管理層發言
Good afternoon, and welcome to the BJ's Restaurants First Quarter 2025 Earnings Release Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Rana Schirmer, Director of SEC Reporting. Please go ahead.
Thank you, operator. Good afternoon, everyone, and welcome to our fiscal 2025 first quarter investor conference call and webcast. After the market closed today, we released our financial results for our fiscal 2025 first quarter. You can view the full text of our earnings release on our website at www.bjsrestaurants.com. I will begin by reminding you that our comments on the conference call today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements are not guarantees of future performance and that undue reliance should not be placed on such statements. These statements are based on management's current business and market expectations, and our actual results could differ materially from those projections in the forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events, or otherwise, unless required to do so by the securities laws.
Investors are referred to the full discussion of risks and uncertainties associated with forward-looking statements contained in the company's filings with the Securities and Exchange Commission. We will start today's call with prepared remarks from Brad Richmond, our Interim Chief Executive Officer; followed by Lyle Tick, our President and Chief Concept Officer; and Tom Houdek, our Chief Financial Officer. After our prepared remarks, we will take your questions. And with that, I will turn the call over to Brad Richmond. Brad?
Thank you, Rana, and good afternoon, everyone. We appreciate you joining us today to discuss our performance for the fiscal first quarter of 2025 and updated annual outlook for 2025. Our first quarter comp sales performance was strong, driven by significant traffic growth, which meaningfully outpaced the industry. While sales were a bit behind our internal expectation, the shortfall was isolated to February, where monthly comps were negative due to adverse weather and the delay in federal income tax refund processing. But January and March comp growth was strong at approximately plus 3%, in line with our expectations. Importantly, our operating initiatives delivered improved guest satisfaction scores, which bodes well for future sales growth. And we expanded margins beyond the normal sales growth leveraging expectations. As a result of the stronger margin performance, we've raised our earnings expectations and increased our planned share buyback range.
Tom will take you through those details in a minute. Even amidst the potential macroeconomic headwinds in 2025, we believe we are well-positioned to continue to be a share taker and expand margins as we look across the remainder of the year. Underlying this are well-developed near-term sales growth drivers, initiatives around operational excellence and executing at our best, while also supporting investments in our longer-term strategic initiatives to create shareholder value beyond 2025. Before I turn it over to Lyle to walk you through a few of those key highlights, I want to thank our restaurant operators who make this happen every day, at every restaurant, for every guest. Our support team centers who have raised their level of support to enable our operators to perform better and the rest of our leadership team who have been very agile and adaptive on developing and implementing near-term actions and have put in the extra effort to develop our broader strategic initiatives as we move this business ahead with more clarity and certainty.
And a big thanks to Lyle for his guidance through the early phases of this journey. His insight and leadership have been instrumental in our progress, and we believe BJ's is well-positioned for the long-term. With that, let me turn it over to Lyle to talk more broadly about our brand refresh and growth initiatives.
Thank you, Brad. Good afternoon, everyone, and thank you for joining us today. I'm happy to report another quarter of positive sales, driven by 2.7% traffic growth, which beat the black box industry average by approximately 320 basis points as well as margin expansion, resulting in 16% restaurant-level operating margins and 10.2% adjusted EBITDA margins, representing improvements of 100 basis points and 150 basis points, respectively, year-over-year. I'm also pleased with the progress we're making across both our short- and long-term strategic initiatives. While we're still in the early innings of this journey, we're increasingly confident in our actions and continue to believe the work we're putting in place now we can build upon going forward. Before I look ahead, I will take a moment to briefly double-click on Q1. We continue to put the guest and team member experience at the center of everything we do, and I believe that is reflected in our sales performance, particularly our continued traffic outperformance as well as our margin expansion.
