BJ's Restaurants, Inc.
Q3 2013 Earnings Call Transcript

Published: 25 Oct 2013

[Operator:]

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the BJ's Restaurants, Inc. Third Quarter 2013 Results Conference Call [Operator Instructions] This conference is being recorded today, Thursday, October 24, 2013. I would now like to turn the conference over to Greg Trojan, President and CEO. Please go ahead, sir.

[Gregory A. Trojan:]

Thank you, operator, and good afternoon, everybody. Welcome to BJ's Restaurants Third Quarter 2013 Investor Conference Call, which we are also broadcasting live over the Internet. I am Greg Trojan, BJ's Chief Executive officer; and joining me on the call today are Greg Levin, our Chief Financial Officer; Greg Lynds, our Chief Development Officer; and Wayne Jones, our Chief Restaurant Operations Officer. After the market closed today, we released our financial results for the third quarter of fiscal 2013 that ended on Tuesday, October 1, 2013. You can also view the full text of our earnings release on our website at www.bjsrestaurants.com. Our agenda today will start with Greg Levin, our Chief Financial Officer, providing our financial review of the quarter and some commentary for the rest of 2013. These are preliminary commentary for 2014. I will then conclude with an overview of our business and strategies going forward; and after that, we'll open it up to questions. But before we begin with our prepared remarks, Dianne Scott, our Director of Corporate Relations, will provide our standard cautionary disclosure with respect to forward-looking statements. So Dianne, go ahead, please.

[Dianne Scott:]

Thank you, Greg. Our comments on the conference call today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Investors are cautioned that forward-looking statements are not guarantees of future performance and that undue reliance should not be placed on such statements. Our forward-looking statements speak only as of today's date, October 24, 2013. 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.

[Gregory S. Levin:]

Thanks, Dianne. Yes, as we noted in our press release today, the overall sales environment for the casual dining industry continues to be a very challenging. The casual dining industry data book from a Knapp-Track and a Black Box showed negative comparable restaurant sales in July, August and September. Our sales more or less followed this pattern, and while our sales were not a strong as we expected, we were pleased with how our restaurant teams executed in terms of both cost management and delivering great service to our guests. Our revenues increased approximately 7.4% to $188.2 million from $175.2 million in the prior year's comparable quarter. This increase is due to an approximate 11% increase in total operating weeks, partially offset by a decrease in our weekly sales average by about 3.2%. Our comparable restaurant sales decreased 2.2% during the quarter, as compared to a positive 2.3% in last year's third quarter. Therefore, on a 2-year cumulative basis, our comparable restaurant sales were approximately flat. Our 2.2% decrease in comparable sales for the third quarter consisted primarily of an approximate 2% benefit from menu pricing, offset by a decrease in guest traffic. As you may recall, on the last quarter conference call, we noted that our comp sales were trending around a negative 2% for the first few weeks of July. This sales trend continued through the rest of July and into August and September. From a quarterly perspective, August was our softest month. Of late, our comparable restaurant sales have improved, which I will comment on shortly. There are a couple of things that impacted our comp sales for the quarter when compared to last year. From a marketing perspective, in last year's third quarter, we ran one of our strongest promotions of the year, our 2 Can Dine pizza special, which we ran in both August and September. While this year, we are running that same promotion in September and October. Instead in this past third quarter, we introduced a seasonal barbecue offer that began in July and ran through all of August. As part of this barbecue offer, we had a 2 Can Dine barbecue platter, which, while well received by our guests, had a lower incident rate than our traditional deep dish pizza for 2 offer. Also in last year's third quarter, we introduced our loyalty program in July and our new fall menu, which included our new line of hand-tossed pizzas in late September. While both of those initiatives last year impacted our cost structure, they did help drive sales, as they provided a promotional vehicle to keep BJ's top of mind for the consumer. As we mentioned in our press release today, we have intentionally focused less on new menu development this year, so that we can operationally digest our past initiatives and make investments in refining our menu and kitchen operations to improve our capacity going forward. As a result, our fall menu update will be rolling out in mid-November, which Greg Trojan will comment on shortly. In addition to the impact from the calendar shifts around our promotional items and new menu rollout, we continue to see our comp sales impacted by 3 other factors

[Gregory A. Trojan:]

