BJ's Restaurants Inc (BJRI) 2011 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by, andwelcome to the BJ's Restaurants, Inc. first quarter 2011 results conference call. During today's presentation, all parties will be placed in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions). This conference is being recorded today Wednesday, April 20 of 2011, and I would now like to turn the conference over to Mr. Jerry Deitchle. Please go ahead, sir.

Hello, everybody. I'm Jerry Deitchle with BJ's Restaurants, and welcome to our first quarter 2011 investor conference call, which we are also broadcasting live over the Internet. After the market closed today, we released our financial results for our first quarter of fiscal 2011 that ended on Tuesday, March 29, 2011. And you can view the full text of our earnings release on our website at bjsrestaurants.com.

Joining me on the call today, in order of their comments, are Wayne Jones, our Executive VP and Chief Restaurant Operations Officer; Greg Lynds, our Executive VP and Chief Development Officer; and Greg Levin, our Executive VP and Chief Financial Officer. We will begin our with prepared remarks after Dianne Scott, our Director of Corporate Relations, provides our prepared our standard cautionary statement with respect to forward-looking statements. Dianne, go ahead, please.

Thank you, Jerry.

Our comments on the conference call today will contain forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance of achievements by the Company to be materially different from any future results, performance or achievement expressed or implied by forward-looking statements. Investors are cautioned that forward-looking statements are not guarantees of future performance, and that undue reliance should not be placed on such statements. Our forward-looking statements speak only of today's date, April 20, 2011. We undertake no obligations to publicly update or revising 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 risk and uncertainties associated with forward-looking statements contained in the Company's filings with the Securities and Exchange Commission.

Thanks, Dianne.

As we noted in our press release today, our leadership team was pleased to deliver one of our best quarterly financial performances ever here at BJ's. To quickly summarize our financial results for the first quart of fiscal 2011, compared to the same quarter last year, our total revenues increased 19% to $144.9 million. Our comparable restaurant sales increased a solid 7.8%. Our average weekly sales per restaurant increase a solid 7.2%. Our total restaurant operating weeks increase add solid 11%. Our estimated four-wall restaurant cash flow margins --now that's a non-GAAP measure -- increased 210 basis points to 20.5%. Our operating margin increased 230 basis points to 7.0%. Our net income increased 65% to $7.2 million. And finally, our diluted net income for share increased 56% to $0.25.

In short, we believe that our first quarters performance was one of our best ever on all key measures, and it just didn't happen by chance or from some sudden improvement in the macro economic environment. It was more the result of the continued popularity of the BJ's restaurant concept with consumers, coupled with the continued effective execution of the entire BJ's team.

As we mentioned in our press release today, our comparable restaurant sales increase of 7.8% for the first quarter successfully hurdled a solid 4.4% increase in the same quarter last year, which in itself is quite impressive for any casual dining concept in recent times. At BJ's we're sales builders first and foremost, and we plan to continue our focus on driving additional sales increases through the effective execution of our operational merchandising and CapEx initiatives that we intend to complete during the rest of this year. Wayne Jones is going to comment on the status of a few of those initiatives later in our call today.

Additionally, under Wayne's effective leadership, our restaurant operational teams continue to do an excellent job of productively managing our sales increases by effectively leveraging the technological and other systems we implemented during the last couple of years to both improve the dining experience for our guests and also to protect our four-wall restaurant operating margins.

We have started off the second quarter of 2011 with continued positive momentum for our comparable sales metric to date, and Greg Levin is going to comment on that a little later in our call today. Now, while our sales comparisons continue to be favorable to date for the second quarter, we always caution investors to remember that we are still operating in a very difficult and volatile environment for consumer discretionary spending. The recovery of the economy, the job market and consumer asset values all continue to be slow and geographically uneven. Foreclosure rates and unemployment rates are still quite high in many of the states that we operate restaurants. Additionally, as with all know, consumers are facing significantly higher grocery and gasoline prices, which could negatively impact the discretionary spending on restaurant occasions in general going forward.

So in light of all of these external factors that are outside of our control, our sales volumes remain difficult even for us to reliably predict, so we don't even try to publicly predict them. And wealso recommend that those in the business of sales keep the estimations on the conservative side. Additionally, our comparable sales comparisons become increasingly more difficult as 2011 progresses.

Now, having said all of that, we've typically had difficult comparisons to rollover at BJ's year after year, so that's nothing new for us. Our entire team welcomes the challenge of surpassing our previous best on all key measures and to effectively control what we can control to continue to drive our favorable results.

Before I turn the call over to Wayne, Greg and Greg for their comments, I always like to take a couple of minutes on our quarterly calls to reiterate our fundamental competitive strategy and our operating philosophy with our investors, our BJ's team members, and our supplier partners that might be also listening in today.

We continue to believe that the battle for casual dining market share is going to be a much more significant factor going forward than it has been historically, primarily because the casual dining segment doesn't have as strong of a macroeconomic tailwind that it enjoyed during the past couple of decades. Now, having said that, annual casual dining segment sales are still estimated to be well north of $80 billion, and annual sales growth for casual dining chains -- excluding the independent casual dining operators -- is still expected by most observers to be in the 4% to 5% range for the next couple of years. Now, that 4% to 5% projected increase in casual dining chain sales would likely be comprised of a 2% to 3% annual increase in capacity, and a 2% or so increase in sales on the existing capacity base.

So how does BJ's measure up to those expectations for growth in the overall segment? Well, we currently expect to continue increasing our capacity base, as measured by total restaurant operating weeks, in the low double digits during the next couple of years, in the approximate range of 12 to 13%. Additionally, over the longer run, we also expect annual sales increases on our existing capacity base to eventually settle in the 2% to 3% range, assuming a more normalized and constant operating environment. So it is our intention to continue to gain market share at a much higher rate than the expected growth rate of the overall casual dining segment. BJ's current share of the casual dining segments the annual sales is still less than 1%, but we believe the majority of our growth remains still ahead of us.

We also believe that the most successful market share takers in casual dining going forward will likely be those that either excel as low cost providers of convenience oriented kitchen replacement meals, or those that excel as dining out for fun destinations that provide a higher quality overall dining experience at a great value for the consumer. Now, we have chosen atBJ's to more clearly compete as a higher quality differentiator and destination restaurant with exceptional approachability and with an outstanding value proposition for all consumers. However, we are also structuring our menu and our operating tactics to enable BJ's to also be an effective competitor for our share of the convenience-oriented kitchen replacement meal occasions, particularly at lunch.

