Q3 2025 BJs Restaurants Inc Earnings Call

Speaker #1: Good day and welcome to BJs RESTAURANTS INC third quarter 2020 earnings Release conference call . All participants will be in listen only mode .

Speaker #1: Should you need assistance , please signal a conference specialist by pressing the star key , followed by zero . After today's presentation , there will be an opportunity to ask questions , to ask a question , you may press star , then one on your telephone keypad .

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Speaker #1: your question , please press star . Then two . Please note this event is being recorded . I would now like to turn the conference over to Rana Schirmer , director of SEC reporting .

Speaker #1: Please go ahead .

Speaker #2: Thank you . Operator . Good afternoon , everyone , and welcome to our fiscal 2020 third quarter investor Conference call and webcast . After the market close today , we released our financial results for our fiscal 2020 third quarter .

Speaker #2: You can view the full text of our earnings release on our website . WW BJs RESTAURANTS INC . 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

Speaker #2: 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 .

Speaker #2: These statements are based on management's current business and market expectations , and our actual results could materially from those projected in the forward looking statements .

Speaker #2: differ

Speaker #2: 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 .

Speaker #2: 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 .

Speaker #2: We will start today's call with prepared remarks from Lyle Tick , our Chief Executive Officer and President , followed by Brad Richmond , one of our board directors .

Speaker #2: We also have Daniel Duran , our senior vice president of strategy and financial planning and analysis . On hand for questions which we will take after our prepared remarks .

Speaker #2: And with that , I will turn the call over to Lyle Tick Lyle Tick .

Speaker #3: Thank you . Rana . Good afternoon , everyone , and thank you for joining us today . I'm happy to report our fifth consecutive quarter of sales and traffic growth , as well as our fourth

Speaker #3: consecutive quarter of profit expansion from a top line perspective , Q3 delivered 5% same store sales growth , which included a slow start to the quarter .

Speaker #3: As we discussed on the last call , with the remainder of the quarter averaging roughly 1.5% comp growth for the final two months , which has accelerated into Q4 .

Speaker #3: On the profit side , we delivered 12.5% restaurant level operating and 6.4% EBITDA margins , representing an improvement of 80 and 70 basis points , respectively , year over year .

Speaker #3: We have now lapped the launch of the meal deal , and I'm pleased with the positive year on year momentum in the business that closed Q3 and has continued into Q4 in the last six plus weeks .

Speaker #3: Our traffic is tracking at roughly plus 3.5% year on year . Close to 9% on a two year basis and outperforming black box casual dining benchmarks .

We are better positioned today to leverage an incremental dollar of sales and win a return visit and the Improvement. We're seeing across our guests, operational, and team member metrics. Give me confidence in the durability of the progress. We're making.

Our restaurant, our operating more effectively and efficiently, focusing on being great, at what we call the table stakes, and both our guest satisfaction scores and team member retention metrics are at multi-year highs.

Our ongoing simplification efforts and focus on Gross to net. Have resulted in sustaining double-digit improvements in comped food and beverage incidents. Improving the guests in team member experience. While removing over half a million unnecessary, POS clicks for our team members and Counting.

Our outlier program and drive for accountability his improved overall, Effectiveness and efficiency as reflected in our restaurant. Level cash flow. We continue to build the Pizookie, meal deal into an everyday value platform. Resulting in continued, improvements in our value scores and traffic.

And we're beginning to see these improvements reflected with positive movement in our guests frequency metrics. As we now begin to Roll Out product and experience improvements with our pizza refresh next week.

Speaking specifically to Q3, we further embedded, our Pizookie, meal deal, as a core value platform, our guests can count on leaned into the power of social media and seasonal pizookies to drive brand momentum and continued the Journey of improvement on table Stakes operations.

Our strong year-on-year momentum since the bizzo meal deal app began, can I believe be attributed to a combination of the foundational work? I talked about as well as the continued refinement of our marketing strategies and tactics that are helping us codify how to most effectively Drive the business.

In Q3, we continue to shift our marketing focus towards social influencers and word of mouth.

Given it's not our strategy to win a share of voice battle. Our effort is increasingly focused on driving social dialogue and relevancy.

I want to give a shout out to the marketing team for the great progress they're making

Our earned media impressions are up over 300% year-on-year.

To resonate with guests. Providing a great value and accessible everyday, Splurge opportunity, driving increased traffic, recruiting new guests, and driving frequency with existing ones.