On the sales side, we continue to leverage one of our core brand equities, the Pizookie. The Pizookie Meal Deal continues to resonate with guests, providing a great value and an accessible everyday splurge opportunity that consumers need now more than ever. I also want to give a shout out to our marketing and operations teams for their agility in recognizing and building on the emerging social media interest in our Pizookie Platter, which combines four regular-sized Pizookies into one huge treat. This off-menu jumbo Pizookie started to gain traction in January on TikTok, and the teams moved quickly on both the marketing and operations side to leverage the momentum. So far, the Platter has generated over 57 million in organic social impressions, and we've sold over 24,000 Pizookie Platters, a 17 times increase from the previous run rate. This compelling value, combined with increased social relevancy was reflected in traffic growth not only during the week when the Pizookie Meal Deal was offered, but also throughout the weekend.
On the margin side, we continue to focus on helping our team members be more effective and efficient to enable better execution and guest satisfaction. Outside our typical sales leverage gains, we continue to make practical improvements to our POS and KDS systems to help make it easier for our team members to enter menu items, improving accuracy and speed for the guests and helping us reduce our comp, food, and beverages, which has seen a 13% reduction year-over-year, a win-win for the team member and guest experience. I also want to highlight our proactive facilities program, leveraging the equipment tagging system we implemented in the second half of last year and our Preventative Maintenance Programs that mitigate emergency repairs. These efforts ensure our team members have the tools to deliver. These programs, combined with other Facilities Initiatives, have resulted in an overall 4% reduction in R&M spend for the quarter, while enhancing team execution.
All of this work culminates in our Guest Satisfaction Metrics, including Food, Value, and Recommend Scores all hitting multi-year highs, making us increasingly confident that the work we are doing has a runway to build upon. As we head into our Celebration Season during the second quarter, this momentum provides a great opportunity to further drive sales and grow profit. I want to thank our teams for their dedication and agility in navigating a choppy sales quarter that started strong in January, followed by a challenging February driven by weather and some delayed tax returns processing and then March that bounced back with strong top-line trends that are continuing to hold. This kind of choppiness requires a lot of agility by our operators to forecast staff and manage the business efficiently and effectively, and they did just that in Q1. With respect to the consumer, clearly, there's a lot of uncertainty out there, which no one loves.
Having said that we're not seeing any marked changes in our Guest Behavior across Income Cohorts, Traffic, or Check Management, while we have seen a nominal increase in Pizookie Meal Deal incidents, the increase in Traffic, combined with the great job our team is doing in leveraging Incremental Sales, has delivered strong results overall. I feel confident that between the Pizookie Meal Deal, Operational Improvements, and our Product Roadmap, we're in a strong position to compete and win, especially at a time when consumers are focused on making sure their dining experiences are worth it. On the Tariff front, Tom will provide further detail, but approximately 85% of our food is sourced from the U.S., Canada, or Mexico under USMCA, and is not subject to the proposed tariffs. We do not see much impact in Q2, but have contemplated some modest incremental inflation in the second half. At this point, we feel comfortable with what we have baked into our guidance based on what we know today and are not planning any extraordinary changes to our pricing or promotional optimization initiatives.
We are, of course, keeping a close eye on the evolution of the policy and will adjust accordingly. Looking ahead, we recently completed our brand positioning work. And while it's only been 10 weeks since we reported Q4, our cross-functional teams are diligently working to move our plans from strategy to action, and I continue to be pleased with the progress. We'll begin to see the impact of the work across our menu, operations, marketing in the second half of the year. I will now provide a brief update on progress across our four strategic priorities. Starting with the team member experience, we continue to focus on simplification and training. As I mentioned before, we are working from a relative position of strength here. Our turnover continues to be below pre-pandemic levels, significantly below industry averages, and the trend is improving. Plus, we see a high correlation between manager tenure and restaurant performance.