Thanks, Greg. So clearly, we're not happy about negative 2% comp sales for the quarter, although our performance is better than the average of our industry peers slightly in Q3 by a more significant margin for the year, we know there's opportunity for BJ's to be even better. Despite the challenges of the consumer economy and despite the challenges of the casual dining sector, we feel like there are a number of opportunities within our control to drive sales going forward. But before I get to those, let me take a few minutes to address a couple of questions you might be asking in this weak sales environment. Those questions being, is there something wrong with our concept? Or are we operating our restaurants at a lower standard of performance in some ways to cause our slowdown? Let me address this operating effectiveness question first with some pertinent data. Key metrics, we look at every single day. The 2 best measures of guest satisfaction we have today are our Gold Standard Service scores, which are derived through third-party mystery shops and the amount of food we give away to compensate our guests for less-than-great food or service. Our GSS scores, as we call them, are on 100-point scale, are up 31 bps for Q3 and 69 for the year. Keep in mind our GSS scores are already at historically high levels to begin with. The amount of food and beverage we gave away to our guests due to service issues is down 14 bps for the quarter and versus a year ago and 19 bps for the year. We also track the average total time it takes our guests to complete their BJ's experience. This time has improved, that means, decreased by about 4% -- 4.5% for the quarter and about 2% for the year. Our food cost control as measured by variance theoretical was a bit higher in Q3 by about 13 bps due to the new items trained for the BB -- for the barbecue promotion but we're running better for the year. Our effective labor efficiency has also improved this year. Our key labor productivity metric, items per labor hour, has stayed flat for the quarter and year as well in the face of negative traffic trends, something that's very difficult to do. Although food cost and labor efficiency are not guest-facing metrics, they are great indicators of overall restaurant operation performance so our steady improvements speaks to our solid execution overall. So although we never declare victory in these key operating metrics, and we know we can continue to improve, it is clear to me that our operators continue to do a great job serving our guests. And there has not been a decline in operating performance driving our slower sales. For those thinking there is some other inherent weakness or problem with our concept, first of all, I'd suggest visiting one of our restaurants and remembering a few key facts about our concept. According to a survey conducted by RBC [ph] earlier this year, our sales per square foot are #2 among established chains in casual dining. However, remember, we do these sales volumes on a lower check average than many. So our transaction productivity, as measured by guest traffic per square foot, is over 20% higher than our next highest competitor. Also recall that we have grown our comp sales 15% over the past 5 years, while the industry, as measured by Knapp-Track, is down 7%, growing our average restaurant volumes during that time from 5.2 million per restaurant to 5.8 million per restaurant. Another important measure of our concept health is the strength of our new restaurant openings. We are very pleased with our 2013 class thus far. We expect our opening sales per new restaurant week to finish this year at the levels of the strong classes of the last couple of years. We just opened Corpus Christi, Texas, a couple of weeks ago and are averaging over $180,000 per week. We opened in our own backyard here in Huntington Beach at -- in Orange, California, last month and are doing over $150,000 a week. So again, we believe BJ's continues to offer one of the most impressive consumer propositions and operating models out there. We happen to be climbing the comp sales now at a much steeper point than most concepts, already setting the industry standard for guest traffic per square feet. Our comp sales arithmetic, as Greg Levin referenced, is also challenged by our own cannibalization, a greater level of competitive intrusion and our newer restaurants entering our comp base, still coming off their high honeymoon levels. Our core restaurants not impacted by these factors, many of which are 7-, 8- and 9-year old locations, are comping positive for the year. Now all that being said, I and my fellow team members at BJ's, know that regenerating top line momentum is our highest, single priority. Towards that end, the biggest thing we're doing to drive sales is creating more of what I describe as quality capacity in our restaurants. We need to be able to serve more guests more quickly and add an even better quality level than we are today. Those of you who have followed BJ's over the years know that our comp restaurant sales have been driven by adding effective capacity in both front-of-house and in our kitchens. Deuce [ph] seating, better labor deployment, workflow balancing, our technology investments, our design changes in our kitchens, all increased our ability to serve more guests. We drove check through both pricing, as we elevated the BJ's experience, and we drove incidents by significantly expanding the number of menu items, a formula that has worked very well. But as a result, many of our kitchens are running at or near their peak ability to execute at the level of speed and, most importantly, the level of quality we demand of ourselves. So a key unlock for us is to create even more effective production capacity in our back of house. This will enable us to do some essential things with our menu. First is create capacity to execute compelling limited time offers, create more unique and crave-able items, such as our Pizookie, improve our everyday food quality and strengthen the value and add on-trend items in the middle of our menu. As you guys know over the past several years, we have worked the ends of the barbells of our menu, as we call them, very effectively. Our Snacks & Small Bites, our lunch specials on one end, and our higher-end center of the plate protein on the higher end, have both been very, very successful. Meanwhile, we have spent less time innovating our core middle of the menu items. In addition, they have absorbed pricing along the way and do not represent the level of value -- the value offering as strongly as we would like in that middle of the menu. So our menu development is focused on more below $10 price point in this middle of the menu, smaller portion, lower calorie options and bolder, more on-trend flavors. Frankly, we could have been addressing our sales slowdown by adding more menus to our menu this year -- more menu items, I should say. But we have made the right decision for the longer term to focus first on taking a deep breath and decreasing the amount of complexity in our kitchens, creating the production capacity we need and setting us up for exciting additions and promotions going forward. Our November menu rollout, which includes the introduction of a smaller sized, grilled top burger line, and thanks to our Project Q initiative, we'll have a net reduction of 24 items, about 15%, and, just as importantly, incorporate over 50 changes to our prep, recipe and ingredient processes, which will add speed, quality and throughput to our kitchens. Maybe the best example of the complexity chains we are making is putting our Deep Dish Pizza back in the pan. We had made a change to serve our pizza on plates because we thought it showcased the product better. Well, our guests didn't seem to agree and it actually took longer for our cooks to remove the pies from the pans and slowed our service times. We have taken the number of cuts of our onions from 9 to 4. These kinds of changes may seem mundane, but when you extract them over the volumes we do everyday across 143 restaurants, they are very meaningful. Our new burger line, which we will merchandise as BJ's Brewhouse Burgers, are a good example of what you will see more of early next year, new and interesting taste, smaller yet plentiful portion sizes, lower calories and fantastic below $10 price points. Our other capacity addition initiative is improving the speed of the BJ's experience. Aside from our kitchen initiatives, we will be commencing testing this month of connecting guests' mobile and desktop devices to our current restaurant technology to enable our guests to speed up their dining and take out experiences if they wish. While too early to declare ready for full rollout, we are committed to pushing the envelope on using technology to improve our guest experience. This speed should result in higher table turns and gain valuable, greater quality capacity. So while we are working hard on these critical kitchen and front-of-house capacity initiatives, we have been working just as hard on the demand generation side of the equation. Our 3 key levers here are getting to an efficient media spending mix, our loyalty initiative and the foundation of all of our marketing, our brand messaging and positioning. We continue to test and learn on media spend and recently completed our second wave of TV in California and Texas markets. These tests continue to show that television will continue to evolve as the useful awareness driver in some of our markets. Our loyalty promotions continue to show good results as well. We've just implemented our targeted e-mail capabilities and have begun to launch a series of targeted offers, which we believe will both drive sales and help us learn which promotions strike the best balance between traffic and discounting. Lastly, I'm very pleased with the progress in our messaging and positioning work, and you will start to see the creative output of this work in Q1 of next year. This is an important platform to tell BJ's stories around our amazing array of taste under one roof, our food quality and our amazing value. We will do so by adding a more contemporary look and feel and a more fun, approachable personality to our media, our point-of-sale materials and even our menu itself. So although sales-building is our #1 priority, our work on the middle of the P&L cost structure, as well as our design and construction teams' efforts to build our restaurants at lower level of capital investment, are bearing important fruit as well. We expect to open 17 to 19 restaurants next year, 2/3 of which will likely utilize our new design approach, which will save in the neighborhood of $1 million per restaurant. Our work in the middle of the P&L has already identified several million dollars of annualized savings. Both are key steps forward to drive our growth with even higher returns, enable us to deliver both growth and ROIC at balanced levels and, ultimately, strong returns. So before we take your questions, I would summarize with the following

[Operator:]

[Operator Instructions] And our first question comes from the line of Brian Bittner with Oppenheimer & Co.

