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What changed in BJs RESTAURANTS INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of BJs RESTAURANTS INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+307 added−344 removedSource: 10-K (2023-02-28) vs 10-K (2022-02-25)

Top changes in BJs RESTAURANTS INC's 2023 10-K

307 paragraphs added · 344 removed · 250 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

113 edited+26 added−30 removed75 unchanged
Biggest changeExamples of programs we have implemented include: • Use of recycled products for the lids and bases of our take-out containers • Use of 100% recycled napkins and paper towels • Use of plastic bags made of 20% post-consumer resin • Portioning paper towels to reduce waste • Installation of flush-valve toilets and faucets in our newer restaurants • Adding electric vehicles to our fleet vehicle program • Use of energy-efficient HVAC equipment • Recycling of organics to prevent them from going into landfills at over 10% of our restaurants • Use of digital rather than paper new-hire onboarding and other employment-related documents across our company • Hybrid in-person/remote work schedule at our Restaurant Support Center to balance the importance of workplace culture and stewardship of the environment, including leveraging of video and telephone conferencing tools to reduce the need for travel to in-person meetings For more information on our Environmental Stewardship efforts, please click on the following link. https://investors.bjsrestaurants.com/governance/governance-documents/default.aspx INSURANCE We maintain comprehensive insurance coverage, including, but not limited to, property, casualty, directors and officers liability and network privacy security liability, with coverage and limits we believe are currently appropriate for our operations.
Biggest changeExamples of programs we have implemented to date include: • Use of 100% recycled napkins and paper towels • Use of recycled products for the lids and bases of our take-out containers • Use of plastic bags made of 20% post-consumer resin • Portioning paper towels to reduce waste • Installation of flush-valve toilets and faucets, LED fixtures, high efficiency water heaters, low emittance window glass systems, and energy efficient cooking equipment in our newer restaurants • Offering electric vehicles in our fleet vehicle program • Use of energy-efficient HVAC equipment • Recycling of organics to prevent them from going into landfills at over 15% of our restaurants • Use of digital rather than paper new-hire onboarding and other employment-related documents across our company • Hybrid in-person/remote work schedule at our Restaurant Support Center to balance the importance of workplace culture and stewardship of the environment, including leveraging of video and telephone conferencing tools to reduce the need for travel to in-person meetings • Testing of food donation program that improves donation frequency • Leveraging our handheld computers to convert various paper logs at each restaurant into a digital format to reduce paper use, printing and freight Our Human and Labor Rights Policy, Environmental Stewardship Policy, Food and Personal Safety and Quality Policy, and Vendor Partner Compliance Program information confirm our focus on taking care of our people, communities, stakeholders and planet.
We leverage a learning management system with numerous on-line learning resources for team member development, performance management and talent planning. We strive to ensure that advancement opportunities are transparent and equitable.
We leverage a learning management system with numerous on-line resources for team member development, performance management and talent planning. We strive to ensure that advancement opportunities are transparent and equitable.
Today our restaurants feature a broad menu with over 100 menu items designed to offer something for everyone including: slow roasted entrees such as prime rib, EnLIGHTened Entrees® such as our Cherry Chipotle Glazed Salmon, our original signature deep-dish pizza, the world-famous Pizookie® dessert, and our award-winning BJ’s proprietary craft beers.
Today our restaurants feature a broad menu with over 100 menu items designed to offer something for everyone including: slow roasted entrees such as prime rib, EnLIGHTened Entrees® such as our Cherry Chipotle Glazed Salmon, our original signature deep-dish pizza, the world-famous Pizookie® dessert, and our award-winning BJ’s craft beers.
We caution that the information on our website is not part of this or any other reports we file with, or furnish to, the SEC. 1 BUSINESS STRATEGY We compete in the casual dining segment of the restaurant industry, which is a large, highly fragmented segment with estimated annual sales in the $100+ billion range.