I just returned from some visits last week in California and Colorado and the engagement and energy in the field is great. They feel the momentum in the business and are excited about the changes on the horizon, many of which have come from them. And I think this energy is reflected in the improvements we're seeing across guest metrics that I mentioned earlier. Simplification is going to be an ongoing journey for us, led by operations and supported by our cross-functional support center teams. In addition to continuing the work we're doing to optimize our POS ordering screens, we stood up a working group led by operations with the participation of our directors of operations, general managers and team members. This task force has identified 50-plus potential process and procedure improvements that come directly from the restaurants, and we are working through prioritizing and sequencing impact and effort.
On the training front, we continue to refine our new team member training, and that feedback continues to be very positive. This is particularly true with respect to the first 90-day retention as new team members get buddied up from the beginning and more quickly feel part of our community. Our next big training initiative is rolling out new manager training and a refreshed certified training manager program. Our aim is to roll this out at our GM conference in Q4. With respect to our menu and handcrafted food and beverage offering, on our last call, I mentioned that the brand work we have done has reinforced that we have some very powerful core pillars of our menu with strong brand equity and association as well as some emerging opportunities. Our signature pizza, our world-famous Pizookie and our award-winning craft beverages are clear areas of strong association and equity. Our shareable items, steaks, and slow roast are strong traffic drivers and emerging areas of strength.
In these platforms where we choose to compete to win, we want to ensure we have the best offering and we can deliver it consistently great. To enable this, we've also identified an opportunity to optimize menu offerings around these core pillars. We're taking a structured category management approach to this work with the first category being a renovation of our signature pizza platform. Pizza is a core equity and strong brand association, but has had eroding guest satisfaction and incidents in recent years. We've dissected the feedback, and our culinary team has renovated the product from the ground up, starting with the crust to ensure it's crispy and light every time through the new sauce, the cheese, pepperoni, and so on. Our operations and central location testing were very strong, and we recently moved into an expanded market test with encouraging initial results. Along the journey, we're also taking advantage of our natural menu cycles to implement low-hanging fruit opportunities to drive guest engagement and our simplification opportunities.
On April 17th, we introduced two new wing sauces, Honey Barbecue and Honey Buffalo, expanding turf coverage with the sauces, the main driver of choice in this category without adding any operational complexity. Wings remain our number one ordered shareable appetizer. We also launched our LTO sneakers Pizookie, which is driving a lot of brand buzz and trial. Looking ahead to our June menu, we've identified 9 SKU reductions and 5 prep simplifications that we're moving forward as we continue to plan for further category optimizations, which require more thorough testing like pizza. Our third priority is delivering WOW Hospitality. Hospitality has always been at the heart of BJ's and a big reason why our loyal guests keep coming back. We continue to be focused on putting our managers and team members in the best position to deliver WOW hospitality to our guests, both on and off-premise. We continue to evolve and calibrate our AI forecasting model and labor scheduling.
It's all about having our team members in the right place at the right time to WOW our guests. We're seeing opportunities to be more efficient and effective, particularly around the shoulder periods while also identifying labor mix and peak hour opportunities. In an expanded pilot in certain restaurants in Texas and Northern California, we're leveraging AI to drive not just the forecasting but also our labor scheduling, and we're seeing encouraging improvements in both labor hours and guest sentiment versus control. We will continue to calibrate and scale throughout 2025, but we believe we have a definite opportunity going forward. Lastly, we have our fourth priority, keeping our atmosphere fresh. BJ's atmosphere has always been a differentiator for the brand. Investing in keeping our atmosphere fresh through remodels will continue to be a priority as we move through 2025 and we continue to rebuild our new restaurant pipeline.
On remodels, we’ve completed eight so far in 2025 with approximately 20 more planned for the remainder of the year. Our remodeled restaurants continue to perform as expected with improved performance versus control. On new restaurants, we opened a new restaurant in Queen Creek, Arizona, just outside of Phoenix. It was our second highest sales opening week ever after Tracy, California in 2024 and reinforces our hypothesis of focusing our near-term development in geographies where we have an existing footprint, infrastructure, and awareness. Our capital expenditures in 2025 related to new restaurant openings continue to depend on how quickly we can develop a more robust and targeted pipeline that aligns with our refined criteria for new locations. We’re excited about the future unit growth for BJ’s and we’ll keep you updated as we move through the year. I’m proud of our teams and the progress to date.