[Brian J. Bittner:]

You guys said something earlier about how there are certain group of stores that are comping positively. I know you said the older ones. Can you just fill in on that a little bit more? Exactly, what stores are comping positive, ones that are over 5 years old, over 2 years old, to start with that, please?

[Gregory S. Levin:]

Brian, I don't know if we said specifically what restaurants are comping positive. What we talked about is the fact that, I believe, there is 116 restaurants in our comp sales base. Out of that 116 restaurants in our comp sales base, 41 of those restaurants are either impacted by cannibalization by us opening a new restaurant, competitive intrusion or are the class of 2011 and now some are in the class of 2012 restaurants, just depending, that are coming into our comp base. So outside of that, we have about 75 restaurants that we consider to be kind of unimpacted restaurants, where there is nothing going on there that we can identify as competitive intrusion or cannibalization. And those restaurants continue to do well for us. I think when you look at overall, knowing that we were down negative 2.2%, those restaurants kind of came down. I think they are slightly negative, those 75 restaurants, and it's a mix of those restaurants, meaning there are some in California, some in Texas, some in Arizona. There is nothing specific towards those 75 restaurants.

[Brian J. Bittner:]

Okay. But is that the same -- in conjunction with the same comment that the other Greg said about, there are stores that are comping positive year-to-date? Maybe I'm confused. I thought you said that there were some units coming off the honeymoon periods and the older stores, 8, 9 years old, year-to-date, are comping positive.

[Gregory A. Trojan:]

Yes, those -- what we're saying is that those restaurants that aren't impacted by cannibalization, competitive intrusion and the honeymoon factor are comping positive for the year.

[Brian J. Bittner:]

Okay. So October seems to -- the trend has gotten a little bit better. How was September? Because you said August was your worst month. I mean, is it a quick change that you've seen in October? Was September better than the overall quarter's comp -- quarterly comp?

[Gregory S. Levin:]

Well, as I mentioned, August was the worst from that standpoint. September started getting better, but the difference between September and October is kind of night and day.

[Brian J. Bittner:]

Night and day between September and October?

[Gregory S. Levin:]

Yes. September was still a difficult quarter for us. We -- put it this way, we didn't end up with a negative 2.2% by having a negative 5% 1 month and then a flat next month, so all 3 periods were somewhere in that kind of low-single-digit negative.

[Operator:]

Our next question comes from the line of John Glass with Morgan Stanley.

[John S. Glass:]

Greg, just given you're talking about how your industry-leading volumes and high transactions per restaurant, there's a reality, I think, likely that you're going to always be in a very low comp environment going forward. I would -- it's probably -- at least, that's a good assumption. So can you talk about what is -- remind us maybe, what is the goal in terms of the new breakeven point for comps you're striving for because it's got to be lower than it was before? And where are you in that process of simplification you talked about, cutting things differently and different kitchen preps? Where are we in that continuum of that process?

[Gregory A. Trojan:]

Yes, good questions, John. The -- well, let me say initially, we are in no way resigned to a point of view that our comps can't be back at -- trading at premium, more -- higher premiums than they are today, like I'm very enthusiastic about the things that we're working on, on the sales side. And look, unfortunately, comp sales just don't -- are not a straight line, right. And we have had to take a little bit of a deep breath on -- more on the capacity side, but I think some of the things that we're addressing in this middle of the menu in terms of value and some more, better-for-you offerings that have done very well for us, there is some things that we can do there that, I think, will have big impacts. And this speed opportunity is a big opportunity for us. We haven't slowed down overall, but we've never been that fast a concept. And my personal point of view, as fast casual has grown and grown as an alternative, we've got to look at our market share perspective, not just around casual dining but of all dining, particularly fast casual and casual. And my feeling that casual dining, overall, is losing share to fast casual for -- and one of those reasons is speed. And that's not really been an advantage of ours given the complexity of our menu. And I think if we can successfully address that and improve that, I think there is some real sales upside to that. So that's the sales side of your question. I think the other part of the question is -- and I don't mean to put words in your mouth here, but is, where are we in getting more efficient so we can drive down that comp breakeven, where we can hold or improve margins? And I think we have made good progress on that. I think -- you look at -- it's hard to see in this comp environment but the work that we've done particularly on the labor efficiency side of things and, I think, the opportunities that we have on the operating cost side of the equation. We feel like we're at a very -- a pretty different place in terms of that comp breakeven. I think on the last call, Greg, we talked a bit about that. And I think we've made progress, but we've got to continue to work hard on those middle of the P&L costs. And I think we're seeing some good opportunities there.

[John S. Glass:]

What was -- and remind me then, what was the number that you've thought you could target? Or do you think you could ever get cost leverage on a 1% to 2% comp, I guess, if you follow through in those? Or is that just never going to be possible given the inflationary pressures ambient in this industry?

[Gregory S. Levin:]

I think there is a short-term opportunity to get some margin benefit on the 1% to 2% line just because of some of the other things that we're looking at in the middle of the P&L, John. I do think that we'll start talking about a 2% number. We should be able to hold our own there, if not get some expansion when I just think about the things that we're putting in place currently. So I think before, we've talked about BJ's needing somewhere closer to 4%, I mean, 3.5% to 4%, and you look at some of the costs that we've built into this business, whether they are around just the things in the operating occupancy side of things. As we go through, what Greg Trojan, if you've heard, called Project Q, and with everything we've done there, that also starts to look at some of the things that are a little bit more guest-facing, meaning if we start to change some of the menu items, the way we look to rationalize some of that, we might not need much plate that we're currently using. So there is some savings there. We're looking at utility in the demand side, as well as supply side of utility. There's a lot of things within that operating occupancy side of the business that we're going after, that will help give us some leverage going forward, frankly, on a lower comp.

[Gregory A. Trojan:]

I mean, the other thing I'd add to that is, as we drive the CapEx cost on the front end of our business down, primarily through investing less on the -- on our new restaurants, but also, we've spent a good amount of capital in the past few years, which has had very solid returns on improving, in moving this concept up to the upper side of casual dining. We won't have to spend at that same rate because we've done that work, the heavy lifting on our current restaurant base. So our depreciation and amortization has been putting some pressure on our margins, and we're working hard and it should -- that should provide some leverage going forward.

[John S. Glass:]

And just last question then I'll leave it, can you self-fund development next year given that your earnings base has now been reduced this year materially? It sounds like you still have some challenges in the near term. Can you -- and this part -- I guess the implied question is, why do you need to grow at the rate you're growing at given these challenges?

