BJs RESTAURANTS INC (BJRI)

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE

Certain information included in this Form 10-Q and other filings with the Securities and Exchange Commission, in our press releases, in other written communications, and in oral statements made by or with the approval of one of our authorized officers may contain “forward-looking” statements about our current and expected performance trends, growth plans, business goals and other matters. Words or phrases such as “believe,” “plan,” “will likely result,” “expect,” “intend,” “will continue,” “is anticipated,” “estimate,” “project,” “may,” “could,” “would,” “should,” and similar expressions are intended to identify “forward-looking” statements. These statements, and any other statements that are not historical facts, are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, as codified in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended from time to time. The cautionary statements made in this Form 10-Q should be read as being applicable to all related “forward-looking” statements wherever they appear in this Form 10-Q. These forward-looking statements are based on information available to us as of the date any such statements are made, and we assume no obligation to update these forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, the risk factors described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 30, 2025, as updated in our Form 10-Q for the twenty-six weeks ended June 30, 2026, and in other reports filed subsequently with the SEC.

GENERAL

BJ’s Restaurants is a leading full-service restaurant brand differentiated by a high-quality, varied menu with compelling value, a dining experience that offers our customers (referred to as “guests”) best-in-class service, hospitality and enjoyment, in a high-energy, welcoming and approachable atmosphere. BJ’s is a national restaurant chain that, as of July 30, 2026, owns and operates 219 restaurants located in 31 states.

The first BJ’s restaurant opened in 1978 in Orange County, California, and was a small sit-down pizzeria that featured Chicago style deep-dish pizza with a unique California twist. In 1996, we introduced our proprietary craft beers and expanded the BJ’s concept to a full-service, high-energy restaurant when we opened our first large format restaurant with an on-site brewing operation in Brea, California. Today our restaurants feature a broad menu with approximately 90 menu items designed to offer something for everyone including: slow roasted entrees and wings, EnLIGHTened Entrees® such as our Cherry Chipotle Glazed Salmon, our original signature deep-dish pizza, and the world-famous Pizookie® dessert. We also offer our award-winning BJ’s craft beers, which are produced at four in-house brewing facilities, two standalone brewpubs and by independent third-party brewers using our proprietary recipes, alongside a full bar featuring innovative cocktails.

Our revenues are comprised of food and beverage sales from our restaurants, including takeout, delivery and catering sales. Revenues from restaurant sales are recognized when payment is tendered. Amounts paid with a credit card are recorded in accounts and other receivables until payment is collected from the credit card processor. We sell gift cards which do not have an expiration date, and we do not deduct non-usage fees from outstanding gift card balances. Gift card sales are recorded as a liability and recognized as revenues upon redemption in our restaurants. Based on historical redemption rates, a portion of our gift card sales are not expected to be redeemed and will be recognized as gift card “breakage.” Estimated gift card breakage is recorded as revenue and recognized in proportion to our historical redemption pattern, unless there is a legal obligation to remit the unredeemed gift cards to government authorities.

Our guest loyalty program enables participants to earn points for qualifying purchases that can be redeemed for food and beverages in the future. We allocate the transaction price between the goods delivered and the future goods that will be delivered, on a relative standalone selling price basis, and defer the revenues allocated to the points, less expected expirations, until such points are redeemed.

All of our restaurants are Company-owned. In calculating comparable restaurant sales, we include restaurants open for at least 18 months as of the beginning of the period presented. Guest traffic for our restaurants is estimated based on the number of guest checks.

Cost of sales is comprised of food and beverage costs, including the cost to produce and distribute our proprietary craft beer, soda and ciders. The components of cost of sales are variable and typically fluctuate directly with sales volumes but also may be impacted by changes in commodity prices, a shift in sales mix to items with different cost structures, or changes in level of promotional activities.

Labor and benefit costs include direct hourly and management wages, bonuses, payroll taxes, fringe benefits and stock-based compensation, and workers’ compensation expense that are directly related to restaurant level team members.

Occupancy and operating expenses include restaurant supplies, credit card fees, general liability and property insurance, third-party delivery company commissions, marketing costs, fixed rent, percentage rent, common area maintenance charges, utilities, real estate taxes, repairs and maintenance and other related restaurant costs.

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General and administrative expenses include costs for our corporate administrative functions that support existing operations and provide infrastructure to facilitate our future growth. Components of this category include corporate management, field supervision and corporate hourly staff salaries and related team member benefits (including stock-based compensation expense and cash-based incentive compensation), travel and relocation costs, information systems, the cost to recruit and train new restaurant management team members, corporate rent, certain brand marketing-related expenses and legal and consulting fees.

Depreciation and amortization are composed primarily of depreciation of capital expenditures for restaurant and brewing equipment and leasehold improvements.