We leaned into our All-American Smashburger as a new feature, on the Pizookie meal deal and garnered over 2 billion Impressions on National. Cheeseburger day alone.

On September 17th. We also ruled our latest menu update and the Spooky Pizookie has been a social phenomenon.

Again, the team has taken a more proactive approach to Social and influencer engagement driving a 350% increase in overall engagement and doubling overall Impressions year-over-year further codifying, the role of seasonal positions as both a buzz and traffic driver,

In addition to the traction of the spooky Pizookie, our other menu optimizations are resonating with our guests.

The 22 oz, beer pore offering is seeing about a 23% pickup rate and helping to improve checks with beer attached and the Brew House. Sampler is a top 3, appetizer resonating with guests while driving a premium trade-up.

In Q3 and through October, our growth continued to be traffic-driven, with broadly flat to slightly down average check.

Underlying this performance is an increase in frequency that is more than making up for any check compression.

Play primarily it's the increased traffic and number of checks driven by the growth of the Pizookie meal deal which is continued into Q4.

Additionally, the outside growth, we continue to see in late night, which carries a lower check and continued pressure on alcohol. Beverage attachment are also contributing factors.

On the margin side, our operators continue to do an excellent job, making progress on the foundations of great operations and hospitality.

Despite some choppiness in Sales Early in the quarter, they delivered another strong quarter of restaurant margin expansion by continuing to focus on the fundamentals.

I want to thank all our teams from the restaurants through to the support center for the continued energy passion and commitment they show every day.

As I look ahead through the rest of the year and into 2026, we remain focused on continuing to make progress across our forest, strategic priorities. And I'm excited about what is yet to come.

Starting with the team member experience. Our team members are the heart, and soul of BJ's, our job is to make things easier and better for them in the guests and the rest follows suit.

I come into this call having just hosted our GM conference in Dallas 2 weeks ago and the excitement and engagement was energizing and infectious.

We spent 3 days together building alignment and ownership of our brand strategy, learning together and sharing best practices.

We rolled out our new company values which were informed by our engagement survey co-developed by cross functional team and will guide us in how we deliver on our brand promise every day.

Our people in training, teams LED learning sessions that Empower our directors of operations and general managers to bring these values back to their restaurants and bring them to life across the system.

Maybe most importantly, we began the roll out of a comprehensive. Refresh to our manager and team member training. There will be fully implemented across the system in q1 2026.

This new training establishes 1. Best way for BJs. While also empowering general managers and team members to deliver. Wow. Hospitality

I think what resonated most with this training was that it was created in partnership with our operations people and training teams, and it was authored by people who came up through the restaurants.

With respect to handcrafted food and beverage. We continue to progress Development Across our priority. Categories identify areas for simplification and are now on the cusp of launching. Our first major renovation,

On November 6th will be introducing the refreshed Pizza platform across the system. The entire BJ system is locked and loaded and can't wait to share the new product with our guests. Our team members love the product and is Chris pinsak, our chief operating officer and our senior operation leaders. Remind me. That is the foundation of creating excitement with our guests.

We will ramp up the pizza, refresh to the end of the year and through Q1, introducing our first LTO pizza product in over five years in Q1, continuing to drive engagement and excitement.

We also have 2 exciting seasonal pizookies launching in November with the monkey bread, Pizookie, coming back after much. Prodding from fans on social media and a Dubai. Chocolate Pizookie, and dessert Martini taking advantage of this current, uh, trending flavor.

As we head into 2026, our culinary priorities will be to continue to renovate our core categories.

To refresh, strong, sellers with clear NPS and executional opportunities.

And to continue work on simplification.

In 2025, we have had net reduction in menu items of 6 and in January in the January menu update, we will be removing 2 more items, eliminating 5 additional single-use skus. And then additional simplification will be primarily connected to the category. Refresh work throughout 2026.

Our third priority is delivering, wow. Hospitality our focus in 2026 is to build off the foundations, we have laid and continue to improve guest satisfaction, throughput and efficiency.

We will continue to focus on great fundamentals and not seeding Concord ground by continuing to drive accountability, through our directors of operations, and general managers focused on lifting up our outliers and sharing best practices.

As I mentioned earlier in our team member section, the new manager and hourly training is driving a 1. Best way approach to the system. Ensuring we're all pulling in the same direction and can deliver a consistent BJ's experience to our guests.