We also believe that our primary positioning as a higher quality, more differentiated and decommoditized restaurant concept in our segment of the casual dining market also provides us with greater pricing power than most of our current chain competitors in our segment, whichare what we refer to as the more commoditized or mass market competitors. Now, we have intentionally kept most of our pricing power in reserve during the past couple of years, andas we move forward through the rest of 2011 and prepare our plans for 2012, where food and energy costs in general are expected by most to be somewhat higher than they are right now, although it's presently unknown exactly how much higher they are likely to be next year, we do believe that we are in a solid position to carefully deploy some of our pricing power that we have held in reserve, which will help us manage through these potential cost increases and also help us to protect our margins. Coupled, of course, with certain cost reduction initiatives that we have underway to improve our productivity and efficiency.

With respect to our new restaurant expansion plan, we successfully opened two new restaurants during the first quarter of 2011. We remain very pleased with the initial sales volumes of those two new restaurants. We have seven restaurants currently under construction for potential openings later this year. We will remain solidly on track to open as many as 12 to 13 new restaurants during 2011, and achieve our capacity growth goal for this year. And we are well underway in securing high quality locations for potential new restaurant openings in 2012. During each of the past several years we have consistently done exactly what we said we were going to do with respect to our annual restaurant expansion plan, thanks to the effective work of Greg Lynds and his development team.

And we have executed our expansion plan over the past six years with high quality predictable results, without experiencing a deterioration of our four-wall margins as we have grown. Now, I have been in the chain business for 35 years with different concepts, and in my view the most challenging economic aspect of executing a national restaurant expansion plan is to preserve the original favorable unit economics of the concept, as it expanded to new markets and as it gets further and further away from its initial home base. We have been essentially able to accomplish that at BJ's over the years, and we intend to keep doing just that.

And now I will turn the call over to Wayne Jones, our Chief Restaurant Operations Officer, for a few comments on our restaurant level key operational initiatives. Wayne, go ahead.

Thanks, Jerry, and good afternoon, everyone. As Jerry noted, our strong comparable sales and four-wall operating margin performance during the first quarter was driven by our merchandising, CapEx and operational initiatives, and I will comment on a few of the more significant ones.

During the first quarter, we successfully launched BJ's first ever Seafood Celebration, specifically timed to coincide with the Lenten season. Maintaining our strategy of working the barbells of our menu pricing spectrum, we added an ahi snack, small bite at the lower end of the menu, inaddition to seafood entrees at the upper end of the menu. All of these new offerings have been very well received by our guests and are at the top or near the top in each of their respective sales categories.

Additionally, during the quarter we continue to see an increase in [incident] rates for alcoholic beverages. Our Irish drinks promotion, which ran in conjunction with our Seafood Celebration, and our increasingly popular seasonal beer program are helping to drive this favorable trend. In its second year of offering, our BJ's Oasis Amber drove increased beer incidents as it continues to gain in popularity.

One note on the California menu labeling law that went into effect this past January, mandating the calorie counts be listed to each menu item on the menu. Our initial testing in 2010 and subsequent analysis of actual results the first quarter indicate no material shifting within our overall menu mix or per person profit averaging. As part of our on going evaluation of consumer preferences for menu offering, we are planning to roll an expanded selection of lighter entrees -- less than 575 calories per entree -- and lighter cocktails next month, which will provide even greater variety an options for our more calorie conscious gifts.

Our guest traffic and throughput continue to benefit from improved operational execution, driven by more complete management staffing levels and also by what we internally call our "quality fast" operational initiatives. We also continue to see improved guest traffic as a result of the success of our CapEx-related initiatives, particularly our increased seating for parties for two -- what we call our "deuce seating" initiative, and our expanded "guest beer tap" initiative. We have slightly over two-thirds of our existing restaurants which have these in place, and we plan to complete their full company-wide roll outs during the next 12 to 18 months. So there continues to be more off side yet to come from these two initiatives. All new restaurants have these two programs in place when we open.

As we all know, the most effective four-wall profit margin protection program is always anchored by an effective sales building program. At BJ's we are also focused on sales building first and foremost, and we have several sales building initiatives planned for 2011. These include, among other things, a new guest loyalty program, a new catering program, and new menu and beverage items. On a productive and cost savings initiative front, we completed the new automated prep system roll out during the quarter, and our initial results in this early phase have been quite encouraging andare partially responsible for offsetting some current commodity cost pressures.

Additional program roll outs planned for and underway for 2011 include a new computerized recipe viewer to reduce cooking errors, a new automated bar display system to improve bar service speeds and order accuracy, new lower costing take-out packaging, and new labor scheduling metrics.

Last but not least, we're continuing to make [good] investments to steadily advance the overall quality, capabilities and bench strength of our restaurant management and field [decision] talent base. We have several talent development initiatives scheduled for 2011 rollouts that are intended to further strengthen our ability to recruit, assess, train, develop, reward and retain the best restaurant management talent available. We can only open new BJ's Restaurants as fast as we can develop highly qualified and seasoned restaurant management teams to correctly and consistently execute our restaurants.

Jerry, back to you.

Hey, thanks for your comments, Wayne, and also thanks to our restaurant field supervision team. And most importantly, the operational teams at our 104 restaurants for their continued focus on profitable sales building in a more leverageable manner, with solid follow through to the bottom line. We have said many times to our teams that we cannot save our way to success in this business. Nor can we price our way to success. We can only grow our way to success in a productive and efficient manner.

Now I will 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, and good afternoon, everybody.

As we noted earlier in our call today, our 2011 and 2012 new restaurant development pipelines remain in excellent shape. We continue to be very pleased with the overall quality and quantity of the new sites that we are seeing. Our new restaurant development strategy continues to focus on acquiring AAA quality locations in mature, densely populated trade areas with premier co-tenants whose brands and operations are consistent with the BJ's brand and operation. We have worked hard over the past five years to better position BJ's as a higher quality, more differentiating casual-plus dining concept, and our new restaurant design and site selection strategy continues to strengthen this.

Our development plan for this year calls for all of our new restaurants developed within our 13 state footprint, which will allow us to continue leveraging our brand position, consumer awareness, supply chain infrastructure and field supervision. So far in 2011, we have opened two successful restaurants. On February 26 we have -- we had a record breaking opening in Tyler, Texas, where we opened on a free-standing pad at a main entry of the Broadway Square regional shopping center. And on March 21 we opened in Sacramento, California, part of the newest edition of the 1 million square foot Arden Fair regional mall.