[Gregory S. Levin:]

In regards to self-funding, I believe we can -- well, our, obviously, cash flow and earnings are not where we wanted to be this year, you start to think about next year and the things we're putting in place there, where our investment cost on December is around 2/3 of our restaurants, will be $1 million less. So if we build, take the middle there, 18 restaurants, 12 of them come in at $1 million less. That's $12 million of cash flow coming down the bottom line. On top of that, we do have a target to reduce our traditional 8,500-square-foot restaurant as well. So I think we're in a good position, actually, going into 2014 with our TI. We don't have any funded debt. We have $75 million line of credit. So I feel pretty happy about our balance sheet, overall, as of today. And then I know -- John, I'm sorry, you asked about to continue the growth side of our business. Everywhere we continue to open up the BJ's, it does really well. This is a concept that works in Tallahassee, Florida; Corpus Christi; to Irvine, California; to Dallas, Texas; and Miami, Florida. I mean, the opportunity in the white space out there is still really tremendous. And our goal, when we talk about the growth, is to do it at a controlled pace. So we think about 12% is a controlled pace. I think if we were maybe sitting at 18% or 19%, maybe, we would think about a little bit of a different view in regards to that growth rate.

[Operator:]

Our next question comes from the line of David Tarantino with Robert W. Baird.

[David E. Tarantino:]

Greg, I just wanted to follow up on that last point. I guess, you have a lot going on, on the initiative side, both from a menu and operation perspective, and it just begs the question of whether you'd be better served to slow down the growth and let the system digest some of those initiatives and get the momentum back in the existing base, rather than trying to grow so quickly. So has that thinking, at all, been considered at the company? Or why wouldn't you try to slow it down temporarily to focus on getting the existing base in a better shape?

[Gregory A. Trojan:]

I'll address that. It's -- hey, listen, if we felt differently that there was something amiss or broken, if you will, that we had to fix, I look at all the things we're working on as opportunities off already a strong foundation. And I look at, as Greg mentioned, the performance of our new restaurants this year and they're continuing to do very well. If I started seeing our new openings struggle and -- that would give us pause, but we're not seeing that. And as long as there is the quality of real estate available and we're continuing to do well there, I think we want to continue to take advantage of those opportunities and we're creating great returns for our shareholders in doing that.

[David E. Tarantino:]

I guess -- maybe I should reframe and I guess, the question I was trying to ask is, is the growth inhibiting your ability to make the positive impact on the existing base, managing both at the same time, I guess?

[Gregory A. Trojan:]

I think -- I hear you there, too, and let me address that more straightforward. It is a good question, but I don't feel like -- we've got a veteran crew of operation team members that, largely, are responsible for opening those restaurants. And if I felt like it was distracting our culinary development team or our marketing team and our development team from the -- pursuing these opportunities, again, I'd have a different point of view, but they are -- our current pace of openings has not taken away from the work that we're doing on the sales side.

[David E. Tarantino:]

Okay. That's helpful. And then one other question, I think you mentioned that the value in the middle of the menu has not been as strong as it needs to be and you're addressing that, so just curious to know kind of how you came to that conclusion and maybe if you can elaborate on how you're going to attack that going forward.

[Gregory A. Trojan:]

Yes. The -- if I just -- let me be more specific on what we mean by middle of the menu because we're really talking about the categories around burgers, entrée salads, sandwiches, would be pastas, perhaps. And look, we knew and we've mentioned this earlier this year that so much of the innovation and work on the menu has been on the other side of that menu and that we needed some refreshing and new news there, first of all. And look, we've just -- are doing comparisons and looking at the market research that we've done and price comparisons, competitively, in the markets that we're in and -- where we don't think we are offering the same kind of value that we'd like to, comparatively, in those categories. And so I use the example of the Brewhouse Burgers, but I think they really are kind of the poster children, if you will, of what you'll see more of along these other categories. It's -- I believe that -- not all, but there are a number -- and growing number of our guests out there. As opposed to the hay day of the '80s and early 90s, it's not about how much food you can put on the plate for a certain price point. Now people are interested in eating less in some instances, for sure, and so they would value a lower price point with a little less food on the plate at -- but that still doesn't compromise great, distinctive flavors. So that's essentially where we're going on -- in terms of offering more choice in that area to address value, better-for-you and lighter portions all at the same time.

[Operator:]

Our next question comes from the line of Jeffrey Bernstein with Barclays.

[Jeffrey Andrew Bernstein:]

A couple of questions. Just first, we talked about the gap to the industry narrowing over the past few quarters, and you mentioned that part of it might be the lack of new products as you digest the ops changes, but you also mentioned kind of the discounting and the intense promotional environment. I'm just wondering where, perhaps, you're seeing -- what part of the menu or what segment are you seeing the greatest weakness? Or what's changed over the past few quarters? What competitor -- or competitive set things to be taking the most share in terms of -- relative to your menu?

[Gregory S. Levin:]

Jeff, it's Greg Levin. That's an interesting question. I don't know if we have all the specifics. I think as we look through and try to take a look at your day parts. We look at the weekday business versus the weekend business. As we mentioned before, and it continues, that lunch continues to be a challenge for us. And I think, as Greg Trojan has mentioned, a little bit with the fast casual seems to be an impact there. I know as we look through our competitive nature and the cannibalization that's happened to some of our restaurants and competitive intrusion, a lot of what we're seeing is some fast casual concepts coming to many more of our areas that we were in the past. So we tend to see that a little bit. As of now, when you look through our menu categories, overall, I'm not necessarily seeing a decline of one category versus the other. Our incident rates, when we look at it, which is kind of the items per -- items ordered per guest, still sits around 1.9 to 2. So we're not necessarily seeing a big change on incident rates from a guest standpoint. It really, again, looking through the numbers and looking over the summertime, seem to be more that lunch business we did get -- take a nick at dinner. Competitive intrusion seems to be a little bit more around the fast casual side of our business. I also think, personally, in the July, August and September, our marketing calendar that we talked about, didn't give us quite the lift that we were looking, some BBQ versus the 2 Can Dine, and it was just kind of a summer swamp. There wasn't any reason to dine out as much as I think what we've seen in the past, from a celebratory standpoint.

