bear interest at an annual rate equal to either (a) LIBORthe Bloomberg Short-Term Bank Yield Index rate (“BSBY”) plus a percentage not to exceed 3.00%2.00% (with a floor on LIBORBSBY of 1.00%0.00%), or (b) a percentage not to exceed 2.00%1.00% above a Base Rate equal to the highest of (i) the Federal Funds Rate plus 1/2 of 1.00%, (ii) BofA’s Prime Rate, or (iii) one-month LIBORthe BSBY rate plus 1.00%, and (iv) 1.00%, in either case depending on the level of lease and debt obligations of the Company as compared to EBITDAR (lease adjusted leverage ratio).EBITDA plus lease expenses. The weighted average interest rate during the thirty-ninethirteen weeks ended September 28, 2021March 29, 2022 was approximately 4.0%2.1%.

The Credit Facility is secured by the Company’s assets and contains provisions requiring us to maintain compliance with certain covenants, including a minimum fixed charge coverage ratioFixed Charge Coverage Ratio and a maximum lease adjusted leverage ratio, which was required to be tested after the completion of the third quarter of 2021. Additionally, we must maintain a minimum liquidity balance through December 2021. Lastly, we are subject to certain limits on capital expenditures for fiscal 2021 andLease Adjusted Leverage Ratio. At March 29, 2022, with relief from these limits if we satisfy certain fixed charge and lease adjusted leverage ratios. At September 28, 2021, we were in compliance with these covenants.

Pursuant to the Line of Credit, we are required to pay certain customary fees and expenses associated with maintenance and use of the Line of Credit, including letter of credit issuance fees, unused commitment fees and interest on the Line of Credit, which are payable


monthly. Interest expense and commitment fees under the Credit Facility were approximately $0.6 million and $1.4 million, for the thirty-ninethirteen weeks ended September 28,March 29, 2022 and March 30, 2021, and September 29, 2020 were approximately $4.0 million and $5.1 million, respectively. We also capitalized approximately $0.7$0.04 million and $0.8$0.03 million of interest expense related to new restaurant construction during each of the thirty-ninethirteen weeks ended September 28, 2021March 29, 2022 and September 29, 2020.March 30, 2021.

 

5.  NET INCOME (LOSS) INCOME PER SHARE

Basic and diluted net income (loss) income per share is calculated by dividing net income (loss) income by the weighted average number of common shares outstanding during the period. Potentially dilutive shares are excluded from the computation of diluted net (loss) per share since they have an anti-dilutive effect, yet potentially dilutive shares are included in the computation of diluted net income per share. The number of diluted shares reflectreflects the potential dilution that could occur if holders of in-the-money options and warrants exercised their right to convert these instruments into common stock and the restrictions on restricted stock units (“RSUs”) lapse. Additionally, performance-based RSUs are considered contingent shares; therefore, at each reporting date we determine the probable number of shares that will vest and we include these contingently issuable shares in our diluted share calculation unless they are antidilutive. Once these performance-based RSUs vest, they are included in our basic net income (loss) income per share calculation.

The following table presents a reconciliation of basic and diluted net income (loss) income per share, including the number of dilutive equity awards that were included in the dilutive net income (loss) income per share computation (in thousands):

 

 

For the Thirteen Weeks Ended

 

 

For the Thirty-Nine Weeks Ended

 

 

For the Thirteen Weeks Ended

 

 

September 28, 2021

 

 

September 29,

 2020

 

 

September 28, 2021

 

 

September 29,

2020

 

 

March 29, 2022

 

 

March 30, 2021

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(2,176

)

 

$

(6,584

)

 

$

1,052

 

 

$

(39,801

)

Net income (loss)

 

$

1,460

 

 

$

(3,141

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding – basic

 

 

23,290

 

 

 

22,280

 

 

 

23,154

 

 

 

20,777

 

 

 

23,377

 

 

 

22,926

 

Dilutive effect of equity awards

 

 

 

 

 

 

 

 

900

 

 

 

 

 

 

339

 

 

 

 

Weighted-average shares outstanding – diluted

 

 

23,290

 

 

 

22,280

 

 

 

24,054

 

 

 

20,777

 

 

 

23,716

 

 

 

22,926

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

Basic

 

$

(0.09

)

 

$

(0.30

)

 

$

0.05

 

 

$

(1.92

)

 

$

0.06

 

 

$

(0.14

)

Diluted

 

$

(0.09

)

 

$

(0.30

)

 

$

0.04

 

 

$

(1.92

)

 

$

0.06

 

 

$

(0.14

)

 

For the thirteen weeks ended September 28,March 29, 2022 and March 30, 2021, and September 29, 2020, there were approximately 0.51.1 million and 1.1 million shares of equity awards, respectively, that were excluded from the calculation of diluted net loss per share because they are anti-dilutive. For the thirty-nine weeks ended September 28, 2021 and September 29, 2020, there were approximately 0.2 million and 1.10.5 million shares of equity awards, respectively, that were excluded from the calculation of diluted net income (loss) per share because they are anti-dilutive.


 

6.  RELATED PARTY

James Dal Pozzo, the Chairman of the Board of the Jacmar Companies (“Jacmar”), is a member of our Board of Directors. Jacmar, through its affiliation with Distribution Market Advantage (“DMA”), a consortium of large, regional food distributors located throughout the United States, was our largest distributor of food, beverage, paper products and supplies from 2006 through June 30, 2020, when our contract with DMA expired. Effective June 1, 2020, after conducting an extensive request for proposal process and evaluation, we entered into an agreement with US Foods, replacing DMA. The new agreement expires in July 2023.

Through June 30, 2020, Jacmar serviced our restaurants in California and Nevada, while other DMA distributors serviced our restaurants in all other states. Under the terms of our agreement with DMA, Jacmar was required to sell products to us at the same prices as the other DMA distributors. Jacmar did not provide us with any produce, liquor, wine or beer products, all of which were provided by other third-party vendors and included in “Cost of sales” on the Consolidated Statements of Operations. Effective July 1, 2020, with the expiration of our DMA agreement, Jacmar is no longer considered a related party.

The cost of food, beverage, paper products and supplies provided by Jacmar included within restaurant operating costs consisted of the following (in thousands):

 

 

For the Thirteen Weeks Ended

 

 

For the Thirty-Nine Weeks Ended

 

 

 

September 28, 2021

 

 

September 29,

 2020

 

 

September 28, 2021

 

 

September 29,

 2020

 

Cost of sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third-party suppliers

 

$

76,647

 

 

 

100.0

%

 

$

48,938

 

 

 

100.0

%

 

$

208,382

 

 

 

100.0

%

 

$

116,662

 

 

 

80.6

%

Jacmar

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28,070

 

 

 

19.4

 

Total cost of sales

 

$

76,647

 

 

 

100.0

%

 

$

48,938

 

 

 

100.0

%

 

$

208,382

 

 

 

100.0

%

 

$

144,732

 

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Occupancy and operating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third-party suppliers

 

$

68,876

 

 

 

100.0

%

 

$

56,401

 

 

 

100.0

%

 

$

196,271

 

 

 

100.0

%

 

$

159,455

 

 

 

97.5

%

Jacmar

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,058

 

 

 

2.5

 

Total occupancy and operating

 

$

68,876

 

 

 

100.0

%

 

$

56,401

 

 

 

100.0

%

 

$

196,271

 

 

 

100.0

%

 

$

163,513

 

 

 

100.0

%

7.  STOCK-BASED COMPENSATION

Our current shareholder approved stock-based compensation plan is the BJ’s Restaurants, Inc. Equity Incentive Plan, (as amended from time to time, “the Plan”). Under the Plan, we may issue shares of our common stock to employees,team members, officers, directors and consultants. We have granted incentive stock options, non-qualified stock options, restricted stock and performance and time-based restricted stock units. Stock options are charged against the Plan share reserve on the basis of 1 share for each share granted. Grants of restricted stock, RSUs, performance shares and performance units, if any, are currently charged against the Plan share reserve on the basis of 1.5 shares for each share granted. The Plan also contains other limits on the terms of incentive grants such as limits on the number that can be granted to an employeea team member during any fiscal year. All options granted under the Plan expire within 10 years of their date of grant.

Under the Plan, we issue time-based and performance-based RSUs and non-qualified stock options to vice presidents and above on an annual basis, as well as new hires who are given the option between receiving their full grant as a time-based RSU or split evenly between non-qualified stock options and time-based RSUs. We issue time-based RSUs to other select support employees,team members, and we issue time-based RSUs to non-employee members of our Board of Directors. We also issue RSUs, and previously issued non-qualified stock options, in connection with the BJ’s Gold Standard Stock Ownership Program (the “GSSOP”). The GSSOP is a long-term equity incentive program for our restaurant general managers, executive kitchen managers, directors of operations and directors of kitchen operations. GSSOP grants are dependent on the length of each participant’s service with us and position. All GSSOP participants are required to remain in good standing during their vesting period.

