BJ's Restaurants Inc (BJRI) 2015 Q4 法說會逐字稿

Good day and welcome to the BJ's Restaurants, Inc. fourth-quarter 2015 earnings release and conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Greg Trojan, President and Chief Executive Officer. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and welcome to BJ's Restaurants FY15 fourth-quarter investor conference call and webcast.

I am Greg Trojan. BJ's Chief Executive Officer, and joining me on the call today is Greg Levin, our Chief Financial Officer. We also have Greg Lynds, our Chief Development Officer and Kevin Mayer, our Chief Marketing Officer, on hand for Q&A.

After the market closed today, we released our financial results for the fourth quarter and fiscal year ended Tuesday, December 29, 2015. You can view the full text our earnings release on our website at www.BJsrestaurants.com.

Our agenda today will start with Rana Schirmer, our Director of SEC Reporting, providing our standard cautionary disclosure with respect to forward-looking statements. I will then provide an update on our business and current initiatives and then Greg Levin, our Chief Financial Officer, will provide a recap of the quarter and some commentary regarding trends to date this year and our thoughts regarding FY16. After that, we will open it up to questions.

Rana, please go ahead.

Thanks, Greg. Our comments on the conference call today will contain forward-looking statements within the meaning of the Privacy Securities Litigation Reform Act of 1995.

Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Investors are cautioned that forward-looking statements are not guarantees of future performance and that undue reliance should not be placed on such statements.

Our forward-looking statements speak only as of today's date, February 18, 2016. We undertake no obligation to publicly update or revise any forward-looking statements or to make any other forward-looking statements whether as a result of new information, future events, or otherwise, unless required to do so by the securities laws. Investors are referred to the full discussion of risk and uncertainties associated with forward-looking statements contained in Company's filings with the Securities and Exchange Commission.

Thanks, Rana.

Q4 was another successful quarter for our Company and capped a tremendous record-setting year for BJ's. With 9% top-line growth, we increased net income in Q4 a robust 32% and EPS by 39%, lapping one of our most successful quarter of 2014 when be grew net income almost 17-fold. Comparable restaurant sales in the quarter came in at 0.7% and given the headwinds from the Halloween and Christmas calendar shift, we were pleased to slightly exceed our initial internal sales projections while extending our string of six successive quarters of positive comp sales growth.

For the full FY15, we grew sales by 8.8% to $920 million fueled by restaurant operating week growth of 9% and a comparable restaurant sales increase of 1.7%. Importantly, we out paced casual dining trends for the year as reported by NavTrak and Black Box in both traffic and sales. Given that we operate many of the industry's busiest restaurants, that is no small feat. Just as importantly, we accelerated our profitability and free cash flow as we continued to leverage our Project Q initiatives and improve our overall cost structure.

We expanded our Q4 operating income margins by 170 basis points and our full-year margins, adjusted for the one-time gain on our lease termination in 2015 and our shareholders settlement cost in 2014, by 210 basis points. Our net income, again adjusted for the 2015 one-time lease termination gain and the 2014 settlement cost, grew 47.8% for the year. On that same basis, our 2015 diluted net income per share grew 60.2%, reflecting our opportunistic share repurchase activity of the past 18 months. Again, our strong 2015 financial growth lapped a very successful 2014, where our adjusted net income and EPS rose 18.8% and 21.2%, respectively.

I want to express my pride in our 19,000-plus team members who work so hard and with more creative energy than you can imagine to improve our processes and execution across nearly every meaningful area of our business. Accomplishing these results while growing our footprint by 9% through the opening of 16 new restaurants in more newer markets for us than ever is a testament to what I often describe as our biggest secret weapon, and that is our team's proven ability to execute. I believe this strength the second to none in the sit-down restaurant space.

Those of you who follow our Company know that over the past two years we have made significant refinement to our menu, reducing our overall item count by about one-quarter. At the same time, we've also made over 100 separate back-of-house process improvements, ranging from how we prep lettuce to the way we proof our pizza dough. Many of these have saved us labor, but most importantly, they have allowed us to improve our quality. We have also redesigned our restaurant prototype to reduce our operating footprint by about 15% while reducing our required capital for new unit openings by about 20%.

Many of the changes we made came directly from our team members, who today are more involved in the future of our concept than ever before. Their ideas for innovation and change have been the backbone of Project Q and our overall complexity reduction efforts.

Our annual team member satisfaction survey had the highest satisfaction scores in the past three years. And our turnover rates, while edging slightly higher due to market demand for restaurant operations talent, continued to be one-third to one-half of the industry averages, depending on the job category.

In terms of our guests, we are now in our third year of monitoring guest satisfaction through our NPS feedback system and we've been improving our overall satisfaction, our value and our food quality metrics consistently. All of which is encouraging as we continue to pursue a lot of goals to make BJ's the most successful casual dining concept ever.

I believe our results, both on the traditional financial metrics and the strategic indicators just quoted, demonstrate we are making tremendous progress against the strategies and objectives we set out to accomplish just over two years ago. Having said that, we have more to do and accomplish to achieve these goals. Let me spend a few minutes talking about the initiatives underway in 2016 that will continue our quest for greatness.

Adding new flavors and improving our quality throughout our menu, along with making a big statement in the better for you space with our enLIGHTened category, has been key to driving better-than-industry sales performance. In 2014 when we embarked on this journey, we reduced our menu count but we also added additional better for you items in our enLIGHTened category and improved our front fundamental value proposition by adding key items below $10 in our burgers, sandwich and salad lineup. Most of these items performed exceedingly well and played a major role in driving solid traffic gains in 2014, while keeping our total guest check flat in 2014, net of pricing of about 1.5%.

Having made this value investment in 2014, we were able to focus in 2015 on driving average check through some targeted new product development in pieces with our new Tavern-Cut product, burgers with our mid-year lineup of loaded full-size burgers, and the entrees and pastas we introduced in October with our successful introduction of some classic Italian pasta flavors. This strategy drove solid average check growth of over 3% in 2015.

In 2016, our plan is to strike a balance between traffic and check growth. One of our key traffic initiatives is to drive incremental transactions at lunch. We believe we can attract more value-oriented guests at lunch by offering some new flavors and lunch combinations, anchored by a new lineup of Italian wraps, or piadinas, along with some compelling and innovative grill cheese sandwiches at a very compelling price point.

Later in the year you will see some check building menu initiatives in both our enLIGHTened and center of the plate entree menu categories. We will continue to leverage what we think is perhaps the best quality and variety of enLIGHTened products and casual dining with some new exciting products later in the year.

Last year at this time I mentioned that about 25% of our checks include an item from our enLIGHTened category. Not surprisingly to me, our mix of enLIGHTened sales continues to grow year-over-year, even during more indulgent times of the year like Q4. We have been consistently delighted by our guest reception to high quality, higher-priced items and believe we have the permission to continue to drive check through higher quality center of the plate items.

Our success starts with the product we deliver every day, our food, our hospitality and service, and a high-energy, contemporary, fun social dining environment. Our menu innovation and pipeline for 2016 leaves us well positioned to continue to drive sales on these fronts.