[Jeffrey Andrew Bernstein:]

And then the talk about marketing in '14, I think, you said being in the low 2% range. I'm just wondering, if it is achieving a desired result, which is to drive sales or drive traffic, is there any concern that maybe you're driving traffic to stores that already have, like you said, maybe some capacity or throughput issues that may be marketing, not as if marketing caused the problem, but marketing might be -- might accentuate the problem, if you're really effectively marketing if your stores can't handle it.

[Gregory S. Levin:]

We're pausing to kind of understand the question a little bit. I don't think -- I mean, what you're talking about would be kind of what we call the leakage or people coming to our restaurant and going "there's too long of a line" because of the marketing message, they go somewhere else. Is that what you're asking?

[Jeffrey Andrew Bernstein:]

Well, just things like the goal of marketing is to drive traffic to your stores, and it seems like you believe it's working for you, but you've also talked about your speed of service is the problem. You have throughput issue, driving traffic to your store when you have a throughput issue.

[Gregory A. Trojan:]

Okay. It's -- I think about it, what -- really, what we're trying to say is, look, we can -- we're not capacity constrained from -- there is still -- there is room to do more business in a lot of different day parts, in a lot of different parts of our business, but one of the ways that we -- that traditionally has worked and will continue to work is to innovate around the menu, right. And so the constraint is, we -- is, our kitchen capacity is somewhat of a constraint, and what we don't want to do is add new menu items to that menu until we've created the capacity to handle them. So it's not really -- we're not saying we can't take more guests in our restaurants. What we're saying is until -- as we continue to work and develop capacity in our kitchens, it will allow us to create more menu news than the pace than we are today, and that will drive traffic.

[Jeffrey Andrew Bernstein:]

Understood. And then just lastly, the 17 to 19 for next year, can you break that down in terms of new versus existing, just trying to size up how much might cannibalize others versus how much your new markets and maybe by quarter how you would expect that to lay out?

[Gregory S. Levin:]

I don't know if we have all that detail. We did say -- I'm looking at some of the stuff here. I'm not sure we have -- I don't think there is going to be much cannibalization next year, to be perfectly honest, just kind of looking through it. I mean, we're going to build out Orlando. We're going to build out more in Florida, but California has been the bigger area from a cannibalization standpoint. We just don't have that being lined up in California.

[Jeffrey Andrew Bernstein:]

And by quarter, is it roughly...

[Gregory S. Levin:]

What, quarter -- we'll still work through the detail. I would plan on, right now, 2 in the first quarter, and then we're going to try and be as even throughout the quarters after Q1 and not be as back-end-loaded as we are this year.

[Operator:]

Our next question comes from the line of Will Slabaugh with Stephens Inc.

[Will Slabaugh:]

I want to ask you a follow-up on the middle of the menu that you mentioned earlier. Are you concerned that as you add some of these lower-cost items on -- that you talked about that you'll actually lower the ticket average, that some people might actually trade down from more premium item to one of those items you're talking about? And assuming so, would you be okay with that?

[Gregory A. Trojan:]

Well, look, that's a great question. And we're not going to know until we do it, but not doing it is not an option. Our first priority is to drive traffic. And if that ends up -- my feeling is even though the emphasis of these items is to add more items below a $10 price point, and you would be concerned about lower guest check. Whenever we've done -- even when we do our promotions, our guests tend to order that extra beer or order a dessert or a Pizookie when they haven't before. And they -- it's incredible how frequently we see a guest behave in a way where that guest check really doesn't change that much. So it would be my expectation, and certainly, our goal is to offer a better value without decreasing our guest check appreciably, and our guest leading even more pleased by the value.

[Gregory S. Levin:]

Yes. I think, Will, when we've done this in the past, we would rollout snacks in small bites. Frankly, we're concerned what that can do to appetizer sales, is it going to cannibalize average check, and we saw that as an add-on in that regard. When we rolled out our lunch specials as well, it ended up generating more earn as we call it, or more turn versus earned. Turn being more guests coming into our restaurant, versus the decrease in that price as we put together those lunch special versus some of the other menu items back in 2009. And I think we're kind of looking at this in the same way, in a sense that we're providing a new product with great value and great innovation that could drive additional frequency and guests into our restaurant and then allow them to kind of trade up with some of the other items as well.

[Will Slabaugh:]

Got you. And looking over to restaurant level margin, you talked about that goal of maintaining that into next year. And I'm trying to balance that with, it sounds like, if we think about conservatively modestly positive comps next year and taking into account the comp break even point we just mentioned, that 1% to 2%, that that may be difficult to do. Can you help me rationalize and kind of frame that as we look into next year?

[Gregory S. Levin:]

That's a great question. I think next year, the issue will be the challenge at least in the first half of the year on the marketing spend. If we move that marketing up to Q2, Q3 and Q4, versus kind of the 180 drag and 60 basis points in the -- frankly, it's what type of sales that are we going to get from that marketing, which gets, I think Jeff Bernstein's question a little bit earlier, we think that that's the right thing to do, especially as we roll out a new menu format, we want to tell the guests about that. So I think, as I look through it, that first half of next year gets a little more challenged from a margin standpoint. But I do think the things that we're putting in place, the labor scheduling system, the somewhat benign commodities market for next year, and obviously not everything is locked in yet. But I think some of those things help on the middle of the P&L as well, some of the cost-saving initiatives that our supply chain team is taking on, gives us a little bit of a tailwind in some of those areas. And frankly, that tailwind is going to be needed to cover the additional marketing costs, assuming we don't see a tremendous increase in guest traffic based on kind of the -- some of the macro environment.

[Will Slabaugh:]

Got it. And just lastly, on the quarter-to-date commentary, you mentioned that there was sort of night and day, can you help us out with anything that may have driven that, from September to October?

[Gregory S. Levin:]

You know, there could be a little bit regards to the way our Party for Two can run this year. As we mentioned, we've run it September to October. That promotion tended to build upon itself. Last year, as we said, it was kind of August to September. So we've got that going in there. We also had TV that started in September, so we had 2 weeks of TV in September, then we went dark. And then we went 2 weeks here in October. We also had the Dodgers in the playoffs. Let me say, some of those things that can help the Southern California market. I do think to some degree we're hearing that, in general, casual dining has been a little bit better in October. What we like the most out of it, is the fact that we're seeing that improved trend on less menu pricing. Which means, we're seeing a bigger hit on the guest counts, which to us is really the thing that we pay the most attention to.