All of our remaining 2011 openings have been identified and secured with signed leases or letters of intent. Seven of these restaurants are currently under construction. We plan to start construction on three or four more restaurants within the next 60 to 90 days. As of this date, the Company currently expects to open as many as 12 to 13 new restaurants for the full year 2011, as we discuss before, it is difficult to precisely predict the actual timing of our 2011 openings due many factors outside of our control. So with that in mind, our plan openings by quarter are projected to be as many as three restaurants during in the second quarter, and as many as four during the third quarter, and as many as three or four restaurants during the fourth quarter. Again, our quarterly openings can fluctuate, and we will keep everybody advised of future changes on our quarterly calls.

Looking forward to 2012 and 2013, our gross goals remain the same, and that is to double -- low double digit capacity increase per year as measured by total restaurant operating weeks, in the approximate range of 12% to 13%. We have not yet set a specific operating growth targets for 2012, but we will be able to provide more insight on that target during the next quarter or so, as our 2012 development pipeline firms up. Geographically, our development plan for the next two years or so calls for about a third of our restaurants to be built in our home court of California, another third are plan to be built in Western states outside of California, and another third are planned to be built in the current Midwest Florida market, or possibly a few new markets that are contiguous to our existing operations.

With our solid new restaurant growth over the last few years, we now have a stronger base of restaurants coast to coast, and we are very well positioned to continue building and leveraging the BJ's brand nationally. We continue to believe that we have room to open at least 300 BJ's Restaurants at various site [and sizes] across the country over time.

Lastly, and as I mentioned on our last call, the new development opportunities that we are seeing today are primarily within existing shopping centers that are being redeveloped as a result of big box vacancies or other retail restaurant closures. The landlord community today is focused on enhanced value by redeveloping and adding leasable space to existing centers. We are very well positioned to take advantage of this new redevelopment opportunity.

In today's environment our team is more focused than ever on remaining disciplined in our approach to site selection and lease economics, so that our new restaurants are well positioned to take additional market share in each new trade area that we enter. Our team is looking forward to the next several years, and I'm confident that BJ's should have many years of high quality, solid new restaurant growth to come.

Jerry, back to you.

Okay, thanks, Greg. We continue to believe that BJ's four-wall economics are sound, and they support a continues pace of restaurant expansion. We are always going to pick quality over quantity when it comes to our new restaurant locations, and we are going to continue to carefully execute our expansion program at a pace that facilitates high quality, predictable results. We are going to avoid any temptation to outrun our headlights, so to speak, when it comes to expanding our restaurant base at BJ's.

Now I'm going turn the call over to Greg Levin, our CFO, for his financial commentary on the first quarter. Greg, it is all yours.

All right, thank you, Jerry.

I'm going to take a couple minutes and go through some of the highlights for the first quarter and provide some forward-looking commentary for the rest of 2011. All such commentary speaks only as of today's date and are subject to the risks and uncertainties regarding forward-looking statements, as well as of all the risk factors that are included in our SEC filings. Additionally, my commentary may also refer to certain non-GAAP measures that we use in our internal view of the business and that we believe will help to provide insight into our on going operations.

As Jerry previously noted, totalrevenues for BJ's first quarter of 2011 increased approximately 19% to approximately $144.9 million, from $121.7 million in the prior year's comparable quarter. This increase is a result of approximately 11% more operating weeks and an approximate 7.2% increase in our weekly sales average.

As Jerry mentioned, our aggregate comparable restaurant sales for the first quarter increased approximately 7.8%. While we do not report monthly comparable restaurant sales, January, February and March were all solidly positive, with February the strongest month, and that's really a result of our additional marketing support in this year's February -- that was done via some additional print media -- as compared to February of 2010 in which we did not have the additional marketing support. In aggregate, all our 13 states in which we operate had positive comparable restaurants sales during the quarter, and in general our restaurants outside of California had comparable restaurant sales that were just slightly higher than our restaurants inside California. So on a overall basis, both California and our other restaurants in aggregate has very solid comparable restaurant sales during the quarter.

As we have said before, we believe some of the strengths in our comparable sales is directly related to our clustering strategy, which allows us to get economies of scale in management, supply chain, marketing, supervision and brand awareness, which ultimately leads to better execution within the four walls of the restaurant, and as a result, better topline sales. Therefore, as Greg Lynd's noted, we will continue to be very prudent in our pipeline so that we can drive these economies of scale and preserve our favorable four-wall economics as we grow.

In the first quarter our weekly sales average increased by 7.2% as compared to our comparable restaurant sales growth of 7.8%. As I have frequently discussed over the last year, this difference is to be expected as we lap over our strong initial honeymoon sales volumes from our third and fourth quarter of 2009 restaurant openings. All of these high volume, noncomp restaurants will be in the comp base beginning in the third quarter of this year.

I do want to remind everyone that is a relatively small restaurant company, our weekly sales average performance as compared to our comparable restaurant sales metrics will be a result of many factors, of which one will be the geographic mix of newer restaurants not yet in the comparable restaurant sales base. I would therefore caution investors to not read too much into the initial sales volumes of many of our new restaurants or changes in our weekly sales averages as compared to our comparable restaurants sales metrics, since we will also have a diverse geographic mix of newer restaurants as we continue to build our national presence.

During the first quarter, our estimated menu pricing factor was approximately 3.5%. In regards to the middle of our P&L, our cost of sales of 24.7% of sales was flat with last year's first quarter, and on a sequential basis from the fourth quarter of 2010 it was down about ten basis points. While on a percentage of sales we were able to maintain our percentages, our absolute costs for many of our commodities increased during the quarter, as we generally expected, and were essentially offset by menu pricing and some efficiencies from our new auto food prep system.

Additionally, due to the timing of new commodity contracts and depletion of existing inventories at our supplier's distribution centers, we did not see the increase in many of our commodities until later in the quarter -- until late February and March. This was especially true for produce, which took a significant increase in March for our business, and for most other restaurant businesses as well, dueto the earlier cold weather in January. In fact, from a trend perspective, our food costs as a percent of sales increased about 60 basis points from January to March of this year. While we are currently beginning to see some relief in our produce costs, I still anticipate higher cost of sales for the remainder of 2011, which I will comment on later in my prepared remarks.

In regards to both labor and benefits during the quarter, and operating and occupancy costs, the margin improvement from the prior year's first quarter is really a result of sales leverage over the fixed and semifixed component of these costs. As we continually say at BJ's, we are sales builders first and foremost. By driving sales, it provides the opportunity to leverage the fixed and semifixed nature of many of these costs. Specifically in labor, on an absolutely basis we leverage both hourly and management, and as we expected, gave some of this back in the form of higher payroll taxes and benefits. In fact, on a cost per week basis, our hourly labor dollars were up about 4% over the prior year. This increase was driven by higher hours in our comparable restaurant base.

