BJ's Restaurants Inc (BJRI) 2010 Q3 法說會逐字稿

Good afternoon ladies and gentlemen. Thank you for standing by. Welcome to BJ's Restaurants Incorporated third quarter 2010 results conference call. (Operator Instructions) Now, I would like to hand the conference over to Jerry Deitchle, President and Chief Executive Officer.

Hello everybody, I'm Jerry Deitchle with BJ's Restaurants and welcome to our third quarter 2010 investor conference call. Which we are also broadcasting live over the Internet. After the market closed today, we released our financial results for our third quarter of fiscal 2010 that ended on September 28. You can view the full text of our earnings release on our website at www.bjsrestaurants.com. Joining me on our call today is Greg Levin our Executive VP and Chief Financial Officer, Greg Lynds our Executive VP and Chief Development Officer, and Diane Scott our Director of Corporate Relations.

We will begin with our prepared remarks after Diane provides our standard cautionary disclosure with respect to forward-looking statements, Diane, go ahead.

Thanks, Jerry. 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 undue reliance should not be placed on such statements. Our forward-looking statements speak only as of today's date October 21, 2010. We undertake no obligation to publicly updated 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.

Thanks, Diane. As we noted in our press release today our leadership team here at BJ's was very pleased to deliver a very strong financial performance for fiscal third quarter of 2010. Just to quickly summarize our financial results for the quarter compared to the same quarter last year our total revenues were up 24%, our comparable restaurant sales were up 6.7%, our average sales per operating week were up 8.7%, our total restaurant operating weeks were up 14%. Our estimated four wall restaurant cash flow margin which is a non-GAAP measure that also excludes non-cash equity compensation included in restaurant labor, that statistic was up approximately 200 basis points to 20.2%. Our consolidated operating income margin excluding the $884,000 pretax asset disposal charge for the current quarter was up 220 basis points. Our net income was up 75% and our net income per share was up 75%. Finally, our net income and net income per share were up about 92% and 83% respectively when excluding the previously mentioned asset disposal charge for the current quarter.

After considering all key performance metrics across the board we believe that BJ's performance for the third quarter was quite strong. Greg Levin, our CFO, will comment in more detail about our financial results for the quarter a little later in our call today.

Despite the continuing pressures on consumer spending in general and the current economy we made a decision when the economy started weakening a few years ago to stay laser focused on BJ's longer term growth opportunity and we decided to continue to keep prudently investing in the very core of our business by further improving the quality and differentiation of the BJ's concept in every respect including our food, our beverages, our facilities, our guest service, our managerial talent base and all of the underlying support systems and processes that enable higher quality execution. We believe that our recent performance supports the judgment that we made in this respect. Going forward we remain highly confident that BJ's will continue to emerge from the current tough economy as an even stronger restaurant brand concept Company and market share taker.

We always want to take a few minutes on our quarterly calls to reiterate our fundamental competitive strategy and operating philosophy with our investors so that everyone will always be crystal clear as to how we intend to keep building our Company. We continue to believe that the battle for market share will be much more significant for casual dining companies going forward than it has been historically primarily because the casual dining segment doesn't have as strong of a macroeconomic tail wind that it enjoyed during the past couple of decades. We think the ultimate market share takers in casual dining going forward will likely be those that either excel as low cost providers of kitchen replacement meals or those that excel as dining out for fun destinations that provide a higher quality overall dining experience at a solid value for the consumer. BJ's has chosen to more clearly compete as a higher quality differentiator with exceptional approachability and with an outstanding value proposition for our consumers. Accordingly invest in the core and build market share has been our key internal theme during 2010 and we're going to stick to this theme next year as well. We intend to keep carefully balancing our resource allocations to taking good care of both our new restaurant development program and our established base of restaurants for which we're going to have 102 open as of the end of this year.

Moving through our -- to our third quarter results, our assessment of the underlying factors for our strong 24% increase in revenues for the quarter essentially mirrors the assessment for our strong top line results for the sequential second quarter. First of all, sales from our newer restaurants not yet in our comparable restaurant base continue to exceed our expectations in the aggregate. All of these new restaurants were open in mature densely populated trade areas with stable levels of retail sales and that's our principle development strategy going forward. The strong sales volumes from our newer restaurants in the aggregate continue to give us good confidence going forward, as to the competitive power of the BJs restaurant concept continue to gain market share as we continue to execute our national expansion plan in a very careful and controlled manner.

Next, in our comparable sales base of 82 restaurants during the quarter, we experienced sales increases across the board in every one of the 13 states that we currently operate in with the one exception of Nevada, where our two Las Vegas restaurants experienced essentially flat sales for the quarter which in light of the nation's highest state unemployment rate of 14.4% in Nevada, we still think is a pretty good performance in our opinion. Speaking of unemployment rates we still believe that until the job market starts to considerably improve in general, we probably won't see a more significant advance in our overall guest traffic and it may be some time before the job market shows considerable improvement in our country. So while our sales trends have been relatively strong when compared to many of our peers, we always caution investors to remember that we're still operating in a very difficult and volatile operating environment for consumer discretionary spending in general.

Sales volumes still remain pretty difficult for us to forecast with a high degree of certainty, so we always advise those who are in the business of forecasting sales to keep their expectations on the conservative side. Greg Levin will comment more on that a little later in our call today. During the quarter, our strong increase in comparable sales was driven by a combination of factors as follows. First, our successful new menu introductions this year, especially our new small bites and snack offerings have benefited the average spend per guest in our restaurants. By the same token increased beer purchases by our guests have also benefited our sales particularly driven by our popular seasonal beer offerings and our new BJ's LightSwitch Lager brew which, to borrow from an old beer advertising slogan, Tastes better and is less filling at least in our opinion than most of the popular mass market light beers out there.

Next, our guest traffic and throughput have also benefited from improved operational execution during the quarter. Driven by stronger management staffing levels and also by what we internally call our quality past operational initiatives. Last but not least, we have also improved guest traffic as a result of the success of our CapEx related initiatives particularly our increased seating for parties of two what we internally call our deuce seating initiative and our expanded guest beer cap initiative. By the end of this year we will still have about 37 restaurants left that can receive deuce seating conversion and about 29 restaurants left that can still receive an expanded guest beer cap set. We currently plan to complete all of this CapEx work no later than the end of fiscal 2012 so there clearly is more upside to come from these two particular CapEx initiatives.