The Plan permits our Board of Directors to set the vesting terms and exercise period for awards at its discretion.their discretion; however, the grant of awards with no minimum vesting period or a vesting period less than one year may not exceed 5% of the total number of shares authorized under the Plan. Stock options and time-based RSUs vest ratably over one, three or five years for non-GSSOP participants and either cliff vest at fivethree or threefive years or cliff vest at 33% on the third anniversary and 67% on the fifth anniversary for GSSOP participants. Performance-based RSUs generally cliff vest on the third anniversary of the grant date in an amount from 0% to 225% of the grant quantity, dependent on the level of performance target achievement.


On January 15, 2021, our Board of Directors approved special fully-vested restricted stock grants, in lieu of cash bonuses to Restaurant Support Center employeesteam members at the Vice President and Director levels. These grants were in amounts designed to approximate a portion of their potential incentive compensation, which was approximately $0.5 million.


The following table presents the stock-based compensation recognized within our consolidated financial statements (in thousands):  

 

 

For the Thirteen Weeks Ended

 

 

For the Thirty-Nine Weeks Ended

 

 

For the Thirteen Weeks Ended

 

 

September 28, 2021

 

 

September 29,

 2020

 

 

September 28, 2021

 

 

September 29,

 2020

 

 

March 29, 2022

 

 

March 30, 2021

 

Labor and benefits

 

$

641

 

 

$

707

 

 

$

2,171

 

 

$

2,028

 

 

$

751

 

 

$

808

 

General and administrative

 

$

1,808

 

 

$

2,312

 

 

$

5,261

 

 

$

4,774

 

 

$

1,961

 

 

$

1,611

 

Capitalized (1)

 

$

66

 

 

$

 

 

$

223

 

 

$

29

 

 

$

76

 

 

$

96

 

 

 

(1)

Capitalized stock-based compensation relates to our restaurant development personnel and is included in “Property and equipment, net” on the Consolidated Balance Sheets.

Stock Options

The fair value of each stock option was estimated on the grant date using the Black‑Scholes option-pricing model with the following weighted average assumptions:

 

 

For the Thirty-Nine Weeks Ended

 

 

For the Thirteen Weeks Ended

 

 

September 28, 2021

 

 

September 29, 2020

 

 

March 29, 2022

 

 

March 30, 2021

 

Expected volatility

 

 

60.7

%

 

 

33.5

%

 

 

63.2

%

 

 

60.4

%

Risk-free interest rate

 

 

0.5

%

 

 

1.6

%

 

 

1.6

%

 

 

0.5

%

Expected option life

 

5 years

 

 

5 years

 

 

5 years

 

 

5 years

 

Dividend yield

 

 

0.0

%

 

 

1.5

%

 

 

0.0

%

 

 

0.0

%

Fair value of options granted

 

$

23.54

 

 

$

10.38

 

 

$

17.38

 

 

$

23.78

 

 

U.S. GAAP requires us to make certain assumptions and judgmentsestimates regarding the grant date fair value. These judgments include expected volatility, risk-free interest rate, expected option life, and dividend yield. These estimationsassumptions and judgmentsestimates are determined by us using assumptionsinputs that, in many cases, are outside of our control. The changesChanges in these variables or trends,assumptions and estimates, including stock price volatility, dividend yield and risk-free interest rate, may significantly impact the fair value of future grants resulting in a significant impact to our financial results.

TheUnder our stock-based compensation plan the exercise price of oura stock options under our stock-based compensation planoption is required to equal or exceed the fair value of our common stock at market close on the option grant date or the most recent trading day when grants take place on market holidays. The following table presents stock option activity:

 

 

Options Outstanding

 

 

Options Exercisable

 

 

Options Outstanding

 

 

Options Exercisable

 

 

Shares

(in thousands)

 

 

Weighted

Average

Exercise

Price

 

 

Shares

(in thousands)

 

 

Weighted

Average

Exercise

Price

 

 

Shares

(in thousands)

 

 

Weighted

Average

Exercise

Price

 

 

Shares

(in thousands)

 

 

Weighted

Average

Exercise

Price

 

Outstanding at December 29, 2020

 

 

801

 

 

$

40.56

 

 

 

503

 

 

$

39.91

 

Outstanding at December 28, 2021

 

 

775

 

 

$

41.77

 

 

 

519

 

 

$

41.02

 

Granted

 

 

107

 

 

 

46.26

 

 

 

 

 

 

 

 

 

 

 

98

 

 

 

32.27

 

 

 

 

 

 

 

 

 

Exercised

 

 

(129

)

 

 

37.40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forfeited

 

 

(11

)

 

 

44.22

 

 

 

 

 

 

 

 

 

 

 

(8

)

 

 

45.30

 

 

 

 

 

 

 

 

 

Outstanding at September 28, 2021

 

 

768

 

 

$

41.84

 

 

 

518

 

 

$

41.04

 

Outstanding at March 29, 2022

 

 

865

 

 

$

40.66

 

 

 

621

 

 

$

41.69

 

 

As of September 28, 2021,March 29, 2022, total unrecognized stock-based compensation expense related to non-vested stock options was approximately $2.6$3.4 million, which is generally expected to be recognized over the next three years.


Restricted Stock Units

Time-Based Restricted Stock Units

The following table presents time-based restricted stock unit activity:

 

 

Shares

(in thousands)

 

 

Weighted

Average

Fair Value

 

 

Shares

(in thousands)

 

 

Weighted

Average

Fair Value

 

Outstanding at December 29, 2020

 

 

586

 

 

$

37.14

 

Outstanding at December 28, 2021

 

 

619

 

 

$

39.35

 

Granted

 

 

203

 

 

 

47.20

 

 

 

161

 

 

 

32.33

 

Released

 

 

(138

)

 

 

41.56

 

 

 

(96

)

 

 

43.76

 

Forfeited

 

 

(60

)

 

 

35.64

 

 

 

(10

)

 

 

44.92

 

Outstanding at September 28, 2021

 

 

591

 

 

$

39.71

 

Outstanding at March 29, 2022

 

 

674

 

 

$

36.97

 

 

The fair value of our time-based RSUs is equal to the fair value of our common stock at market close on the date of grant or the most recent trading day when grants take place on market holidays. The fair value of each time-based RSU is expensed over the vesting period (e.g., one, three or five years). As of September 28, 2021,March 29, 2022, total unrecognized stock-based compensation expense related to non-vested RSUs was approximately $11.5$13.7 million, which is generally expected to be recognized over the next five years.  

Performance-Based Restricted Stock Units

The following table presents performance-based restricted stock unit activity:

 

 

Shares

(in thousands)

 

 

Weighted

Average

Fair Value

 

 

Shares

(in thousands)

 

 

Weighted

Average

Fair Value

 

Outstanding at December 29, 2020

 

 

109

 

 

$

42.39

 

Outstanding at December 28, 2021

 

 

112

 

 

$

45.60

 

Granted

 

 

46

 

 

 

46.91

 

 

 

52

 

 

 

32.27

 

Released

 

 

(36

)

 

 

37.70

 

 

 

(27

)

 

 

53.22

 

Forfeited

 

 

(7

)

 

 

44.14

 

 

 

(1

)

 

 

53.22

 

Outstanding at September 28, 2021

 

 

112

 

 

$

45.60

 

Outstanding at March 29, 2022

 

 

136

 

 

$

38.93

 

 

The fair value of our performance-based RSUs is equal to the fair value of our common stock at market close on the date of grant or the most recent trading day when grants take place on market holidays. The fair value of each performance-based RSU is expensed, based on management’s current estimate of the level that the performance goal will be achieved. As of September 28, 2021,March 29, 2022, based on the target level of performance, the total unrecognized stock-based compensation expense related to non-vested performance-based RSUs was approximately $3.4$3.9 million, which is generally expected to be recognized over the next three years.

 

87.  INCOME TAXES  

We calculate our interim income tax provision in accordance with ASC Topic 270, “Interim Reporting” and ASC Topic 740, “Accounting for Income Taxes.” The related tax expense or benefit is recognized in the interim period in which it occurs. In addition, the effect of changes in enacted tax laws, rates or tax status is recognized in the interim period in which the change occurs. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including the expected operating income for the year, permanent and temporary differences as a result of differences between amounts measured and recognized in accordance with tax laws and financial accounting standards, and the likelihood of recovering deferred tax assets in the current fiscal year.assets. The accounting estimates used to compute income tax expense may change as new events occur, additional information is obtained or the tax environment changes.

On December 18, 2019, the FASB issued ASU 2019-12 (Topic 740), to simplify the accounting for income taxes. The ASU’s amendments are based on changes that were suggested by stakeholders as part of the FASB’s simplification initiative (i.e., the Board’s effort to reduce the complexity of accounting standards), while maintaining or enhancing the helpfulness of information provided to financial statement users. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The adoption of this standard did not have a material impact on our consolidated financial statements or related disclosures.