Our simplification team continues to work day in and day out to remove unnecessary barriers and this will be a continued process.

Finally, we will advance our technology initiatives to help ensure we have the right people in the right place at the right time with our

AI driven activity based labor models.

By the start of 2026 and we're beginning to lay the groundwork for future use cases.

In 2026, we will also continue to invest in our remodel program, which consistently is shown strong results and pilot a refreshed BJ's prototype setting, the foundations to grow our restaurant portfolio in support of our fourth strategic pillar, keeping our atmosphere fresh.

In 20125, we will complete 20 Ramos. Bring the total to 72 over the past 3 years. Impacting 50% of our pre 2016 Fleet and are pleased with the value of creative results. We continue to see

In 2026, we will continue the program. In a refining, our 2026 remodel targets. Now,

with the progress, we're making on the Core Business. We're now laying the groundwork of reigniting, new unit growth and have signed 2, leases with a number of deals in late, stage development. We're actively building a flexible pipeline as we target up to 2 new openings in the second half of 26, to Pilot the to Pilot, the refresh prototype and set the foundations for further growth in 2027 and Beyond.

As we drive towards a strong finish to 2025, we've made great progress. In building the foundations of a stronger and more consistent BJs. And now we're on the cusp of beginning to introduce product and experience improvements.

I will wrap by reiterating what I believe are the 3 key themes coming out of Q3 and looking ahead.

The first is continued progress. Q3 marks our fifth consecutive quarter of sales and traffic growth, along with our fourth consecutive quarter of profit expansion.

The second is stronger foundations. All of our financial consumer and team member metrics. Continue to indicate that we're building a stronger and more durable. BJs. We are better positioned today to leverage an incremental dollar of sales and win a return visit

And the third is momentum since the launch of the Pizookie meal deal. We have seen increasing momentum in strong, traffic-driven growth year on year. This momentum, combined with the strong product lineup through the end of the year—with the pizza refresh and two seasonal Pizookies—gives us confidence in maintaining strong performance.

Before I turn it over to Brad, to take us through more detail, on our Q3 financial performance and Outlook. I'm excited to share that we have finalized an agreement with our next CFO, who brings deep restaurant industry experience and will be starting at BJ's in mid December. You can expect more details and a public announcement next week.

Given that I also wanted to take a moment to thank Brad and the entire board for their continued support partnership and guidance, it has and will continue to provide Great Value to me and the entire management team.

Brad.

Thanks, love and good afternoon everyone.

As well as just outlined, BJ's brand is healthy and thriving. Um, doing the third quarter, we achieved record sales and profitability levels we have not seen in over six years. The cash flow of the business is durable and growing to support our growth drivers, with ample excess cash to repurchase shares from the market, priced at a meaningful discount to its intrinsic value.

To the latter point. We we we purchased and retired 996,000 uh common shares for 33.2 million during the third quarter.

And for a year to date total of 1,838,000 common shares for 62.4 million.

With the board's authorization today for an additional 75 million and share, where you purchases. We have updated our 2025 handle, share repurchase expectations, from 45 to 55 million, to 65 to 800 million.

Importantly our balance sheet remains healthy. As we end of the third quarter with a net funded debt of 64.1 million comprised of debt, a debt balance of 89.5 million with cash and equivalents of 25.4 million.

and the third quarter, we generate sales of 330 million or 1.4% increase versus last year on a comparable basis,

Q3 sales increased by half a percentage point.

All driven by traffic growth.

This quarter included a little over 2% of year-over-year pricing.

The compression and check is driven by three factors: the outsized growth we continue to see in the late-night daypart and the basic meal deals, both of which carry a lower check.

These comprised about half of the check compression.

Continued pressure on alcohol's, beverage sales comprised the other half.

Less food. And beverage is up, 90 basis points, and margin after direct, labor is up 130 basis points. This year over last year,

This is a testament to our menu and marketing teams management of the menu and our operations teams delivery of the menu.

We achieved meaningful increases in our restaurant, level operating profit adjusted, ibaa and eps.

While highlighting what I call the four drivers of this margin improvement, I want to briefly recap our focused efforts on table stakes.

Simplifications restaurant outliers, and the Pizookie meal deal platform.

This is driven our restaurant. Level operating returns to 12.5% in Q3 which represents an 80 basis points improvement year-over-year with a restaurant level, operating profit, increasing 8.8% to 41.3 million.