Before we leave the topic of our top line results, we should note that our comparable sales trends for the first three weeks of fiscal October continue to be solidly positive. Greg Levin will provide some additional detail on our current sales trends in his remarks in a few minutes.

Before we comment on our expansion plan, I'd also like to share a few of our preliminary views about the likely operating environment for 2011 particularly regarding higher cost potentially for our key food commodities next year which is certainly on everybody's mind these days. Many restaurant businesses including ours have enjoyed flat to even slightly down commodity costs in the aggregate during the past year, eighteen months or so. Currently indications in the commodity markets suggest that the restaurant industry will likely see some modest commodity cost inflation next year. At BJ's we're currently in the middle of most of our commodity contract negotiations for 2011, so we really don't have much in the way of definitive information to share with you today.

Based on what we do know or expect at this time, about the likely cost for our key inputs next year, however, we currently believe that we can offset most if not all of these potential cost increases through a combination of thoughtful marketing and promotional mix shift planning, by working in a few potential product and packaging specification changes, by driving forward with our productivity and efficiency initiatives and as necessary, by implementing carefully targeted menu price increases.

As a result of the many investments we have made over the years to improve the overall quality and differentiation of the BJ's Restaurant concept and given our relatively low average guest check compared to most of our peers, we believe that we have greater pricing power and flexibility when compared to that of many of our mass market chain competitors. We have kept most of our pricing power deliberately in reserve during the past couple of years. Having said that, we will always deploy our pricing power very carefully and as a last resort to protecting our margins. And frankly, as we all know, the most effective four wall margin protection program that I know of will always be centered on sales building initiatives and the flow through from those incremental sales. At BJ's we always focus on sales building first and foremost.

Moving to our new restaurant expansion program, we have opened nine successful new BJ's Restaurants so far this fiscal year. Our tenth and final new restaurant opening for this year is currently expected to occur before Thanksgiving. As a result, we will successfully achieve our stated restaurant expansion goal for 2010. Not only in terms of quantity, but also in terms of quality as reflected in the growth of our average weekly sales volumes this year. We believe BJ's is one of just a few publicly held casual dining restaurant companies to have achieved double digit capacity growth during both 2009 and 2010 and that also plans to achieve double digit capacity growth during 2011.

In our press release today, we noted that we currently plan to open as many as twelve to thirteen new restaurants next year. Similar to the past couple of years our new restaurant development will be focused within our thirteen state geographical footprint in order to drive greater leverage with respect to our overall brand awareness, our supply chain, our field supervision resources and our restaurant management and talent base. We're not going to start diluting our development in supervision resources by scattering our new restaurants around the country wherever we happen to find a good site. Instead we're going to maintain strong self discipline in our expansion program by remaining more tightly focused on concentrating our resources to achieve maximum operating and brand leverage while still achieving good geographical diversification. Now I'm going to turn the call over to Greg Lynds, our Chief Development Officer for his update on our new restaurant development pipeline. Greg, go ahead.

Thanks, Jerry. As Jerry just noted and also in our press release today, our new restaurant development pipeline remains in excellent shape. We continue to be very pleased with the overall quality and quantity in the new sites in our pipeline. We worked very hard over the past five years to better position BJ's with a higher quality, more differentiated casual plus dining concept, in our new restaurant design and site collection strategies continue to strengthen this position.

Over the last year or so we have become one of the restaurants of choice within the retail development community because of our strong brand positioning combined with our proven and sustained top line performance we are seeing higher quality sites to slightly better lease economics. Our development team has worked very effectively this year to successfully achieve our previously stated expansion targets, to grow our total restaurant operating lease by approximately 13% and successfully execute our ten new restaurant openings during 2010. Jerry mentioned to date in 2010 we have opened nine new restaurants. We are very pleased with the initial performance of every one of them.

In the third quarter just ended we opened four restaurants, Daytona Beach, Florida, opened on July 12, Tucson, Arizona on August 2, Colorado Springs Colorado on August 30, and Sparks, Nevada on September 20. So far in the fourth quarter we opened right here in Southern California, in the Puente Hills East shopping center and we opened that on October 4. We have one more planned opening in the fourth quarter which is in Houston, Texas market in the northern suburb known as The Woodlands. And as Jerry just mentioned this restaurant will open up before the Thanksgiving holiday.

Looking forward to our development plan for the next year, we currently expect to open as many as twelve to thirteen restaurants in 2011 and similar to our 2010 development plan where we opened six of our ten restaurants within our core California and Texas markets our current plan for 2011 calls for all new restaurants to be built within our existing thirteen state footprint. In today's economic environment we believe it's more important than ever to continue to cluster development of our restaurant within our existing markets to achieve better leverage in the supply chain, field supervision, marketing and overall BJ's brand awareness.

In terms of our long-term development plan, we continue to believe that we have room to open at least 300 BJ's Restaurants of various site types and sizes across the country over time. At the end of this year, we will have 102 restaurants open in thirteen states. We have plenty of quality growth opportunities remaining in our core California and Texas markets. And we have now established strong national brand presence and national footprint from California to Florida and into the Ohio valley. We are currently evaluating a couple new markets for potential entry in 2012. And we'll keep everyone advised as we firm up these plans.

As I mentioned in our last call, the current economic conditions have taken their toll on many national retailers, our external development partners and our landlords. As a result of these difficulties in the current stock commercial real estate market our team has been more focused than ever on securing real estate within densely populated more mature areas and we will maintain this discipline as we build our 2011 and 2012 site pipeline. Even though today's slow national economy has caused the postponement and cancellation of many new retail projects, our BJ's new restaurant development pipeline remains in excellent shape. BJ's brand within the development community has never been stronger and our team will continue to leverage the strength of our brand positioning, to secure the AAA real estate opportunities and gain market share as we grow from Coast to Coast.

Once again it's important to reiterate that we believe that BJ's is one of just a few publicly held casual dining restaurant companies that achieved high quality double digit capacity growth during 2010 and that plans to do so again during the next year. Our team is definitely looking forward to continuing to execute at high quality and profitable expansion plans for BJ's during the next several years to come. Jerry, back to you.

Thanks Greg, for that update. We continue to believe that BJ's four wall economics are very sound and they clearly support a continued steady pace of new restaurant expansion. And we're always going to pick quality over quantity when it comes to our new restaurant locations. Now I'm going to turn the call over to Greg Levin our CFO for his financial commentary on the third quarter. Greg go ahead.