Our effective income tax rate for the thirty-ninethirteen weeks ended September 28, 2021 reflectedMarch 29, 2022 was a 108.9% tax benefit rateof 116.8% compared to a 41.7% tax benefit rateof 66.3% for the comparable thirty-ninethirteen week period of 2020.2021. The effective tax rate benefit for the thirty-ninethirteen weeks ended September 28,March 29, 2022 and March 30, 2021, was different from the statutory tax rate primarily due to FICA tax tip credits, excess tax deductions realized for stock-based compensation and the employee retention credit. The prior year effective tax rate benefit was different than the statutory rate primarily due to FICA tax tip credits and the incremental benefit arising from the ability to carryback the 2020 loss to prior years when the tax rate was at 35%.


On March 11, 2021 the President signed the American Rescue Plan of 2021. The law did not have a material impact on our consolidated financial statements or related disclosures.credits.

As of September 28, 2021,March 29, 2022, we had unrecognized tax benefits of approximately $1.4$1.2 million, of which approximately $1.1 million, if reversed, would impact our effective tax rate.


A reconciliation of the beginning and ending amount of unrecognized tax benefits is the following (in thousands):

 

 

For the Thirty-Nine Weeks Ended

 

 

For the Thirteen Weeks Ended

 

 

September 28, 2021

 

 

September 29, 2020

 

 

March 29, 2022

 

 

March 30, 2021

 

Gross unrecognized tax benefits at beginning of year

 

$

1,333

 

 

$

1,345

 

Beginning gross unrecognized tax benefits

 

$

1,198

 

 

$

1,333

 

Increases for tax positions taken in prior years

 

 

 

 

 

190

 

 

 

3

 

 

 

 

Decreases for tax positions taken in prior years

 

 

(1

)

 

 

 

Increases for tax positions taken in the current year

 

 

35

 

 

 

65

 

 

 

19

 

 

 

22

 

Gross unrecognized tax benefits at end of year

 

$

1,368

 

 

$

1,600

 

Ending gross unrecognized tax benefits

 

$

1,219

 

 

$

1,355

 

 

Our uncertain tax positions are related to tax years that remain subject to examination by tax agencies. As of September 28, 2021,March 29, 2022, the earliest tax year still subject to examination by the Internal Revenue Service is 2015. The earliest year still subject to examination by a significant state or local taxing jurisdiction is 2016.2017.

 

9.8.  LEGAL PROCEEDINGS

We are subject to lawsuits, administrative proceedings and demands that arise in the ordinary course of our business and which typically involve claims from customers, employeesguests, team members and others related to operational, employment, real estate and intellectual property issues common to the foodservice industry. A number of these claims may exist at any given time. We are self-insured for a portion of our general liability, employeeteam member workers’ compensation and employment practice liability insurance requirements. We maintain coverage with a third-party insurer to limit our total exposure. We believe that most of our customerteam member claims will be covered by our general liability insurance, subject to coverage limits and the portion of such claims that are self-insured. Punitive damages awards and employeeteam member unfair practice claims, however, are not covered by our general liability insurance. To date, we have not been ordered to pay punitive damages with respect to any claims, but there can be no assurance that punitive damages will not be awarded with respect to any future claims. We could be affected by adverse publicity resulting from allegations in lawsuits, claims and proceedings, regardless of whether these allegations are valid or whether we are ultimately determined to be liable. We currently believe that the final disposition of these type of lawsuits, proceedings and claims will not have a material adverse effect on our financial position, results of operations or liquidity. It is possible, however, that our future results of operations for a particular quarter or fiscal year could be impacted by changes in circumstances relating to lawsuits, proceedings or claims.

 

10.9.  SHAREHOLDERS’ EQUITY

Private Placement

On May 5, 2020, we completed the sale of $70 million of our common stock to certain funds and accounts advised by T. Rowe Price Associates, Inc., acting as investment adviser, and to Act III Holdings, LLC (“Act III,” and collectively “the investors”). The investors purchased a total of 3,500,000 shares of BJ’s Restaurants common stock for $20.00 per share in a private placement under Section 4(2) of the Securities Act of 1933, as amended. The Company also issued a five year warrant to purchase 875,000 shares of our common stock with an initial exercise price of $27.00 per share to Act III. The warrant expires on May 4, 2025. 

We accounted for the common stock and the warrant issued based on their relative fair values. The fair value of the warrant was estimated using the Black-Scholes pricing model. We recorded the net proceeds of $64.0 million related to the 3,500,000 shares of common stock to “Retained earnings” and the net proceeds of $3.4 million related to the warrant to “Capital surplus” on our Consolidated Balance Sheets.


At-the-Market Offering

On January 21, 2021, we sold 703,399 shares of our common stock at $42.65 per share for cash proceeds of $30.0 million (before commission and other fees) through an “at-the market” (“ATM”) offering program. As a result of the anti-dilution provisions contained in ACT III’s warrant, the number of shares issuable upon exercise of such warrant was adjusted to 876,949 and the exercise price was adjusted to $26.94.

Stock Repurchases

As of September 28, 2021,March 29, 2022, we have approximately $24.4 million remaining under the current $500 million share repurchase plan approved by our Board of Directors. We have suspended our repurchase program until the Board determines that resumption of repurchases is in the best interest of the Company and its shareholders and is permitted by our Credit Facility.

Cash Dividends

Due to the COVID-19 pandemic, our Board of Directors suspended quarterly cash dividends until it is determined that resumption of dividend payments is in the best interest of the Company and its shareholders and is permitted by our Credit Facility.shareholders. As such, the only cash dividends paid during the thirty-ninethirteen weeks ended September 28, 2021 and SeptemberMarch 29, 20202022 were related to dividends (declared prior to fiscal 2020) which vested under our stock compensation plans.

 

Item 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE

Certain information included in this Form 10-Q and other filings with the Securities and Exchange Commission, in our press releases, in other written communications, and in oral statements made by or with the approval of one of our authorized officers may contain “forward-looking” statements about our current and expected performance trends, growth plans, business goals and other matters. Words or phrases such as “believe,” “plan,” “will likely result,” “expect,” “intend,” “will continue,” “is anticipated,” “estimate,” “project,” “may,” “could,” “would,” “should,” and similar expressions are intended to identify “forward-looking” statements. These


statements, and any other statements that are not historical facts, are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, as codified in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended from time to time (the “Act”). The cautionary statements made in this Form 10-Q should be read as being applicable to all related “forward-looking” statements wherever they appear in this Form 10-Q. These forward-looking statements are based on information available to us as of the date any such statements are made, and we assume no obligation to update these forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, the risk factors described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 29, 2020,28, 2021, as updated in our Form 10-Q for the thirty-ninethirteen weeks ended September 28, 2021March 29, 2022 and in other reports filed subsequently with the SEC.

GENERAL

As of November 1, 2021,May 2, 2022, we own and operate 212213 restaurants located in the 29 states of Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Indiana, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Virginia and Washington.states. Our proprietary craft beer is produced at several of our locations, our Temple, Texas brewpub locations and by independent third-party brewers using our proprietary recipes.

The first BJ’s restaurant, which opened in 1978 in Orange County, California, was a small sit-down pizzeria that featured Chicago style deep-dish pizza with a unique California twist. Our goal then and still today is to be the besta leading, varied menu casual dining concept ever by focusingrestaurant brand that focuses on delivering high quality menu options at a compelling value, a dining experience that exceeds customers’our guests’ expectations for service, hospitality and enjoyment, and an atmosphere that is always welcoming and approachable.

In 1996, we introduced our own proprietary craft beers and expanded the BJ’s concept from its beginnings as a small pizzeria to a full-service, high energyhigh-energy casual dining restaurant when we opened our first large format restaurant includingwith our own internal brewing operations in Brea, California. Today our restaurants feature a broad menu with over 100 menu items designed to offer something for everyone including: slow roasted entrees such as prime rib, EnLIGHTened Entrees® such as our Cherry Chipotle Glazed Salmon, our original signature deep-dish pizza, the often imitated, but never replicated world-famous Pizookie® dessert;dessert, and our award-winning BJ’s proprietary craft beers. Our craft beer is produced at several of our restaurants, our Temple, Texas brewpub locations and by independent third-party brewers using our proprietary recipes.

Our revenues are comprised of food and beverage sales from our restaurants and third-party retail beer sales.restaurants. Revenues from restaurant sales are recognized when payment is tendered at the point of sale.tendered. Amounts paid with a credit card are recorded in accounts and other receivables until payment is collected.collected from the credit card processor. We sell gift cards which do not have an expiration date, and we do not deduct non-usage fees from outstanding gift card balances. Gift card sales are recorded as a liability and recognized as revenues upon redemption in our


restaurants. Based on historical redemption rates, a portion of our gift card sales are not expected to be redeemed and will be recognized as gift card “breakage.”“breakage” over time. Estimated gift card breakage is recorded as revenue and recognized in proportion to our historical redemption pattern, unless there is a legal obligation to remit the unredeemed gift cards to the relevant jurisdiction.government authorities. The estimated gift card breakage is based on when the likelihood of redemption becomes remote, which has typically been 24 months after the original gift card issuance date.