This included approximately 40 basis points, year-over-year headwind on this line. As we wrote down certain asset valuations this year, that's included in the operating and other expense line.

Our Justin Eva margins reached 6.4% in, Q3 which represents a 70 basis points improvement year-over-year with our adjusted ibida. Increasing 14.1% to 21.1 million.

now, on our line item basis, our cost of sales was 25.7% in the quarter, which was 90 basis points favorable a year ago,

Food cost. Inflation was approximately 2% on a year-over-year basis driven, broadly by higher beef and seafood costs, partially offset by lower costs for bone in chicken.

Cost of sales also benefits from our four margin drivers.

Labor and benefit expenses were 37.1% of sales in the quarter which was flat to last year.

our restaurant teams continue to operate at a heightened level from better, guest count forecasting enabling better, labor scheduling, and then managing to that schedule,

We leverage hourly and management labor by approximately 50 basis points, but this progress was largely offset by cruels for higher anticipated. Medical cost inflation related to workers compensation.

Despite the progress in reducing the number and severity of claims.

Occupancy and operating expenses which includes marketing was 24.7% of sales in the quarter, which was flat to the third quarter last year.

Marketing costs increased by 10 basis points and sales leveraging offset approximately, 40 basis points of year-over-year headwind on the right down of certain assets. I mentioned earlier.

General and administrative costs increased 40 basis points. Year-over-year largely driven by investments in our strategy and a negative -20 basis points. Impacts of mark-to-market accounting which is fully offset Below ibida. In other income.

Pre-opening costs declined, 30 basis, points from fewer. New restaurant opening activities this year.

Depreciation, expense increased 20, basis points compared to last year reflecting the remodel investment in our restaurants.

And as well as already mentioned.

We reiterated our 2025 comp sales guidance of approximately plus 2%.

Restaurant level operating profit of $211 million to $219 million.

Adjusted IBA of 132 to 140 million.

And capital expenditures of $65 million to $75 million.

And as I mentioned earlier, we increased our expected share repurchases to 65 to 80 million, 80 million, depending on market conditions.

Our earnings assumptions. Include an overall.

Inflation increase from approximately 2% in the third quarter, to the mid 2% in the fourth quarter.

And with that, we'll take your questions, operator.

To ask a question, you may press star, then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2.

Let's work. Question comes from Alex, Lego with Jeffrey's, please. Go ahead.

Banned on that a little bit more, um, on on what? Drove that acceleration.

Yeah, sure Alex, thank you. It's Lyle um, you know as as as we're looking at it year on year, there's a couple of things that I would point to, I think, you know, there's kind of a combination of factors that go into it. Some of it I believe is some of the foundational stuff that I've talked about, you know, on the past several calls we're seeing Improvement in guest metrics uh Improvement in satisfaction Improvement in value and you know eventually you expect to see that starting to come through in frequency and we're we're starting to see those frequency numbers, uh, improve across income cohorts and age cohorts. So that that kind of works together.

Pizookie, meal deal has continued to grow. So, you know, as we came into the, the lap, the, the numbers that we were seeing coming into the last that I think, you know, we alluded to probably the last quarter is that PMD continued to grow. We continued to see more people coming into it and more frequencies. So it made us gave us confidence going into that and then, you know, I I mentioned the, you know, the marketing and the lean in on the social side. Yeah, I wouldn't underestimate that increase in Social dialogue and Buzz. Um, and in, you know, influencing our engagement, I'd say, the 2, kind of main platforms for that were the Pizookie meal deal. Uh, and the Smashburger, but really the, the spooky Pizookie

Was really a, a phenomenon in this year and, and the team leaned in, and it really gained a lot of traction on social. And I think, um, that resonated and we saw it coming through, obviously, in traffic. But we also see that in the, in the rise in, in, uh, spooky Pizookie incidents. So, you know, we kind of can see that correlation there. That, that helps us point to that.

Interesting thanks. Um, and I guess, you know, you've been here a year and I guess started the CEO role in June but kind of curious if there's anything in the business that's surprising you now or just shaking out a little bit different than you expected coming in.

Um,

I don't, I don't know if there's anything that is, um,

You know.

Particularly, uh, you know, surprising me. I mean, look, I'll tell you. I'm pleased with the performance. We're seeing in the level of acceleration, we're seeing in the business recently, you know, I think, you know, the team came together, did the hard work on the strategy and the priorities and we're, we're remaining kind of Guided by that and trying to keep ourselves focused on on what matters and and continue to build build a stronger business. Right? Um, over time and so um, you know, I'm pleased with the progress we've made. I'm pleased with the progress of the team is made. Um, and I'm excited about where we're going uh, with the business right now.

