BJ's Restaurants Builds Momentum With Traffic Despite Cost Pressures

BJ's Restaurants, Inc. BJRI has been benefiting from increased traffic growth, improved operational efficiency and effective marketing execution. In addition, its AI-driven activity-based labor model, ongoing remodeling initiatives and higher guest satisfaction continue to support the company’s long-term, sustainable growth trajectory.

Shares of this premium casual restaurant chain have gained 36% in the past three months, outperforming the Zacks Retail - Restaurants industry’s 2.7% rise. Its earnings topped the Zacks Consensus Estimate in each of the trailing four quarters, the average being 155.6%.

The earnings estimate for 2025 has moved up to $2.19 per share from $2.14 over the past 60 days. Despite operating efficiencies and margin improvement, elevated costs, potential tariff-related risks and ongoing inflationary pressures continue to cloud the outlook.

BJ's Restaurants — a Zacks Rank #3 (Hold) stock — has a favorable VGM Score of A. Let’s take a closer look at the key factors supporting the stock’s performance and the challenges that may hold it back.

Factors Fueling Growth of BJRI Stock

Sales-Building & Margin-Driving Initiatives: BJ’s Restaurants is driving growth through sales-building initiatives while advancing its strategic priorities. The company continues to see solid engagement from seasonal menu offerings and social-led marketing campaigns, which have meaningfully enhanced brand visibility and support its long-term shareholder value creation strategy.

In the third quarter of 2025, BJ’s Restaurants posted 0.5% year-over-year comparable sales growth, driven by a 3.3% increase in guest traffic. From a profitability standpoint, restaurant-level operating margins expanded to 12.5%, while adjusted EBITDA margins reached 6.4%, reflecting year-over-year improvements of 80 and 70 basis points, respectively. Restaurant-level operating profit rose 8.8% to $41.3 million, marking the company’s profitable quarter and underscoring its ability to balance growth investments, margin expansion and capital returns.

Focus on Menu Innovation: BJ's Restaurants is moving on with its long-term growth plan by continuing to come up with new menu items, with a particular focus on bringing some of the old platforms back to life. The company recently rolled out its latest menu update, with the Spooky Pizookie emerging as a social-media-driven success, generating significant guest engagement and brand visibility. The 22-ounce beer pour has achieved an approximately 23% pickup rate, supporting higher check averages through increased beer attachment.

The Brewhouse Sampler has become a top-three appetizer, resonating well with the guests. Looking ahead, BJ’s Restaurants is preparing for the nationwide rollout of its revamped pizza platform in the fourth quarter of 2025, featuring Detroit-style-inspired dough. Additionally, the introduction of the All-American Smash Burger as a new feature within the Pizookie Meal Deal generated more than 2 billion impressions on National Cheeseburger Day alone. Collectively, these initiatives reinforce the company’s focus on strengthening the guest experience while supporting sustainable long-term growth.
 
Remodeling Efforts: BJ's Restaurants is progressively moving forward with its expansion plans by taking a balanced approach to both new unit construction and remodels. The company is actively working on initiatives to increase sales by prioritizing guests’ dining experience. By year-end 2025, BJRI expects to complete 20 remodels, bringing the three-year total to 72 locations and covering about half of its pre-2016 base, with consistently value-accretive results. In 2026, the company plans to continue remodel investments while piloting a refreshed prototype to support future portfolio growth and maintain a modern dining atmosphere.

Factor Hindering Growth

Inflationary Pressure: BJ’s Restaurants continues to navigate a challenging cost environment marked by persistent inflationary pressures, particularly in food commodities. During the third quarter of 2025, management noted approximately 2% year-over-year food cost inflation, caused primarily by higher beef and seafood costs, partially offset by lower bone-in chicken prices. Looking ahead, management expects overall inflation to step up modestly in the fourth quarter, moving from roughly 2% in the third quarter to the mid-2% range.

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This article originally published on Zacks Investment Research (zacks.com).

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