The energy engagement and alignment behind our strategic initiatives has allowed us to create early momentum and lay strong foundations for an exciting and ambitious agenda still on the horizon. Thank you. And now, I’m going to turn it over to Tom to provide more details on first quarter results and an updated outlook for 2025.
Thanks, Lyle, and good afternoon, everyone. In the first quarter, we generated sales of $348 million which was 3.2% higher than last year. On a comparable restaurant basis, Q1 sales increased by 1.7%, driven primarily by 2.7% traffic growth. We had a solid start to the quarter, with comp sales up approximately 3% in January. Winter weather impacted our February results, with comp sales down approximately 1%. Then we ended the quarter much like it started, with March comp sales up approximately 3%. As Lyle mentioned, we have not seen any material change in guest behavior in recent weeks. April comp sales are up in the mid-2% area and up more than 3% when excluding the Easter week with the mismatch holiday lap. Our restaurant-level cash flow margin was 16% in Q1, which was a 100 basis point improvement from a year ago. We effectively leveraged our sales and improved our operational efficiencies, delivering improving margins while also investing in marketing.
Our restaurant-level operating profit increased 10% to $55.6 million, which marks our most profitable Q1 ever. We are pleased with our progress improving margins to date, and as Lyle outlined, we have a range of strategies and initiatives to continue to grow margins both on a dollar and percentage basis going forward. For more detail on restaurant expenses, our cost of sales was 25% in the quarter, which was 20 basis points favorable compared to a year ago. Food cost inflation was approximately 3% year-over-year, but deflationary from Q4 levels, driven by lower sequential costs for bone-in wings, steak, and produce. Labor and benefits expenses were 36.1% of sales in the quarter, which was 100 basis points favorable to last year. Our restaurant teams hit their stride leveraging higher sales and boosting efficiencies, while improving our guest sentiment scores as we drove solid traffic in the quarter.
Remember that winter weather had a meaningful impact on sales and operations during the quarter, so we delivered a solid labor performance despite operational headwinds during periods of less predictable traffic. Occupancy and operating expenses were 23% of sales in the quarter, which was 20 basis points unfavorable compared to last year. The difference versus last year was due to investing 20 basis points in additional marketing to drive incremental traffic to our restaurants. G&A was $21.8 million in the first quarter, which was $1.2 million lower than a year ago and in line with our expectations. As a reminder, our Q1 2024 G&A was elevated due to legal expenses related to our shareholder cooperation agreements, higher deferred compensation expense and severance, totaling approximately $1.9 million. As a reminder, the higher deferred compensation expense last year of approximately $800,000 had a matching amount in the other income line where the offsetting market gain is recognized.
Adjusted EBITDA was $35.4 million and 10.2% of sales in the first quarter. Q1 EBITDA was $6 million higher than last year, while we also made longer-term investments in our brand positioning, which Lyle highlighted. We reported net income of $13.5 million and diluted net income per share of $0.58 on a GAAP basis for the quarter. Diluted net income per share increased by 80% compared to $0.32 per share last year. During the quarter, we repurchased and retired approximately 404,000 shares of common stock at a cost of $14.1 million. At the end of Q1, we had approximately $72 million available under our share repurchase program. And in April, we repurchased an additional 324,000 shares at a cost of $10.5 million. Turning to the balance sheet, we ended the first quarter with net debt of $66.5 million, comprised of a debt balance of $85.5 million with cash and equivalents of $19 million. We successfully upgraded to a new ERP system at the end of Q1.