In regards to management labor, during the quarter our restaurant management teams were staffed at approximately 100%, which is consistent with last year's first quarter. Again, we believe it is extremely important to be fully staffed in the restaurants in order to drive top line sales and leverage your margins. We don't believe at BJ's in trying to save your way to success.

As I mentioned, the effective leverage in our operating and occupancy costs as a percentage of sales in the first quarter was also a result of strong top line sales. On an absolutely dollar basis per restaurant operating week, our operating and occupancy costs increased about 2% as compared to last year. However, this was offset by the solid increase in comparable restaurant sales of 7.8%.

Our general and administrative expenses decreased approximately 20 basis points from the prior year to 6.8% of sales. Included in G&A is $680,000 and $778,000 of equity compensation of 2011 and 2010 respectively, or 0.5% of sales and 0.6% of sales for 2011 and 2010 respectively. Excluding equity compensation, G&A increased approximately $1.5 million compared to the prior year. The increase in G&A is primarily related to our continued investment in our field supervision and support infrastructure costs, plus continued higher than anticipated recruiting and legal costs. In fact, during the first quarter we incurred more than $500,000 more in legal and recruiting costs as compared to last year.

Our depreciation expense for the first quarter was 5.5% and flat with last year's first quarter. Our restaurant opening expenses were approximately $1 million during the first quarter, which primarily relates to the two restaurants that opened in the first quarter, plus some preopening rent and other costs for restaurants that will be opened in the second and third quarter of this year. We denied cur approximately $385,000 in asset disposal costs during the quarter, with the majority of these costs related to several remodels and our deuce seating retrofit initiatives. Our tax rate for the first quarter was approximately 30.5%, which is in line with our expected tax rate for the year. Our total gross capital expenditures was approximately $15.3 million before any landlord allowances, which was in line with our internal business plan.

Before I turn the call back over to Jerry, let me spend a couple of minutes commented on our liquidity position, and also provide some forward-looking commentary for the rest of 2011. Once again, all of this commentary is subject to the risks and uncertainties associated with forward-looking statements as discussed in our filings with the SEC.

In regards to our liquidity we ended the quarter with approximately $50 million of cash and investments. Our line of credit is for $45 million and does not expire until December of 2012, of which zero is outstanding for today, otherthan for standby letters of credit that support our insurance program. As for today, we are still are targeting approximately $75 million in gross capital expenditures for 2011, which we anticipate funding from cash flow from operations, as well as our expected landlord allowances and our current cash and investment balances.

From the revenue perspective, as Jerry mentioned, we continue to see solid comparable restaurant sales so far in this second quarter. Our most recent trend in trying to normalize for the shift in the Easter holiday and related spring break vacations seems to be trending in the mid 5% range or so. However, I do want to remind our investors that our comparisons for 2011 get significantly more challenging throughout the year, as we average 6% or better for the remainder of 2011. Additionally, while the environment does appear to be stabilizing, consumers today are facing higher gas and energy prices, as well as higher food costs. As a result, these inflationary pressures may temper restaurant sales in general in the future.

Specifically, in regard to the second quarter, April of 2010 was our easiest comparison, as our same store sales increased throughout May and June of last year. And while we are not a sports bar and do not heavily promote sporting events, our 103 inch plasma TV in many restaurants and our other large flat screen televisions do allow us to benefit from certain sporting activities from time to time. Specifically in the second quarter last year, there was some macro sporting events that gave us some positive sales momentum, including the World Cup, which started in early June, and the Laker/Celtics finals.

Therefore, as we have mentioned in the past, for a restaurant concept like BJ's that is already one of the leading public companies regarding guest traffic, shooting par for this course is being able to get your menu pricing and maintaining your guest count. That being said, each year we continue to work on additional sales building initiatives and productivity initiatives as Wayne discussed, and we believe other the long run there is still opportunity to drive additional guest traffic to our restaurants.

For those of you that are building your models, I would therefore err on the side of conservatism and base your models more on our menu pricing and yearly comparisons. Currently we anticipate having 3% of menu pricing for the second quarter, and then menu pricing in the mid 2% range in both Q3 and Q4 for this year. However, this is based on information and our expectations as of today. As such, the amount of menu pricing may be more or less, depending on many things, including the consumer discretionary environment, commodity costs and other sales building and productively initiatives.

Furthermore, I would expect that our weekly sales average will be a little less than our comparable sales for at least the second quarter of this year, until some of our strong new restaurant openings from the latter part of the second half of 2009 enter our comparable sales base. Additionally, as we mentioned, fiscal 2011 will be a 53 week year for us, and therefore Q4 will be comprised of 14 weeks as compared to our traditional 13 week quarters.

In regards to cost of sales for the rest of 2011 and based on information available and our expectations as of today, we currently estimate the total cost of our food commodity basket to increase 4% during the second half of 2011. As I mentioned earlier, we started see a more pronounced increase in our actual commodity costs towards the March period as compared to January and February. As such, I anticipate cost of sales for the remainder of 2011 to be around 25% or so. This current estimate is based on negotiations with suppliers that have been completed to date, coupled with current and expected market conditions for certain fresh and other commodity items that the Company is unable to or has currently elected not to contract for longer periods of time.

In regard to labor, we do not anticipate significant pressure for 2011 for both wages and salary. As such, the slight increase or decrease in labor as a percent of sales will be more based on the ability to gain leverage on our comparable restaurant sales. In general, I would expect to see some increase in operating occupancy as a percent of sales for the remainder of 2011 due to some higher energy costs. We are still anticipating a 3% increase in these costs per operating week as compared to 2010. As such, much like labor, the change as a percent of sales in operating and occupancy will be more dependent on the leverage obtained from comparable restaurant sales.

I would anticipate our G&A costs to be slightly less than Q1 costs as a result of some lower recruiting costs, but in general, I would anticipate G&A to be around $9.7 million to $10 million per quarter, including equity compensation. And as expected, it will be slightly greater than that range in the fourth quarter of this year due to the extra week.

As I have already mentioned, we currently expect restaurant opening costs to be about $500,000 per restaurant. However, we will incur preopening noncash rent as much as five or six months before a restaurant opens, and therefore preopening costs for any quarter may not be indicative of the number of restaurants that open in that quarter. As such, I anticipate opening costs of approximately $1.7 millionto $2 million in the second quarter related to the expected three new openings in the quarter, plus preopening rent for restaurants expected to open later in 2011.