We will also continue to evolve our brand messaging and media mix as our top of mind awareness lags our competition, even in some of our more established markets. Kevin Mayer, our CMO, has been in place over a year and a half now, and he and his team have made some great progress refining our brand positioning and starting to more effectively tell the BJ's story through our improved brand messaging. We call it Craft Matters.

Our messaging starts with a deep-seated commitment to our guests to deliver quality with every facet of the BJ's experienced. Whether it's our quality ingredients, our 20 years of brewing award-winning beer, or the energy you can feel on a Friday night, we are using a variety of proof points to speak to the underlying quality that runs through everything we do.

No matter your age or demographic, whether you are a loyal lunch patron or a family night out frequenter or watching your favorite team at our bar, appreciation of our quality at an amazing value is the common denominator. Our messaging also speaks to the approachability of our concept, the lack of pretense and our authenticity. It's about telling our very credible quality story around we care that you have a great experience in every way at BJ's.

The second part of the marketing equation is deploying our marketing spend to most efficiently drive traffic in our restaurants. We've done a good amount of testing and learning, utilizing both conventional and digital media, along with improving our segmenting of our loyalty database to drive more personalized messaging. As a result, we are seeing increased response rates, growth in the percent of our total transactions coming from our loyalty members, and most importantly, increased frequency from our most loyal guests.

We will also be expanding our use of digital video, as well as conventional media, in 2016. Digital video enables us to target specific trade areas at levels of spend and CPMs far more affordably than traditional TV in our less-penetrated markets. In total, we expect to take advantage of our scale and our growth and increase our overall impression in 2016.

As it has been in the past, a continued focus on how we can reduce our operating costs will be vital to our success. Greg and I are constantly asked, given our 200 basis point margin improvement from last year alone, how much more can BJ's accomplish in cost savings and margin enhancement?

The answer is not as much as we have achieved over the last two years. The laws of diminishing marginal returns tell us that. However, we have strengthened our already strong resolve as a Company and created a culture focused on continuously hunting down cost savings opportunities for three reasons.

First, we know wage pressure and general inflation over time guarantees that our margins will erode if we are not vigilant. Second, we know in order to maintain our high-quality value quotient we can't rely on price to offset inflation. And third, one of the biggest opportunities for us, outside of our organic restaurant growth, is the drive top-line sales by more effectively driving trial and frequency through our brand positioning and marketing. Our goal has always been to find cost efficiencies in our model to fund incremental marketing spend to drive trials as well as establish our margin performance in the upper quartile of leading casual dining concepts.

While our menu innovation, Project Q successes and the progress were are making in marketing are exciting in terms of results they are achieving, I am equally excited about our new restaurant momentum. We opened in four new states in 2015, all within proximity to our middle-Atlantic Ohio core and are planning under several more states in 2016. I'm pleased to report that our new restaurants in places like Huntsville, Alabama, McCandless, Pennsylvania in the Pittsburgh market or Murfreesboro, Tennessee, have opened at sales levels above our expectations and guests in these markets have quickly embraced the BJ's concept.

Our new 7,400 square foot prototype is performing well and its lower investment cost has been instrumental as we penetrate new markets outside of California and our Texas core. As expected, the prototype is delivering very solid returns at the expected WSA sales levels that we have historically seen in markets outside of California.

I could not be more proud of the progress our team has made towards our goal of being the best casual dining concept ever. Yes, it's true we are blessed to have a great concept to work on every day, but the reason I am so optimistic about our future is our people, the great teams we have in our restaurants and our RSD home office who are so passionate about being better tomorrow than they are today.

We clearly have a lot of work ahead of us, but in 2016 we will continue to focus on our play book that has proven to be a driver of bottom-line growth. We will leverage our broad menu to continue to deliver great unique food at an extraordinary value. We will continue to pursue savings in our cost structure to enable us to price at attractive levels while simultaneously driving more traffic through our improving marketing strategies and our ability to target our numerous customer segments.

We have a great lineup of contemporary new restaurants to open this year and are already off to a strong start, with openings in Dayton, Ohio, and Bakersfield, California, the first new opening in California to feature our new prototype, by the way. The fundamental strength of our concept, its the appeal across such a wide range of guests and the momentum our team has created gives me great excitement to build the next several hundred BJ's Restaurants. With a 172 restaurants in 22 states and estimated national capacity for at least 425 BJ's, we are very excited that the majority of our growth remains ahead of us.

Greg Levin will now do a financial review of Q4 and offer some additional perspectives on our 2016 expectations.

Thanks, Greg. As Greg Trojan noted, our record fourth-quarter and full-year operating results were driven by positive comparable restaurant sales and the benefits of our return focus restaurant development strategy, coupled with our continuing success with our productivity and efficiency initiatives.

Revenues for the 2015 fourth quarter increased approximately 9% year-over-year to $233.1 million, while net income and diluted net income per share increased 32.2% and 38.7%, respectively, to $10.9 million and $0.43. Our fourth-quarter 19.9% restaurant level cash flow margin marks a 150 basis point increase over last year's fourth quarter. And I will remind you that included in our restaurant level cash flow is approximately 2.3% of marketing spend, which many peer companies include in their G&A. Therefore, excluding marketing spend, our four-wall restaurant level margins for Q3 were 22.2%, which we believe are among the highest in casual dining.

Our comparable restaurant sales rose 0.7% during the quarter despite the negative impact from the calendar shift around Halloween and Christmas. We estimate that the holiday calendar shift negatively impacted comp sales by approximately 0.3%, so on a stable calendar basis we estimate Q4 comp sales would have been positive 1%. Our weekly sales average for Q4 was a little over $105,000 per week, which was down about 0.7% from last year's fourth quarter.

Quarterly revenue benefited from menu pricing in the upper 2% range, offset by a traffic dip of about 2.5%. Q4 cost of sales at 24.7% was in line with our expectations and 90 basis points lower than last year's fourth quarter due to lower commodity costs, primarily in cheese, dairy and seafood and the benefits we continue to derive from our initiatives around menu mix and menu pricing.

Labor was 34.2% for the fourth quarter and that represented a 50 basis point reduction from the year-ago period and also came in better than what we anticipated. The decrease resulted primarily from a year-over-year leverage in restaurant level manager cost and less workers compensation expense, as well as continued improvement in hourly productivity, largely due to our Project Q initiative.

Our operating occupancy costs were 21.2% of sales for the fourth quarter, which is flat as a percent of sales with the prior-year same quarter. Included in operating occupancy cost is approximately $5.3 million of marketing spend which, as I noted earlier in my review of restaurant operating margins, equates to 2.3% of sales. By comparison, marketing spend in last year's fourth quarter was $4.5 million, which amounted to 2.1% of sales.

Excluding marketing, operating occupancy cost in the fourth quarter averaged approximately $20,000 per restaurant operating week, which equates to about 19% of revenue compared to $20,300 in last year's fourth quarter, which was about 19.1%.