We caution that the information on our website is not part of this or any other reports we file with, or furnish to, the SEC. 1 BUSINESS STRATEGY We compete in the casual dining segment of the domestic restaurant industry, which is a large, highly fragmented segment with estimated annual sales in the $100+ billion range.
The TASC Force program recognizes and supports the volunteer efforts of our restaurant team members across the country, as they donate their own free time to benefit charitable causes and community events which are important to them, while helping give back to the communities in which our restaurants do business.
The 4 TASC Force program recognizes and supports the volunteer efforts of our restaurant team members across the country, as they donate their own free time to benefit charitable causes and community events which are important to them, while helping give back to the communities in which our restaurants do business.
In addition, we may face claims of misappropriation or infringement of third parties’ trademarks, patents or other intellectual property rights. Defending these 13 claims may be costly and, if unsuccessful, may prevent us from continuing to use certain intellectual property rights or information in the future and may result in a judgment or monetary damages.
In addition, we may face claims of misappropriation or infringement of third parties’ trademarks, patents or other intellectual property rights. Defending these claims may be costly and, if unsuccessful, may prevent us from continuing to use certain intellectual property rights or information in the future and may result in a judgment or monetary damages.
These exceptions are unique to each state and do not mirror one another. However, brewpubs 11 are generally licensed as retailers and do not have the same privileges as microbreweries, and the privileges of, and restrictions imposed on, brewpubs vary from state to state. These restrictions sometimes prevent us from operating both brewpubs and restaurants in some states.
These exceptions are unique to each state and do not mirror one another. However, brewpubs are generally licensed as retailers and do not have the same privileges as microbreweries, and the privileges of, and restrictions imposed on, brewpubs vary from state to state. These restrictions sometimes prevent us from operating both brewpubs and restaurants in some states.
Our handheld ordering tablets have helped to improve our pace and productivity, including reducing the time it takes to deliver the first drink or food item to our guests. The tablets have resulted in an improved guest experience and driven higher incident rates for beverages, appetizers and desserts.
Our handheld ordering tablets improve our pace and productivity, including reducing the time it takes to deliver the first drink or food item to our guests. The tablets have resulted in an improved guest experience and driven higher incident rates for beverages, appetizers and desserts.
Even if we operate our restaurants in strict compliance with ICE and state requirements, some of our team members may not meet federal work eligibility requirements, despite our efforts and without our knowledge, which could lead to a disruption in our work force.
Even if we operate our restaurants in strict compliance with ICE and state requirements, some of our team members may not meet federal work eligibility requirements, despite our efforts and without 12 our knowledge, which could lead to a disruption in our work force.
Our commitment to safety and culture is maintained through our open door policy and empowering our team members to utilize our anonymous Team Member Hotline, 4 without fear of retaliation, if they have any concerns about how they or others are treated.
Our commitment to safety and culture is maintained through our open door policy and empowering our team members to utilize our anonymous Team Member Hotline, without fear of retaliation, if they have any concerns about how they or others are treated.
In addition to performing an annual risk assessment and developing a mitigation plan, along with a comprehensive review and update of our 9 cybersecurity policies and procedures, we continuously evaluate new and emerging risks and ever-changing legal and compliance requirements.
In addition to performing an annual risk assessment and developing a mitigation plan, along with a comprehensive review and update of our cybersecurity policies and procedures, we continuously evaluate new and emerging risks and ever-changing legal and compliance requirements.
Through our contactless curbside pickup with short message service (“SMS”) text and email technology, we keep our guests informed of their menu order and allow them to notify the restaurant when they arrive.
Through our order tracker, contactless curbside pickup with short message service (“SMS”) text and email technology, we keep our guests informed of their menu order and allow them to notify the restaurant when they arrive.
Houdek served as 5 Director of Strategic Planning and Marketing Analysis at Taco Bell from June 2017 to January 2019, and as Sr. Manager of Strategic Planning from June 2015 to June 2017. Mr. Houdek also served as Manager of Mergers and Acquisitions at Yum! Brands from February 2014 to June 2015 .