Thanks, Jerry. Let me take a couple minutes and go through some of the highlights for the third quarter and provide some forward-looking commentary for the rest of 2010. And some preliminary commentary for fiscal 2011. I do want to remind everyone that all such commentary is subject to the risks and uncertainties regarding forward-looking statements that are included in our SEC filings. Additionally, my commentary may also refer to certain non-GAAP financial measures that we use in our internal review of the business and that we believe will help provide insight into our ongoing operation.

As Jerry previously noted, total revenues for BJ's third quarter of 2010 increased approximately 24% to approximately $128.8 million from $103.9 million in the prior year's comparable quarter. This increase is the result of approximately 14% more operating weeks and an approximate 8.7% increase in our weekly sales average.

As Jerry mentioned, our aggregate comparable restaurant sales increase for the third quarter was 6.7%. While we do not report monthly comparable restaurant sales July, August and September's comp sales were basically the same with comparable restaurant sales in the mid-6% range. While we are appreciative of our solid comparable restaurant sales, we do realize that some of this strength is the result of the comparisons from last year in which we reported a negative 1.6% comparable restaurant sales which was our weakest comp restaurant sales quarter since we became a publicly traded company.

Much like last quarter our restaurants outside of California in aggregate had higher comparable restaurant sales than our restaurants inside California. However, California was solidly positive for the quarter and certain restaurants in certain areas of California continue to outperform the Company average. Our newer regions continue to deliver some of our strongest comparable restaurant sales.

In the third quarter our four Florida restaurants had in aggregate positive comparable restaurant sales in the 11% range and our two newest restaurants in Florida in Gainesville and Daytona Beach that are not yet in our comparable restaurant base continue to exceed our expectations. We believe some of the strength in our comparable restaurant sales in our newer regions is directly related to our focus to cluster our restaurants in specific geographic markets,

This cluster strategy allows us to gain economies of scale and management supply chain and marketing supervision and brand awareness as we have already mentioned, which ultimately leads to better execution within the four walls of the restaurant and therefore better top line sales.

As Jerry and Greg Lynds noted we will continue to be very prudent in our new restaurant development pipeline so that we can drive these economies of scale and provide superior shareholder returns. Our 8.7% increase in our weekly sales average during the third quarter continues to be the result of our solid new restaurant openings in the second of half of 2009 and our recent openings this year. In the fourth quarter of 2009, we opened four new restaurants in very mature areas of California and set some new opening week sales records for us.

Therefore, beginning this fourth quarter we will be lapping these record setting sales openings and this favorable geographic mix in new restaurants will begin to abate. As such, I would caution investors not to read too much into the initial sales volumes of many of our new restaurants that are still in their grand opening honeymoon period as well as changes in our weekly sales average as compared to our comparable restaurant sales. In fact, beginning this fourth quarter I am anticipating our weekly sales average will either be in line with our comparable restaurant sales or be slightly less than our comparable restaurant sales.

Please remember with only a relatively small number of restaurants operating today compared to many other public casual dining companies the timing and geographic location of our new restaurants will have an impact not only on preopening costs for the quarter but also on our weekly sales average for the quarter and may not be indicative of the mature sales level for many of these restaurants.

During the third quarter, our estimated menu pricing factor was approximately 3.2%. In regards to the middle of our P&L our cost of sales of 24.3% of sales was 80 basis points lower than last year's third quarter and sequentially flat with the second quarter. The decrease from last year is principally a result of lower commodity prices, primarily from poultry and produce coupled with the benefit from new menu pricing. Labor and benefits during the third quarter was 34.4% which was 20 basis points lower than last year's third quarter. Included in labor and benefits for 2010 is $341,000 of equity compensation or 30 basis points as compared to a credit last year of $129,000 for equity compensation which was equivalent of 10 basis points credit.

The credit last year in equity compensation was due to a favorable adjustment to the estimated forfeiture rate experienced in our restaurant level equity compensation program. Therefore excluding equity compensation from restaurant labor for this year and last year our restaurant labor as a percent of sales would have been 34.1% in this year's third quarter as compared to 34.8% in last year's third quarter. The 70 basis point improvement is the result of the solid comparable restaurant sales allowing us to leverage both hourly labor and management labor partially offset by higher workers compensation expense. We continue to be pleased with our management staffing levels at BJ's during the third quarter our management staffing levels as compared to our target pars were approximately 97%.

As I mentioned last quarter having a full complement of managers really allows our management team to concentrate on driving productivity and throughput in our restaurants. Our operating occupancy cost as a percentage of sales decreased 60 basis points to 21.3%. This decrease was primarily the result of sales leverage over the fixed nature of many of these costs. On an absolute basis, we did see a higher utility costs and higher costs related to our like new first class maintenance policy within our restaurants which primarily shows up as higher repairs of maintenance expenses. Our general and administrative expenses were 6.4% of sales in the third quarter of 2010 which was down 40 basis points from last year's third quarter.

Including G&A of $661,000 of equity compensation for 2010 or 0.5% of sales compared to $517,000 of equity compensation for 2009s third quarter which also was 0.5% of sales. Excluding the equity compensation G&A increased approximately $1.1 million compared to the prior year. The increase in G&A is a result of increased cost for our field supervision and support cost plus as I mentioned in prior calls higher legal and consulting cost. Sequentially G&A decreased from approximately $8.2 million excluding equity compensation in the second quarter of 2010 to $7.6 million again excluding the equity compensation in the third quarter of this year. The decrease is primarily due to less legal fees and other outside services in the current quarter as well as less managers and training during the current quarter.

For the third quarter of 2010 we average approximately 29 MITs per week or 29 managers in training per week as compared to 43 managers in training per week in the second quarter of 2010. Our restaurant opening expenses were approximately $1.8 million during the third quarter of 2010 which primarily includes the pre-opening costs related to the four restaurants that opened during the current quarter.

Our tax rate for the third quarter was approximately 27% which is consistent with the first and second quarters of this year. Our total gross capital expenditures to date for the end of the third quarter was approximately $49 million and that's before any landlord allowances.

Before I turn the call back over to Jerry, let me spend a couple minutes commenting on our liquidity position and also provide some forward-looking commentary for the remainer of this year. And some preliminary commentary for fiscal 2011. All this commentary is subject to the risks and uncertainties associated with the forward-looking statements as discussed in our filings with the SEC.