[Operator:]

Our next question comes from the line of Nicole Miller with Piper Jaffray.

[Nicole Miller Regan:]

Can you please give us some idea of what the underlying comp is x cannibalization?

[Gregory S. Levin:]

Nicole, I don't have that one in front of me. I think what I had said, if you took out those 41 restaurants out of 116 or so there on the comp base, the 75 remaining, were just down slightly, less than negative 0.5% or so in Q3.

[Nicole Miller Regan:]

Okay. So safe to say -- I'm trying to tie back to your comment about, not a lot of California developments for next year. So in what quarter do you lap cannibalization, and we should see like 150 basis point lift and some rolling over the cannibalization.

[Gregory S. Levin:]

I don't know if I have that in front of me, Nicole, because not only that cannibalization is competitive intrusion of new restaurants that have opened up that at all different times. Really talking about [indiscernible] one there. So it's not quite as black and white as what you'd like it to be, I guess.

[Nicole Miller Regan:]

That's okay. And it's also not going to be that static at one moment in time. So it's more that it should be a progression of improvement due next year as you lap those different opening times.

[Gregory S. Levin:]

That's correct.

[Nicole Miller Regan:]

Okay. And then the comps, can you give us an idea for October and November and December of last year, what was the best and what was the worst month, so we can put the October comp in the some context for what we're projecting?

[Gregory S. Levin:]

I don't really got -- I only have the quarterly comp in front of me right now, Nicole. I actually don't have it by month. I would tend to say that the December timeframe, I want to say, was better for us last year. But I'm speculating a little, December is when the -- frankly, when we make hay in this quarter.

[Operator:]

Our next question comes from the line of Tony Brenner with Roth Capital Partners.

[Anton Brenner:]

I have 2 questions. First, really, I didn't understood the middle of the menu. You've recently added a number of higher end entrées, where BJ's was underrepresented in the past. You just mentioned a few moments ago that small bites were an add-on for you. So I'm wondering where these 24 menu items that are being eliminated are coming from. Hopefully, you're not reducing your Pizookie too much?

[Gregory A. Trojan:]

No. We are protecting the Pizookie, trust me. But Tony, actually, there is just -- to put it in perspective, is the items you're talking about that we've added were over the last few years, right? So -- but we are adding these middle of the menu items, will take the place of existing items in some cases, so they won't all be incremental. I'll give you an example, we're redoing our turkey burger, for example. Our current turkey burger is 1,700 calories, right? And we think somebody ordering a turkey burger is not expecting a 1,700 calorie experience. So although we're developing the menu items with the objective that I discussed, they're not all incrementally new, right? And then in terms of the reduction, we've just looked -- we've taken them from, frankly, all areas of the menu, from appetizers, to sandwiches, some entrées and, of course, we're taking a look at some of our slower-moving items. But honestly, the challenge is, with a menu that is as large and varied as -- and diversed as ours, we have a lot of menu items that people like, and it's fairly dispersed. So if we were -- if we had a bunch of items that no one was ever ordering, it would be really simple, but it isn't that simple. And so we've tested these in a number of restaurants over the last couple of months, and we feel comfortable we're making the right trade-offs.

[Anton Brenner:]

Okay. And second question is regarding the additional kitchen capacity. You talked about your new restaurants will be smaller, roughly 1,000 square feet smaller I believe, with some of that space coming in the back of the house. So in terms of increased capacity, I wonder if you could elaborate a little bit on exactly what you're going to be doing in the kitchen.

[Gregory A. Trojan:]

Yes, well look, the space is largely coming from front of house, but it also will include some back of house. I mean, it's somewhat proportional right? And but the focus is we're not making reductions in number of burners or cook top ranges, we're not making these stations smaller from a pure capacity, we're still going to have 1 or 2 deck pizza ovens, for example. So the pure machinery production capacity is not going to change. We're just laying them out, and laying out the lines more efficiently, so our stations can work together and workflow can work better together. And that enables us to get a little bit smaller in the back of the house, but still improve efficiency. And the biggest way is what we're doing on the demand side of what we're asking those kitchens to do, and making it simpler without sacrificing quality or taste. And that goes to, like I said, somewhat mundane-sounding kind of things, but it's a lot of -- it's over 50 in the case of this coming menu of items that are like, prep areas and how we're cutting onions and peppers, and how we're having certain ingredients come in. We're looking at seldom used ingredients on the line, and making substitutions in our products so that we don't have one-offs taking places on our lines and make areas. It's a lot of manufacturing engineering kind of stuff.

[Gregory S. Levin:]

Real quick, operator. Just Nicole, a follow-up to your call. It looks like, frankly, we finished at 3% comp in Q4 of last year. We are fairly close through all the periods. October and December were about the same. They were the kind of the 2 of the higher and November was the lower of 3 periods in Q4 of last year. So operator, back to you for the questions.

[Operator:]

Our next question comes from the line of Sharon Zackfia with William Blair.

[Sharon Zackfia:]

Just wanted to follow up on a prior question on October. Greg, you mentioned the marketing impact potentially on October, did you see the improvement sequentially outside of L.A. and Dallas in October, and was it of the same magnitude of the sequential improvement you saw in the 2 markets you did TV? And then secondarily, I think we discussed before the breakeven rates for comps to hold your restaurant margins, but obviously, at this rate of growth, you're deleveraging D&A pretty heavily on these comps. So could you give us any kind of rule of thumb going into 2014 on what kind of comp you need to grow earnings?

[Gregory S. Levin:]

Yes. Let me see, there's a lot in your question there, Sharon. In regards to the October time frame, we saw improvement -- actually, we saw improvement in just about all of our restaurants. I would tend to say, though, that the ones that saw the television ads, as we mentioned in our formal remarks, television does move top line sales. So we did see improvement probably more so in like a California, Dallas market than maybe some of the other markets. But overall, the trends, at least starting for a couple weeks in October, were better across all the restaurants. In regards to kind of the earnings and depreciation and amortization, I tend to think that we're going to need to be on the slightly positive side in regards to the comp sales next year to continue moving forward with earnings. I mean, we're going to have a 12% increase in operating weeks for next year, so you kind of start with that and assume 12% increase in revenue, and then where those comps come in positive or negative from that standpoint. And I would tend to think that if revenues grow less than the week from that standpoint, we should still be able to get some leverage in our business and grow earnings. I mean, that's our goal as a management team going forward. And frankly, we'd like to see that number more in the mid-teens, that's always been our longer-term target in that regard. As we continue to start to build our restaurant that in lower cost, it's very important for us to get this -- get the cost down in our restaurants, especially as we think about moving to 400 restaurants and doubling the EBIT over the next 5 years, we should get pick up on depreciation and amortization. A lot of those costs that we put into our restaurants were incremental costs that were used to drive the sales from that $5 million to $5.8 million where we are today. But we've also overshot the target a couple of places that we've talked about, and therefore, we think we can get that price down in regards to building new restaurants, which should enhance shareholder return. And frankly, at the same time, means that add incremental restaurant that comes on, it's going to have a lower depreciation and that should give us leverage in the business model.