All right. Thank you.

Sure.

The next question comes from, Brian. Bittner with Oppenheimer. Please go ahead.

Thanks, congratulations on on solid results. Um you clearly have reiterated that the guidance for for full year, same store sales. And you also said that the 1 and a half percent comps you were seeing towards towards the end of of the third quarter accelerated into the fourth quarter and and getting to that kind of 2% range for the full year. Would suggest something in the fourth quarter that is closer to like the 3% range. So I'm just trying to level set because there's a lot of outcomes for 4 q to get roughly 2%. It's kind of the 3% range, the right way to think about the fourth quarter.

Uh, thank you Brian as as as we're looking at our models and kind of where we're at today as we speak and and how we're rolling things forward. Uh, we're looking at about 2 to 2 and a half percent growth and that will land us right around that 2% for the year.

Great. And that's still incredibly impressive. Um, the acceleration given what we're seeing and just elaborating on, on Alex's question. I just trying to understand what's going on. Are you guys just not seeing, um, any pullback in consumer Behavior? Are you not seeing in your data and insights any changes, um, in frequency or anything like that? That basically everyone else is talking about.

Yeah, so I mean, I I I'll tell you what we are seeing, we're actually seeing an increase in frequency.

Beginning to emerge across all of our age cohorts, as well as all of our income cohorts.

Per customer across those cohorts. Now, across all of those cohorts, whether you look at it from an age or an income perspective, we are also seeing a bit of check compression, right? But the frequency is more than making up for that.

Um, you if you kind of break that out at the lower end, we're actually seeing higher frequency gains and a little bit more compression and at the higher end, we're seeing less frequency gains and less check compression. But there's not like big, big glaring, differences between them and on the age cohort side, we're seeing actually the older and the younger consumer kind of be a little bit more on frequency, uh, and a little bit more on compression and that kind of between the 2, we're seeing again, increased frequency to a lesser extent and a little less check. I think what it might suggest right is we've seen the PMD growing in the cohorts where we're seeing the more the higher level of frequency and a little more check. That's a higher engagement rate with PMD but you know when you look at the frequency resulting in the average, spend it suggests. It's also driving an incremental occasion. So, you know, that's kind of the way I'm looking at it and

Dissecting it. And so, you know, I'm, I'm pretty happy with what we're seeing but that's kind of the mechanics of it.

Great. Ya know that it certainly suggests the foundational work you've been doing on the brand is is working. Uh, thank you so much.

The next question comes from Jeffrey Bernstein with Barkley. Please go ahead.

Great. Thank you. Um, couple of things you touched on from the, the unit side of things. Uh, the first 1 was on the, the remodels. Uh, sounds, I guess still on track for the 2025 and I think you said that's 50% of your

class of units opened prior to 2016. I'm wondering if you can give us an update in terms of

You know, the cost of their zero models, maybe the sales lift, and how many you think you might do in 2026 as you, uh, move towards, presumably 100% of those stores. Opened more than 9 years ago and then I had 1 follow up.

Yes. I mean what I'll tell you is on the remodels, we continue to see a return that we're that we're pleased with which, you know, gives us confidence that it is a good use of our Capital to continue to invest in the in the remodel program.

Uh, as I look into 2026, we're definitely going to continue the program. I'd say it might be at somewhat of a moderated Pace next year as we start to also get the refresh prototype out there, and then apply those elements to the remodel. And then, as we gain a little bit of experience with that, I think returning to that pace of, you know, like we're doing this year, 20 to 25 plus remodel units. As we as we work through the rest of them. So feel really good about the program, uh, want to do a little bit of learning with, uh, the, the new product type and then, you know, accelerate again. But, but we're going to continue it next year. So,

Got it. And then I think you mentioned from a new unit perspective. Um,

You know, the re-acceleration and growth. I think you said you have 2.