Houdek served as Director of Strategic Planning and Marketing Analysis at Taco Bell from June 2017 to January 2019, and as Sr. Manager of Strategic Planning from June 2015 to June 2017. Mr. Houdek also served as Manager of Mergers and Acquisitions at Yum! Brands from February 2014 to June 2015.
Our information is processed, transmitted, and stored in a secure environment using hardened, proven enterprise grade technologies in order to protect both our data and the physical computing assets.
Our information is processed, transmitted, and stored in a secure environment using hardened, proven enterprise grade technologies to protect both our data and the physical computing assets.
We perform third-party cybersecurity audits no less than annually, following the standard set by the National Institute of Standards and Technology. We also conduct third-party security reviews and testing of our network, processes and systems on a regular basis. We use internally developed proprietary software, cloud-based software as a service (SaaS) as well as purchased software, with proven, non-proprietary hardware.
We perform third-party cybersecurity audits no less than annually, following the standard set by the National Institute of Standards and Technology. We also conduct third-party security reviews and testing of our network, processes and systems on a regular basis. We use internally developed proprietary software, cloud-based software as a service (“SaaS”) as well as purchased software, with proven, non-proprietary hardware.
BREWING OPERATIONS Our internal brewing operations originated in 1996 with the opening of the first large format location in Brea, California, which included our first on-site brewing operation. We currently have five restaurants with brewpub operations and two stand-alone brewpubs located around the country. We also utilize qualified independent third-party brewers to produce our beer, using our proprietary recipes.
BREWING OPERATIONS Our internal brewing operations originated in 1996 with the opening of the first large format location in Brea, California, which included our first on-site brewing operation. We currently have four restaurants with brewpub operations and two stand-alone brewpubs located around the country. We also utilize qualified independent third-party brewers to produce our beer, using our proprietary recipes.
These laws generally prohibit brewers from holding an interest in retail licenses and require manufacturers, distributors and retailers to remain separate “tiers.” Over the last 25 years, “brewpubs,” which are both retailers and onsite brewers, have been authorized by law in most states through specific exceptions to these laws.
These laws generally prohibit brewers from holding an interest in retail licenses and require manufacturers, distributors and retailers to remain separate “tiers.” Over the last 30 years, “brewpubs,” which are both retailers and onsite brewers, have been authorized by law in most states through specific exceptions to these laws.
Our food quality and safety teams strive to ensure compliance with our food safety programs and practices, components of which include: • Partnering with suppliers to improve food safety processes and technology • Food safety training for all new team members • Advanced food safety training for management trainees • Manager food safety certifications • Several layers of audits and inspections: o Unannounced audits by an independent third-party auditing company to validate food safety and personal safety protocols o BJ’s internal Quality Assurance team audits o Operation’s team food safety audits o Regulatory inspections • Daily food safety checks based on Hazard Analysis and Critical Control Points (“HACCP”) principles • Tamper-resistant bag seals for all take-out orders • Routine disinfection of high touch points • Daily team member wellness checks and stay at home requirements for symptomatic team members during the COVID-19 pandemic • Utilization of technology to manage food safety risks GOVERNMENT REGULATIONS We are subject to various federal, state and local laws, rules and regulations that affect our business.
Our food quality and safety teams strive to ensure compliance with our food safety programs and practices, components of which include: • Partnering with suppliers to improve food safety processes and technology • Food safety training for all new team members • Advanced food safety training for management trainees • Manager food safety certifications • Several layers of audits and inspections: o Unannounced audits by an independent third-party auditing company to validate food safety and personal safety protocols o BJ’s internal Quality Assurance team audits o Operation’s team food safety audits o Regulatory inspections • Daily food safety checks based on Hazard Analysis and Critical Control Points (“HACCP”) principles • Tamper-resistant bag seals for all take-out orders 11 • Daily team member wellness checks and stay at home requirements for symptomatic team members during the COVID-19 pandemic • Utilization of technology to manage food safety risks GOVERNMENT REGULATIONS We are subject to various federal, state and local laws, rules and regulations that affect our business.