G&A was $13.1 million in the fourth quarter, representing 5.6% of sales and down from 5.8% in the year-ago period. G&A was lower than expected due to reduced consulting costs and fewer than anticipated managers in training as well as continued leverage from restaurant growth. Depreciation and amortization was approximately $15.4 million, or 6.6% of sales, and averaged about $7,000 per restaurant week, which is in line with our recent D&A trends.

Our pre-opening expenses were $860,000, which was lower than anticipated and was primarily for the Akron, Ohio, restaurant that opened in October and our Longview, Texas, restaurant that opened in November. In reviewing our opening cost for FY15, we are averaging around $415,000 per restaurant. This is down from around $500,000 per restaurant in 2013 and is another direct benefit of the newer prototype 7,400 square foot restaurant in addition to the $1 million savings in the gross construction cost. Our tax rate for the quarter was 29%, which is right in line with our targeted rate.

In terms of capital allocation, we continue to use our strong cash flow from operations to execute on our national expansion plan while opportunistically repurchasing shares and, given the strength of our cash flow and balance sheet, we are doing so while maintaining conservative leverage levels. In fact, full-year 2015 cash flow from operations was $127 million compared to our total capital expenditures for FY15 of $86 million, which includes the construction of the 16 new restaurants we opened this past year as well as maintenance CapEx and other sales-building CapEx initiatives. As a result, we generated $41 million of excess cash flow while increasing our restaurant base by 10%.

As I said, reflecting our commitment to enhance shareholder value, our opportunistic share repurchase activity contemplates the growth and returns we are deriving from our ongoing nation restaurant expansion program. In this regard, during the fourth quarter we allocated approximately $30.2 million towards the purchase of 694,000 shares of our common stock, bringing our total repurchase for FY15 to $95.6 million and that is for the purchase of 2 million shares.

Since the authorization of our initial share repurchase program in April 2014, we have repurchased and retired approximately 4.9 million shares of BJ's stock for approximately $195 million. This leaves us with approximately $54 million remaining under our current share repurchase authorization. The weighting of these repurchases in our share count is now more evident as the 9% rise in Q4 revenue led to a 32.2% increase in net income and a 38.7% increase in diluted earnings per share.

With regard to liquidity, we ended the fourth quarter with approximately $35 million of cash and $100 million of funded debt on our line of credit, which is in effect until September 2019. And as I noted a moment ago, our leverage remains very low with a net debt to EBITDA of about 0.54 at year end. Our line of credit is for $150 million and combined with the strong cash flow from operations, provides us the flexibility to continue our national expansion program while returning capital to shareholders through our share repurchase plan.

Before we open the call up to questions, let me spend a couple of minutes providing some commentary on expectations for FY16. As always, all of this commentary is subject to the risks and uncertainties associated with forward-looking statements as discussed with our filings with the SEC.

Our comparable restaurant sales for the first seven weeks of the quarter are around positive 1% as we go over some of our toughest comparisons from prior years, though there remains a key amount of choppiness in our business. While our comparable restaurant sales appear to be outpacing the industry at the start of 2016, we remain guarded on comp sales growth until we see clear evidence that the consumer is back on a consistent basis in casual dining.

Additionally, Easter Sunday moves to March 27, which is the last weekend of Q1 this year compared to April 5 in 2016, which was in Q2 last year. Therefore, we expect this holiday shift to negatively impact comp sales by about 10 to 20 basis points for Q1 as a result of the slower than normal weekend, with that offset being positive -- a positive benefit to sales which we will realize in Q2.

Therefore, from a modeling perspective, I would continue to lean toward conservatism and building comp sales forecast, taking into consideration that menu pricing in Q1 and Q2 should again be very similar to what we saw in Q4 and that is in the mid to upper 2% range. Again, as I mentioned, that is fairly consistent with Q4.

Moving past comp, for the first quarter I would expect approximately 2,230 restaurant operating weeks, marketing an approximate 9% increase from the 2,044 weeks in last year's Q1. Also, as we continue to move into new markets, I would expect us to continue to see a negative 100 basis points to 150 basis point spread between comp sales and weekly sales averages. This has been pretty consistent over the last couple of years, as most of our restaurants are being opened outside of California.

Investors should keep in mind that are lower-cost prototype, along with lower operating costs from our operating initiatives and the fact that most of our newer restaurants are in states that are significantly less expensive to operate than California, is leading to returns on these new restaurants that are meeting our or exceeding our internal targets.

Moving on to the rest of the P&L, I would expect cost of sales to be in the mid-24% range this year based on an overall commodity basket increase of around 1%. Right now we have locked in about 60% of our commodities for FY16.

With regard to labor, as everyone knows, we will absorb an increase in California minimum wage as well as additional minimum wage pressures in other states. Aside from state minimum wages, we have seen an increase in wage pressures across the restaurant business for hourly positions and managers. Therefore, I expect to see additional upward pressure on hourly management wages this year.

That said, based on preliminary planning, we believe we can mitigate some of this labor pressure through prudent menu pricing, menu design, and cost saving initiatives currently underway. Therefore, I would expect labor to be in the low- to mid-35% range in the first quarter and then slowly come down throughout the year as we implement our normal menu pricing and new menu updates as well as some additional productivity initiatives that we have underway that we plan to implement later this year.

Also please remember that as in the past, the first quarter of each year is our highest labor cost as a percent of sales, primarily due to higher payroll taxes and benefits that occur at the beginning of each year until we hit many of the state caps or limits later in the year. And obviously, of course, labor as a percent of sales is highly correlated to weekly sales averages and comparable restaurant sales growth, so labor as a percent of sales will certainly be impacted by these factors.

With regard to occupancy and operating cost for the year, our expense management and margin enhancement initiatives have significantly reduced these expenses and our goal is to hold the line on these savings while using the additional savings to offset some of the normal inflationary pressure we get each year. As such, we're targeting occupancy and operating cost to be around 21%. Included in this total occupancy and operating costs will be approximately 2.5% of marketing spend, which is pretty consistent with the levels of marketing spend in FY15. However, we may see a little more marketing spend in the first quarter, given the success of some of our targeted loyalty promotions as of late.

On the G&A line for 2016, our goal is to continue to gain leverage as we grow. As such, we expect G&A to be around $60 million in 2016, including equity compensation. Remember, FY16 will be a 53-week year and therefore G&A will be heavier in the fourth quarter since the fourth quarter will have one more week of operation.

For Q1, I'm expecting G&A to be in the mid- to upper-$14 million range. Pre-opening costs should be in the $1.8 million range for the first quarter and that's based on four restaurant openings.

I'm expecting our tax rate to be in the 28% to 29% range in this first quarter as we expect a larger work opportunity tax credit in Q1 as Congress reinstated the WOTC credit in Q4 of last year, which means that we will get a larger credit in this first quarter related to all of FY15. Going forward, I would expect our tax rate in the second quarter through fourth quarter to be in the mid-29% range.