We currently anticipate our tax rate to be somewhere between 30% and 31%. And based on our current stock price, we estimated that our diluted shares outstanding for 2011 will be in the 29 million range.

With that, Jerry, back to you.

Okay, thanks, Greg. As usual, a very thorough review.

So to summarize our prepared comments, we were very pleased with our solid results for the first quarter of 2011. We are continuing our forward momentum so far in the second quarter of 2011, and we are looking forward to executing another year of profitable expansion for BJ's during the full year of 2011. We intend to continue to make the right investments for BJ's long term success; investments in our team members,investments in our guests, investments in our operating and support infrastructure, and investments in the quality and differentiation of our brand. We believe the best years of growth are still well ahead of us at BJ's.

So that concludes our prepared remarks. Now we will open the call for questions.

Thank you, sir. We will now begin the question-and-answer session. (Operator Instructions). our first question comes from the line of Steve West with Stifel Nicolaus. Please go ahead.

Yes, thank you. Matt Leedon for Steve this afternoon. My first question, and you gave pretty good color on the food commodity inflation, but if we can talk about the first quarter. You mentioned that produce prices are up. Are you starting to see those come down at all now? And I guess, how much of that is kind of built into the new commodity inflation estimate, and how much is kind of more longer term throughout the year inflation that you are expecting?

We are seeing produce costs come down. They have started to normalize, but we are still expected them to be up for the second half of this year, particularly on things that might not have got effected by the freeze such as avocados. And we do a lot of avocados at BJ's. Additionally, cheese prices took off during the first quarter of this year. While it has come down a little bit, they are not as high -- they are not as low as they were beginning with the month of January, where they started in the $1.67, $1.40range, just look at the 40 pound blocks here. So we are still expecting some of those additional costs to come through for the rest of this year, and that's why I think as we look towards Q2-forward, we are expecting somewhere it to be in the mid 3% to 4% range.

Okay. In terms of the 2012 development that you said you are starting to look at, not really looking for a special number of units, but how is the -- how have maybe negotiations been going? Or as you are looking at the market, is it still pretty attractive? And are you still getting some pretty decent discounts or benefits from the landlords, or isthat starting to tighten up some?

Matt, this is Greg Lynds. We're -- themarket right now, it is still very competitive in terms of pad sites -- the AAA pads sites that BJ's is looking to secure. So in addition to the restaurants out there, you have some of the drugstores that are starting to expand again, a couple of the banks, surprisingly, are starting to expand. That being said, with our performance and the fact that our restaurants bring a lot of guests to the retail centers that we go to, we are certainly the preferred restaurant tenant out there right now, or the top four or five inour category. So we continue to have a strong pipeline, and 2012 and 2013 still look strong.

And then kind of a follow on that, so where -- are you still seeing pretty reasonable construction costs? And kind of I guess, where are those year over year on a comparison, just to get a sense of the return on the new unit?

Yes, we have been able to put additional quality materials, finishes, patios into our restaurant and really keep the overall cost. Even though recently we have seen some raw material inflation, the fact that contractors have been so competitive, we have been able to keep our construction costs in check, and certainly for this year it looks solid.

And this is Jerry. Just to respond to the question on the return on investment on our restaurants. Greg is right we have been able to keep the denominator of that equation under great control while actually adding some additional qualitative elements and components to the restaurant. What is more impressive I think is over the past couple of years we have been able to improve the numerator of the ROI equation on our new restaurants. Look back over the last couple of years, and look at the average sales volumes and overall operating margins that we have been able to achieve from our new restaurant openings. In the aggregate for the last couple of years they have been above the base for the average, and have actually helped to drive returns up a little bit from what we saw a couple of previous years.

So we are very very confident that our four-wall economics remain very very sound. As Greg mentioned, the pipeline for new restaurants for this year and for next year is coming together very nicely. We are an effective competitor for those 8,500 square feet spaces if a developer is looking for that size and looking for a high traffic restaurant in our category to come in and be a part of the project. And right now the pipeline looks very very attractive.

All right. And then one last question. You talked about the additional marketing that you had in February. Could you give us a little more detail on maybe what kind of returns you saw on that, and maybe how that might play into using additional marketing going forward, whether it be later in the year or even moving into next year, and kind of what your thoughts are around that?

Well -- this is Jerry. In terms of overall marketing spend as a percentage of sales, we are still only about 1%, compared to the mass-market competitive set, which is able to be on television, with thousands of restaurants, and typically spend 3% to 4%, maybe even 5% of sales. So our media marketing spend is quite small when compared to our mass-market competitors. And we are really managing our marketing spend at about 1% of sales. Some quarters it will be a little bit less, some quarters it might be a little bit more, again depending on the key events that we select and the new items or promotions that we want to run.

In this particular quarter what really drove to spend maybe a little bit higher, and frankly was reflected very very successfully in our 7.8% comp number for the quarter, was our Seafood Celebration, which Wayne mentioned earlier. As we looked into planning our key marketing events and merchandising events for fiscal 2011, we felt that why can't BJ's be an effective competitor during the Lenten season with our great seafood offerings? Whey should we cede that to other of our competitors?

So we decided, as Wayne mentioned, to come up with a couple of new entrees, including a shrimp dinner, as well as ahi entrees, and we added that to our salmon dishes and some of our other items. And we promoted that actually beginning the month of March, with a free standing insert, and our guests responded very very favorably, to that particular promotion. And not only did it drive guest traffic, but more importantly, it enabled our guests to spend a little bit more, as they made the decisions on their own at BJ's and helped our average check a little bit.

So that was really our thinking with respect to the first quarter. Again, depending on the timing of our key events and our allocation of that kind of overall 1% of sales throughout the year, it could be a little more, it could be a little less.

All right, thank you, guys.

You're welcome.

Thank you. And our next question comes from the line of Brad Ludington with KeyBanc Capital Market.

Thank you. I just wanted to start off with your commodity guidance. I think they are favorable here in the first quarter, but youare talking about an increase for the year because of some of the initiatives you have rolled out. I just -- it just seems like just with the pressure of comparisons year over year, it should be weighted to the first half of the year and more even in the back half. Am I looking at that wrong?

Generally what you are saying would make a lot of sense; however, there are a couple of things that ended up happening there. One is just what we had in our supplier distribution warehouses or distribution centers helped us get through the month of January, virtually with flat commodity pressure. And then as those new contracts kicked in, they started kicking in February, and then you saw the spike increase really come into the month of March inthat regard. So we are going to have those costs coming through for the rest of this year, where virtually Q1 was kind of flat.