To prepare for the migration, we released all invoices for payment, which created a temporary working capital need and was the key driver of the step-up in our revolver balance. Now four weeks after we closed Q1, we have paid down our revolver by $13 million and expect to continue to reduce the balance as our working capital position further normalizes. Next, we provided an updated 2025 financial outlook today in our earnings release. Given our performance to date, we are raising our profit guidance. We now expect restaurant-level operating profit of $210 million to $219 million and adjusted EBITDA of $131 million to $140 million. We are also raising our expected share repurchase range by $5 million to $45 million to $55 million, given the higher expected operating profit. We continue to anticipate full-year comparable restaurant sales in the 2% to 3% range and capital expenditures of $65 million to $75 million.
Our updated guidance takes into account our current inflation expectations, including the potential impact from tariffs as understood today. For context, approximately 85% of our food is sourced either domestically or from Mexico and Canada under the USMCA and exempt from any new tariffs. For the remaining 15% of our food basket, we expect only modest impact in Q2, but potential for extra food inflation in the 1% area in the second half, including certain beef and seafood items. Tariffs could also impact other costs, including small wares, to-go packaging and equipment used for repair and maintenance as well as building new restaurants. All in all, the run rate impact could be about 30 basis point headwind to restaurant level margins starting later this year, assuming no change from current tariff policy or before any mitigating actions. We have also preemptively purchased critical equipment to mitigate costs and ensure availability of these key items.
We expect the tariff situation to remain fluid, and we will continue to explore how to best position our business in a range of environments. In closing, we are proud of our first quarter results and the strong foundation we are building for sustainable, profitable growth. We have a clear path to sales and profit growth ahead and our long-term strategy and the strong consumer appeal for the BJ's brand position us well to continue building on our successes. With strong and improving cash flow, expanding margins and a healthy balance sheet, we are well positioned to execute multiple initiatives aimed at enhancing shareholder value. Thank you for your time today, and we'll now open the call to your questions.
分析師問答
We will now begin the question-and-answer session. The first question comes from Alex Slagle with Jefferies. Please go ahead.
Thank you. Congratulations on the quarter. The margin performance was impressive, especially in terms of the cost of goods and labor. I was wondering if you could help us understand the extent of the impact from the recent simplification and process changes you've implemented. Specifically, I’d like to get a sense of where restaurant-level margins might have been if these actions had been in place for the entire quarter, considering they were likely rolled out during the quarter. Additionally, do you see any opportunities to reinvest some of these savings into improving the guest experience moving forward?
Alex, thank you for the question. With the 100 basis point margin improvement year-over-year, about half of that was due to leveraging sales from the additional traffic we generated. We also observed strong performance on the labor side. We ended 2024 on a high note, with a solid finish in Q4 and those benefits continuing into Q1. While the performance is building to some extent, it remained fairly consistent throughout the quarter. As we updated our guidance, we expect these levels to continue. Lyle mentioned that our use of AI for forecasting and scheduling labor is currently limited to a small number of restaurants, which may add some incremental benefits. In terms of reinvestment, we're adopting a balanced approach to gaining efficiencies while also implementing modest pricing increases. This allows us to effectively attract traffic with a great value message while achieving solid profits. Therefore, I don’t anticipate any new investments in this area.
I would like to add that what we’re aiming to do is initiate projects that we can continuously build on, making them integral to our operations and enhancing our efficiency and effectiveness moving forward. Simplification is a key priority; we have ongoing initiatives in that area. I previously mentioned POS simplification, and we have another update coming soon that will focus on modifiers for our appetizers and handhelds. For example, we anticipate that by simplifying how we handle modifiers for these items, we can save our team members around 3 million clicks each year. This improvement will lead to greater accuracy, an enhanced guest experience, and improved management of our complimentary food and beverage. I spoke with our COO, Chris, recently, and he expressed excitement about the results we’re seeing, emphasizing that we are not forcing outcomes but rather building on strategic initiatives. We are maintaining our standards, benefiting from the increased tenure of our managers, and maintaining clear focus. This approach is allowing us to refine our operations as we continue to progress, which I find very encouraging.
Good color. Thank you. And just a follow-up question on the check and the mix component. Maybe you could just kind of talk about the dynamics behind that. The traffic growth was great. I guess the mix was a little bit lighter. How do you see that progressing through the year and any drivers?