In regards to our liquidity, we ended the quarter with approximately $39 million of cash and investments, our line of credit is for $45 million and does not expire until 2012 of which $0 is outstanding. As we previously mentioned we believe our cash flow from operations as well as our expected landlord construction allowances and our current cash and investment balances should provide us with the necessary liquidity to fund our expected CapEx requirement for expansion and other needs for the remainder of 2010 and for the full year of 2011.

Based on our current planned rate of expansion and expected landlord construction allowances. In regards to the remainder of 2010 as Jerry mentioned we continue to see positive comparable restaurant sales for the first three weeks of fiscal October. However, the comparable restaurant sales have become a little more choppier than in prior quarters. Therefore looking at the first three weeks of October we are seeing comparable restaurant sales somewhere around the mid-4% range to the mid-6% range depending on the week so far. And again, since we only have three weeks so far in sales information and have seen more variability in our comp sales to date it's very difficult to predict exactly where sales may end up for the entire fourth quarter. Therefore, based on our current run rate of sales and based on our upcoming prior year sales comparisons our comp sales for the fourth quarter may very well trend in the low to mid-single digit range which is more in line with our normalized expectation for that metric. Again, please remember that this information we provide today is only for the first three weeks in October. So it is difficult to ascertain if the current trend represents the trends we will end up seeing throughout the remainder of this year or how strong the holiday retail selling season will be. Additionally, this year Christmas Eve and Christmas Day will be on a Friday and a Saturday respectively as compared to a Thursday and Friday for last year.

In the fourth quarter we anticipate opening two new restaurants of which one is already open and therefore we are targeting an increase in our operating weeks for the fourth quarter of approximately 12%. I would expect that our weekly sales average as I noted earlier will come more in line with our comparable restaurant sales comparisons for the fourth quarter as we begin to lap our fourth quarter 2009 California restaurant openings with our high honeymoon sales volumes. In fact, as I said previously I would not be surprised if our weekly sales average in the fourth quarter were to slightly lag our comparable restaurant sales comparisons.

In regards to menu pricing, our new fall menu is scheduled to roll out the first week of November at which time approximately 1% of menu pricing will roll off and be replaced with approximately 0.5%. As such we expect our menu pricing in the fourth quarter to be about 2.7%. Additionally, I would expect our menu pricing in the first quarter of 2011 to be about 2.5%.

In regards to the cost of sales for the fourth quarter I am anticipating a slight increase in the cost of our commodity basket for the fourth quarter for this year. This is primarily predicated on higher cheese costs as we blocked in on our expected cheese requirements for the remainder of this year. Additionally we have seen some higher cost for some of our meat products as they've come off of our recent contract in the late summer months. I also anticipate that labor in the fourth quarter will be in the middle to upper 34% range. I would expect operating occupancy cost as percent of sales be pretty consistent with the third quarter and remain in the middle 21% range. I would anticipate our G&A cost to be somewhere around $8 million excluding equity compensation.

We currently expect restaurant opening costs to be about $500,000 per restaurant. However, we will incur pre-opening non-cash rent as much as five or six months before restaurant opens and therefore preopening costs for any quarter may not be indicative of the number of restaurants that open in that quarter. Therefore based on our current opening schedule I would anticipate preopening expenses for the fourth quarter to be around a $1 million to $1.2 million.

We continue to expect our income tax rate for the full year of 2010 to be in the 27% range which is consistent with the first three quarters of this year. We expect that diluted shares outstanding will likely be in the $28 million range. We continue to target gross capital expenditures to be around $60 million to $65 million before any landlord contributions for fiscal 2010. At the current time we expect to receive approximately $6 million in landlord allowances.

In regards to some preliminary information for 2011, as Jerry and Greg Lynds mentioned we anticipate opening 12 to 13 new restaurants next year. As we also mentioned, we are currently preparing our 2011 annual business plan and therefore certain sites that we have identified for next year are still preliminary in regards to their actual opening date. Therefore, as of today, I would anticipate two to three new restaurants opening late in the first quarter of next year resulting in an expected increase in operating weeks of about 11% to 12% for Q1 of 2011. However, as we said before the actual number and timing of new restaurant openings for any given period is subject to a number of factors outside of the Company's control including weather conditions and factors under the control of landlords, contractors and regulatory and licensing authorities. Once we complete our 2011 business plan during the next couple of months, we will be able to provide additional guidance regarding the 2011 opening schedule.

As Jerry mentioned, we will continue to be investing in our core business and making sure our restaurants do not lose their relevancy and appeal with the guests. Therefore, in addition to the 12 to 13 new restaurants for next year we will continue to allocate capital to remodels and productivity enhancement initiatives. Therefore, I would anticipate our gross capital expenditures for 2011 to be around $75 million before any tenant improvement allowance.

As of 2010 we anticipate funding our 2011 capital expenditure plan from cash on our balance sheet, cash flow from operations, and landlord allowances. In regards to margin for 2011 and inflationary cost for next year, as Jerry mentioned it is still very difficult for us to comment with a high degree of certainty as our supply chain department is currently in the middle of negotiations for many of our key commodities for next year. However, based on our latest information, and that is still very preliminary as we are continuing to negotiate with suppliers we currently anticipate the cost of our aggregate commodity basket to increase in the range of 2% to 4% next year. As Jerry mentioned we currently believe this increase can be managed through a combination of marketing and operational initiatives coupled with prudent menu price adjustments.

While we do have some items locked for at least the first six months of next year such as out pizza dough, the majority of our protein contracts including chicken, pork, and our Angus ground beef expire at the end of this year. Again, our current expectation is subject to significant risks and uncertainties in the food and energy commodity market. We will know more specifics about our commodity cost positions for 2011 during the next 45 days.

BJ's competitive strategy has always been focused on providing a higher quality, more contemporary, casual plus dining experience at about the same average guest check as many of our mass market competitors. Accordingly, to the extent that our cost of key input such as food commodities are lower than expected we will be able to better protect our value concept positioning with consumers and thereby keep our expected menu price increases as small as we can. Therefore, as of today we have not determined any specific amount of new menu pricing we may take in 2011 at our regularly scheduled menu rollouts in the spring and fall. However, we will likely take some new pricing at that time. One thing to remember for BJ's, is we are starting with a relatively low average check compared to many other restaurant companies. Therefore, as we said previously if the cost of our market basket of commodities were to increase, for example, by as much as 4% next year and excluding any pressure on labor or other operating costs for us to be able to maintain our prime dollar profit and maintain our prime profit percentage we would only need to increase our average check by about 1% to 1.5%. This translates to about an increase in our average check of about $0.15 to $0.20.