Potentially, that could open in the back half of 26 and then I thought you mentioned something about Accelerate from there. So just wondering how you think about obviously there's no shortage of opportunity across the the US for the concept. So what's how do you think about what that ramp looks like in 27 and Beyond? I mean, is it just a like, what's the constraint to that seemingly? You have lots of opportunity, but whether it's people or real estate or just operations, I mean, how do you think about

when kind of disguised the limit what you do in 27 and Beyond,

yeah, I think look, I mean, I think part of it is

building the pipeline obviously, which we're doing now. Uh, another part of it is, uh, gaining the confidence in the Prototype and the return on the spend which, uh, which will be doing. And, um, and so I would think of it as kind of 2026 end of 2026. We'll take a step in 2027, and then in 2028, really starting to see, you know, that, that that full run rate come back. Um, when you think of it from a g geographical point of view and what kind of how we're going to attack that and what are enablers? Uh we're going to focus on where we are. Already have a footprint, right? So the way we've talked about it is kind of think of it as concentric circles. So we're we're going to look at markets where we already have restaurants and we either need to fill out that density to get kind of that Alchemy on awareness and consideration and also leverage on multi-unit management. Or we feel like we have room to fill in where we already have a decent amount of restaurants because

A head start gets us out of the gate quicker. We have the leverage on management, we have the leverage on supply chain infrastructure and so we'll get to New Markets but building out in kind of concentric circles uh, versus kind of putting 1 offs out because we actually have frankly, a lot of markets that what I would call are kind of between clubs on multi-unit management, where we have just a couple of restaurants. So I think what you'll see, you'll see some of those leases in places, like in Arizona, where we're filling in and building out and you'll see some in places, like a Pennsylvania or in Illinois, right? So, they'll be those types of things. But, it'll be building out from where we have in existing Footprints, to a certain extent.

Understood, thank you.

The next question comes from Sharia with Bill Blair. Please go ahead.

Hi. Thanks for taking the question as we think about those 2, new locations and 2 new prototypes for next year, are there any key changes that we should be looking for either in the size of the box or the features of the box that you're really Keen to explore?

Um, I think the, you know, as we look at the Box, the first thing that we talked about was, as we did, the positioning work, does the environment and atmosphere itself, uh, really live and breathe our positioning in our DNA? Does it feel like it would be familiar to existing guests, but excite new guests and bring us into kind of the Next Generation kind of contemporize contemporize, uh, BJs. Um, I do think there's an opportunity to probably lighten things up a little bit with BJ's that. That we know we're we're taking an opportunity, uh, to do with the Prototype. I am a big believer in, uh, right? Right kind of size right costs, right place. So, you know, you're going to see a prototype that has very clear indicators of that, you'll see consistently across. BJ's like, what are those design elements that make a BJ's a BJ's which you see everywhere? Um, but we'll see that applied in

Different markets to different sizes and different costs in some markets. We'll we'll look to test um you know a conversion versus a ground up. So you know I think we're we're trying to get really clear on what makes a BJ's, a BJ's and then apply it flexibly to get the right return on the investment.

And then can I ask a follow-up on the, the revamped Pizza launch? I mean, as you launch that, I mean, how do we think about that and the impact to check? I mean, I I don't know kind of

I mean, you already have pizzas, I don't know how you're expecting the attached of pizza or the incident rate to kind of increase and I'm assuming that's going to be more value for the consumer than necessarily ordering. You know, everyone ordering entree for themselves. So, I'm curious on how you expect that to play out. And also, if you're going to lean into that as another kind of value offering, in addition to the PMD, thanks,

Yeah, sure. I mean, I think Pizza inherently does provide a value um and feels kind of a different occasion for people, which is, which is really nice. And so I think it's historically played that role but I think is the pizza kind of quality and satisfaction eroded it it. Did that less effectively and so part of what we're doing is, you know, refreshing the pizza to to help it play the role, it's supposed to play in our menu more effectively, going forward. I think, when you look at kind of the way I think about pizza, you know, it's it's a core product Improvement that I would expect to kind of build over time as we drive trial and and I think of it as just another layer in building a stronger, more sustainable BJs and kind of working in combination with the other improvements, we talked about. So what I don't expect is

Like a short-term inflection point in in short-term performance, but rather another layer in building kind of sustainable growth over time. And this is Daniel, I'll expand that on that just a little bit here. Um, in terms of the check, what we've seen in the test locations is we've actually seen a little bit of a uptick in our average check, in those locations versus control. Um, part of that is I think we mentioned previously that we're seeing about a 10% uplift in our pizza incidents overall. So just kind of wanted to add a little color so you get a little more clear answer there around kind of what works anticipating to have happen um, with our check their

Thank you.

The next question comes from Todd. Brooks with Benchmark. Please go ahead.