Sure. Yes. As you mentioned, we're currently experiencing mid-2% pricing. The Pizookie meal deal we launched has been driving a lot of traffic, contributing to that. Additionally, we are comparing this quarter to a strong launch last year with new menu items, which also impacted our results. The timing of spring breaks and Easter affected our mix a bit in Q1. Looking ahead, I would anticipate that the check component will be closer to flat. It was a slight drag on comps in the first quarter, but we've worked through various issues. We plan to continue promoting the Pizookie meal deal and are exploring ways to enhance our check. There will be more promotions aimed at increasing the check coming up. Overall, I expect our check component to remain relatively flat moving forward.
Helpful. Thank you.
Hi, thank you. Your same-store sales trends are just holding up really well. You talked about the plus 3% in March and then holding up into April. And obviously, you guys are taking share, which is a big positive. But what's your hypothesis on why the casual dining customer seems to be holding up so much better than the quick service customer and the quick casual customer, which they're seeing much softer trends in that segment? How are you guys thinking about what's going on?
Hi, this is Lyle. I can share more about the BJ's customer than the broader trends. Firstly, the BJ's customer generally has a higher income than average, which brings some resilience. We're also seeing improvements in our execution, along with a strong value proposition and appealing new products like Snickers and our wing sauces. This is evident in the consumer scores I mentioned earlier. In uncertain times, consumers are focusing on ensuring their dining experience is worthwhile. Our atmosphere, service, and food are compelling in this respect. Additionally, our recent brand work indicates that BJ's excels in everyday celebration and treat occasions, which we refer to as social splurge occasions. These are the regular outings that people plan for and appreciate, and I believe they are more resilient compared to other more transactional occasions that can be easily skipped. This is my perspective, particularly from the viewpoint of our consumers and our brand.
This Brad. Just to add to that is you got to get beyond the conventional thinking, if you will, particularly in the casual dining space, it's a very fragmented industry. It wasn't too long ago that the big chains were more than half the establishments out there, meaning there's a good number of small independents or regional operators out there. Some do well, but a lot of them aren't doing particularly well. And Lyle touched on it, the social splurge occasions, and I think more of occasions that we're after than the guests that we're after. And these occasions are very valued by the consumer right now. They're retaining those fairly well. And so the way we're operating we continue to think we will be taking share from some of the weaker players and the relevancy of our brand to what the consumer is looking for right now. So I think that gives us optimism as we look forward. And we're early in that journey. We've had a lot of smart people here with us working on this and understanding it and crafting what it means. But we think we have a plan that is pretty durable for the foreseeable future.
Thanks. I appreciate both those perspectives. And just my follow-up is the margin performance. As Alex talked about on the previous question, very impressive. And I want to focus on the labor line, the operating leverage there that you got 100 basis points. But what stood out to me was also the per-store labor costs when you break it down, we were actually down year-over-year. What's the biggest driver of that dynamic? And how sustainable are those impacts?
Hi, Brian, yes, I would say it's very sustainable. This is a combined effort. If we examine our labor practices, we're improving scheduling. We analyzed the restaurants where we had the best schedules and matched them with others that had room for improvement. We also identified areas where we were spending more over time in certain restaurants and found ways to reduce that. Our focus is on maximizing traffic without compromising the guest experience, optimizing schedules as much as we can. Lyle mentioned that the tenure of our team members is increasing, and our retention rates are significantly better than the industry average. Everything is coming together well. On the financial side, our Net Promoter Scores are crucial, and they are indicating positive trends. Our overall recommend score is at multi-year highs, along with our value and food scores. If we were pushing too hard and making short-term decisions at the expense of the long-term, it would reflect poorly in our NPS scores, but they’re improving instead.