More importantly at BJ's over the last five years we have continuously been reinvesting into our restaurants and our people. Over the last several years, we have upgraded our napkins, plateware, glassware, silverware, invested in better audio and visual technology, upgraded the ambience in our restaurants with better furniture and fixtures, as well as implemented several productivity tool sets to enhance the dining experience. Thankfully by investing in the core and not trying to save our way to success, we believe we provide a much better value for the overall dining experience compared to many of the mass casual dining restaurants. As such these upgrades give us the pricing power if we choose to deploy it. In this business you can't just raise prices without improving the overall dining experience. The guests have too many options to choose from and are too sophisticated to accept this strategy which may have worked five or ten years ago.

Our hourly labor and management wages over the last year have been relatively flat, but I do not anticipate significant pressure on wages for 2011 at the current time. However we do continue to see pressure on medical benefits which currently account for approximately 1% of sales. I do anticipate that many states will continue to increase some of their payroll taxes to help fund their state unemployment deficits. For 2011 again based on our preliminary renewal numbers to date I anticipate benefits pressuring labor possibly 10 to 20 basis points next year.

In regards to our operating costs for next year I would anticipate some normal inflationary pressure; however, in general a significant percentage of these costs are fixed such as occupancy, insurance, and preventative maintenance contracts and therefore our operating and occupancy costs as a percent of sales will vary based on comparable restaurant sales comparisons and average weekly sales levels. While we have not finalized our 2010 G&A plan as of this date our continued goal is to gain leverage in our G&A costs. As such the only way we can do this is by making sure that our G&A costs do not increase at a rate greater than our top line growth. Therefore, if we plan on increasing our operating weeks for 2011 by 12% or so, we would anticipate G&A growth to be slightly less than that amount. Our expected income tax rate for 2011 should be in the 27% range. We continue to expect that diluted shares outstanding for 2011 will likely be in the low to mid $28 million range.

Finally, I do want to mention that fiscal 2011 will be a 53 week year for us. Generally that 53rd week is a big sales week. Again the forward-looking perspective that I provided today for 2011 is preliminary and is subject to change. Our final operating plan for 2011 will be formally considered by our Board of Directors before the end of this year and we will share those details of that approved plan with investors in January.

With that I am going to turn it back to Jerry.

Thanks, Greg. As usual a very thorough review. So to summarize our prepared comments we were very pleased with our solid results for the third quarter of 2010. We're continuing our forward momentum so far in the fourth quarter of 2010 and we're looking forward to executing another year of profitable expansion for BJ's during 2011. In our view BJ's's ability to continue to take additional market share in the casual dining segment is steadily strengthening as time goes on. We're going to continue to make the right investments for our long-term success. We're going to invest in our team members, we're going to invest in our guests, we're going to invest in our operating and support infrastructure and we're going to continue to invest in the quality and differentiation of the BJ's brand. We believe the best years of growth are still well ahead of us at BJ's and you can't say that about many publicly held casual dining restaurant companies today.

So that concludes our prepared remarks, and now we're going to open up the call for your questions. Operator, turn it to you.

Thank you sir. (Operator Instructions) Our first question comes from the line of Brad Ludington from Keybanc Capital Market.

Hi guys, it's John Drivenscot on for Brad. First question on the 53rd week can you give us any kind of guidance EPS wise, sales wise EBITDA, what we should expect from that.

A couple things. One is I think the easiest way to think about that is by the end of next year we will have 114, 115 restaurants open. You know, we're averaging right now about $100,000 a week in sales, so you can kind of figure out sales from there. In regards to thinking about the flow through and how that places the majority of our cost thinking about it are pretty variable. You start thinking about your prime cost of sales, labor, majority of G&A is payroll related and support. Many of our operating costs such as glassware, linen, cleaning, etc. Are again very low cost. So I would tend to think your flow through from that and throughput on those additional sales is not going to be tremendous. It would just be kind of more like an average week.

All right. And secondly on the average weekly sales versus the same store sales, I mean there's still really high in the 3Q, you said you wouldn't be surprised if they came in a little bit in the 4Q. But, if you're still opening within your core geographies, why would you expect those to come down below same store sales or anywhere close to that in the 4Q?

Yes, well, we're still opening our core geography. California has always been our strongest market. And last year we opened I believe in that fourth quarter what we call here the big four C's, and the four C's are Concord, California;Carlsbad, California; Culver City and there's one other in there that just really boomed last year, set opening records, they opened in the October timeframe.

For instance Culver City it was a brand new remodel the regional mall, that was getting ready for the holiday period. That's going to be a year later now in that mall as a result I would be surprised if we were able to achieve those sales records that we achieved last year on those openings. I will tell you internally I think myself and maybe I'm speaking for the rest of the team, I'm shocked at how well some of our new restaurant sales have continued to hold up and not come down off the traditional honeymoon. And therefore, we're very happy with those sales results. But going over to Carlsbad, the Concord and the Culver Cites right here in Southern California, in this fourth quarter, I think will be a little bit more challenging.

This is Jerry. Just let me weigh in on this as well. I think Greg is absolutely right about the timing comparisons really that we're talking about here in terms of the strong openings that we had in Q4 last year in our home court and those are coming off of their honeymoon periods as normally expected. This year we're only opening really two restaurants in the fourth quarter, one is in our home court, the other one's in Houston. So I think we're really dealing with a timing variance primarily with these two statistics. I have been in this business for a long, long time and I've seen this happen both ways quarter over quarter as time progresses. Again, principally depending on the timing of your openings.

Great. Just one more if I can slip it in, was there anything different about the impairment or disposal charge this quarter structurally than what you have taken in previous quarters?

That's a great question John, that I did not address in my formal remarks.

As we go through and do our initiatives we take a look at obviously what's going on in regards to those restaurants and as we were putting the new seatings as well as doing upgrades in other restaurants as you put in new seatings you take a look at some of your other booths and some of your other work in those restaurant, you want it to look good. You don't want it to look like a nose job, for lack of a better term. You want the restaurant to have an overall good look from that standpoint as a result those really are related to just those initiatives. We closed out I think somewhere in the neighborhood of about 30 initiatives in the third quarter. So when we tend to close out those initiatives that's when we write them off and it just happened to be that in the third quarter we closed out 30 plus. It was a big number, my hats go off actually to our facility department for getting the work done.