In fact, I did my own analysis looking at each quarter, and I can tell you looking at period one, or even looking at the fourth quarter of last year versus where we are today on an absolute dollar perspective, they would have gone up about 80 basis points, and then some pricing and other offsets dropped it about 60 basis points, when I look at it from year over year perspective. Probably getting a little granular in that regards, Brad, but the bottom line is as we are going through and looking at our commodity costs right now, they are up a little bit versus where we saw in the month January, and even a little bit from where we saw in the month of February.

Yes, this is Jerry. Let me just also add a little bit of commentary cost discussion here. We said in the beginning of the year that we felt that the overall cost would be up somewhere between 3% to 4%. Again, when we started the year, there was a certain large proportion of our commodity spend that was already locked in for the full year. We had a certain percentage locked in for six months, and then we had a certain percentage, about 25% as I recall, that we left on the spot market at the beginning of the year. Now we are three to four months down the road here, and as Greg mentioned, we still believe that our overall commodity cost basket for the full year will be up about 4% in cost.

We have been able to lock down at least half of our expected cheese spend for the rest of the year. We decided to keep the other half floating here, which we believe is a smart decision, again depending on the volatility of the cheese market. We still have some produce, as Greg mentioned, that has not been locked up, because you can't lock it up. It is subject to certain floors and ceilings, but nevertheless, as Greg mentioned, it could be susceptible to some demand increases.

But overall, we are still within our expected range for the full year, as we started out the year, between 3% to 4% in the absolutely cost of the basket. Our expected menu price increases, as Greg mentioned, for the full year are still targeted to be right around 3%. Now, depending on movements and commodity costs that we don't have locked down for the remainder of the year, we do have some flexibility and we do have some pricing power I think to effectively manage through those pushes and pulls. Again, as Greg mentioned, we are going to have to see what comes forward.

So I just wanted to kind of wrap up the overall commentary here. I think for the most part we are right on target with where we thought we would be. There had been and has been a little bit of upward pressure, but not beyond our ability to manage it as we understand it today.

Okay, that's very helpful. And just kind of to wrap that up, two other things to watch. I was wondering if the food prep system is in your guidance, or if that can be incremental? And also where should we look at gas prices where it can start triggering some real impact on maybe fuel surcharges, and even where you think it can hit your consumer?

Yes, a couple of things there. On the auto prep system, it pretty much in place now. I think it has given us some benefit in general. We measure that against our theoretical food cost system, andwe look at that variance, and where we have been rolling it out and managing [against] that we have seen some improvement against our theoretical numbers in that regard.

We have seen about two to five basis points in our cost of sales right now on diesel. We have got escalation clauses in our contracts where you start to get the delivery charge or the fuel surcharge. And as it stays in that $4 range plus in diesel, there's that change of that five basis points -- or two to five basis points could get into the ten basis points range in that regard. I think even at the height a few years back, it was somewhere in that ten to 20 basis points.

In regards to consumers, that's a tough one. I think you guys, meaning the analyst community, have written a lot about where fuel has gone back in 2007, 2008, andit was a little bit different in macro economic environment. As a result, where we are today, I think if we can continue to improve on the macro side of things from the economy standpoint, there is that point that could offset a little bit of the higher fuel prices. So we don't really have a solid answer in regards to what that dollar amount in regards to gasoline prices that might have an impact into our business.

Okay, thank you.

You're welcome.

Thank you. And our next question comes from the line of Grant Robinson of Robert W. Baird. Please go ahead.

Hi, this is Grant Robinson up for David Tarantino. A couple quick mop up questions here. You talked about the April quarter-to-date comps and mentioned the Easter shift as the benefit. Would you be willing to provide any color on how much that helped?

I don't want to get all into the specifics. What makes it hard is really I won't know until next week to be perfectly honest. We picked up that weekend, three weeks back, I guess, three weeks back from this current weekend, and it was a very solid weekend. You're picking up that Saturday, you're picking that Sunday in that regard. You are off a little bit because spring break might have started longer as of today. So it is hard to guess where it is. When I start to try to pull all of that and try to get myself to look more normalized, which is in itself a challenge, I see it somewhere kind of in that 5% to 6% range, which is what I talked about today.

Great, thanks. And then the difference in the Q1 comp to the quarter-to-date comp, the decline, do you think that's largely because of the effective marketing that you had in Q1, or were there other factors there?

I think it's just looking at things from more of a macro picture. The first quarter of last year was a 4.4% comp, and we started accelerating. So we're going up against more difficult comparisons in that regard. There could have been other macro things from that perspective, but I have got to tell you, as we said in today's prepared marks, if we do 5% to 6% for the entire 2011, 2012, 2013, and as long as they will have me at BJ's, I would be happy with that. Frankly, that's batting close to 1,000 in regards to that number.

Great, thanks. One last one, just bigger picture questioning on pricing. I know you have talked about 3% for 2011, but just thinking about it on a longer term picture, can you talk about how you approach your pricing decisions? Meaning, isit something that you think about on absolutely basis to offset the commodities, or do you take more of a relative basis and try to manage your check relative to your peer set?.

Yes, this is Jerry. Our overall philosophy on pricing starts with a fundamental presence that we -- a fundamental point, I guess, that we want to keep our menu pricing as low as we possibly can for our consumers. That is fundamental. So as we face pushes and pulls on our input costs like everybody else, we never look to the menu as the ultimate solution for solving those particular cost pressures and preserving our economics. We always look to real sales building, we look to productivity and efficiency improvements, we look to cost reduction programs that don't take anything away from the guests. And then the last place we look to preserve our margins is on our menu pricing.

Historically, over the past five or six years we have worked very very hard to add more points of quality and differentiation into the BJ's concept, and arguably, as we have raised the overall levels in that respect and the overall quality of the dining experience for the guests, we have not taken menu pricing commensurate with all of the additional quality that we have added to the concept. We have deliberately put our pricing power in reserve, and we have always approached our average check in terms of trying to keep it relatively in the same ballpark as that of our -- what we call our mass market, more commoditized casual dining competitive set. So that is our basic philosophical approach to menu pricing and where we would like to keep the average check.

Now, as we managed the barbells of our menu development going forward, as we add more to our small bites and snacks offerings, that $2.95 to $4.95 price point, which are very welcome by our guests and represent an incremental sale and an increment to the average check. And as we work the other part of the barbell of the menu where we are underrepresented on our menu, the upper end entrees between, say, $11 and $15,which is underrepresented and which is a good opportunity for us, it may very well be that our guests decide to spend a little bit more at BJ's. And we are happy with that.

