BJ's Restaurants, Inc. (BJRI) Earnings

Management highlights

### Core Financial & Sales Momentum - This was the eighth consecutive quarter of sales and traffic growth, and seventh consecutive quarter of profit growth, with same-store sales significantly outperforming Black Box casual dining benchmarks - Over 80 restaurants broke daily or weekly sales records during the quarter, with Mother's Day sales up 8% and Father's Day sales up 3% year-over-year, while guest satisfaction metrics continued to improve - The 6.5% same-store sales growth is evenly spread across all weekdays, weekends, day parts, geographies, and channels, with no overreliance on a single day or promotion ### Marketing & Culinary Performance - Marketing spend was shifted from Q1 to Q2 to capitalize on peak celebration season, resulting in 20% higher marketing efficiency (as a percentage of sales) for the first half overall, with a 67% increase in Q2 impressions and 146% increase in first-half impressions - The seasonal Biscoff Pizookie was an outstanding hit, doubling pizookie transaction volume year-over-year, and drove significant new guest trial across all segments - Completed category refreshes for pizza, burgers, and chicken sandwiches are driving higher transaction volume, sales, average prices, and dollar margins, with over $1.5 million invested to improve product quality, particularly for pizza - The Pizookie Meal Deal (PMD) continues to resonate, driving new customer acquisition and repeat visits; testing of a new premium tier for the PMD is ongoing, with early learnings still being collected ### Organizational & Operational Investments - Two key senior leadership hires were completed: Monica Saxena as Brand President (from Longhorn Steakhouse) and Birju Amin as Chief Technology Officer (from Yum! Brands), supporting the next phase of growth - Investments are ongoing to improve team member tools and retention, including training program rollouts for team members and managers, POS modernization, tablet upgrades, and expansion of an AI-supported activity-based labor model through the end of 2026; team member and manager retention already outperforms casual dining benchmarks - Incremental investment is being made to catch up on deferred facilities maintenance, upgrade existing restaurant physical plants and equipment, and complete remodels, to maintain atmosphere as a competitive advantage; $1 million incremental P&L investment in repairs and maintenance was made in Q2 ### New Unit Development - Two new restaurant openings planned for late 2026 (Buckeye, Arizona and Joliet, Illinois) are well underway, and will feature a refreshed BJ's brand prototype - The company continues to build its new unit pipeline, following a "right size, right place, right cost" approach for future growth

Guidance

- Management raised full-year 2026 guidance following strong first-half results: comparable restaurant sales growth is now guided to 3-4% (up from the prior 1-3% range) - Restaurant-level operating profit guidance is raised to $228-$235 million, up from the prior $221-$233 million range - Adjusted EBITDA guidance is raised to $145-$152 million, up from the prior $140-$150 million range - Capital expenditure guidance remains unchanged at $85-$95 million, and share repurchase guidance remains unchanged at up to $50 million (subject to market conditions) - Q3 2026 is off to a strong start, with continued sales and traffic growth that is outperforming Black Box casual dining benchmarks; Q3 comparable sales are expected to outpace Q4 comparable sales due to favorable year-ago comparison timing - The company implemented an 110 basis point price increase in a late June 2026 menu launch, resulting in expected full-year effective pricing of 3%, with 3.7% effective pricing in Q3 and 2.6% in Q4 - Average check pressure is expected to ease in Q3 compared to Q2, with a return to moderate positive average check growth expected by Q4

Segment performance

BJ's Restaurants is a single-segment casual dining restaurant company, so all results are consolidated for the full portfolio of 219 existing locations. Total Q2 2026 revenue was $388.9 million, a 6.4% increase year-over-year. Comparable restaurant sales grew 6.5%, driven by 8.3% traffic growth, with 1.8% average check compression. Restaurant-level operating profit was $66.8 million, with restaurant-level operating margins expanding 20 basis points to 17.2%. Adjusted EBITDA increased $2.3 million year-over-year to $44.4 million, with adjusted EBITDA margins at 11.4%. Cost of sales was 25.5% of revenue, a 70 basis point increase year-over-year, pressured by 5% commodity inflation (including 20% higher beef costs and weather-driven produce price increases). Total labor expense was 34.5% of revenue, a 90 basis point improvement year-over-year from sales leverage. Occupancy and operating expenses held steady at 22.8% of revenue. General and administrative costs were 6.8% of revenue, a 90 basis point increase driven by one-time legal reserve and leadership transition costs.

Risks & headwinds

- Commodity food inflation remains a key headwind: Q2 saw 5% overall commodity basket inflation, including a 20% increase in beef costs and additional pressure from weather-driven produce price increases and higher transportation costs - Dynamic consumer and market conditions create uncertainty for actual results to differ from forward-looking projections - Seasonal pizookie popularity can drive temporary average check compression, even as it delivers net benefits to traffic and total profit - While the portfolio is delivering broad-based growth, optimizing individual promotional programs like the premium PMD tier carries implementation uncertainty, with results still early in testing

Analyst Q&A

• Q: Given the strong labor leverage in Q2 and elevated cost of goods from inflation, what is the outlook for cost of goods improvement in the second half, and is there upside potential? /

  A: Management confirms Q2 was heavily impacted by broad commodity inflation, and expects modest year-over-year cost of sales improvement in the remainder of 2026. They note no large step-down in costs is expected, as beef costs will still increase sequentially, so only a minor improvement is anticipated. (172 characters)

• Q: Was there any one-time factor that drove the strong Q2 traffic and comp results, such as the World Cup or lingering impacts from the LA wildfires? /

  A: Management states there were no material one-time impacts. Any lingering LA wildfire effects were limited to Q1, and the World Cup only produced minor isolated bumps at individual restaurants with no material system-wide impact. The strong results reflect sustained progress on core programming and initiatives. (209 characters)

• Q: What is driving the negative average check/mix in Q2, and when will this balance out? /

  A: The primary driver is the outsized popularity of the Biscoff seasonal pizookie, which brought in large volumes of new, often younger guests with smaller trial checks. The company’s core menu renovation work has renovated higher-traffic, higher-margin lower check categories (pizza, burgers, chicken sandwiches) so far, and as remaining higher check categories are renovated over time, mix will balance out, with check compression expected to ease in Q3 and turn moderately positive by Q4. (321 characters)

• Q: How has Black Box casual dining peer group performed at the start of Q3, and how is BJ's performing relative to that benchmark? /

  A: Management states Black Box casual dining performance at the start of Q3 is consistent with Q2: peer traffic is slightly negative, and peer sales are slightly positive. BJ's has continued significant outperformance, beating the peer traffic benchmark by over 9 percentage points in Q2, and continues to outperform the benchmark in early Q3. (228 characters)

• Q: With other casual dining chains narrowing the gap in social and digital marketing, how does BJ's plan to maintain its competitive advantage in this area? /

  A: Management notes the performance gap in casual dining is driven by the holistic value proposition (operations, product, atmosphere, and marketing working together) rather than marketing alone. BJ's advantage comes from aligning its strong, ownable product pipeline (built around seasonal pizookies, the PMD, and menu innovation) with digital and social channels, which creates a multiplier effect that the company expects to sustain. (276 characters)