Thank you.

Welcome.

Our next question comes from the line of Matthew DiFrisco with Oppenheimer and Company, please go ahead.

Thank you. Can you I guess talk a little bit about, the-- not to harp on this, but growth, if you can get that a little faster? I mean how, what is the governor to that? Is that just that you're being a little bit cautious with best real estate? Sites aren't available? Or is it, I'm just curious, on you don't want to maybe overtax the current markets that you're in for supply wise? I would think that you would be able to maybe take advantage of some regional opportunities that might be out there?

Well, this is Jerry. Let me just respond to that. I think it's a very good question.

You know the question for BJ's is not necessarily how many restaurants if you're going to open in any given period, but how many really high quality great restaurants can you open in any given period. When we take a look at all of the sites, we evaluate, we're working on in our pipeline, when we look at, you know, the potential timing of when landlords are going to make them available to us, and also we have, you know, self restricted ourselves with our own self discipline as I mentioned in my opening remarks where we're trying very, very hard to open restaurants within our thirteen state footprint and our established trade areas so that we can really drive more leverage in the entire BJ's expansion model.

We have kind of self limited ourselves as a result of those factors. Plus the fact that there is really no new retail project development happening in a lot of our trade areas. In fact if any of our trade areas so we have got to get in and find established projects that might be undergoing a renovation or an expansion or they're taking spaces previously occupied by a Mervyn's or a Circuit City, opening those up for additional development. When you take all of those constraints into consideration and when you focus on quality development as your number one criteria within your current thirteen state footprint we believe that the right number for us is twelve to thirteen restaurants next year. Could we accelerate that if more sites become available, do we have the capacity internally, do we have the financial capability on our balance sheet to accelerate that? Certainly we could, based on what we see in our pipeline right now given all those constraints we think this is the right number for us going forward here at least into 2011. Greg Lyndis do you want to adds anything to that?

I think the combination of the state of the industry in terms of retail development combined with our team always talking about getting great talent within the restaurant, when you combine the two of them we think it's a good rate of growth for us.

Is that, does that maybe put at risk the outlook for plus 20% being sustainable in the next couple years if you don't have more meaningful square footage growth?

I don't think so. I mean I think there's a couple ways to look at that. As we talked about, one is that we want to make sure that we have high quality sites.

When you think about that real return coming through to investors, it's a matter of restaurant level economics. The strength of our restaurant level economic share in the third quarter really is a culmination of that strategy of trying to build out those thirteen restaurants and getting efficiencies out of the supply chain, getting out management talent, getting it out of supervision, and while we could sprinkle restaurants in other areas, the fact of the matter is if your margins aren't there because you're not running it with the talent that you need, you're just going to be spending more money to get maybe more top line sales, but you are not get through to return to investors and your economics.

So I think really just to summarize our position on this, provided that all of our pipelines for growth are solidly primed and we feel comfortable with their capabilities we certainly have the ability to ramp up growth, but we're only going to do it in a high quality way here at BJ's. And as Greg mentioned a lot of it really depends on the seasoning and availability of great managerial talent to run your restaurants correctly. As you know, our restaurants more operationally complex, they have higher volumes than most casual dining companies out there. Frankly, when you take a look at our talent base over the past three or four years, when I got involved with BJ's, gosh, six years ago, you know, our starting lineup was full of red shirt freshmen and sophomores. So as the years--from a restaurant operations perspective, as the years have gone by we have been able to get even more seasoning in that particular talent base. We would like to see a little more seasoning frankly before we really begin to consider ramping up the pace of our development going forward.

Okay. Excellent, thank you.

You're welcome.

Thank you . And our next question comes from the line of Conrad Lyon with Bradley and Company, please go ahead.

Hey, good afternoon. A question about the beer mix. I think Jerry early in the call you said that alcohol sales, beer sales were up stronger than the prior year. Can you give us specifics on that?

Well, I can tell you that our incident rates in terms of beer purchases per 100 guests are up I believe by about 5% to 10%. I can also share with you that in our average check the weighted average contribution of our beer sales contributed about an extra nickle quarter-over-quarter, this quarter versus the same quarter last year. Again that's driven by the continuing success of our seasonal beer program we have seen over a 50% lift year-over-year quarter-over-quarter and our seasonal beer program as guests become more familiar with it and begin to expect it coming in the following year.

And then, I can't underestimate the success of our new BJ's LightSwitch lager beer which is also increased overall incidents as well. So, those are some of the metrics that we're willing to share with respect to our beer.

Got you. One other question. It really looks like you guys are starting fit into this trend now. I have been reading more and more about-- hearing more about really beer pairing and really getting those specialty brews out there. Do you feel that's part of what's happening now, is that phenomenon really starting to take hold now as well.

Well, we believe it is. When you look at all of the beer consumption data in the United States over the past couple years, clearly the mass market beers have been losing share, the craft beers have been gaining significant share.

Clearly BJ's I think, has been a beneficiary of that. I think today's restaurant consumer is much more informed and much more savvy with respect to craft beers. We work very very hard and our menu with beer parings with food as many menus do with wine parings with food. We have a very active program underway at our company with respect to quarterly beer dinners where we will take an evening once a quarter in our restaurants and we will sell out a number of seats and we will have the beer officionatoes come in and we will go through demonstrations and tastings with respect to beer. We will pair them up with a lot of our menu items, those have become extremely popular with our guests. And frankly, you know, BJ's core competency with respect to craft beer has always been on the creative side. Our Brewers have consistently created some of the great craft beers which consistently win medals at the great American Beer Festival and other competitions. And I think we have established a strong reputation, you know, for being a real creative innovator with respect to craft beer. I think that plays to some of the macroeconomic consumer trends that I think you're speaking to.

Okay, fair enough, thank you.

Thank you.

Thank you. Our next question comes from the line of Bart Kline with DA Davidson.

Thank you. Just had a couple quick questions. One in terms of the opportunity to kind of further season your management talent, just wondering, you know, if over a period of time there is an opportunity to find more locations that would fit what you're looking for, do you think that in a way gives you an opportunity to also kind of season your strength so when the real estate is available you would be prepared to potentially accelerate the pace of openings?