This gives us confidence in how sustainable our practices are. In fact, we are discovering more opportunities to enhance efficiencies. We plan to continue leveraging the sales we are generating, and we are witnessing that. Hi, Brian, Brad, I want to emphasize this point because it can be overlooked. When we analyze January's performance followed by the significant decline in February, we recognize that we are not immune to weather and other factors. Like many others, we experienced a drop, compounded by delays in processing refunds. However, as soon as the weather improved and refunds were processed, we rebounded to March levels. I really appreciate our operators for their proactive and agile approach in managing this downturn without significant losses. This reflects our operational philosophies and the collaboration within the team. We expect there will be challenges along the way, but we believe we are now in a much stronger position to handle them compared to the past.
Great. Thanks, Brad. Thanks, Tom, Appreciate it.
The next question is from Jeffrey Bernstein with Barclays. Please go ahead.
Great. Thank you very much. First question is just on the macro and the value implication. I'm just wondering what you see in your data to showcase more challenging macro at all. I mean, it sounds like you're not really seeing any change in consumer behavior, which is what led me to think maybe it's in value. I don't know if you can share how you define value or what the mix of sales is. It sounds like the Pizookie meal deal is one, but I think you mentioned your mix is probably down 3.5 points if I back out just the traffic and price. So just trying to get a sense for how you would even tell looking at your own data that you're seeing a more challenged macro? And then I had one follow-up.
Yes, of course. This is Lyle. I'll begin, and then Tom will add some details. Referring to our consumer, we are noticing a slight increase in the popularity of the Pizookie meal deal, but this is being outweighed by the overall increase in our traffic. Notably, we're seeing similar traffic increases on both weekdays and weekends. All demographic groups are experiencing these traffic gains, and there is a slightly more pronounced increase among some lower-income groups who are taking advantage of the Pizookie meal deal. Overall, the combination of traffic and our operational performance has yielded very positive results. There haven't been any significant changes in these areas that might indicate fundamental shifts in traffic patterns, whether it be by day of the week, time of day, check management, or income demographics.
Yes, regarding the mix, as Lyle mentioned, there were no significant shifts overall. When considering the longer-term perspective, we've noticed a decline in some alcohol incidents that began last year and is continuing slightly this year, but it's mostly minimal. Specifically for this quarter, we were comparing to some higher checks, so we expected a somewhat larger negative mix in the first quarter. On the positive side, the Pizookie meal deal remains strong. It started well in the fourth quarter and has seen a slight increase in mix, but nothing too dramatic. There are a few factors at play that are positively impacting traffic and sales, but they may manifest differently in terms of check averages. For example, guests coming in for lunch might be ordering less, leading to lower checks. Addressing your broader question about the macro environment and value, we were proactive in launching this unique promotion that stands out for BJ's. It offers great value and is positioned during our typically busy times from Monday to Friday. It’s encouraging to see our value scores and the resulting traffic, which has led to good flow-through. I'm excited about what this promotion is achieving. Looking ahead, we are exploring ways to leverage this promotion to increase check amounts further. More details to come, but we are seeing positive outcomes related to this initiative.
Got it. And then my follow-up is just on the unit growth opportunity, if I flash back five or 10 years, this call was dominated by how quickly you can open up new stores and how you were pretty much only halfway to where you thought you could get to in terms of total number of units. And I feel like we're potentially embarking on that conversation once again over the next year. I'm just wondering your confidence, it sounds like you opened up one unit this quarter and perhaps that's it for this year. But should we expect an acceleration of openings next year? Is that integral to the thesis? And if you could snap your fingers, like what do you think the right rate is? Like how does your team equip to handle something like that? Could we expect a big snapback in unit growth? Or should we just assume it's more about fixing the existing and you're going to hold off for the next couple of years in terms of any major uptick? Thank you.