Our customerguest loyalty program enables participants to earn points for qualifying purchases that can be redeemed for food and beverages in the future. We allocate the transaction price between the goods delivered and the future goods that will be delivered, on a relative standalone selling price basis, and defer the revenues allocated to the points until such points are redeemed.

All of our restaurants are Company-owned. In calculating comparable restaurant sales, we include a restaurant in the comparable base once it has been open for 18 months. CustomerGuest traffic for our restaurants is estimated based on customerguest checks.

Cost of sales is comprised of food and beverage costs, including the cost to produce and distribute our proprietary craft beer, soda and ciders. The components of cost of sales are variable and typically fluctuate directly with sales volumes, but may be impacted by changes in commodity prices, a shift in sales mix to higher cost proteins or other higher cost items, or varying levels of promotional activities.

Labor and benefit costs include direct hourly and management wages, bonuses, payroll taxes, fringe benefits and stock-based compensation and workers’ compensation expense that is directly related to restaurant level employees.team members.

Occupancy and operating expenses include restaurant supplies, credit card fees, third-party delivery company commissions, marketing costs, fixed rent, percentage rent, common area maintenance charges, utilities, real estate taxes, repairs and maintenance and other related restaurant costs. Since fiscal 2020, occupancy and operating expense also include COVID-19 related costs such as temporary patios and safety related items.

General and administrative costs include all corporate administrative functions that support existing operations and provide infrastructure to facilitate our future growth. Components of this category include corporate management, field supervision and corporate hourly staff salaries and related employeeteam member benefits (including stock-based compensation expense and cash-based incentive compensation), travel and relocation costs, information systems, the cost to recruit and train new restaurant management employees,team members, corporate rent, certain brand marketing-related expenses and legal, professional and consulting fees.


Depreciation and amortization are composed primarily of depreciation of capital expenditures for restaurant and brewing equipment and leasehold improvements.

Restaurant opening expenses, which are expensed as incurred, consist of the costs of hiring and training the initial hourly work force for each new restaurant, travel, the cost of food and supplies used in training, grand opening promotional costs, the cost of the initial stock of operating supplies and other direct costs related to the opening of a restaurant, including rent during the construction and in-restaurant training period.


RESULTS OF OPERATIONS

The following table provides, for the periods indicated, our unaudited Consolidated Statements of Operations expressed as percentages of total revenues. The results of operations for the thirteen and thirty-nine weeks ended September 28,March 29, 2022 and March 30, 2021, and September 29, 2020, are not necessarily indicative of the results to be expected for the full fiscal year. Percentages below may not reconcile due to rounding.

 

 

For the Thirteen Weeks Ended

 

 

For the Thirty-Nine Weeks Ended

 

 

For the Thirteen Weeks Ended

 

 

September 28, 2021

 

 

September 29,

 2020

 

 

September 28, 2021

 

 

September 29,

 2020

 

 

March 29, 2022

 

 

March 30, 2021

 

Revenues

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

Restaurant operating costs (excluding depreciation and amortization):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

27.2

 

 

 

24.6

 

 

 

26.2

 

 

 

24.9

 

 

 

27.3

 

 

 

25.1

 

Labor and benefits

 

 

37.2

 

 

 

37.5

 

 

 

36.6

 

 

 

39.5

 

 

 

38.9

 

 

 

36.6

 

Occupancy and operating

 

 

24.4

 

 

 

28.4

 

 

 

24.7

 

 

 

28.1

 

 

 

24.0

 

 

 

26.8

 

General and administrative

 

 

6.1

 

 

 

7.7

 

 

 

6.2

 

 

 

7.1

 

 

 

6.1

 

 

 

6.8

 

Depreciation and amortization

 

 

6.5

 

 

 

9.1

 

 

 

6.9

 

 

 

9.4

 

 

 

6.0

 

 

 

8.2

 

Restaurant opening

 

 

0.1

 

 

 

0.1

 

 

 

0.2

 

 

 

0.1

 

 

 

0.2

 

 

 

0.1

 

Loss on disposal and impairment of assets

 

 

1.0

 

 

 

0.1

 

 

 

0.4

 

 

 

2.5

 

 

 

0.1

 

 

 

0.1

 

Gain on lease transactions, net

 

 

 

 

 

(1.0

)

 

 

 

 

 

(0.3

)

Total costs and expenses

 

 

102.5

 

 

 

106.4

 

 

 

101.1

 

 

 

111.4

 

 

 

102.6

 

 

 

103.7

 

Loss from operations

 

 

(2.5

)

 

 

(6.4

)

 

 

(1.1

)

 

 

(11.4

)

 

 

(2.6

)

 

 

(3.7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(0.4

)

 

 

(0.8

)

 

 

(0.5

)

 

 

(0.9

)

 

 

(0.2

)

 

 

(0.6

)

Gain from legal settlements

 

 

 

 

 

1.1

 

 

 

 

 

 

0.4

 

Other income, net

 

 

0.2

 

 

 

0.3

 

 

 

0.1

 

 

 

0.1

 

Total other (expense) income

 

 

(0.2

)

 

 

0.6

 

 

 

(0.4

)

 

 

(0.4

)

Other (expense) income, net

 

 

(0.1

)

 

 

0.1

 

Total other expense

 

 

(0.3

)

 

 

(0.5

)

Loss before income taxes

 

 

(2.7

)

 

 

(5.7

)

 

 

(1.5

)

 

 

(11.7

)

 

 

(2.9

)

 

 

(4.2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

 

(1.9

)

 

 

(2.4

)

 

 

(1.6

)

 

 

(4.9

)

 

 

(3.4

)

 

 

(2.8

)

Net (loss) income

 

 

(0.8

)%

 

 

(3.3

)%

 

 

0.1

%

 

 

(6.8

)%

Net income (loss)

 

 

0.5

%

 

 

(1.4

)%

 

Thirteen Weeks Ended September 28, 2021March 29, 2022 Compared to Thirteen Weeks Ended September 29, 2020March 30, 2021

Revenues.  Total revenues increased by $83.3$75.4 million, or 41.9%33.8%, to $282.2$298.7 million during the thirteen weeks ended September 28, 2021,March 29, 2022, from $198.9$223.3 million during the comparable thirteen week period of 2020.2021. The increase in revenues primarily consisted of a 41.8%33.9%, or $81.4$74.0 million, increase in comparable restaurant sales, a $4.5$2.9 million increase in sales from new restaurants not yet in our comparable restaurant sales base, coupled with a net $0.7 million increase related to the re-opening in August 2021 of our temporarily closed restaurant due to the COVID pandemic. Revenue increases were offset by a $1.2 million decrease in revenues related to expired loyalty points during the same period in the prior year, which were recorded to revenue, a $0.5 million decrease related to the closure of our Pasadena restaurant, and a $0.4$0.3 million increasedecrease related to our temporarily closed restaurant which was re-opened during the quarter, offset byas a $2.9 million decrease in revenues related to less loyalty point expirations. At the beginningresult of the COVID-19 pandemic in March 2020, we stopped expirations to allow customers to use their loyalty points at a later time. During the thirteen weeks ended September 29, 2020, we resumed the expiration of loyalty points, resulting in incremental revenue.fire. The increase in comparable restaurant sales was the result of an increase in customerguest traffic of approximately 30.1%26.4%, coupled with an increase in average check of approximately 11.7%7.5%. The increase in customerguest traffic iswas primarily due to the recovery from the COVID-19 pandemic and the full re-opening of our dine-in restaurant operations,dining rooms, which were curtailedclosed or restricted in operation during the comparable thirteen weeksame period of 2020. Additionally, the increase in average check is due to our customers per check, menu mix and sales channels, which focused heavily on our deep dish pizza and family feast menu offerings for off-premise sales during the thirteen week period of 2020.2021.

Cost of Sales.  Cost of sales increased by $27.7$25.3 million, or 56.6%45.1%, to $76.6$81.5 million during the thirteen weeks ended September 28, 2021,March 29, 2022, from $48.9$56.1 million during the comparable thirteen week period of 2020.2021. This increase was primarily due to the increase in revenue, commodity cost increases and costs related to our three new restaurants opened and one restaurant re-opened since the thirteen weeks ended September 29, 2020.March 30, 2021, offset by our Pasadena restaurant that was closed at the beginning of the current fiscal year. As a percentage of revenues, cost of sales increased to 27.2%27.3% for the current thirteen week period from 24.6%25.1% for the prior year comparable period. This increase was primarily due to overallinflationary pressure on food costs, partially mitigated by menu mix and an increase in meat, seafood and liquor costs.price increases.