As the weighting of our recently repurchase activity continues to positively benefit the share count, I anticipate our diluted shares outstanding will be in the low $25 million range for the first quarter versus $26.9 million at the end of Q1 2015 and just under $29 million when we embarked on our repurchase program. Again, I'd remind you that we still have approximately $54.5 million available under our current share repurchase authorization as of year end.

Our CapEx for 2016 should be in the range of $110 million to $120 million for the development of 18 to 19 new restaurants, maintenance cap expenditures and other sales and growth initiatives before any tenant improvement allowances or sale lease-back proceeds we may receive. As with 2015, we anticipate funding our 2016 capital expenditure plan from cash in our balance sheet, cash from operations, our line of credit, landlord allowances and sales lease-back proceeds.

As I mentioned before, FY16 will be a 53-week year. As a result, we expect some additional leverage in operating and occupancy cost for that 53rd week in Q4.

So finally as we look forward to 2016, we see a clear path for BJ's to continue to grow. The operating and financial momentum achieved in this past year has solidified our foundation for further growth and FY16 sales are off to a decent start. Throughout 2015, we demonstrated quarter in and quarter out that our strategy to elevator food offerings, productivity, restaurant efficiency, and guest service are generating outsized bottom-line growth.

As Greg indicated, our focus on the menu innovation, affordability, speed and restaurant hospitality, coupled with Project Q productivity initiatives and a bottoms-up approach to reducing operating occupancy cost has been embraced throughout the organization by our local restaurant team members. Our organization-wide culture reflects our commitment to ensuring that BJ's is the best casual dining restaurant in the industry and progress with these initiatives are complemented by our vast runway for restaurant expansion.

Overall, our sales and operating initiatives are bearing success. Restaurant and operating margins are headed in the right direction, guest traffic per square foot is solid and our restaurant expansion plan is on track. At this juncture, BJ's a proven growth company with steady double-digit unit growth, solid margin enhancement and high-quality, high-value brand positioning.

Our 2016 restaurant pipeline is in solid shape with 18 or 19 planned for the year and with 172 restaurants opened, an estimated national capacity for at least 425 BJ's restaurants. As such, the majority of our growth continues to remain ahead of us. In addition, our balance sheet is strong and leverage is modest, providing us the flexibility to achieve continued growth while opportunistically returning capital to shareholders in the form of a share repurchase program.

In closing, we remain confident that our initiatives to continue BJ's expansion, drive sales, productivity and efficiency, combined with prudent management of our capital structure, is a proven formula for sustained long-term financial growth and the appreciation of our shareholder value.

With that, that concludes our formal remarks. Operator, open it up the line for questions.

(Operator Instructions)

Brian Bittner, Oppenheimer & Company.

Thanks. Just have a couple of questions. First question is on the unit growth. Can you just remind us, the analysis that you guys have done through arrive at the 425 that you target? As we look over 2017 and 2818, where are the new openings coming? Are they still a lot coming in California or are you starting to venture more and more out to the East Coast and the Midwest?

Yes, Brian, on the 425 units we did analysis, I want to say now it's probably five to seven years old, where we used one of those national real estate site selection firms to go out and kind of target where we can put BJ's based on historical factors. We also actually had our real estate group go out as well and go through the US based on their experience and see where they can put BJ's restaurants as well. We looked at both of those reports, which basically came together eerily similar, meaning they both came up with around 425 units. We have not updated that.

I will tell you when I first got to BJ's and we did our first analysis same type of analysis back in, I want to say, 2006 to 2007, that should at that time 200 restaurants. We did it a few years later and it came up to the 400 range and it's something that we have internally talked about doing an update probably this year or maybe next year. We have not increased the number out there because of the end of the day we don't have a concrete analysis saying what it is and instead of just throwing at a number, we always feel it's very important to have some type of quantitative analysis behind it. So that's where the 425 comes from. It was research done by us about five years ago.

In regards to our new restaurant, we did open one just recently in California, our first one in a few years. But most of the openings is going to continue to be in the Ohio Valley and on the East Coast in kind of the Virginia, mid-Atlantic area. So as I look through our openings this year, we've got, I want to say, maybe three or four in the Virginia/Maryland area. We've got a few in the Ohio. In fact, we just open our first one up in Bearfield Commons up in Beavercreek, Ohio. We're going to open another one in Cleveland later this year. We've got two more coming into the Pennsylvania market in the Pittsburgh area. That's been really strong for us. We're looking for our first New Jersey restaurant. So, primarily outside of California and also outside of Texas, two of our, obviously, larger markets.

Okay. And then the second question is about comps. When you are thinking about the comps throughout 2016, is using a two-year trend a good way to think about it? Because you did take the big mix hit in 2014 so I guess you can say you started maybe a new sales cycle starting in 2015? If this is the case, and you're comping a 1% now with easier comparisons on the horizon, internally would you kind of think about full-year 2016 comps as being a bit better than 1%?

Brian, that's a good question. I don't know if I have an answer for you on that. One of the things that we have seen so -- and I talked about the fact that we are going over our tougher comparison. What I have continued to see in casual dining and that is when there is a reason to go out, meaning it's a Valentine's Day, let's call it, something from a social standpoint, especially in casual dining, we see some pretty big sales.

But when I look at where we're trending this first quarter here, we went over some of our toughest comparisons and we did that in early January and frankly, that's when we had some of our best comps to start off the year. I think the reason for that is, you're still on a celebratory mode from year end, whether you've got gift cards, you haven't gone back to work, et cetera. And then you start to come back at your normal patterns and even though our normal pattern seem to be a little bit easier, let's call it, year over year, we see that same type a slowdown. When I look at something like what just happened, Valentine's Day weekend, we do big numbers on that and again, I think casual dining has become a place that's a place of gathering, a place where people want to experience things together. BJ's is great for that. So I am not sure I can conclude that sometimes easier comparisons means that comps will be easier from that standpoint.

Brian, the only thing I would add to that is we are not looking at a repeat of 2014. Clearly, it was easier to drive comp sales where we have some check growth on our side, right, in this environment. We are not looking at a return to 2014, when we consciously, and we knew we were doing this and we are happy that we did, held in check our guest check growth by -- through our menu strategy. We still, as I mentioned in my remarks, we still think there is room to grow check in this concept.

It's really -- one of the fun things about BJ's is its diversity of appeal. We have continued to do pretty well on the high end, and we're going to -- what I tried to explain before is to strike a balance. We do think there's an opportunity of value at lunch. I still think people will order the large burger offerings that we have out there, but I think we can attract some of those more value bargain hunter folks with some lunch offerings at the same time. So I am happy to be in a more of a balanced situation in 2015 and look forward to our strategy, going after both traffic and some guest check at the same time. That's a better place to be. It was necessary to do it in 2014 but I like where we sit from that perspective.

Alright, thanks, Greg.

Will Slabaugh, Stephens Inc.