Hey Jeff, this is Brad. We see a clear opportunity to expand our unit base and there is plenty of potential for growth. We feel positive about this, although we've been slow to add new locations. After some reassessments, we have demonstrated the box economics and made significant progress. Unfortunately, the lead time for opening new locations has increased to 20 to 22 months from the initial desire to establish them, unless it's a conversion. However, we remain optimistic about our current position and future prospects, and we are actively searching for sites now. Realistically, we expect to see the benefits of this not until the second half of 2026, and we will keep you updated as more deals are finalized. We believe this growth will help create shareholder value, but we also see significant opportunities in the interim to enhance the economics of our existing locations and increase average unit volumes. Our facilities are substantial, and there is still capacity that we can take advantage of.
Yeah. This is Lyle. Just building upon that, I think probably bigger than the pad shift would be just kind of as we think about sequencing out the priority of geographies over time. And so as Brad said, we're focusing in on places where we have existing infrastructure. We have some existing brand awareness, and we have operations in place. And when you think about it, what we've seen, Tracy, as an example, last year as well as Cypress in Houston last year, as well as what just happened in Phoenix is we don't really have any markets, including California that are fully saturated as yet with our existing footprint. And so for us, as we think about filling in, it helps us on multiunit management efficiency. It helps us on operational excellence. And it actually helps us with something that has come out loud and clear outside of California, which is we have a real brand awareness and consideration opportunity in our non-California markets. And we are not going to be carpet-bombing marketing everywhere. We're using that very strategically. So, as we build out some of these markets, that also has the effect of helping us drive brand awareness and consideration in some of our existing markets where we have headroom.
Hey, thanks for taking my questions. I wanted to lead off kind of following up on Sharon's question and drilling down on an infill strategy going forward for new units. If you think about overall white space for the brand, you've always sized it kind of 400 plus, and that number has been there for a long time. But if we look at the pivot to an infill-driven strategy and trying to get to scale in some of these non-Californian markets, have you sized what the infill unit opportunity is just so we can get our mind around, okay, with an infill strategy, we have x-years' worth of growth that we can exploit higher return, higher awareness type of openings?
Tom, I'll begin with this one. Our near-term strategy over the next couple of years will concentrate on infill. However, looking further ahead, market expansion will also be a part of our strategy. We are not dismissing the expansion aspect; we just recognize that currently, as we ramp up and develop our pipeline, our focus will be more on infill. But as we progress, we will pursue both strategies. This is an important point to consider because we analyze our markets and our restaurant locations, and there is ample opportunity in every market where we operate. There is plenty of potential for infill, which we appreciate for various reasons. Additionally, when we consider the portability of our brand, as Lyle noted, we've had excellent openings from California to Phoenix to Texas. This brand has a wide appeal, and we have fantastic restaurants that can generate significant sales and profits. So, we are not restricting ourselves to one approach over the other. I want to emphasize that our current focus is geared towards infill.
Sure, Todd, let me elaborate on that. We're planning to enter those markets, but each expansion requires a significant investment, so we want to approach it thoughtfully, choosing the right timing and locations. I've noticed throughout my career that initial projections can increase if the brand is performing well and the business model is effective. As we enhance our operations, we can identify more trade areas where we can profitably establish our presence and increase shareholder value. At this moment, we don’t need to revise our initial projections since we have other priorities to focus on. However, there's potential for growth, and we still need to evaluate that. There’s plenty of opportunity available now, and our strategy will likely involve expanding around our existing locations rather than rushing into new areas. We don't see a strong first-mover advantage in these new markets, so it makes sense to leverage our current strengths.
This is Tom. It's a good question. Looking at, let me answer it two ways. Looking at regions, California is slightly above. I mean, this is really Q1 and through April. California was slightly above our average, but nothing outsized. So it really isn’t driven by California having an easy lap or anything like that. As we go into Q2 here, it really does, when we look at one and two-year laps, we’ll even look back to 2019 still just to triangulate internally. It’s the first half of the year looks pretty normal. We had the Easter lap that pushed a little from Q1 and Q2, but other than that, it’s a pretty clean lap. So, yeah, I wouldn’t worry about it being a tougher lap as we go through this quarter or anything like that.
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