Labor and Benefits.  Labor and benefit costs for our restaurants increased by $30.4$34.6 million, or 40.8%42.4%, to $105.0$116.3 million during the thirteen weeks ended September 28, 2021,March 29, 2022, from $74.6$81.7 million during the comparable thirteen week period of 2020.2021. This increase was


primarily due to the increase in revenue resulting fromincreased team members and higher training and overtime costs due to the re-opening of our dining rooms, which were closed or had restricted in operationoperations during the same period in 2020, coupled with higher training and overtime costs due to the full re-opening of our dining


rooms,2021, and expenses related to the three new restaurants opened and one restaurant re-opened since the thirteen weeks ended September 29, 2020,March 30, 2021. Increases in labor and benefit costs were offset in part by the closure of our Employee Retention Tax Credit in conjunction withPasadena restaurant at the CARES Act.beginning of the current fiscal year. As a percentage of revenues, labor and benefit costs decreasedincreased to 37.2%38.9% for the current thirteen week period from 37.5%36.6% for the prior year comparable period. This decreaseincrease was primarily due to our abilityhigher wages, training and overtime hours due to leverage managementincreased hiring activities, and hourly wages over comparablethe deleveraging impact from the COVID-19 Omicron wave in January when sales increases.were severely impacted. Included in labor and benefits for the thirteen weeks ended September 28,March 29, 2022 and March 30, 2021, and September 29, 2020, was approximately $0.6 million and $0.7$0.8 million, or 0.2%0.3% and 0.4% of revenues, respectively, of stock-based compensation expense related to equity awards granted in accordance with our Gold Standard Stock Ownership Program for certain restaurant management employees.team members.

Occupancy and Operating.  Occupancy and operating expenses increased by $12.5$11.9 million, or 22.1%19.8%, to $68.9$71.7 million during the thirteen weeks ended September 28, 2021,March 29, 2022, from $56.4$59.8 million during the comparable thirteen week period of 2020.2021. This increase was primarily due to higher merchant credit card fees as a result of increased revenues, increased supply costs, higher janitorial services as a result ofrelated to the re-opening of our dining rooms, coupled with increased marketing costs and expensescosts related to the three new restaurants opened and one restaurant re-opened since the thirteen weeks ended September 29, 2020.March 30, 2021. As a percentage of revenues, occupancy and operating expenses decreased to 24.4%24.0% for the current thirteen week period from 28.4%26.8% for the prior year comparable period. This decrease was primarily due to our ability to leverage certain fixed operating and occupancy costs over a higher revenue base.

General and Administrative.  General and administrative expenses increased by $2.0$3.0 million, or 13.4%19.6%, to $17.3$18.3 million during the thirteen weeks ended September 28, 2021,March 29, 2022, from $15.3 million during the comparable thirteen week period of 2020.2021. This increase was primarily due to increases in personnel, travel, recruiting and outside services as certain restrictions related to the COVID-19 pandemic eased and we returned backcloser to more normal operations.pre-pandemic operations and have invested in growth initiatives. Included in general and administrative costs for the thirteen weeks ended September 28,March 29, 2022 and March 30, 2021, and September 29, 2020, was approximately $1.8$2.0 million and $2.3$1.6 million, respectively, or 0.6% and 1.2%0.7% of revenues, respectively, of stock-based compensation expense. As a percentage of revenues, general and administrative expenses decreased to 6.1% for the current thirteen week period from 7.7%6.8% for the prior year comparable period. This decrease was primarily due to our ability to leverage our fixed costs over a higher revenue base.

Depreciation and Amortization. Depreciation and amortization increaseddecreased by $0.2 million, or 1.0%1.2%, to $18.2$18.0 million during the thirteen weeks ended September 28, 2021,March 29, 2022, compared to $18.0$18.2 million during the comparable thirteen week period of 2020.2021. This increasedecrease was primarily related to the three new restaurants opened since the thirteen weeks ended September 29, 2020, offset byimpairment and disposal charges taken in fiscal 2021, including the impairment and reduction of carrying value related to oneour Pasadena restaurant that closed at the beginning of the year. The decrease in depreciation and amortization was partially offset by depreciation expense related to our restaurants duringopened since the quarter.thirteen weeks ended March 30, 2021. As a percentage of revenues, depreciation and amortization decreased to 6.5%6.0% for the current thirteen week period from 9.1%8.2% for the prior year comparable period. This decrease was primarily due to a higher revenue base.

Restaurant Opening.  Restaurant opening expense increased by $0.2$0.5 million, or 193.0%355.5%, to $0.4$0.6 million during the thirteen weeks ended September 28, 2021,March 29, 2022, compared to $0.1 million during the comparable thirteen week period of 2020.2021. This increase was primarily due to the re-openingtiming of our Richmond, Virginiaopenings. We opened one restaurant that was temporarily closed due to the COVID-19 pandemic. We did not open any new restaurants during either of the thirteen weeks ended September 28, 2021 or SeptemberMarch 29, 2020.2022 and a second restaurant two weeks after the thirteen weeks ended March 29, 2022, compared to no new restaurant openings during the thirteen weeks ended March 30, 2021.

Loss on Disposal and Impairment of Assets.  Loss on disposal and impairment of assets was $2.7$0.2 million during the thirteen weeks ended September 28, 2021,March 29, 2022, and $0.2$0.3 million during the comparable thirteen week period of 2020.2021. For the thirteen weeks ended September 28, 2021, theseThese costs were primarily relatedrelate to the impairment and reduction in the carrying value of the long-lived and operating lease assets related to one of our restaurants. For the comparable thirteen week period of 2020, these costs were primarily related to the disposals of assets in conjunction with initiatives to keep our restaurants up to date, coupled with disposaloffset by a $0.3 million gain related to the sale of certain unproductiveassets and our liquor license at our Pasadena restaurant assets.

Gain on Lease Transactions, net.  Gain on lease transactions, net, of $1.9 million duringin the thirteen weeks ended September 29, 2020, related to a sale-leaseback transaction.current fiscal year.

Interest Expense, Net.  Interest expense, net, decreased by $0.6$0.8 million to $1.0$0.6 million during the thirteen weeks ended September 28, 2021,March 29, 2022, compared to $1.6$1.4 million during the comparable thirteen week period of 2020.2021. This decrease was primarily due to a lower average debt balance during the thirteen weeks ended September 28, 2021,March 29, 2022, compared to the comparable thirteen week period of 2020.2021.

Gain from Legal SettlementsOther (Expense) Income, Net.  Gain from legal settlements,Other (expense) income, net, decreased by $0.7 million to $0.4 million of $2.3 millionexpense during the thirteen weeks ended SeptemberMarch 29, 2020, related to a settlement with credit card providers pertaining to interchange fees and a settlement related to a maintenance agreement to repair our handheld tablets.

Other Income, Net.  Other income, net, decreased by $0.2 million to $0.4 million of income during the thirteen weeks ended September 28, 2021,2022, compared to $0.6$0.3 million of income during the comparable thirteen week period of 2020.2021. This was primarily related to the decrease in the cash surrender value of certain life insurance policies under our deferred compensation plan.

Income Tax Benefit.  Our effective income tax rate for the thirteen weeks ended September 28, 2021 reflected a 71.2% tax benefit rate compared to a 42.3% tax benefit rate for the comparable thirteen week period of 2020. The effective tax rate benefit for the thirteen weeks ended September 28, 2021 was different than the statutory tax rate primarily due to FICA tax tip credits, excess tax deductions realized for stock-based compensation and the employee retention credit. The prior year effective tax rate benefit was different than


the statutory rate primarily due to FICA tax tip credits and the incremental benefit arising from the ability to carryback the 2020 loss to prior years when the tax rate was at 35%. 

Thirty-Nine Weeks Ended September 28, 2021 Compared to Thirty-Nine Weeks Ended September 29, 2020

Revenues.  Total revenues increased by $214.3 million, or 36.8%, to $795.8 million during the thirty-nine weeks ended September 28, 2021 from $581.5 million during the comparable thirty-nine week period of 2020. The increase in revenues primarily consisted of a 35.8%, or $205.0 million, increase in comparable restaurant sales, a $10.3 million increase in sales from new restaurants not yet in our comparable restaurant sales base, offset by a $0.3 million decrease related to our temporarily closed restaurant due to the COVID-19 pandemic. The increase in comparable restaurant sales was the result of an increase in customer traffic of approximately 22.5%, coupled with an increase in average check of approximately 13.3%.

Cost of Sales.  Cost of sales increased by $63.6 million, or 44.0%, to $208.4 million during the thirty-nine weeks ended September 28, 2021, from $144.7 million during the comparable thirty-nine week period of 2020. This increase was primarily due to the increase in revenues, commodity cost increases and costs related to our three new restaurants opened since the thirty-nine weeks ended September 29, 2020. As a percentage of revenues, cost of sales increased to 26.2% for the current thirty-nine week period from 24.9% for the prior year comparable period. This increase was primarily due to overall menu mix and an increase in meat and seafood costs.