Thanks, guys. This is actually Billy on for Will right now. I wanted to ask a little bit on the value, something that you guys spoke to earlier and as we talked about, had more of a focus on 2014. But looking forward to this year, and given that we've seen a lot of value promoting across the industry, just wonder how you're thinking about what the next leg of your value message should be. Maybe along with that, what do you think is the biggest component that you're going to need to communicate to the guests in order to drive more sustainably positive traffic. Is it that value messaging? Is it the quality of offerings? Is it diversity, or something else?

So look, from a value perspective, we are focused, early on in the year anyway, Billy, on the lunch opportunity. I think clearly that's where fast casual over the last few years has become more competitive to us and just in general, people tend to be more value focused that day part as well. As I think, as we've done some menu engineerings and things that we've introduced at lunch we haven't focused on sort of value side as much. So the answer that question from a value perspective is that we will still -- I agree with your comment around the promotional and competitive activity is not getting any easier out there given the environment. If we think we're getting better at better at that from a targeted perspective and utilizing loyalty, but we see that continuing, so I agree with you on that front.

In terms of the overall brand messaging, I think the important part to BJ's story, that I look forward to telling, and I know Kevin is focused on is this notion around our quality and looking at making sure we communicate through what we call these touch points I was trying to communicate. I think if you took a poll, which we haven't officially done, and ask people how many people really realize that we brew our own really fantastically award-winning beer at BJ's, we would be disappointed in that answer. So how we told that story not just about our beer but our food quality in a way that -- people tend to see our menu and our category and unfortunately not really appreciate, oftentimes, the level of differentiation we have on that quality front.

That quality value quotient is what we're trying to get people to understand, particularly in our newer markets. That's what really, when we refer to craft matters, it's by association and telling the story around different components of who we are and for people to really understand the quality of the experience.

Thanks. That's helpful. And just one more, if I could. Could you speak a little bit to any geographical trends? We've heard a few of your peers point to continued strength in California where you guys obviously have a presence. Are there any other notable trends to speak of, maybe in Texas or on the East Coast where we saw some winter weather?

Yes, I will take a first stab at it, Greg. You can fill in. It has continued to be what we've noted in last few quarters where it's, we are experiencing the same thing where California is a stronger, is -- continues to be one of our stronger markets. Texas has been more challenging compared to our other markets. Our perspective, my perspective, continues to be it's less about what's happened in the world of energy and more around the growth and just the level of development and seat added in the market, in the Texas markets specifically.

There's a fair amount of relocation happening, given that growth, particularly in the DFW area. So I think that's something that all the casual dining concept are going to are going to be battling for a while to sort of swallow this -- the level of development as that hopefully settles down a little bit; and I think some of the dislocation, that's a combination of new development and frankly just infrastructure development and highway development in these Texas markets. I think that's going to be a challenge that's going to be here for a little bit.

Great, that's helpful. Thanks, guys.

Matthew DiFrisco, Guggenheim Securities.

Thank you. Just a couple of questions here. With respect to price, I was curious, when did you say you were going to roll that out or take the incremental price? I assume you are going to stay at the high end of 2% but then you expect to take some with that new menu. What is the timing of that?

That timing is actually next week, Matt, but we'll lap about 1% and 1% will get added. I think less than 1%, but it's more or less neutral. That's why our overall menu pricing will be very consistent in Q1 with Q4. A new menu rolls out next week with some of the lunch offerings that Greg Trojan mentioned.

Excellent. Okay. And then just looking at the comp, a year ago you gave us a number of sort of a range of mid-single digit through the first seven weeks and obviously on this call you been specific to say the first half of 1Q was more challenging than sort of the way it ended. I was curious though also within that 1%, are you getting stronger as far as the comp processing throughout the quarter? Because I observed, obviously, you didn't have a West Coast team in the NCAA finals. Did you get any lift from that from last year, where maybe there was some sports viewing that you didn't have this year around the New Year's Eve holiday that were the first couple of days of the quarter?

No, I am going to try to answer, Greg. I'm not sure I understood all the parts your question there, Matt. The last year when we talked about this quarter, if you remember, we talked about I think at this time sales were probably higher in the first seven weeks of last year and some of that was going against the weather and so on and then we finished the quarter at 3.2[%] but at the time, we were a little bit higher. Everybody can interpret -- or interpret that sales get a little bit softer from that standpoint from a quarter -- from this quarter. That being said, and all my earlier comments, we tend to see our highest sales when there is a reason to get together and gather. So our sales started out of the gate pretty well this year, even though we were going over higher sales versus last year.

Yes, I was just talking more so about the football and the college football game following on. It wasn't a well-televised game as far as ratings wise. I wonder if that affected you on a year-over-year basis as well, as far as the semifinal games playing on New Year's Eve versus New Year's Day that prior year, if that affected your volume from those days?

It's not large enough of an impact, Matt, to make a difference on the quarter.

Excellent, okay. And then just lastly, on the COGs line, I might've missed it, but did you give an inflation or deflationary basket type number? Because with 2.5% price, I guess I was looking for maybe even a little bit more leverage on the COGs line or is there potential for that if -- I would assume you're seeing lower year-over-year dairy cost you've locked in?

A couple of things in that regard. We saw, last year, a little bit more of deflation and we're expecting it to be a little bit more inflationary this year, up about 1%. As we start off this year, we're expecting our COGs in the first quarter to be kind of flat, maybe up a tad and then it slowly goes up throughout the year, right now, because we're just not expecting to get the same type of benefit we got last year on things like cheese. Cheese last year in the first quarter looking in January was in the $1.40, $1.50 range and that's kind of where it is right now, so we're not looking to get as much.

To your point about getting additional leverage, I think there might be some of that later in the year. Don't forget, when we talk about 2.5% of pricing, it's not like we put it all on, on January 1. We're rolling 1% on and then we're rolling on another 1% later and so on. Depending on when our contracts expire, we might end up being -- the full year being only up 1% but we see a little over 1%, let's call it, in Q3 or Q4 but laps this early part of it. So while I do expect some leverage in COGs year over year, I -- maybe probably not as much as maybe you would think. When you start to say 2.5% of pricing, you're only thinking about somewhere in the neighborhood of 1% commodity basket.

Excellent. That's very helpful. Last question, bookkeeping-wise. Did you -- I think you had a planned closure, if I'm correct, in Century City in late January. Was that executed or have you relocated that store?

It was executed, if you want use the term. It was closed, unfortunately. As you said, it was a good restaurant. We were sorry to have to close it in the Century City Mall but where they want to relocate us is not a spot that we thought we could do the sales volumes that we got -- that we had in the past. It is closed. When you start to look at the week, that's why that's kind out of there. It was open for about, I want to say, three weeks in January and then closed from there on.

We're looking at that options in that trade area. We are actively looking and so we don't have a commitment on a replacement at this point. That restaurant was still comping positively almost to its last day. (Multiple speakers) It was amazing. It did not die down.

Despite the renovation going on at the mall.