[Sharon Zackfia:]

Okay. And then just one last question on the G&A, because it obviously has been outstripping revenue growth this year, and you mentioned it would hopefully not do that next year. I mean is -- your G&A has been kind of growing at a double-digit clip in dollars for a really long time, is there a possibility for that to come down to kind of like a mid-single digit growth rate in terms of dollars? Or, I guess, I'm not clear if there's anything systemic that you're doing at the more corporate level that could create the opportunity for even greater leverage on a lower comp?

[Gregory A. Trojan:]

Well, we haven't formalized our plan for next year, and really taking into consideration the top line revenue growth and figure out from there how we can leverage G&A in that perspective. When we look at it and figure as a company that's still adding new restaurant but has a lot of white space in front of you, there's going to be a certain amount of costs that are just inherent to growth. There is going to be our managers and training or we call our AMT [ph] program here. There is going to be the recruiting cost, the relocation cost, all of those things that are built into our business that, frankly, represents about 1/3 of our G&A. And then you start to get the leverage in the other areas of G&A, whether it's field supervision, or myself, the infrastructure side of our business. Or, you tend to see companies all of a sudden get a tremendous amount of leverage in G&A, frankly, it's when they stop growth. In that regard, because there's a certain amount built into the G&A side. For this year specifically, and we've mentioned this before, this is just a difficult year in the sense that we made a decision based on how we are growing our business, and we needed to expand at our corporate offices or our restaurant support centers, as we call it. So we've taken on basically 2 more floors here. We've added or expanded our culinary test kitchen. We've had other kind of one-off G&A costs from that standpoint. We're spending some money to understand how we want to reposition and brand this company. So there's some additional things in G&A this year, which won't be repeated next year, where we start to get leverage on that top line growth, which bring it down. So I think we can continue to get that. But you're not -- I don't think we're going to see a 50-basis point reduction in G&A as a percent of sales, unless we drive top line comps about 2% or 3%. From a dollar perspective, if we're still adding 12% new units, next year, you'd probably see G&A, we've always talked about this being somewhere in the neighborhood of about 75% of kind of capacity growth, and that's kind of probably our target.

[Operator:]

Our next question comes from the line of Jeff Farmer with Wells Fargo.

[Jeffrey D. Farmer:]

Another follow-up. I think you said -- I think this is Greg Levin, marketing, 2.2% to 2.4% in '14, I think that's the number I heard, and I believe roughly 1.6% in '13. So that's 60 to 80 basis point spread, again I did the math quickly, but it looks like it implies about $6 million year-over-year increase, which, all else equal, will be about $0.15 per share. So obviously, you're going to get some return on that, but I just wanted to be clear that that's sort of the order of magnitude you're talking about, would be at almost a $6 million increase in your marketing expense year-over-year in '14?

[Gregory S. Levin:]

Jeff, I don't think that's right. Right now, we're running about a 2% marketing cost. We are 1.8% in Q1, 1.9% in Q2 and 2.2% in Q3. So we're not out 1.6% going to 2.4% Q4, we're more at 2% going to 2.3%, 2.4% in that regard.

[Jeffrey D. Farmer:]

Okay. So not nearly that order of magnitude? Okay.

[Gregory S. Levin:]

Yes.

[Jeffrey D. Farmer:]

That makes sense. Then coming back to the 34 restaurants. So again, just coming out of -- your prior comments said that some at early October, again a little bit of a recap of what you said earlier, you had called out 34 restaurants that had been impacted by cannibalization, encroachment, extended honeymoons, et cetera. That was at the end of Q2, it was 34 restaurants. Now at the end of 3Q, it's 41 restaurants? I know it's a little bit of a moving target for you, but as you get into '14, do you sort of see a situation where, especially as those cannibalization units fall off, that this number could fall to 20, or is this something that we're going to be sort of looking at for the next several quarters, maybe even into '15 in terms of the number?

[Gregory S. Levin:]

That number should fall off. A couple of things. One is, when I look through those numbers, there's a decent amount in California, some of those are little competitive intrusions, so they'll fall off. Inspecting about our cannibalization here in California, that falls off. And that's over the last couple of years that we've seen that bigger cannibalization. Additionally, in some of the other markets in California where we see it, they were newer centers or newer areas that people have opened in the last couple of years as they kind of pulled back from the development from the recession years. So those areas are more or less filled up. So I would expect that number to start to come down. The reason it's gone up versus -- your summit [ph] versus today, is we've got more restaurants in our comp base. So when I presented the numbers at your comp base for the first 6 months, we had a certain amount of restaurants that hadn't gone to that comp base yet.

[Jeffrey D. Farmer:]

Okay. And then just one quick clarification. So just to be clear, for 2013, sort of all-in, all the quarters, assuming you started a little bit lower in terms of ad spend in the first quarter. For 2013, what are you thinking you're going to spend on advertising, all-in, across all 4 quarters?

[Gregory S. Levin:]

That's going to be like I said, I think I said we're going to spend about $4 million, $6 million here in the fourth quarter. So that number plays out where were going to be somewhere in the neighborhood of about $15.8 million or so, or lower -- yes, $15.5 million, $15.8 million or so for this year.

[Jeffrey D. Farmer:]

Okay. All right. And then I can use -- okay, I'll figure out the denominator part of that, okay. And then you're so far so good, it sounds like obviously your decision to sort of accelerate TV that you think you guys are getting paid for this, is that a fair assessment?