Labor and Benefits.  Labor and benefit costs for our restaurants increased by $61.0 million, or 26.5%, to $290.9 million during the thirty-nine weeks ended September 28, 2021 from $229.9 million during the comparable thirty-nine week period of 2020. This increase was primarily due to the increase in revenue resulting from the re-opening of our dining rooms, which were closed or restricted in operation during the same period in 2020, coupled with higher incentive compensation, higher training and overtime costs due to the full re-opening of our dining rooms, and expenses related to the three new restaurants opened since the thirty-nine weeks ended September 29, 2020, offset by our Employee Retention Tax Credit in conjunction with the CARES Act. As a percentage of revenues, labor and benefit costs decreased to 36.6% for the current thirty-nine week period from 39.5% for the prior year comparable period. This decrease was primarily due to our ability to leverage management and hourly wages over our comparable sales increases during the thirty-nine weeks ended September 28, 2021. Included in labor and benefits for the thirty-nine weeks ended September 28, 2021 and September 29, 2020 was approximately $2.2 million and $2.0 million, respectively, or 0.3% of revenues of stock-based compensation expense related to equity awards granted in accordance with our Gold Standard Stock Ownership Program for certain restaurant management employees.

Occupancy and Operating.  Occupancy and operating expenses increased by $32.8 million, or 20.0%, to $196.3 million during the thirty-nine weeks ended September 28, 2021 from $163.5 million during the comparable thirty-nine week period of 2020. This increase was primarily due to higher commissions to third-party delivery companies as a result of increased off-premise sales, higher merchant card fees and percentage rent as a result of increased revenues, increased supply costs, increased janitorial service costs, and expenses related to the three new restaurants opened since thethirty-nine weeks ended September 29, 2020. As a percentage of revenues, occupancy and operating expenses decreased to 24.7% for the current thirty-nine week period from 28.1% for the prior year comparable period. This decrease was primarily due to our ability to leverage certain fixed operating and occupancy costs over a higher revenue base.

General and Administrative.  General and administrative expenses increased by $8.3 million, or 20.0%, to $49.6 million during the thirty-nine weeks ended September 28, 2021, from $41.3 million during the comparable thirty-nine week period of 2020. This increase was primarily due to increased personnel costs, including higher incentive compensation, salaries and deferred compensation expense, and general corporate and office expenses. From mid-April 2020 until mid-September 2020, restaurant support center salaries were reduced for all employees making over $100,000, and cash retainer payments to members of our Board of Directors were similarly reduced. The increase in deferred compensation expense relates to an increase in the cash surrender value of our life insurance policies under our deferred compensation plan and is offset by higher other income included in “Other income (expense), net” on our Unaudited Consolidated Statements of Operations. Included in general and administrative costs for the thirty-nine weeks ended September 28, 2021 and September 29, 2020 was approximately $5.3 million and $4.8 million,respectively, or 0.7% and 0.8% of revenues, respectively, of stock-based compensation expense. As a percentage of revenues, general and administrative expenses decreased to 6.2% for the current thirty-nine week period from 7.1% for the prior year comparable period. This decrease was primarily due to a higher revenue base.

Depreciation and Amortization.  Depreciation and amortization was $54.7 million during the thirty-nine weeks ended September 28, 2021, and the comparable thirty-nine week period of 2020. The increase related to the three new restaurants opened since the thirty-nine weeks ended September 29, 2020 is offset by the decrease related to the impairment and reduction of carrying value related to five restaurants in 2020 and one restaurant in 2021. As a percentage of revenues, depreciation and amortization decreased to 6.9% for the current thirty-nine week period from 9.4% for the prior year comparable period. This decrease was primarily due to a higher revenue base.

Restaurant Opening.  Restaurant opening expense increased by $0.4 million, or 48.8%, to $1.2 million during the thirty-nine weeks ended September 28, 2021compared to $0.8 million during the comparable thirty-nine week period of 2020. This increase was primarily due to the timing of our restaurant openings during the period. We opened two new restaurants and re-opened one restaurant,


which was temporarily closed due to the COVID-19 pandemic, during the thirty-nine weeks ended September 28, 2021, compared to one restaurant opened during the thirty-nine weeks ended September 29, 2020.

Loss on Disposal and Impairment of Assets.  Loss on disposal and impairment of assets was $3.2 million during the thirty-nine weeks ended September 28, 2021, and $14.5 million during the comparable thirty-nine week period of 2020.For the thirty-nine weeks ended September 28, 2021 these costs were primarily related to the impairment and reduction in the carrying value of the long-lived and operating lease assets related to one of our restaurants, coupled with the disposals of assets in conjunction with initiatives to keep our restaurants up to date and the disposal of certain unproductive restaurant assets. For the comparable thirty-nine week period of 2020, these costs primarily related to the impairment and reduction in the carrying value of the long-lived and operating lease assets related to five of our restaurants, coupled with a charge to reserve for beer spoilage due to the sudden decrease in draft beer sales as a result of the COVID-19 pandemic and routine asset disposals.

Gain on Lease Transactions, net.  Gain on lease transactions, net, of $1.9 million during the thirty-nine weeks ended September 29, 2020, related to a sale-leaseback transaction.

Interest Expense, Net.  Interest expense, net, decreased by $1.0 million to $4.0 million during the thirty-nine weeks ended September 28, 2021 compared to $5.1 million during the comparable thirty-nine week period of 2020. This decrease was primarily due to a lower average debt balance during the thirty-nine weeks ended September 28, 2021, compared to the comparable thirty-nine week period of 2020.

Gain from Legal Settlements.  Gain from legal settlements of $2.3 million during the thirty-nine weeks ended September 29, 2020, related to a settlement with credit card providers pertaining to interchange fees and a settlement related to a maintenance agreement to repair our handheld tablets.

Other Income, Net.  Other income, net, increased by $0.2 million to $0.8 million of income during the thirty-nine weeks ended September 28, 2021, compared to $0.6 million of expense during the comparable thirty-nine week period of 2020. This increase was primarily due to the increase in the cash surrender value of certain life insurance policies under our deferred compensation plan. This increase offsets the related deferred compensation expense impact included inwithin “General and administrative” expenses on our Unaudited Consolidated Statements of Operations.

Income Tax Benefit.  Our effective income tax rate for the thirty-ninethirteen weeks ended September 28, 2021March 29 2022, reflected a 108.9%116.8% tax benefit rate compared to a 41.7%66.3% tax benefit rate for the comparable thirty-ninethirteen week period of 2020.2021. The effective tax rate benefit for the thirty-ninethirteen weeks ended September 28,March 29, 2022 and March 30, 2021, was different than the statutory tax rate primarily due to FICA tax tip credits excess tax deductions realized for stock-based compensation and the employee retention credit. The prior year effective tax rate benefit was different than the statutory rate primarily dueits relationship to FICA tax tip credits and the incremental benefit arising from the ability to carryback the 2020 loss to prior years when the tax rate was at 35%. pre-tax earnings.


LIQUIDITY AND CAPITAL RESOURCESMATERIAL CASH REQUIREMENTS

The following table provides, for the periods indicated, a summary of our key liquidity measurements (dollars in thousands):

 

 

September 28, 2021

 

 

December 29, 2020

 

 

March 29, 2022

 

 

December 28, 2021

 

Cash and cash equivalents

 

$

59,815

 

 

$

51,664

 

 

$

27,201

 

 

$

38,527

 

Net working capital

 

$

(72,909

)

 

$

(82,609

)

 

$

(112,099

)

 

$

(109,619

)

Current ratio

 

0.6:1.0

 

 

0.5:1.0

 

 

0.4:1.0

 

 

0.5:1.0

 

 

As a result of uncertainties in the near-term outlook for our business caused by the COVID-19 pandemic, we continue to focus on cash flow generation. Currently, we have no intention to repurchase shares or pay dividends until it is determined by our Board of Directors that it is in the best interest of the Company and its shareholders and that it is permitted under our Credit Facility.shareholders. We will review and, when appropriate, adjust our overall approach to capital allocation as we know more about the ultimate duration of the COVID-19 pandemic and how the post-pandemic recovery will unfold and affect revenues and costs at our restaurants.cash flow from operating activities.


We are taking what we believe to be reasonably necessary and appropriate measures to control costs and maximize liquidity. Our $70 million (before commission and other fees) private placement of common stock completed in May 2020 and our $30 million sale (before commission and other fees) of common stock through our ATM offering program, completed in January 2021, have strengthened our financial position. As of September 28, 2021, we have approximately $59.8 million of cash on our balance sheet, with an additional $124.4 million of borrowings available under our Credit Facility. See Note 4 of Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this report for further information on our Credit Facility. Based on the current level of operations, we believe that our current cash and cash equivalents will be adequate to meet our capital expenditure and working capital needs for at least the next twelve months. Our future operating performance will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control.