Our guests don't come to BJ's to window shop. They come to eat. They come to spend money, and we want to give them every opportunity, if they so desire, to add an extra beverage, or add a small bite and snack, or to trade up on a little bit of a nicer entree. So that's how our menu management factors in. And if our guests on their own decide to add another dollar to our average check, and they are happy with spending the money, then we are happy to accept that andto see it go through to our bottom line.

So that is a little bit -- probably a little longer term philosophical discussion, but as we approach each year, we look at our input costs, we look at our ability to offset new productivity and efficiency improvements, welook at our menu development strategy, and we try to try to triangulate all of those factors to, at the end of the day, preserve our operating margins in that 19% to 20% operating cash flow margin that we have today, and that represents a top quartile operating margin in public casual dining companies. Does that help you to understand it better?

Yes, absolutely. Thank you for the color, and congrats on the quarter.

Thank you very much.

And your next question comes from the line of Conrad Lyon of B. Riley & Co. Please go ahead.

Thank you very much. Hats off to a outstanding quarter. That was just simply amazing. So a question to you is in terms of your traffic, can you provide any color how much is related to these efforts in terms of say wait time, table turns, even the configuration of the tables? Have you been able to quantify that or that can you talk about that?If that has been meaningful as we are going through time here?

Well, it is certainly meaningful, but unfortunately we have a lot of these things simultaneously being executed in the four walls of a lot our restaurants, so it is very very difficult to isolate certain impacts on certain of the programs. And frankly, a lot of the programs work together in a synergistic way, so it's very difficult. But in the aggregate, when you take a look at the money that we spent on these programs and the incremental bump that we are seeing in the aggregate in guest traffic, I think we have at least about a one year pay out on the investment, and that's a pretty good ROI. So that's the best answer, I think. Wayne, would you want to add anything?

I think that's right on the money. They all do work together in aggregate and facilitate a better flow within the restaurant, which inherently drives greater a guest count and a stronger top line.

Got you. Last question. This is for Greg Levin. I believe you said something that you were staffing 100% at your restaurants. One of your competitors said that an opportunity that they had during this last quarter was to manipulate the staffing during inclement weather, which obviously it's quite rainy some days here. So it sounds like they sent some staff home. Is that something that you do as well, or is it just keep it 100% staffed? Or is there opportunities during those inclement weathers as well?

Let me answer my part, what I was talking to, and then I'm actually going turn it over to Wayne and talk maybe about theway they look at it from a daily shift standpoint. Here's our operator in the room. I was giving more the point from a restaurant management perspective, meaning wewant to have all of our restaurants fully staffed at what we consider the par level for the managers. That way the managers can pay attention to what is going on on the floor, make sure we are executing at what we call the gold standard level at BJ's in giving the customer service and the hospitality that really I think our guests demand when they come into BJ's. Now, on an individual day by day and how the shift plays out, that really is I think that really is a general manager's perspective, and I will let Wayne take that part of the question.

Yes, Greg is exactly right on that in terms of management. In terms of the hourly team members, we flex very well and our general managers and management teams are keenly aware of what the business patterns look like and how weather specifically impacts the restaurants. So in those cases we don't have a whole bunch of folks standing around looking at each other. We definitely send people home when warranted, but always top of mind that we staff [for] sales. So, yes, we do react.

Got you. Congratulations on a great quarter, again.

Thank you.

Thank you.

Thank you, and our next question comes from the line of Tony Brenner with ROTH Capital Partners. Please go ahead.

Thank you. Jerry, I think you suggested that the guest beer tap program was a contributor to the strong sales increase in the first quarter. That program has been in the process of being installed in your restaurant for at least a year -- I don't recall exactly how long. And you are suggesting that it could be as much as another 18 months before it's fully installed in the system. Why such a deliberate pace?

Well, Tony, it really has to do with our internal resources to be able to get out and arrange for all of the conversions from a construction and conversion point of view. Alex Puchner is our Senior VP of Brewing Operations, and he personally works on that, and there's only one Alex, and we have one facility executive that we are able to schedule against that. In addition, we have take an lot of resources that we do have for our CapEx initiatives and really put them behind our deuce seating conversions as a major priority. So again,I think we are moving as quickly as we can, given the resources that we have, to get these conversions done in a very timely manner. So, yes, if we can flipped a switch today and have all of our deuce seating done and all of our expanded guest taps done, it would be beautiful thing, but we have to pace ourselves given the internal resources that we have.

Will that guest beer tap program be put in beach restaurants?

Eventually it will if they have the space. The handful of beach and college restaurants that we have a little bit constrained with the --

A little bit.

Yes -- a little bit with respect to the size of their coolers. So it could very well be that a handful of those can't take any more kegs in their coolers, but that will just be a handful.

Okay. And the deuce seating, is that now fully implemented, or you're suggesting it is not? How long might that take to -- ?

Well, I think we will get the vast majority of our deuce seating conversions done before the end of this year. We have a few that kind of spill over to 2012. But that's one area one of our CapEx initiatives that we are putting the pedal to the metal, and it is such a no brainer from a conceptual and financial perspective and from an operational perspective. So again, I think you will get the vast majority of those done by the end of this year.

Okay. And one last question for Greg Levin. Last quarter, Greg, you suggested that the full year tax rate would come in between 29% and 30%, and now you are suggesting between 30% and 31%, which would be the first time in about four years you are reporting an effective rate of over 40%. What changed?

Higher income. Realistically, I mean I wish there was more there. A little bit of a higher income as we went through it. Not much as FICA tax tip credit as we went through the analysis as well. We pulled back a little bit of the other tax credits, but a big portion was higher income than what we had internally anticipated.

Okay. Thank you.

Thank you, Tony.

Thank you. And our next question comes from the line of Paul Westra with Cowen and Company. Please go ahead.

Thanks. Good afternoon, everyone.

Hey, Paul.

Hey, Paul.

The question on your new product news or promotional efforts of late. Obviously they seem to be working extremely well. I guess that seems to me to be a little new. Would you agree that your promotional success with these seasonal efforts has picked up, and that is part of an on going trend as you look out in the years ahead?

I would agree, Paul. We have spent the first five years or so of my time here guiding the Company's progress to really working and making investments in our operational talent and systems and processes, and in our ability to really strengthen our kitchens and our kitchen talent. And over the past couple of years, now that a lot of that work has been completed, we have decided to really start working more aggressively on the creativity of our menu offerings and our beverage offerings. And I think particularly over the past 18 months we have seen some pretty significant successes in terms of all of those new offerings. They are all carefully tested before we roll. We test them for consumer acceptance and likability. We test them for their economic characteristics before we roll. Last year I think in total we rolled out 37 new menu and beverage items. All were carefully tested, and guestshave responded significantly -- favorably -- to those offerings.