Highlighted the foundational.

Improvements that the team has made um, in that time frame.

We're seeing it. When you talk about unit growth, we're seeing it, maybe on the culinary side.

But with a year of foundation building behind you, what what's the brand better position to play offense on? Now, as we go into 26, other areas that we should see you guys really start to put your um put your stamp on the business and be a little more front footed and how you're running it versus stabilizing it.

Yeah, look I think um, I mean what I guess I would say I I I'm pretty pleased with the momentum that we have and and and and the work that we've done, you know, I I do call it foundational But ultimately it's building a better, more sustainable, more compelling VJs, I think, as you think about getting more in our front foot is kind of what I referenced when I talk about like product and experience improvements. And and so the 2 kind of, probably main drivers of that are going to be the continued work on the menu. Renovations next year, as we start to focus more on kind of the post Pizza categories and then the other 1 would be the new prototype that we're working on. And so I think those things allow us to, you know, having the foundation stronger, allow us to push a little bit harder on, you know, new stuff in the restaurants and the teams will be capable of taking that in and executing it really well.

I think probably the other thing that that is maybe a little harder to to to just put your thumb on is as we get stronger with the foundations and we're running more efficiently, it does give our GMS and our team members, the opportunity to, uh, do more of the added value Hospitality right. As we're making things kind of more systematic for them, it kind of frees them up to deliver that Hospitality more effectively, which, you know, in in my view in our business can't be underestimated.

Okay, great. And my final question, you spoke on the last call about the Pizookie meal deal and evolving.

The platform to have some add-on and and kind of check Builder type of capabilities for customers that are accessing their just wondering a success that you've seen with that. Any other iterations that you're looking at with the program? And how are the teams doing from a front of a house standpoint um kind of selling that ability to build a higher, check on that platform.

Yeah, so, I mean, overall PMD. Um, so as I said, it's growing, it's not only growing in uh, in frequency and attachment, but the check is actually growing a bit on PMD, so that's good. Now,

Uh what I say that we've kind of nailed that uh yet. The answer would be no. Um the PMD, I'm sorry the Pizookie, full-size Pizookie trade-up?

Um, has been an easier sell for our team members at dinner, uh, not much at lunch, uh, the other add-ons we've had so far have not, you know, had much traction. Um, the Smashburger brought a lot of kind of momentum in news to the Pizookie meal deal which which were excited about. Um, and so we're still working through kind of what is the next iteration of add-ons and check building and and and menu refresh for PMD. And so that'll be things that we test and roll in um in 2026. But you know I say we're still at the beginning of that Journey seeing a bit of traction. But you know, I wouldn't I wouldn't Pat ourselves on the back yet about that.

Okay, perfect. Thank you.

The next question comes from.

Pakistan, this case, go ahead.

Thank you. Just wanted to come back to the, the pizza launch, you know, in those test locations you referenced in a prior answer, you know, were you doing anything to proactively drive a awareness? Um, or were those, really those lifts really just

happened purely organically, you know, and and related to that, just talk about the plan to drive awareness once that does launch next week, whether that's social or inside the restaurant, anything you could offer

Yeah, sure. I mean, in the test markets, it was really organic. I mean we we

Selling it and people, and people picking up on it. So, I mean, I think all of those elements obviously continue as we roll out, broadly, then the plan that we're putting in place, we we are going to do external marketing about it. It is going to be heavily driven by social PR and influencer. So, Word of Mouth getting the product in people's mouths, getting people to talk about it and drive it, we'll be doing sampling at a restaurant level again to make sure we're driving trial. But um, yeah, we will, we'll be doing marketing. But it'll be very much in the spirit of what I was talking about a bit more of a center of gravity in the social influencer Word of Mouth world.

Okay, thank you. And then just a question on the share repurchase activity. There's been a notable step-up here in the third quarter. You know, as you evaluate whether or not you want to continue with that moving forward, is there a leverage target we should keep in mind?

It could be a turn of debt, maybe it's something different, just any any color on the philosophy or the parameters from here?

Um, this is Brad, I would say no. I mean, if you look at our balance sheet, look at our debt levels, we have plenty of capacity, um, so if, if the situation presents itself, we'll continue to buy the heavy, um, rate. Um, but also we will keep some dry, uh, powder if you will because, you know, we're on the customer, you know, ramping up, new unit growth. We'll get back to a wrist place on remodel, so we want to keep some power.