Can I just -- since you start talking about comps, I just had one last question. I know this is the third last question I had. I apologize to everybody else. The new stores, the 7,500, 7,400 square foot store, how is that -- have you got enough evidence to sort of talk about how maybe that is comping given it's a smaller store? Are you running into -- is it going to be rolling in as less of sort of the sophomore year growth phase or are they new markets and you're seeing somewhat of a, people getting to know how to use a BJ's a little bit better and gaining momentum in that second year like you have historically with the bigger boxes?

You know what?

We really don't have enough data points yet.

The first one that opened was Oviedo, which is that suburb of Orlando and it opened, I want to say, early September or early/middle August of 2014 and thinking about being a 18-month comp, I think it might have now just dropped in but it hadn't dropped in, in the fourth quarter and that would be the only restaurant that's even coming close to a comp sales perspective. We just don't have the answer. I would tend to tell you, though, looking at our numbers, everything seems very similar to historical comps, meaning they open with a honeymoon, they drop down and I would think that they would kind of comp into the base negative just because that's what we've done historically over the last couple of years.

Great. Thanks very much.

David Tarantino, Robert W. Baird.

Hi, good afternoon. My question is on the traffic trends you are seeing. I think the last couple of quarters, the traffic has been a little bit lighter than the NavTrak benchmark, if that's the relevant comparison. I just want to get a gauge for how you are thinking about that trend and why you think BJ's is not outperforming given the vibrancy of the concept and all the things you are doing. And then I have a follow-up.

David, I will take the first part of this. We might've talked about this ourselves, you and I before, but our real struggle is frankly, is Texas. Texas is -- we've got 32 restaurants, I believe, in the state of Texas which I think all of them are comp or just about all of them, which means 20% of our comp is in that state and then unfortunately, as Greg Trojan said, that's just been a softer state for us. When we look at our numbers and look at our traffic trends, kind of pulling out Texas and other things, we are outperforming here in California, at least on a year-to-date basis looking at traffic versus NavTrak and versus Black Box. We feel pretty good from that perspective. Same thing with some of these other markets.

But really, it's kind of unfortunately, I've got to look at our business and report on our business in totality. But Texas is the real area that I think it has held us back from driving comp sales significantly better than what we would have expected; and at the same time, I think is one of the reasons we're seeing a little bit more softness, let's call it, in our traffic than what we would like. But if I had to pull them out, look at some of our other markets, I feel pretty comfortable in regards to what we're doing to move the business.

There's an interesting disparity between the numbers we have for the quarter, where we actually -- there's a bit of a disparity between NavTrak and Black Box. There's not a big gap there, by the way, where we are versus the industry in total. I think part of the Texas differential is if you are a newer concept where some of the -- your more recent growth has been in some of the newly developed geographies, so to speak. That -- you're -- there is -- as those areas mature, you're going to -- and we have a couple of restaurants in that category, but the lion share of our restaurants are a number of years old and some have been tried and true trade areas that are still doing really well in high volume. As the next mini city has been and new mall developments have occurred 7 or 10 miles away, those restaurants that are 2 or 3 years old in those areas are definitely taking some traffic from those older trade areas. Being a bit more of a veteran concept in Texas, relative to where we are and some other markets, I think that's what we are seeing.

Great. Thank you. And then, just a follow up to that. I think I was intrigued, Greg Trojan, by some of your comments related to reinvesting some of the margins improvement or the productivity gains that you're getting into driving more value and driving more trial and frequency. In that context, is it the approach that you are using going forward, are you going to be thinking about sort of maybe taking a little less pricing and being a little bit more aggressive from that standpoint to drive better traffic? Is that the right way to think about it?

Look, we did that in a big way essentially, right, in our reset in 2014, so I am not suggesting that we're going to go and do. I feel like we need something of that magnitude. But I do think the -- on average, we want to be pricing a bit below the competitive set and remain competitive there. More of it is around the opportunities to just drive awareness about what our concept's about and who we are and this value equation. Because by the way, our value scores have been pretty consistently -- or actually as I should say, very consistently improving over the last couple of years, right? We do very well on value.

But I think the extensiveness of our menu and the -- it's just not obvious to, and particularly in our newer markets, but even in our established markets, who we are and the differentiation in that, in the quality value equation. So it's really how can we reach out and drive new traffic? I think our loyalty program is doing a pretty good job of driving frequency of people that already know us. The challenge is, how do we spread the awareness and drive trial of folks that don't know who BJ's is today. That messaging is not just around price points, it's around the experience, the overall experience, and how you do that efficiently. Thankfully, I think we have made some good strides around particularly digital and through our website and some of the digital video options that we are looking at that, that allow us to do that and not just going on and spending the dollars on conventional media require.

Great, that's helpful. Last quick one on Greg, I think Greg Levin, gave the flavor outlook for the first quarter but I don't think you've mentioned what you expect for the full year other than it will be lower than the first quarter. Could you just maybe frame up how you think the full year will (technical difficulty)?

I think you got it. It obviously is going to depend on a big part in regards to the comp sales numbers, but we finished FY15 with labor at around 34.5% or so, and I do think overall when we add up labor this year because of the pressures in minimum wage and so on, I think you'll see labor up a little bit from the 34.5%. I do think, though, we can offset some of that with lower cost of sales and continue to manage the operating occupancy to get some margin enhancement in the business overall.

So if you took it at that, then it's probably going to be mid-34%s overall for the full year, maybe mid- to upper-34%s when we get some offset in some of the other areas and continue to drive overall restaurant level cash flow margin. And then our goal is again to leverage G&A. We said this, David, just kind of reminds me of one premise that I always that like to reiterate everyone that as -- look, ultimately our goal is we want to get 10%-plus increase in operating weeks. We want to see comp sales be higher than where they are right now but we'd like to see comp sales somewhere around our menu pricing and hold onto our guest traffic and then ultimately we would like to drive earnings above that in the kind of mid-teens revenue number. Because we're going to get leverage in our business model I think we showed that last year and I think we can be on pace to do that again this year to put earnings into that kind of mid-plus teen range on a go-forward basis. That's kind of our long-term operating model.

Great, that's really helpful. Thank you very much.

Jeffrey Bernstein, Barclays.

Great, thank you very much. You mentioned digital a couple of times. I'm just wondering, I know you guys were kind of at the forefront in terms of internally developing your platform a few years ago. Now, obviously we see a lot of new external opportunities out there. I'm wondering how you contemplate your internal versus potential external? Maybe could give us an update on initiatives you've got going now in terms of maybe what percentage of your table is a call ahead or what percent pay on their devices or service opportunity. Any kind of metrics around the technology thus far?

A couple of things, internal versus external, your first question there. We look at both of them. I will tell you, I think we can be faster, believe it or not, and better on certain things that are maybe in front of the guest to be internal because that's -- we want to have our branding around that. And as you know, as you mentioned, we were one of the first out there with kind of a mobile app in casual dining. In fact, we even beat some of the bigger players in QSR and the coffee world and so in regards to mobile applications. Really, hats off to our IT department because they've done a great job on that aspect of our business.