That's exactly what we have in mind. Again when you think about the BJ's concept and its expansion potential, you know, we consistently continue to believe that there is room for at least 300 BJ's Restaurants domestically of various types and sizes. When you think about the constraints for development, capital frankly has not been a constraint. Site availability up until recently has not been a significant constraint. It's really been the availability of great restaurant management talent that can be recruited and developed and trained and seasoned to execute the BJ's Restaurants concept correctly and consistently. So I think as time goes on, as we continue to improve our overall tenure at all levels of our restaurant management team, as we continue to strengthen our field management and supervision team, as we continue to strengthen our kitchen operation team which are frankly the core, the very very core of our ability to execute as we become more confident in the overall strength of that resource, then we clearly will have the ability to consider ramping up, you know, our overall rate of restaurant development. But I'd like to underscore for us there has to be a balance between quality and quantity.

I have been around this business for over 35 years, I have read press release over press release of other restaurant companies that embarked on a very high rate of expansion which gets them down the road for two or three years, then inevitably comes the press release of gosh, of all these restaurants that we opened over the past 30 years, we are going to have to close several of them because we entered trade areas where we shouldn't have, we took sites we shouldn't have, we hired managers to operate them that frankly weren't qualified and we out ran our headlights. So something that I have learned at BJ's, well in my career that I have been trying to apply to BJ's is you have to operate within your headlights. That's something that we are going continue to have the self discipline to do. As I mentioned earlier as our pipelines become more primed and more capable of supporting a higher rate of quality growth believe me there's nothing more we would like to do as a management team than to expand our restaurants, everywhere in America as quickly as we can. But we're going to operate within our headlights.

Wonderful. Then a follow up, could you maybe discuss what's the biggest, you know, opportunity from a menu innovation standpoint. I realize you don't want to get into specifics, but just any general statements.

Well, I think that our menu development strategy during 2010 and as we look into 2011 is really kind of two pronged. First of all we're going to continue to invest in our signature products. Any time that a casual dining restaurant loses its focus on a signature products they will get in to trouble with consumers very, very quickly. So going into 2011, we're going to continue to work on our pizza presentations, we are going to look at our Pizookie presentations, we already talked great deal about our focus on handcrafted beer, you know, our strategy frankly is to become the premiere retailer of craft beer in the casual dining space. So we will continue to focus on our signature products.

Then the other strategy that we're going to focus on is a bit of a barbell strategy. We're going to continue to drive innovation and value at the low end of our menu, principally using our small bites and snacks platform which is currently priced at $2.95 to $3.95 as a great entry point particularly for media advertising. Then on the other end of the barbell we're also going to work on some higher end entrees which quite frankly are under represented in the BJ's menu at this point in time. For example in our next menu rollout, which will be effective here on November the 2nd. We're going to be introducing some new small bites and entree--small bites and snacks, but we're also going to be introducing two new chicken entrees dishes. A chicken marsala and a tuscan chicken lemon. We're also going to be rolling out a tremendous grilled pork chop entree. And we're working on some other entrees that, you know, are priced up there in that $10.95 to $14.00, $15.95 level to offer our guests the opportunity if they so choose to spend a little bit more in our restaurant. So that's kind of what we're thinking in terms of our barbell strategy and --but we will never ever take our eye off of constantly improving our signature products here at BJ's.

Thank you.

You're welcome.

Thank you . Our next question comes from the line of Sharon Zackfia with William Blair, please go ahead.

Hi, good afternoon.

Jerry I got on the call a little late so I apologize if you went over this, but I'm just curious as you reconfigure some of the restaurants to have different seating, and table configuration as well as adding beer tab program, which of those is having the bigger impact from the top line perspective.

That's a very good question. I don't think we have had enough of the horse run all the way around the racetrack yet to where we can really answer that with definitive metrics, Sharon. A lot of these horses have just started the race. So we should let them run around the track one time, then I think we can respond more definitively to your question. I will say however that the deuce seating will be more impactful on overall table turns and guest traffic and the expanded beer tap program will be more impactful on the average check contribution.

Okay. You had a lot of metaphors in your answer, that was kind of fun. It's been a long time since we talked about this, but you have a lot of restaurants outside of California now and actually a good amount east of the Mississippi. When you look at the, you know, the overall ROI from a restaurant level standpoint I mean how are those stacking up relative to your home court in California?

Well, let me give you a CEO's, comment then I'll turn it over to the CFO for a more definitive comment. One thing we noticed about the BJ's restaurant concept particularly when we open up new restaurants outside of our home court of California, for some reason it takes two or three years before they really start hitting their stride. We saw that with BJ's original entry in the Texas market back in 2002 and 2003. You know, those restaurants originally opened up indexing about maybe 70% to 75% of the home court California average sales volumes and then after two or three years all of a sudden these restaurants started to comp double digit and I don't think they stopped since. It takes two or three years it seems for consumers in a trade area, particularly in a new trade area that are unfamiliar with the BJ's brand to really figure us out, to really understand how to use us, to get us into their normal dining rotation. So now as we look at our comparable sales performance, particularly outside of the state of California, you're seeing that phenomenon occur and where we have opened restaurants over the past two or three years in the state of Florida and Louisiana and Oklahoma in the Midwest, you're seeing that same exact phenomenon manifest itself once again. Colorado is the same way, Arizona is kind of the same way. So when we open up initially in those markets the initial sales volumes are pretty close to what we originally anticipate when we run our proformas. And I'm kind of getting into the CFO's answer here, and I'm sorry. But, actually over time as they continue to build their sales their are ROI profiles become almost attractive if not the same as home court. And Greg I didn't want to steel all your thunder there. Greg please add to that.

There's not much to add. As Jerry said California restaurants because they come out of the barn so fast or come out of the gate so fast you look at them right away and you go wow they're hitting their ROI's to begin with. But the fact of the matter is the improvement from a comp sales perspective from the restaurants outside of California has just been tremendous over the last couple years and the fact of the matter is today they're probably coming oust gate almost as fast as the California restaurants. There's still a difference in your cost structure in regards to the two, so when you have sales that might be a little bit less outside of California the fact of the matter is their cash flow that they're bringing down is going to be just as much as California restaurant doing a little bit more. Frankly your cost to build outside of California is a little bit less as well. So overall I think you've got the opportunity to actually get better returns outside of California as we continue to build restaurants.