[Gregory A. Trojan:]

Well, what I'd say is -- Jeff, is, we know we're seeing incremental top line and what I've talked about this in the past has held true here, which is we're still doing a fair amount of experimenting on the media buying front. So different markets, we use different combinations of levels of TRPs, the mix of 15 versus 30, the actual daypart mix of when we ran the TV advertising. So we're trying to hone in on a media mix that is the most effective, and economically works the best. So we still have work to do there. Overall, what I describe is we're seeing pretty good incremental lift but not yet on an immediate ROI basis paying off. And that's not true of all markets but, in general, or in aggregate, I'd say that's where we are. And then the other thing I'd add to the whole equation is, this isn't all just about optimizing the media spend, it's also, you've got to start with the right messaging and positioning to begin with, right? And we're using the same positioning that when we started testing TV 1 year, 1.5 years ago. And we're -- I am personally very excited about some of the work we're doing on the creative front. But together with the optimized media, I think we'll have an even bigger impact. But just to be clear, we're not in a point where we can spend, on an ongoing basis, TV in larger markets in order to be accretive immediately. Now we're generating enough incremental traffic there that you start factoring in sort of the lifetime or even longer-term value. And we haven't even finished the tail period of this second TV test to really -- to fully analyze this current wave of spend, but I think that's where we would end up.

[Gregory S. Levin:]

Operator, we have time for one more call.

[Operator:]

Our final question comes from the line of Nick Setyan with Wedbush Securities.

[Nick Setyan:]

Am I correct to understand that TV testing has ended already in Q4, or is there some more TV air time to come?

[Gregory A. Trojan:]

It's not running, but we test the efficacy by looking at, not only when it's running, but several weeks thereafter, and comparing the pre and post compare it to control. So that period has not concluded, but we are not on air.

[Nick Setyan:]

And you don't plan to be until the end of the quarter?

[Gregory A. Trojan:]

That's correct.

[Nick Setyan:]

Okay. So I mean, it seems like kind of since 2011, we were running in that 2.5-or-so percent as -- of -- as a percentage of sales in terms of the operating occupancy. We've had approximately 250, 300 basis points increase in that expense line item. I think some of that is TV. Obviously, I think most of the others do loyalty, is that correct?

[Gregory S. Levin:]

That is correct.

[Nick Setyan:]

Do you think that sort of increase in the loyalty and the cost of the loyalty, given where -- what the transactions have done, I mean, is that a justifiable investment? Or is there, at some point, are you guys going to look at that and say, "Maybe we should roll that back?"

[Gregory A. Trojan:]

We're always looking at all of the marketing spend and doing the best we can to look at whether it's working. The positive on loyalty is that we continue to see it move sales on a promotional capability. Greg talked about this. But even though our promotional spending is much lower than the average mass casual competitor out there, we did increase promotion from about 0.9% of sales to, many have heard about, 1.4% of sales for the quarter. So that's a big increase for us. Some of that was because TV drove the 2 Can Dine on pizza so effectively. But also, we use loyalty to put -- we use the term internally here, Nick, of surprising and delighting our loyalty guests. So it's not just as much about the points, it's about, a, we know that you're a loyal BJ's customer and here is a compelling offer to drive traffic to our restaurants. And that's what I'm most encouraged by. We just now have the capability to do that on an individual market restaurant and even profiling individual members of loyalty to even do it on a finer basis. So I think that tool is going to continue to be an important one for us. But I am less excited, and I think we've been consistent about this, is the basic point prospects of that loyalty plan, I just think, are certainly not that very differentiated. Everybody's kind of got that, right? So I can tell you, one of the things we're looking at, and I would emphasize looking at, is are there ways that we can look at the point element, because that's a large part of the cost, is the accrual based upon on those unused points. If we can add more of the value on the proportional surprise and delight side, can we make it a more spend-efficient program by making those points behave differently, or that part of the program behave differently. So that's where we are in that thought process as we stand.

[Nick Setyan:]

Got it. And when you guys talk about the new prototype, is that basically the Anaheim Hills type of prototype, or is there something in between the 8,500 square foot and the smaller prototype there?

[Gregory A. Trojan:]

No. We learned a lot from that Anaheim Hills and it's taught us things operationally as well as from a design perspective. So it has informed what we're talking about here. But that -- the Anaheim Hills grill is now about, what, 6,500 square feet, I think, Greg? It started out smaller than that and we added a patio to it. What we're talking about in the 2/3 of the new restaurants going forward next year is something in the order of magnitude of 7,300, 7,400 square feet, compared to 8,500 square feet. And it more mimics, if you will, some of the older design restaurants that we have here in California that are about that size. If you can imagine that kind of size, but layering all the learnings from the new restaurants that we've built over the last couple of years at the same time.

[Gregory S. Levin:]

Nick, since you're local, you're here in Los Angeles. But if you ever get down to the Torrance restaurant in Del Amo, that's about 7,300 square feet, that's actually very close to the square footage and everything of what we're talking about in...

[Gregory A. Trojan:]

But a lot of those restaurants have old kitchen lines, for example, Nick, and so we put -- obviously, we put the newest thinking in terms of the best kitchen layouts in there, some -- a lot of the finish learnings, et cetera. But in terms of size, that's back -- Corona is another one. We have quite a few that we think are closer to the right sized restaurant for us compared to the 8,500 square-foot version, 6A, as we call it.

[Nick Setyan:]

And by the way, I love the fact that -- I want to get my pizza in the pan again. It got really hard cutting that pizza without it sliding off that dish.

[Gregory A. Trojan:]

All right.

[Gregory S. Levin:]

Well, gladly, we can help you out there.

[Gregory A. Trojan:]

We got a standing [indiscernible] internally, people are very excited about that.

[Nick Setyan:]

And just quickly, last question on the mix this quarter. Did you guys comment on that, I don't remember, just the mix versus the price this quarter.

[Gregory S. Levin:]

The mix [indiscernible] rates were pretty much neutral. It was really -- it goes with menu pricing and it was just the lack of guest counts, to be perfectly honest.

[Operator:]

There are no further questions at this time. I'd like to hand the call back to Mr. Trojan for closing remarks.

[Gregory A. Trojan:]

Operator, we don't have any closing remarks. So we just want to say, thank you, everyone, for spending the time with us.

[Gregory A. Trojan:]

Thank you, everybody.

[Operator:]

Ladies and gentlemen, this concludes the BJ's Restaurants, Inc. Third Quarter 2013 Results Conference Call. We thank you for your participation. And at this time, you may now disconnect.