This year, we have not only our Seafood Celebration with some new offerings that we just introduced in March, but in our May menu we will be introduced five new entrees that are going to be very creative and unique to BJ's that will have less than 575 calories each, aswe want to strengthen that part of our menu for our more calorie conscious guests. And our new product development creativity and pipeline is very firm. We spend a lot more time on it. Ray Martin is our Vice President of R&D. We have added additional R&D resources, because we believe that this can be a true source of competitive advantage to our further efforts to enhance quality and differentiation of our concept going forward.

The seasonal beers have just been incredible. And every year as we have developed this portfolio of seasonal beers, and I think we are up to half a dozen now, every year that we offer them, our guests anticipate them. And we have increased the absolutely sales of each seasonal beer by almost 50% year after year after year as our guests become to expect them, to love them. So it's a real competitive capability that we have in the BJ's concept, and it think it kind of falls under our positioning as the premier retailer of craft beer on tap in casual dining.

So all of that has really begun to benefit us, and we are going to continue to work it, because we have lots more opportunities to, again, improve our creativity and with respect to our offering.

And just a follow up, on the incoming May menu, the number of items on the menu, is that pretty [post or static], or has that increased a little bit over that last six to 12 months?

I'm sorry, you faded out there.

I'm sorry, the number of items on the new menu coming in May, is that still trying to keep it into the historical range, or is that (inaudible -- multiple speakers)?

I think it is going to be somewhere around a dozen, when you add up all of the menu items and beverages. So I think you will see about a dozen. And again, I might be off one or two, but I think it is roughly about a dozen.

Okay. And just a follow up question quickly. You said there is -- I think Greg -- that the $500,000 of year over year increases in legal costs? Is there anything specific [as to the] nature? It seems to be on going increases in that line item over the last few quarters.

Yes, it is going to be a little bit on going, but there was a couple of things that we have done as we are preparing on the legal cases that added up incurring additional costs per se than maybe what we normally get on an on going basis.

And what are those? Is there any major outstanding issues?

No, nothing has changed. There's been no new litigation in regard to BJ's from that perspective. It's just as we continue to go down this road towards getting closer -- towards litigation, you start to incur the additional costs to go through and interview people et cetera from that stand point.

Great, thanks (inaudible -- multiple speakers).

There's been no change in that regard from BJ's' perspective and in regards to any new litigation.

Great, thank you, andcongrats on a new quarter.

Thank you. Okay, we'll take a couple more questions, and then we'll call it an evening.

And our next question comes from the line of Sharon Zackfia with William Blair & Company. Please go ahead.

Good afternoon, Jerry. Thanks for taking my call.

Absolutely, Sharon. We'd never -- we're lonely without your call.

But a couple of questions. I guess -- I know, Greg, you mentioned the World Cup, and the Celtics lapping that -- I mean, not the Celtics, the Laker/Celtics in June, and I know that was a very good month for you. How much do you think that benefited the year ago quarter? Just so we can think about as we go forward, becauseobviously the bulls are going to win it all this year.

Well, now, you have still got the San Antonio Spurs in the mix here.

It is really hard to say. I would say those specific World Cup days we did get to see a little bit of an increase during the middle of the week, especially because a lot of the World Cup games, at least in the here on the West Coast, were like 1 o'clock games. So you got that kind of mid afternoon kind of shoulder period, and that ended up really helping us in the month of June from that perspective. But it's hard to come back and say, gee, it was worth 40 basis points et cetera from that standpoint, specifically at that time. We did see acceleration throughout the quarter, specifically -- I thinkspecifically related to some of those events. But, as Jerry said earlier, we always have challenging comps to go over, and we are going to do everything we can and make sure that we continue to execute at the level we are executing at.

Okay, and then I was intrigued. I think you mention add loyalty program may be on tap for next year. Do you have any kind of parameters you can share with us about what you were think about for a BJ's loyalty program? What that might look like?

Well, yes, we certainly do. I don't want to get too granular, because all of our competitors are listening. But for our loyalty program we partner with a company that is one of the leading providers of full service loyalty marketing solutions in the world, and we are testing owe new loyalty program. We call it BJ's Premier Rewards program, and we are testing it in our Las Vegas market, where we got a couple of restaurants open and another one under construction. It is way too early to see what impact, if any, it's going to have on our guest visit frequency.

But our loyalty program is not going to be some card you get punched on every visit and get a free pizza after buying ten pizzas or something like that. Our program is intended to be very customized, it is going to be very upscale, and it is going to be very technologically advanced. So we are excited about it. It is going to have some statement of the art technology that is going connect the guest mobile device into our in-house table management and POS systems. And so again, that's one of the parts that we are fine tuning, but I think we will get all of the fine tuning done, and be prepared for a national rollout sometime during the second half of this year.

But I'm very excited about it, and it is going to really have some interesting components to it. It's intended really to increase the engagement of our team members with our guests. It's intended to enable us to better anticipate their needs. And it's intended to better customize and personalize the guest visits to our restaurants, and to reward them, but again, with some experiential premium rewards. And I think we have a really cool line-up of some interesting rewards other than just buy ten pizzas, get the next one free. So that's the update on it, and it will be exciting to see it get rolled out here in the second half of the year.

Okay, great. Thanks so much.

You're welcome.

Thank you. And our final question comes from the line of Nicole Miller Reagan with Piper Jaffray. Please go ahead.

Hey, this is [John] on for Nicole. I just had a quick question on any progress there might be on being able to get your -- either BJ's branded or crafted root beers in stores, in the [PBG] channel, or maybe for sale at the restaurants? And -- or even on the beer side as well.

Yes, this is Jerry, and the answer is yes. We are continuing to make progress on that initiative. It is one of our key initiatives for 2011, and we are running an experiment with 22 ounce proprietary beer in a market in America. And so we will see how that works in the retail distribution channel, and then based on our assessment of potential demand for it, then we will be able to go from there. We are also working with a couple of potential partners, and we're in very preliminary stages for a retail product or two to hit the retail distribution channels. And we are looking on laying the ground work for that this year, and if all goes well, we can see that beginning to actually hit retail channels starting in 2012 sometime. So those initiatives continue to make progress, and we are pretty excited about it.

Great, thanks for the update.

Okay, thank you. Operator, I think that will conclude our questions for this time, and if anybody else has any questions, please call us at our offices. We are here in California, and we'll be waiting for your calls.

Thank you, sir. Ladies and gentlemen, this does conclude our conference for today. We thank you for your participation, and you may now disconnect.