Where we struggle, and I think you're hearing that from some of the other people in casual dining, is just getting people to change their habit to use the app as frequently as we would expect. For those that have used it, like myself or Greg Trojan, who will comment here shortly, it is one of the greatest inventions ever. I mean, I love being able to go in, see my check right when I order and pay before I am done. I love to be able to put my name on our wait list before ever leave my house. It's really changed the way I dine in our restaurant. It's great from that perspective.

But like anything, if you go -- if you are a user of BJ's maybe once a month, let's call this kind of an average guess, that means you're looking at that app once a month and sometimes you forget about it in that timeframe versus maybe some of the other concepts out there that have higher habitual use, so to speak, like a coffee place where you're going in there every single day. That's where we see it's still a very small percentage in our business. We do have some additional marketing coming out later this year to kind of drive some of the app adoption. We're very looking forward to, for lack of a better term, of other concept that are also developing pay app as well because once with this becomes more common out there, you get more adoption across all users. In that sense, and somebody else can promote their app as well, it's going to help us.

I think the other thing I would add, Jeff, is that one of the things that we're working on to help the initial sign-up, if you will, or adoption on the front end, because we're convinced once people understand this, they will continue to use it because it's just such a easy benefit once to get through the hurdle of using it once. We are working on the front end to make that more seamless and then philosophically, or strategically, one of the things we're doing is making the differentiation between being part of our loyalty program and the app, one thing. Up to now, it has been, hey, sign up to our loyalty program and hey, use our app because it has these functional benefits. The analogy I use in my mind is, iTunes asks you to sign up and give your email address when you have to do that to become -- to be part of the iTunes functionality.

I think it will simplify the communication to our guest to say; hey, use this app. Here are the great things that you are able to do and by the way, you get points at the same time. But just use this app because it has -- it gives you VIP kind of levels of treatment, and it will be less confusing and easier to communicate the benefits when we do so in a more streamlined way. Kevin and his team is working on that, from a communications perspective. And then our IT team is, as functional as our app is, it can still be easier from a UI first time used and signing up perspective and we're continuing to work on that.

As well, by the way, as adding some more useful functionality, particularly around off premise and making carry out more easily and large party ordering. We continue to be, I continue to be, very bullish about the future and the advantage of our concept around it. Is just not moving the business today, but there's no question in my mind it's going to.

Got it. Then just one clarification just to kind of repackage what you said in response to the prior question around 2016's earnings outlook. I think we learned some new information that maybe you don't often provide, but if I look at 2015, for example, I think with a sub-2% comp, obviously you saw a huge margin expansion and 60 percentage points earnings growth. As we now kind of look at 2016 and presumably from the margin opportunities in there that was there the past couple of years, did you say that it's reasonable to assume -- I don't if you said earnings are EPS growth mid-teens-plus range for 2016? Is that kind of a reasonable ballpark for guidance for 2016? Again, just to clarify, I don't know if you're talking about earnings dollars or earnings per share after share repurchase.

Well, I don't know if I got quite that specific, Jeff. More about the fact that when I think about the long-term business model for BJ's, the long-term business model for BJ's is, we are going to expand restaurant weeks somewhere in that low-teens range. This year will be a little less than that because unfortunately our Century City restaurant closed but we're adding 18 to 19 restaurants on a base of 170. You're at 11% unit growth from that standpoint. We want to get we want to get comp sales numbers around our menu pricing.

Now, right now we're our little bit below that so you take that into consideration when you filled out your margins from the business, but generally speaking, we think we have the ability to get our menu pricing and hold onto our guest traffic. That's shooting par for this course and that's what we want to do. When we can put those two things in place, we still have the ability to expand our margins, both at the restaurant level, which finished at 19.9%, and we still think there's some leverage at G&A and over time continue to get leverage on depreciation and amortization, especially as more of the proto 7,400 come on board. That keeps our depreciation and amortization in line. Ultimately, that means that our earnings growth should be above our revenue growth in that regard, and that's kind of what our long-term target is.

Now, there will be years like this last year, 2015, where guess what? We exceeded that because some of our other margin initiatives from that standpoint. There might be years when it's a little bit less from that standpoint. But ultimately, with 172 restaurants and the ability to get to 400-plus, and looking at an averaging of volume right now of $105,000, so you've got restaurant doing $5 million, we think there's a tremendous amount of opportunity for this business from a long-term perspective. Yes, there's going to be ups and downs in that. As much as we'd all love to be able to grow at a 45 angle and grow revenues and earnings perfectly from that standpoint, there's just going to be wobble from that standpoint. But we think the overall curve is going in the right direction for our business.

Jeff, the other thing I would add to that is, from a -- on an EPS basis, we still, we have crossed this line of where our cash flow generation is greater than our requirements from our growth perspective, right, and so that gives us the flexibility from a share repurchase perspective to increase those numbers from an EPS perspective; at least it has in the last year and a half or so. We think that's going to be another lever for us going forward.

Got it. Thank you very much.

Chris O'Cull, KeyBanc.

Thanks. Good afternoon, guys. Greg, I know the Company has been focused on driving traffic through reducing wait times, or speed of service, I guess, as well. Is that still the case and can you give us an update on maybe the progress you've been making and maybe what initiatives you think could have an impact in 2016?

Yes. We're still pushing hard on that, Chris. I would say we haven't cracked the code. I think we've been making sort of -- I'd describe it more as steady incremental improvement, not breakthrough on that -- on that front. It's a good issue to raise because I do think it represents a lot of upside given how busy our restaurants are, right? We are we are both testing and have some things in sort of, call it, R&D lab category that are both front of house and back of house. I am not going to talk about too specifically, but that is still a real opportunity for us.

Like I said, given all the things that we have been working on, our teams have done a good job of getting a bit better there, but we still have room. We have more room to go there and I think it's the combination of, like I said, some kitchen speed and that's probably more technology driven then sort of people driven, if you will. And I think the front-of-house opportunity is probably a combination of both of thinking through our human steps of service, if you will, and configuration of job categories, if you will, but also some technology. (Multiple speaker) I'm sorry, and the last thing is, if we if we can break through and convince some more people the value of the app, that is a real speed, that's an immediate speed benefit as well and that's why we continue to work on that.

Thanks, that's helpful. And then just a follow up on a comment you made earlier about a lot of traffic issue being related to stores located in Texas. What are you doing differently in that market to try to correct the traffic issue or try to improve traffic in that market?

First of all, we're making sure we're running great restaurants and I wish, part of me wishes I could sit here tell you; look, we have a more of an operating issue relative to other markets and that's just not the case. Every operating metric we look at, those restaurants are running quite well. And I think Greg and I, between us, have seen, or the three Gregs in this room, have seen have seen almost every Texas restaurant in this calendar year, and I can tell you, I think we're running good restaurants in Texas.