Similar to many restaurant chains, we typically utilize operating lease arrangements (principally ground leases) for the majority of our restaurant locations. We believe our operating lease arrangements provide appropriate leverage for our capital structure in a financially efficient manner. However, we are not limited to the use of lease arrangements as our only method of opening new restaurants and from time to time have purchased the underlying land for new restaurants. We typically lease our restaurant locations for periods of 10 to 20 years under operating lease arrangements. Our rent structures vary from lease to lease, but generally provide for the payment of both minimum and contingent (percentage) rent based on sales, as well as other expenses related to the leases (for example, our pro-rata share of common area maintenance, property tax and insurance expenses). Many of our lease arrangements include the opportunity to secure tenant improvement allowances to partially offset the cost of developing and opening the related restaurants. Generally, landlords recover the cost of such allowances from increased minimum rents. However, thereThere can be no assurance that such allowances will be available to us on each project. From time to time, we may also decide to purchase the underlying land for a new restaurant if that is the only way to secure a highly desirable site. Currently, we own the underlying land for one of our restaurants that will be opened in fiscal 2022 and our Texas brewpub locations. We also own two parcels of land adjacent to two of our restaurants. It is not our current strategy to own a large number of land parcels that underlie our restaurants. Therefore, in many cases we have subsequently entered into sale-leaseback arrangements for land parcels that we previously purchased. We disburse cash for certain site-related work, buildings, leasehold improvements, furnishings, fixtures and equipment to build our leased and owned premises. We own substantially all of the equipment, furniture and trade fixtures in our restaurants and currently plan to do so in the future.

CASH FLOWS

The following tables set forth, for the periods indicated, our cash flows from operating, investing, and financing activities (in thousands):

 

 

For the Thirty-Nine Weeks Ended

 

 

For the Thirteen Weeks Ended

 

 

September 28, 2021

 

 

September 29, 2020

 

 

March 29, 2022

 

 

March 30, 2021

 

Net cash provided by operating activities

 

$

46,242

 

 

$

36,222

 

 

$

609

 

 

$

14,212

 

Net cash used in investing activities

 

 

(25,145

)

 

 

(28,175

)

 

 

(11,530

)

 

 

(6,877

)

Net cash (used in) provided by financing activities

 

 

(12,946

)

 

 

34,483

 

 

 

(405

)

 

 

31,248

 

Net increase in cash and cash equivalents

 

$

8,151

 

 

$

42,530

 

Net (decrease) increase in cash and cash equivalents

 

$

(11,326

)

 

$

38,583

 

 

Operating Cash Flows

Net cash provided by operating activities was $46.2$0.6 million during the thirty-ninethirteen weeks ended September 28, 2021,March 29, 2022, representing a $10.0$13.6 million increasedecrease from the $36.2$14.2 million provided by during the thirty-ninethirteen weeks ended September 29, 2020.March 30, 2021. The increasedecrease over the prior year is primarily due to the payment timing of accounts payable and accrued expenses, offset by the collection of accounts and other receivable and higher net income during the thirty-ninethirteen weeks ended September 28, 2021, offset by higher operating lease obligation payments as a result of prior year rent deferrals, the timing of accounts and other receivables collections and accounts payable payments.March 29, 2022.  

Investing Cash Flows

Net cash used in investing activities was $25.1$11.5 million during the thirty-ninethirteen weeks ended September 28, 2021,March 29, 2022, representing a $3.0$4.7 million decreaseincrease from the $28.2$6.9 million used during the thirty-ninethirteen weeks ended September 29, 2020.March 30, 2021. The decreaseincrease over prior year is primarily due to an increase in the timingnumber of new restaurant openings, coupled with the suspension of nonessential capital expenditures due to the COVID-19 pandemic.


new restaurants under construction and key productivity remodels.

The following table provides, for the periods indicated, the components of capital expenditures (in thousands):


 

 

For the Thirty-Nine Weeks Ended

 

 

For the Thirteen Weeks Ended

 

 

September 28, 2021

 

 

September 29, 2020

 

 

March 29, 2022

 

 

March 30, 2021

 

New restaurants

 

$

11,706

 

 

$

15,825

 

 

$

7,865

 

 

$

4,676

 

Restaurant maintenance and key productivity initiatives

 

 

11,871

 

 

 

14,021

 

 

 

3,870

 

 

 

1,649

 

Restaurant and corporate systems

 

 

1,589

 

 

 

2,139

 

 

 

361

 

 

 

552

 

Total capital expenditures

 

$

25,166

 

 

$

31,985

 

 

$

12,096

 

 

$

6,877

 

As of November 1, 2021,May 2, 2022, we have opened two new restaurants and closed our Pasadena restaurant during fiscal 2021 as well as re-opening our Richmond, Virginia restaurant. Our Richmond restaurant was our only location that remained closed due to the COVID-19 pandemic. 2022. We currently plan to open at leastas many as eight restaurants in fiscal 2022, and we have entered into signed leases, land purchase agreements or letters of intent for all of our 2022 new restaurant locations. Our new restaurant unit economics continue to warrant an appropriate allocation of our available capital, and we will continue to balance new restaurant growth with quality and hospitality.

We currently anticipate our total capital expenditures for fiscal 2022 to be approximately $90 million to $95 million. This estimate includes costs to open up to eight new restaurants and remodel several existing locations. Total capital expenditures exclude anticipated proceeds from tenant improvement allowances and sale-leasebacks. We expect to fund our net capital expenditures with our current cash balance on hand, cash flows from operations and our line of credit. Our future cash requirements will depend on many factors, including the pace of our expansion, conditions in the retail property development market, construction costs, the nature of the specific sites selected for new restaurants, and the nature of the specific leases and associated tenant improvement allowances available, if any, as negotiated with landlords.

 

Financing Cash Flows

Net cash used in financing activities was $12.9$0.4 million during the thirty-ninethirteen weeks ended September 28, 2021,March 29, 2022, representing a $47.4$31.7 million decrease from the $34.5$31.2 million provided during the thirty-ninethirteen weeks ended September 29, 2020.March 30, 2021. This decrease was primarily due to Line of Credit payments and lower proceeds from the issuance of common stock during the thirty-ninethirteen weeks ended September 28,March 30, 2021.

See Note 4 of Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this report for further information on our Credit Facility. At the onset of the pandemic in 2020, we took the necessary steps to maximize our liquidity by drawing down on our Line of Credit and selling $70 million of our common stock. Additionally, in January 2021, we completed the sale of an aggregate of 703,399 shares of common stock for proceeds of $30 million (before commission and other fees) through an ATM offering program. See Note 10 of Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this report for further information on our ATM offering. We believe that we have sufficient liquidity for the next twelve months as a result of the actions we undertook, the improving operating environment and our current capital position.  However, given the events of the COVID-19 pandemic as well as the post pandemic recovery, we will continue to monitor and evaluate all financing alternatives as these unprecedented events evolve.

OFF-BALANCE SHEET ARRANGEMENTS

We do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or variable interest entities (“VIEs”), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow limited purposes. As of September 28, 2021,March 29, 2022, we are not involved in any off-balance sheet arrangements.

IMPACT OF INFLATION

Inflation on food, labor, energy and occupancy costs can significantly affect the profitability of our restaurant operations. Our profitability is dependent, among other things, on our ability to anticipate and react to changes in the cost of key operating resources, including food and other raw materials, labor, energy and other supplies and services. Substantial increases in costs and expenses could impact our operating results to the extent that such increases cannot be passed along to our restaurant customers. While we have taken steps to enter into agreements for some of the commodities used in our restaurant operations, there can be no assurance that future supplies and costs for such commodities will not fluctuate due to weather or other market conditions outside of our control. We are currently unable to contract for certain commodities, such as fluid dairy, fresh meat or seafood, and most fresh produce items, for long periods of time. Consequently, such commodities can be subject to unforeseen supply and cost fluctuations.While we have not had material disruptions in our supply chain, we have experienced some product shortages and higher costs and inflationary pressures, which have affected our average per-guest check.

A general shortage in the availability of qualified restaurant managers and hourly workers in certain geographic areas in which we operate, which shortage has been exacerbated by continuing effects of the COVID-19 pandemic on the labor market, has caused increases in the costs of recruiting and compensating such employees.team members. Many of our restaurant employeesteam members are paid hourly rates subject to the federal, state or local minimum wage requirements. Numerous state and local governments have their own minimum wage and other regulatory requirements for employeesteam members that are generally greater than the federal minimum wage and are subject to annual increases based on changes in their local consumer price indices. Additionally, certain operating and other costs, including health benefits in compliance with the Patient Protection and Affordable Care Act, taxes, insurance, COVID-19 pandemic related benefits, and other outside services continue to increase with the general level of inflation and may also be subject to other cost and supply fluctuations outside of our control.