Restaurant opening expenses, which are expensed as incurred, consist of the costs of hiring and training the initial hourly work force for each new restaurant, travel, the cost of food and supplies used in training, grand opening promotional costs, the cost of the initial stock of operating supplies and other direct costs related to the opening of a restaurant, including rent expense during the in-restaurant training period.

RESULTS OF OPERATIONS

The following table provides, for the periods indicated, our unaudited Consolidated Statements of Income expressed as percentages of total revenues. The results of operations for the thirteen and twenty-six weeks ended June 30, 2026 and July 1, 2025, are not necessarily indicative of the results to be expected for the full fiscal year. Percentages below may not reconcile due to rounding.

Thirteen and Twenty-Six Weeks Ended June 30, 2026 Compared to Thirteen and Twenty-Six Weeks Ended July 1, 2025

Revenues. Total revenues increased by $23.3 million, or 6.4%, to $388.9 million during the thirteen weeks ended June 30, 2026, from $365.6 million during the comparable thirteen-week period of 2025. The change in revenues primarily consisted of an increase of 6.5%, or $23.5 million, related to sales from restaurants in our comparable restaurant sales base, offset by decreases in non-comparable restaurant sales. The increase in comparable restaurant sales was due to an increase in guest traffic of approximately 8.3%, offset by a decrease in average check of approximately 1.8%, resulting from changes in product mix, partially offset by menu price increases.

Total revenues increased by $33.4 million, or 4.7%, to $747.0 million during the twenty-six weeks ended June 30, 2026, from $713.6 million during the comparable twenty-six-week period of 2025. The change in revenues primarily consisted of an increase of 4.5%, or $31.5 million, related to sales from restaurants in our comparable restaurant sales base, and $1.3 million related to sales from new restaurants. The increase in comparable restaurant sales was due to an increase in guest traffic of approximately 5.3%, offset by a decrease in average check of approximately 0.8%, resulting from changes in product mix, partially offset by menu price increases.

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Cost of Sales. Cost of sales increased by $8.3 million, or 9.1%, to $99.1 million during the thirteen weeks ended June 30, 2026, from $90.8 million during the comparable thirteen-week period of 2025. As a percentage of revenues, cost of sales increased to 25.5% for the current thirteen-week period from 24.8% for the prior year comparable period. The increase was primarily due to approximately 5% inflation in our commodity basket costs led by beef inflation, partially offset by menu price increases and the effectiveness of improved operations.

Cost of sales increased by $11.4 million, or 6.4%, to $189.0 million during the twenty-six weeks ended June 30, 2026, from $177.6 million during the comparable twenty-six-week period of 2025. As a percentage of revenues, cost of sales increased to 25.3% for the current twenty-six-week period from 24.9% for the prior year comparable period. The increase was primarily due to approximately 3% inflation in our commodity basket led by beef inflation, partially offset by menu price increases and the effectiveness of improved operations.

Labor and Benefits. Labor and benefit costs for our restaurants increased by $5.0 million, or 3.8%, to $134.3 million during the thirteen weeks ended June 30, 2026, from $129.4 million during the comparable thirteen-week period

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis (“MD&A”) of Financial Condition and Results of Operations is intended to help you understand our Company, our operations and our current operating environment. For an understanding of the significant factors that influenced our performance, the MD&A should be read in conjunction with the Consolidated Financial Statements and related Notes to Consolidated Financial Statements included in Part II, Item 8 - Financial Statements and Supplementary Data of our Annual Report. Our MD&A consists of the following sections:

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Overview - a brief description of our business, financial highlights, strategy to increase shareholder value, key performance indicators, known and anticipated trends

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Results of Operations - an analysis of our Consolidated Statements of Operations for fiscal year 2025 compared to fiscal year 2024

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Liquidity and Capital Resources - an analysis of cash flows, including capital expenditures, share issuance and repurchase activity, dividends, contractual obligations and commitments, and known trends that may impact liquidity

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Critical Accounting Policies and Estimates - a discussion of accounting policies that require critical judgments and estimates, including new accounting standards, when applicable

OVERVIEW

As of February 27, 2026, we own and operate 219 restaurants located in 31 states as described in Item 2 - Properties - “Restaurant Locations” in this Form 10-K. Our restaurants are open every day of the year except for Thanksgiving and Christmas. All of our restaurants currently offer take-out and delivery services. Additionally, all of our restaurants offer a call-ahead or online wait list, on-line ordering for dine-in, guest pick-up or curbside delivery and reservations for large parties.

Our menu features BJ’s award‑winning, signature deep-dish pizza, our proprietary craft and other beers, as well as a wide selection of appetizers, entrées, pastas, sandwiches, specialty salads and desserts, including our Pizookie® dessert. Our proprietary craft beer is produced at four of our restaurants with in-house brewing facilities, our Texas brewpub locations and by independent third-party brewers using our proprietary recipes.