Look, this isn't a forest fire. This isn't like -- Texas is more challenging, but we're still doing great volumes in these markets and competitively, I will tell you, when I walk across the streets from most of our restaurants and look at what the competition is doing, I am glad we are BJ's, let's put it that way. It's all relative and look, we just want to see more traffic and more growth there. I think the opportunity is how we get more aggressive around menu and we're going to get it, and we have been, more aggressive on giving people more of a reason promotionally to be in our restaurants there, within reason and in a more targeted way. I think those are how we get even better there on speed and turnover. We're still running very speedy restaurant, or busy restaurants, there and the formula isn't that different than the opportunities we have elsewhere.

Okay. Just lastly, does your assumption, Greg Levin, does your assumption for labor coming down later in the year assume menu pricing remains in that mid-2.5% range the back half of the year?

It does. Again, when you think about the 2.5%, there's going to be 1% gets added in February, we do kind of a summer menu or something like that's the kind of May, June, so get an additional 1% at that time and then we will do our fall menu. So we kind of have three menu rollouts will take a little bit of pricing as we did this last year, so each time you get a little bit of that additional menu pricing and that helps leverage, obviously, labor and cost of sales later in the year.

Okay, great, thanks. Very helpful.

Jeff Farmer, Wells Fargo.

Thanks. Actually, I'll follow up real quick on that one. When we say labor down, does that mean that you're -- toward the back half of the year, does that mean sequentially versus the typically higher labor costs first quarter or year over year, you mean, that you'll see some labor benefit year over year in the fourth quarter, the back half?

Great question, Jeff. That means sequentially. As I mentioned, first quarter, it's in that middle 35% whatever. I think last -- we ran 35.4% a year ago and then it started coming down into the 34% range or so. Sequentially, is going to come down from the first quarter but I would still expect quarter over quarter, year to year, I guess, or quarter over quarter compared to prior year and it is going to be up a little bit because of that California minimum wage. I think we some of the offset in the other areas.

That's helpful. Then a couple of other just quick modeling questions. Greg, did you offer any interest expense guidance for 2016?

You know what, I didn't. I would tell you -- I think I did before. It's probably going to be somewhere around $2 million.

Okay.

(Inaudible) Yes.

And then you alluded to it, but it just as it relates to Q1 and media, more specifically the TV media, anything you can share in terms of maybe TV weeks in Q1 of this year and markets versus Q1 of last year?

This is Kevin. Really, in regards to TV weeks, we're going to be running similar point levels across similar weeks we did in Q1 last year. We are looking at some market expansion opportunities, but still trying to kind of work through what those levels would be and what the media placement would be. Overall, I think it's really comparable Q1 to Q1.

Okay. And then final question. Greg, I can't remember if you've talked about this. You guys blew through your longer term restaurant level margin and operating income targets pretty quickly. I think it was 19% and 16% -- or 6%, respectively. Is there a plan? Do you guys plan to provide new target margin levels at any point?

I tried to push that off for an extra year but nobody would let me to do that around here.

Okay.

We said this before, and I think Greg Trojan even made the comment that the ability to get the type of leverage we got this last year just on those pure fact of law of diminishing returns, it's not as great from that standpoint. However, I think as we continue to work through our business and drive a reasonable comp that our restaurant-level margins can get above the 20% range on an annual basis. We came awfully close to it in the prior year. This year you get a little bit challenged with the California minimum wage but I think we've got some other initiatives that I think can help offset some of those things.

We haven't gone and reestablished new targets to go after that. We probably addressed, but I will tell you ultimately we can get ourselves into the 20%-plus range there and as I mentioned earlier, I think the ability continue to leverage G&A and depreciation and amortization in the future should allow us to get above, to continue to grow the rest -- the income from operations above 6%. Significantly above 6%.

Okay, thanks. That works, thank you.

Sharon Zackfia, William Blair.

Hi, good afternoon. Most of my questions were answered but I was intrigued by what you talked about on the commentary but about going after lunch traffic. Can you remind us kind of where lunch is right now as a percent of your mix and whether you have seen success driving that days part kind of more quickly than the dinner day part recently? I guess if lunch grows more quickly going forward, is there any margin implication there? We've seen other companies go after lunch and sometimes it's at negative margin potential for the company.

We haven't seen lunch behave all that differently, Sharon, than dinner. We've been, I'd say a little more challenged on traffic but because of a lot of our slightly more disproportionate part of our guest check growth has been during lunch and I think those burgers have a lot to do with that, our success on the burger line up. And then some of the menu engineering that we've done over the year and a half or so. We used to profile our lunch specials and our lunch combos. Literally, we would turn the menu to that page when people came into our restaurant.

I used to use the analogy, or I sometimes do use the analogy, it was like walking into a car showroom and try to sell the Yugo when you have Cadillacs to sell, right? Not that I think our -- it's probably not the best comparison. Our combos are great. All of that resulted in some good guest check growth, but we don't want to do that at the expense of those folks that are more value conscious. The short answer is, that's where we think the opportunity is. I think we can do that without the -- without undue margin penalty because the intention is to bring back some of the traffic we may have lost by deemphasizing that area of our lunch menu, if you will.

Greg, can I follow up? How are you going to kind of reemphasize lunch from a marketing perspective? Do you have any insight on how that may cannibalize dinner?

Well, we've got some new products that I mentioned, right, so I won't go into excruciating detail here, but we have used some of the platform that we rolled out last year with our Tavern-cut pizza works really well in a wrap format. There's quite a bit of -- from a volume, amount of food perspective and food cost is pretty advantageous, so it gives us a nice platform to utilize. There's some pretty interesting flavors we think. So that and, believe it or not, the sort of tried and true, some of the more gourmet grilled cheese varieties fall into that same category.

So from a product perspective, we like the new news that they provide and then we are also using those in a combination format where we think we can bundle -- not think, we plan are going to be bundling other products with that at, we think, a very attractive price point as well. On an individual basis, given the food cost dynamic, we are -- they're pretty, we think, a very compelling price point. That together with combination allows us to talk about the lunch value more than -- and some of this, Sharon, is just talking about it, right? We haven't, from a marketing perspective, talked about our lunch price point and value in a while because we got a lot of other new product news and burgers, et cetera, to talk about. Some of this obviously product and some new news but it's also just reminding folks that you can have lunch at BJ's at a very -- more than a competitive price point, particularly when you compare to fast casual.

Sharon, in about a week and a half, our new menu rolls out. As Greg was alluding to, we have a couple of lunch type items that are going on there. We will have a national SSI drop in kind of the end of February. By the way, that SSI is the same as it was last year. We ran it at the same time. But last year we, at that time, were promoting our new Tavern-cut pizzas that we rolled out and it did really well for us and been very successful for us. This year, as that SSI out, it will be talking about the new menu that as came out and those new menu items are more lunch centric type menu items on there. So that's kind of the way we will go after it as well as from a digital standpoint. Where last year our digital focused on our Tavern-cut, this year our digital will focus on some of our new lunch items in the sandwich and salad category that rolls out later.

They didn't test for us -- we didn't see any noticeable dinner cannibalization, given how we were positioning the product so we don't expect to see anything significant on that front.

Okay, great. Thank you.

Thank you.

That is all the time we have questions for and that concludes today's call. We thank you for your participation.

Thanks, everybody.