Let me add on one more very very important qualitative factor with respect to the execution of our new restaurants and the generation of our ROI's it really goes back to the question that Matt DiFrisco asked earlier about the rate of growth and the returns that you're able to get. The BJ's Restaurants concept because of its complexity and high volume is very, very sensitive to the quality of operational execution. So to the extent we can further season our general managers, our kitchen managers, overall management teams and when we enter new markets to have very experienced BJ's Restaurants managers open up those restaurants and get them stabilized and get those first 90 to 180 days of your normal startup inefficiency, digest it quickly, that is a significant factor in the success and the ultimate ROI's of our new restaurants and how quickly they come in these new markets. That's something we can't under-emphasize when we talk about the rate of our expansion going forward. And frankly, you know, our great operations are going to make the biggest difference in terms of how quickly a restaurant hits its target and margin.

Great, thank you.

You're welcome.

Thank you, our next question comes from the line of Paul Westra with Cowen, please go ahead.

Guys, most of my questions have been answered. I (inaudible) question. We're seeing some pretty significant pickups in profitability from the top line and margin line existing base how are you going to go back and maybe recalibrate or relook at your return your return bogie for new stores, I mean clearly-- your existing base more profitable than what it was the year before, wondering if you're going to move the bogie higher you have the opportunity to present itself, and if so how would you go about doing it?

This is Greg. It's an interesting question. I don't think internally we plan on changing our bogies. We feel very comfortable with the fact BJ's capital we like to get a return to that capital BJ's cash somewhere in that 25% to 30% range. We think that's still a top number out there as regards casual dining. And as far as kind of return on investing capital using landlord allowances and capitalizing lease we think a return of 20% to 25% is still very top quarter file category to go after that, not many other casual dining concepts are achieving. We're not going to do anything to take it down, increase growth rate by the way. We're going to keep it really where it's at, making sure to keep with discipline in opening new restaurants.

In fact, you know, this gets back a little bit to Matt's questions well as everybody elses questions, we kind of pile on a little bit we talked about this before. When companies come to the public marketplace they want to simplify and dummy it down and their ability to grow their restaurants, is by dummying it down and simplifying it that's how they say they are going to get their expansion. We are taking a different approach here, we're going to keep the complexity, and we are going to break that complexity, we are going to keep that targeted bogie out there to 25% to 30% for BJ's capital and 20% to 25% for other people's -- for total return on invested capital and we are going to grow our business currently from that perspective.

Okay. Then I guess maybe a final question, kind of question on sort of margin seasonality,I would say as you expand outside of California, and there's alot of moving parts with each of the margin line items, but is anything changing seasonally here? I mean--this year (inaudible) shared your highest sales volumes per week in the second quarter yet your margin obviously in the third quarter is even higher. Is there anything we should know about, you know, swinging seasonality, you know, the total cumulative consolidated number?

You know, it's an interesting question. A couple things here.

When I look at it I show still Q2 having the higher weekly sales average. I know that is because of that gouging (inaudible) from that standpoint, in that June time frame is really big for us, that's when we generate just tremendous sales volume. The thing that is surprised me in third quarter I think it helps on our overall profitability was our operating (inaudible) cost. Usually we tend to see the higher utility cost towards the end of summer and that hurt us in the past couple of years.

This year it wasn't nearly as impactful as its been in the past. I think we got an offset there because of the comp sales etc. To drive down a little bit of the accrued margin. But other than that when I think through, I'm kind of looking through our numbers here as we talk, there's nothing significant from the seasonality that was different in Q3 than maybe Q2 or Q1 or coming up here into Q4. Thinking about Q1, as you guys start thinking about next year, you know Q1 we're always going to have higher labor. You're going to have a higher payroll taxes, higher unemployment rate and so on, but other than that there's nothing else that I can ascertain.

Thanks. Congratulations.

Thank you .

Thank you. (Operator Instructions) Our next question comes from Greg Ruedy with Stephens, Inc.

Back to new markets and specifically Texas. You have been there for awhile, as you've double digit comped there just wondering maybe even Dallas to be more specific, you opened four units there in the last year. So I'm just wondering at what point do you see cannibalization in those kind of markets, and then at what point would we see cannibalization in Southern California maybe, what the penetration opportunity is just in that market alone.

We are going to let -- ask Greg Lyndis to answer that question, Greg go ahead.

Sure, thanks Greg. In Dallas right now we have eight restaurants, in Houston we have five, total of 20 in Texas. You know with the size of Texas we feel there's plenty of room to grow there. We typically like to keep our restaurants anywhere from seven to nine miles apart typically is where we see our trade area. For the last two to three years we don't see cannibalization being a problem in the state of Texas.

In California now with the density, you know, we can put them a little closer together, but we still like to be six and seven miles apart in California.

Greg, I will check the transcript afterwards but I don't think we said Texas was double digit.

I'm going to switch over to deuce seating, tackle it from the cost side. I know its early but if you can give us an idea before and after how many tickets you're able to process during the peak hours, are you seeing labor savings on the shoulders that we can point to in these third quarter results?

No, I hate to be that blunt, in regards to just our systems in general and some of the things we put out there, initiatives have allowed us to manage our restaurants much more effectively. I have not looked specifically to determine how many more tickets we might be able to do because of deuce seating, that's what you asked right?

Right.

You know, what that might have changed or not have changed in regards to labor. From a labor standpoint we look at obviously tables and how many people can serve and frankly when you start making less tables or smaller tables you probably have to put an extra server on to get that through put there. But I have not specifically looked at how many additional tickets that might be able to drive in our business by changing the layout.

We will study that, we will try to get an answer for you at your conference.

Okay. The last question, I think I believe this is second year you ran the party for two sales initiatives. Did it resonate better worse year-over-year any color there?

Not really. We really didn't run it that excessively. I think guest reaction was pretty much the same as it was last year. That's a very profitable promotion for us, because after you consider the guest trading up, they see the wonderful opportunity we offer them in terms of that particular promotion, we actually get a blip in the average transaction. So that's something that makes sense for us and the guests love it. But the incident rates were pretty much the same this year when we ran it as last year.

Appreciate it, thanks.

Okay.

Thank you. And Mr. Deitchle, there are no remaining questions in the quere.

Well, thank everybody for being on the call today. We will be at our offices here in California if you have any additional questions. We look forward to talking to you on our next call.

Ladies and gentlemen, that concludes BJ's Restaurants Incorporated third quarter 2010 conference call. Thank you for your participation.