For that. But even with that said there's a lot of capacity uh to to do that. And so we'll gauge that you know as as each day goes by but um you know, we don't feel constrained at this point.

Thank you.

The last question comes from John Tower with City. Please, go ahead.

Hey, thanks guys. Um, maybe just a few quick ones if I met. Um, first, I obviously you'd mentioned that you're seeing a bit of a check pressure, particularly from, um, the higher mix of of PMD rolling through the the business today. But I'm just curious from another perspective, how are you thinking about that in in informing your pricing power going forward? And, and, and frankly, how are you thinking about pricing over the next 12 months and the broader menu?

Yeah. I mean as I think about I mean as as we think about pricing going forward I guess I would take maybe 1 step back John. This is a mile by the way. Um you know the way we're attacking the business is really trying to put that value equation at the center of everything. Right. And is our product and experience worth the price and are we giving delivering kind of a worth it. Experienced in that social Splurge, education and I think you know price plays a role in that but it's not you know um it's not solely about price certainly. Um,

I think that, um, what I like right now is that we're seeing our value score. Goes up, go up, we're seeing our guests metrics, go up, and we're seeing that traffic driven growth. So clearly we're hitting, you know, a good kind of intersection, uh, with that right now. Now, I think the other thing is, as you see, guest satisfaction and value scores go up as long as you're continuing to deliver on that. I think we will be able to find opportunities for pricing, particularly having kind of those entry points of the Pizookie meal deal and daily Brew House specials, right? Because what we're able to do is give, you know, certain consumers, and entry point into social Splurge with PMD in a daily, Brew House, special, and other consumers, and entry point into it with pizza or, you know, a steak for that matter. And so just having all of that work collectively, you know, another thing that I'm looking at, as we go into next year, particularly, as we look at category refreshes is how we think.

Think about like category and revenue Management in the category in order to create opportunities for trade-up, for folks and opportunities to drive mix.

Um and so there's really a lot of levers that I think about using as we kind of go forward and drive, check pricing will be 1 of them but you know, we're going to be thoughtful about pricing as we go forward and continue to keep an eye on those guests and value metrics. Um, so yeah, do we think we have some pricing power? Yes, we think we do, but we want to be judicious about that and make sure we continue to see the traffic. See the scores, go in the right direction. And as long as we're able to lever that in the p&l, which we have been able to do pretty consistently, I feel good about it.

Just under your digital and off-premise business. I know that that had been an area that you'd spoken to in the past in terms of seeing an opportunity to improve the presentation to the guest online. And I'm just curious, you know, where you guys are in that process.

Yeah, that is 1 of or will be 1 of our priorities for 2026 and and I think it's it's it's really an end to end. Um

Piece of work to improve, uh, our office, right? Because it, it starts with some work that, you know, you're you guys, it's not as visible to you guys right now, but we're already working on, which is how we attack missing and Incorrect and again, some of the kind of foundational stuff we've talked about. So we've been tweaking things about like arcades and how the products show up in the, in the restaurants, for our off, premise, teams, and our cooks. And we're, we're seeing improvements in our M&I, so that that's encouraging. And as we start to do that, we can then start to have that stronger foundation and then work on the consumer-facing stuff. I think the consumer facing stuff has to do with

Eliminating friction in our, um, in our kind of digital consumer flow which um, you know, part of that is, is actually improving the flow from a technological point of view. But part of it is improving merchandising making sure the things that people that are relevant for off, premise are presented to people for

First, not offering our phone menu on off premise because it's not all relevant. Um, so there's a lot of kind of those opportunities for us to improve and we're going to be attacking them next year, but um, they just had to be sequenced in the priority this year and and uh, and so they're really a 2026. Um,

Is what we're really going to start to see movement against some of that stuff.

Okay, thank you. And then just last 1, uh, bookkeeping fourth quarter. I obviously, you gave some commentary and where you think comps might shake out, but is that accounting for some of the calendar shifts? I know Halloween hits this Friday versus I think it's a Thursday last year and then I think New Year's Eve falls out of the fourth quarter for you guys.

This year.

Yeah. Hey John, this is Daniel. Uh, that's correct. Our guidance, their accounts for all the holidays shifts that you just called out. So, uh, you can you can take kind of the full quarter of adjusted for those holiday shifts.

Cool, thank you. Appreciate it.

This concludes the question and answer session, and today's conference call, thank you for attending today's presentation. You may now disconnect

Thank you, everyone.