The trend in the restaurant industry is toward fast, casual specialty diners with great food and a great atmosphere. Restaurants that serve beer, pizza, hamburgers and wings represent the flavors of America that diners keep coming back for. These restaurants have developed their own unique concept and have tremendous growth potential.
A restaurant and a brewhouse together
BJ’s Restaurants, Inc. (NASDAQ:BJRI) is a chain of casual-dining restaurants that offers quality food and handcrafted beer. The menu contains approximately 100 items that include its famous deep-dish pizza and its own line of micro-brews. The company owns and operates 132 locations in 15 states and does not franchise.
In the first quarter of this year, revenue grew 13% to $188.6 million. Comparable- restaurant sales were up 0.4% for the quarter. Total revenue for last year was almost $730 million, which is almost double the company’s revenue in 2008 of $374 million. Profits have tripled in that time from $10 million in 2008 to $31 million last year. As the company looks to expand, pre-opening costs for a new location average $500,000. With over $40 million in cash and no debt, the company is certainly in a great position to finance an expansion.
Going forward, the growth for BJ’s Restaurants, Inc. (NASDAQ:BJRI) is in increasing its exposure via advertising and continued store expansion. The company expects to open 17 new locations this year. It seeks to open new restaurants via a clustering strategy where it can leverage its brand and increase customer awareness. This strategy makes sense as the company will get more bang for the buck with its advertising dollars. BJ’s Restaurants, Inc. (NASDAQ:BJRI) ultimate goal is to grow to 425 restaurants, which would triple the number of locations. The growth is in expansion and that will drive the top and bottom lines.
Everything burgers
In the first quarter of this year, same-store sales increased for the 11th consecutive quarter. Comparable sales grew 2.2% for the quarter. Revenue for the full year came in at $984 million and the company ended the year with approximately $17.4 million in cash and $99.5 million in debt.
Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) forecasts same-store sales to increase 2.5% to 3% for the rest of 2013. The company plans on opening 20 new stores this year and remodeling another 20.
Where I see great growth potential for the company is in its recently launched smaller footprint. The new restaurants will be about 4,000 square feet and will give the company greater flexibility in site selection and lower construction costs. This new layout will get Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) into more markets and with its popular menu, help drive results to the top and bottom lines.