While we have been able to partially offset inflation and other changes in the costs of key operating resources by gradually increasing prices of our menu items, coupled with more efficient purchasing practices, productivity improvements and greater economies of


scale, there can be no assurance that we will be able to continue to do so in the future. From time to time, competitive conditions will limit our menu pricing flexibility. In addition, macroeconomic conditions that impact consumer discretionary spending for food away from home could make additional menu price increases imprudent. There can be no assurance that all of our future cost increases can


be offset by higher menu prices or that higher menu prices will be accepted by our restaurant customers without any resulting changes in their visit frequencies or purchasing patterns. Many of the leases for our restaurants provide for contingent rent obligations based on a percentage of sales. As a result, rent expense will absorb a proportionate share of any menu price increases in our restaurants. There can be no assurance that we will continue to generate increases in comparable restaurant sales in amounts sufficient to offset inflationary or other cost pressures.

SEASONALITY AND ADVERSE WEATHER

Our business is impacted by weather and other seasonal factors that typically impact other restaurant operations. Holidays (and shifts in the holiday calendar) and severe weather including hurricanes, tornados, thunderstorms, snow and ice storms, prolonged extreme temperatures and similar conditions may impact restaurant sales volumes in some of the markets where we operate. Many of our restaurants are located in or near shopping centers and malls that typically experience seasonal fluctuations in sales. Quarterly results have been and will continue to be significantly impacted by the timing of new restaurant openings and their associated restaurant opening expenses. As a result of these and other factors, our financial results for any given quarter may not be indicative of the results that may be achieved for a full fiscal year.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions affecting the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenues and expenses in the reporting period. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. We continually review the estimates and underlying assumptions to ensure they are appropriate for the circumstances. Accounting assumptions and estimates are inherently uncertain and actual results may differ materially from our estimates.

A summary of our other critical accounting policies is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended December 29, 2020.28, 2021. During the thirty-ninethirteen weeks ended September 28, 2021,March 29, 2022, there were no significant changes in our critical accounting policies.

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discussion of market risks contains “forward-looking” statements. Actual results may differ materially from the following discussion based on general conditions in the financial and commodity markets.

Interest Rate Risk

We have a $215 million Credit Facility, of which $71.8$50.0 million is currently outstanding and carries interest at a floating rate. We utilize the Credit Facility principally for letters of credit that are required to support our self-insurance programs, to fund a portion of our announced share repurchase program, which is currently suspended, and for working capital and construction requirements, as needed. We are exposed to interest rate risk through fluctuations in interest rates on our obligations under the Credit Facility. Based on our current outstanding balance, a hypothetical 1% change in the interest rates under our Credit Facility would have an approximate $0.5$0.4 million annual impact on our net income (loss) income..

Food, Supplies and Commodity Price Risks

We purchase food, supplies and other commodities for use in our operations based upon market prices established with our suppliers. Our business is dependent on frequent and consistent deliveries of these items. We may experience shortages, delays or interruptions due to inclement weather, natural disasters, labor issues or other operational disruptions at our suppliers, distributors or transportation providers, or other conditions beyond our control such as cyber breaches or ransomware attacks.attacks at our suppliers, distributors or transportation providers. Additionally, many of the commodities purchased by us can be subject to volatility due to market supply and demand factors outside of our control, whether contracted for or not. Costs can also fluctuate due to government regulation. As a result of the COVID-19 pandemic, we have experienced and expect to continue to experience distribution disruptions, commodity cost inflation and certain food and supply shortages. To manage this risk in part, we attempt to enter into fixed-price purchase commitments, with terms typically up to one year, for some of our commodity requirements. However, it may not be possible for us to enter into fixed-price contracts for certain commodities or we may choose not to enter into fixed-price contracts for certain commodities. We believe that substantially all of our food and supplies are available from several sources, which helps to diversify our overall commodity cost risk. We also believe that we have some flexibility and ability to increase certain menu prices, or vary certain menu items offered or promoted, in response to food commodity price increases. Some of our commodity purchase arrangements may contain contractual features that limit the price paid by establishing certain price floors or caps. We do not use financial instruments to hedge commodity prices, since our purchase arrangements with suppliers, to the extent that we can enter into such arrangements, help control the ultimate cost that we pay.


Item 4.  CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 promulgated under the Securities Exchange Act of 1934 as amended, as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 28, 2021,March 29, 2022, our disclosure controls and procedures are designed and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has not been any change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our thirdfirst fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



 

PART II.  OTHER INFORMATION

See Note 98 of Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this report for a summary of legal proceedings.

Item 1A.  RISK FACTORS

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 29, 2020.28, 2021.

Item 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Due to the COVID-19 pandemic, ourOur share repurchase program is currently suspended until it is in the best interest of the Company and its shareholders to resume and is permitted by our Credit Facility, which restricts our ability to pay dividends or conduct stock repurchases.resume. As of September 28, 2021,March 29, 2022, we have cumulatively repurchased shares valued at approximately $475.6 million in accordance with our approved share repurchase plan. We did not repurchase shares during the thirty-ninethirteen weeks ended September 28, 2021.March 29, 2022. As of September 28, 2021,March 29, 2022, we have approximately $24.4 million available under our share repurchase plan.

The following table sets forth information with respect to the repurchase of common shares during the thirty-nine weeks ended September 28, 2021:

Period (1)

 

Total

Number

of Shares

Purchased

 

 

Average

Price

Paid Per

Share

 

 

Total

Number of

Shares

Purchased as

Part of the

Publicly

Announced

Plans

 

 

Increase in

Dollars for

Share

Repurchase

Authorization

 

 

Dollar Value

of Shares that

May Yet Be

Purchased

Under the

Plans or

Programs

 

12/30/20 – 01/26/21

 

 

 

 

$

 

 

 

 

 

$

 

 

$

24,438,776

 

01/27/21 – 02/23/21

 

 

 

 

$

 

 

 

 

 

$

 

 

$

24,438,776

 

02/24/21 – 03/30/21

 

 

 

 

$

 

 

 

 

 

$

 

 

$

24,438,776

 

03/31/21 – 04/27/21

 

 

 

 

$

 

 

 

 

 

$

 

 

$

24,438,776

 

04/28/21 – 05/25/21

 

 

 

 

$

 

 

 

 

 

$

 

 

$

24,438,776

 

05/26/21 – 06/29/21

 

 

 

 

$

 

 

 

 

 

$

 

 

$

24,438,776

 

06/30/21 – 07/27/21

 

 

 

 

$

 

 

 

 

 

$

 

 

$

24,438,776

 

07/28/21 – 08/24/21

 

 

 

 

$

 

 

 

 

 

$

 

 

$

24,438,776

 

08/25/21 – 09/28/21

 

 

 

 

$

 

 

 

 

 

$

 

 

$

24,438,776

 

Total

 

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Period information is presented in accordance with our fiscal months during fiscal 2021.


Item 6.  EXHIBITS

 

Exhibit
Number

 

Description

3.1

 

Amended and Restated Articles of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of the Annual Report on Form 10-K for fiscal 2017.

 

 

3.2

 

Amended and Restated Bylaws of the Company, incorporated by reference to Exhibit 3.1 of the Form 8-K filed on August 14, 2020.

 

 

 

3.3

 

Certificate of Amendment of Articles of Incorporation, incorporated by reference to Exhibit 3.3 of the Annual Report on Form 10-K for fiscal 2004.

 

 

3.4

 

Certificate of Amendment of Articles of Incorporation, incorporated by reference to Exhibit 3.4 of the Annual Report on Form 10-K for fiscal 2010.

 

 

4.1

 

Specimen Common Stock Certificate of the Company, incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form SB‑2A filed with the Securities and Exchange Commission on August 22, 1996 (File No. 3335182‑LA).

10.2

Employment Agreement, dated June 30, 2021, between the Company and Gregory S. Levin (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on July 6, 2021.

 

 

 

31

 

Section 302 Certification of Chief Executive Officer and Chief Financial Officer.

 

 

 

32

 

Section 906 Certification of Chief Executive Officer and Chief Financial Officer.

 

 

 

101.INS

 

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

 

Inline XBRL Taxonomy Extension Schema

101.CAL

 

Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF

 

Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB

 

Inline XBRL Taxonomy Extension Labels Linkbase

101.PRE

 

Inline XBRL Taxonomy Extension Presentation Linkbase

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 


 

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

BJ’S RESTAURANTS, INC.

 

 

 

(Registrant)

 

 

 

November 1, 2021May 2, 2022

 

By:

/s/ GREGORY S. LEVIN

 

 

 

 

Gregory S. Levin

 

 

 

 

Chief Executive Officer and President

 

 

 

 

(Principal Executive Officer)

 

 

 

 

 

By:

/s/ THOMAS A. HOUDEK

 

 

 

 

Thomas A. Houdek

 

 

 

 

Senior Vice President and Chief Financial Officer

 

 

 

 

(Principal Financial Officer)

 

 

 

 

 

By:

/s/ JACOB J. GUILD

 

 

 

 

Jacob J. Guild

 

 

 

 

Senior Vice President and Chief Accounting Officer

 

 

 

 

(Principal Accounting Officer)

 

 

2521