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Financial Highlights for Fiscal 2025

Notable fiscal 2025 financial highlights compared to fiscal 2024 include:

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Total revenues increased 3.1% to $1.4 billion

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Total restaurant operating weeks increased 0.9%

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Comparable restaurant sales increased 2.0%

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Net income of $48.8 million compared to $16.7 million

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Diluted net income per share of $2.16 compared to $0.70

Strategy to Increase Shareholder Value

Our goal is to increase shareholder value by increasing our adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), earnings per share and return on invested capital through:

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Growing restaurant revenue through positive comparable sales and new restaurant growth

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Increasing restaurant margins through sales leverage, cost savings and culinary and menu strategies

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Enhancing new restaurant economics through restaurant margin improvement and new restaurant prototype optimization

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Returning capital to shareholders through share repurchase program

Key Performance Indicators and Non-GAAP Financial Measures

Key measures that we use in evaluating our restaurants and assessing our business include the following:

Comparable Restaurant Sales. In calculating comparable restaurant sales, we include a restaurant in the comparable base after it has been open for 18 months. This measure highlights the performance of existing restaurants, while excluding the impact of new restaurant openings and closures. Comparable restaurant sales increased 2.0% for fiscal 2025.

Weekly Sales Average. We calculate each restaurant’s average weekly sales to understand and manage the business trends and expectations. Our weekly sales average was approximately $123,000, $120,000 and $118,000 for fiscal 2025, 2024 and 2023, respectively.

Restaurant Level Operating Profit. This non-GAAP financial measure is equal to the revenues generated by our restaurants, less their direct operating costs which consist of cost of sales, labor and benefits, and occupancy and operating costs. This performance measure primarily includes the costs that restaurant level managers can directly control and excludes other operating costs that are essential to conduct the Company’s business. We, similar to most of our competitors, use restaurant level operating profit as a supplemental measure of restaurant performance and believe restaurant level operating profit is useful to investors in that it highlights trends in our core business that may not otherwise be apparent to investors when relying solely on GAAP financial measures. Because other companies may calculate restaurant level operating profit differently than we do, our restaurant level operating profit calculation may not be comparable to similarly titled measures reported by other companies. A reconciliation of income from operations to restaurant level operating profit for fiscal 2025, 2024 and 2023 is set forth below both in dollars and as percentages of total revenues (dollar amounts in thousands):

Adjusted Diluted Net Income Per Share. This is a non-GAAP financial measure that represents net income excluding net loss on disposal and impairment of assets, net leadership transition expenses and the related stock-based compensation credit, and charges associated with the 2024 extension of an outstanding warrant. These adjustments are intended to provide greater transparency of underlying performance and to allow investors to evaluate our business on the same basis as our management. Because other companies may calculate this measure differently than we do, our adjusted diluted net income per share calculation may not be comparable to similarly titled measures reported by other companies. A reconciliation of net income to adjusted diluted net income per share for fiscal 2025, 2024 and 2023 is set forth below both in dollars and as percentages of total revenues (dollar amounts in thousands):

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(1)
Amount relates to stock-based compensation forfeited due to leadership transition.

(2)
The tax effect is based on the Company’s annual statutory tax rate of 24.2% for fiscal years ending December 30, 2025, December 31, 2024 and January 2, 2024.

Adjusted EBITDA. This non-GAAP financial measure represents the sum of net income adjusted for certain expenses and gains/losses detailed within the reconciliation below. We use Adjusted EBITDA as a supplemental measure of our operating performance and believe this measure is useful to investors in that it highlights cash flow and trends in our business operations that may not otherwise be apparent to investors when relying solely on GAAP financial measures. Because other companies may calculate this measure differently than we do, our Adjusted EBITDA calculation may not be comparable to similarly titled measures reported by other companies. A reconciliation of net income to Adjusted EBITDA for fiscal 2025, 2024 and 2023 is set forth below both in dollars and as percentages of total revenues (dollar amounts in thousands):

(1)
Amount relates to severance, relocation, signing bonus and bonus expenses related to our leadership transition.

Known or Anticipated Trends

Sales Growth. While most of our established restaurants operate close to full capacity during peak demand periods, we will continue to focus on ways to build sales, positively impact guest traffic and grow average check and weekly sales averages. We continue to focus on sales building initiatives to create more guest loyalty, increase the frequency of guest visits, further build our off-premise sales channel, better optimize our menu sales mix and develop other incremental opportunities to allow guests to utilize BJ’s. We believe that all of these efforts combined with new restaurant openings offer significant growth opportunities and upside for weekly sales averages and comparable restaurant sales.

Restaurant Opening. Newly opened restaurants typically experience inefficiencies in the form of higher cost of sales, labor and direct operating and occupancy costs for several months after their opening relative to our mor

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