The gross cost of our restaurants may vary due to a variety of factors and could be greater or less than the targeted amounts due to geographic location, trade labor costs and commodity inflation for building materials, such as lumber, steel and copper, among many other factors.
The gross cost of our restaurants may vary due to a variety of factors and could be greater or less than the targeted amounts due to geographic location, site work, trade labor costs and commodity inflation for building materials, such as lumber, steel and copper, among many other factors.
We also employed approximately 230 team members at our Restaurant Support Center in Huntington Beach, California and our field supervision positions around the country, whose primary goal is to provide gold standard support to our restaurant teams so they can focus on serving our guests.
We also employed approximately 225 team members at our Restaurant Support Center in Huntington Beach, California and our field supervision positions around the country, whose primary goal is to provide gold standard support to our restaurant teams so they can focus on serving our guests.
Holidays (and shifts in the holiday calendar) and severe weather including hurricanes, tornados, thunderstorms, snow and ice storms, prolonged extreme temperatures and similar conditions may impact restaurant sales volumes in some of the markets where we operate. Many of our restaurants are located in or near shopping centers and malls that typically experience seasonal fluctuations in sales.
Holidays (and shifts in the holiday calendar) and severe weather including hurricanes, tornadoes, thunderstorms, snow and ice storms, prolonged extreme temperatures and similar conditions may impact restaurant sales volumes in some of the markets where we operate. Many of our restaurants are located in or near shopping centers and malls that typically experience seasonal 9 fluctuations in sales.
Additionally, we have a kitchen operations team that oversees the food quality and safety, kitchen efficiency and consistency in our restaurants and helps educate, coach and develop our kitchen managers. Our kitchen operations team reports to our Vice President of Culinary and Kitchen Operations .
Additionally, we have a kitchen operations team that oversees the food quality and safety, kitchen efficiency and consistency in our restaurants and helps educate, coach and develop our kitchen managers. Our kitchen operations team reports to our Vice President of Culinary and Kitchen Operations, and our Senior Vice President of Culinary and Kitchen Operations oversees the entire team.
TARGETED NEW RESTAURANT ECONOMICS Our current restaurant prototypes average approximately 7,500 square feet with seating for as many as 250 guests with a targeted gross construction cost of approximately $5.5 million to $6.5 million, some of which may be reimbursed to us by our 7 landlords in the form of tenant improvement allowance incentives.
TARGETED NEW RESTAURANT ECONOMICS Our current restaurant prototypes average approximately 7,500 square feet with seating for as many as 250 guests with a targeted all-in gross construction cost of approximately $6.0 million to $7.0 million, some of which may be reimbursed to us by our landlords in the form of tenant improvement allowance incentives.
Approximately 15% of our hourly restaurant team members provide their services on a full-time basis, as defined by the Affordable Care Act.
Approximately 19% of our hourly restaurant team members provide their services on a full-time basis, as defined by the Affordable Care Act.
Our menu entrées, excluding our promotional specials, generally range in price from $7.25 to $29.95. We also offer Daily Brewhouse Specials Monday through Thursday, which feature some of our iconic food and drink items at a lower price, as well as daily lunch specials and happy hour offerings, where permitted, to reinforce our everyday value proposition.
Our menu entrées, excluding our promotional specials, generally range in price from $8.25 to $32.95. We also offer Daily Brewhouse Specials Monday through Thursday, which feature some of our most iconic food and drink items at a lower price, as well as daily lunch specials and happy hour offerings, where permitted, to reinforce our everyday value proposition.
In addition to hiring great team members, we continue to invest in productivity and hospitality programs to enhance our ability to consistently deliver the Gold Standard of Operational Excellence we promise our guests.
In addition to hiring quality team members, we continue to 2 invest in productivity and hospitality programs to enhance our ability to consistently deliver the Gold Standard of Operational Excellence we promise our guests.
Each of our restaurants typically employs an approximate average of 110 hourly team members, many of whom work part-time.
