Shares of BJ's Restaurants, Inc. (BJRI Quick QuoteBJRI - Free Report) have lost 9.1% in the past three months compared with the industry’s decline of 2.8%. The recent decline can be primarily attributed to high costs and uncertain macroeconomic conditions.

Inflation has affected the company's operations, new restaurant development and the corresponding return on invested capital. Although the company has initiated efforts to mitigate inflation and fluctuations in key operational costs by gradually raising menu prices and implementing cost-saving measures, improved purchasing practices, productivity enhancements and leveraging economies of scale, uncertainty persists regarding sustainment.

Going forward, the company remains cautious of the uncertain macroeconomic conditions. Our model predicts that total costs and expenses in 2025 will rise 5.6% year over year to $1.4 billion.

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Tailwinds Likely to Aid BJRI

BJ’s Restaurants continues to progress in its sales-building initiatives while focusing on productivity and cost savings. The company anticipates growth in sales and margins, leveraging its long-term strategy and strong consumer appeal to enhance shareholder value.

In fourth-quarter 2024, the company reported benefits from increased guest traffic across all dayparts and channels. Sales-driving initiatives like the Pizookie Meal Deal and holiday large party offerings, supported by targeted marketing, boosted brand awareness and traffic momentum. Solid sales combined with the effective implementation of restaurant efficiency initiatives paved a path for a 100-basis-point year-over-year improvement in the restaurant-level operating profit margin.

Meanwhile, BJ’s Restaurants has been gaining traction with reference to its Beer Club subscription services in California. Notably, high customer engagement is being witnessed on the back of new beer releases along with program benefits. Priced at $30 (for two months), customers can avail of exclusive beers along with a free appetizer and a Pizookie (large pizza). Items that are currently in the pipeline include Bourbon Barrel Chocolate Stout and Coffee Blonde. 

In a bid to drive incremental visits and spending in its restaurants, the company emphasized creating more iconic brewhouse signature food and drink menu items while elevating its high-quality ingredients and presentation. Going forward, the company intends to expand its brewhouse theater experience to the majority of its California restaurants. Also, it is focused on expanding services in additional states.

BJ’s Restaurants is actively working on initiatives to increase sales by prioritizing guests’ dining experience. The company is implementing measures to enhance dining room and kitchen operations, including improved hospitality procedures and kitchen systems. These efforts aim to boost net promoter scores, drive sales and improve operational efficiencies.

BJ’s Restaurants continues to prioritize maintaining a fresh and inviting atmosphere, which has long been a key differentiator for the brand. In 2025, the company intends to focus on refreshing the restaurant footprint by remodeling up to 30 existing locations as part of an ongoing remodel program.

BJRI’s Bottom Line Improves

BJRI's earnings trajectory looks promising, with projections pointing to growth. The company is expected to deliver earnings of $1.73 per share in 2025, indicating a 17.7% year-over-year upsurge. The momentum is set to continue into 2026, with earnings anticipated to climb to $2.03 per share, implying a 17.2% annual increase.

This robust earnings expansion underscores BJ’s Restaurants’ strong upside potential and reinforces confidence in its long-term growth story.

BJRI Trades at a Discount

The company is currently valued at a discount compared with the industry on a forward 12-month P/E basis. BJRI’s forward 12-month price-to-earnings ratio is 18.89, lower than the industry.  The stock is also trading at a discount compared with other industry players like Shake Shack Inc. (SHAK Quick QuoteSHAK - Free Report) , Dutch Bros Inc. (BROS Quick QuoteBROS - Free Report) and First Watch Restaurant Group, Inc. (FWRG Quick QuoteFWRG - Free Report) ,

P/E (F12M)

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Is it the Right Time to Add BJRI Stock to Portfolio?

BJ’s Restaurants presents a compelling buy opportunity despite recent stock declines, as it continues to execute strong sales-driving initiatives, improve operational efficiencies and enhance guest experience. While inflation and macroeconomic uncertainties have pressured margins, BJRI’s strategic cost-control measures, menu innovations and expansion of its Beer Club subscription service are driving sustained consumer engagement. 

The company’s focus on remodeling locations, optimizing kitchen operations and elevating its brewhouse experience further strengthens long-term growth potential. With guest traffic rising, margins improving and earnings expected to surge in 2025 and 2026, BJRI’s fundamentals remain solid. Investors looking for a stock with upside potential, backed by a clear growth strategy, discounted valuation and improving profitability, should consider buying the dip. BJRI currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.