Each of our restaurants typically employs an approximate average of 100 hourly team members, many of whom work part-time.
Climate Change and Environmental Stewardship We are committed to reducing our impact on air, land and water across our restaurants, Restaurant Support Center and global supply chain. We recognize the impact greenhouse gas emissions have on climate change and the importance of water 12 conservation and sustainability for our planet.
We are committed to reducing our impact on air, land and water resources across our restaurants, Restaurant Support Center and global supply chain. We recognize the impact greenhouse gas emissions have on climate change and the importance of water conservation and sustainability for our planet.
Our restaurant concept is a relatively small “varied menu” casual dining competitor compared to the mature “mass market” chains, with 61 of our restaurants currently located in one state - California. Our overall brand awareness and competitive presence in states outside of California is not as significant as that of our major casual dining chain competitors.
Our restaurant concept is a relatively small “varied menu” casual dining competitor compared to the mature “mass market” chains. 60 of our restaurants are located in one state - California. Our overall brand awareness and competitive presence in states outside of California is not as significant as that of our major casual dining chain competitors.
MARKETING AND ADVERTISING We believe the most effective method, over the long run, to protect and enhance our guest visit frequency is to spend time and resources on the plate and provide superior food quality, hospitality and facilities for our guests.
MARKETING AND ADVERTISING We believe the most effective method, over the long run, to protect and enhance our guest visit frequency is to spend time and resources “on the plate” and provide superior food quality, hospitality and facilities for our guests.
We also have an IDEA email address for team member s to use if they have any ideas to improve our culture of diversity and inclusion , and we have a “Killer Ideas” email address for team member s to use to offer their innovative ideas about how to improve our business.
We also have an IDEA email address for team members to use if they have any ideas to improve our culture of diversity and inclusion, and we have a “Killer Ideas” email address for team members to use to offer innovative ideas about how to improve our business.
The typical management team for a BJ’s restaurant consists of a General Manager, an Executive Kitchen Manager and three to five other managers depending on the sales volume of each restaurant. The General Manager is responsible for the day-to-day operations of their restaurant, including hiring, training, and development of personnel, as well as for sales and operating profit.
The typical management team for a BJ’s restaurant consists of a General Manager, an Executive Kitchen Manager and three to five other managers based on the sales volume of each restaurant. The General Manager oversees the day-to-day operations of their restaurant, including hiring, training, and development of personnel, as well as for sales and operating profit.
Additionally, we use a variety of higher quality guest touchpoints, including distinctive glassware, to fit the beer or beverage style and linen napkins not generally found in “mass-market” casual dining. • Broad and Distinctive Menu – Over the years, we have expanded the BJ’s concept to include menu options that meet our guests’ preferences for any dining occasion.
Additionally, we use a variety of higher quality guest touchpoints, including distinctive glassware to fit the beer or beverage style and linen napkins not generally found in “mass-market” casual dining. • Broad and Distinctive Menu – BJ’s concept includes menu options that meet our guests’ preferences for any dining occasion.
Our commitment to supporting humanitarian causes is exemplified by our “Cookies for Kids” program, which was created in 1998 and continues to be the heart of BJ’s continued financial support of CFF, to which millions of dollars have been donated throughout the years.
Our commitment to supporting humanitarian causes is exemplified by our “Cookies for Kids” program, which was created in 1998 and continues to be the heart of BJ’s continued financial support of the Cystic Fibrosis Foundation (“CFF”), to which millions of dollars have been donated throughout the years.
As part of our competitive positioning as a polished casual dining concept, our restaurants have finishes consistent with upscale casual dining concepts, including high ceilings and a signature bar statement with large flat screen televisions which can be viewed from any seat and provide the comfort of a restaurant in a bar.
As part of our competitive positioning as a polished casual dining concept, our restaurants have finishes consistent with upscale casual dining concepts, including high ceilings and large televisions which can be viewed from any seat and provide the comfort of a restaurant and the energy of a bar.
During fiscal 2021, we internally brewed approximately 55% 8 of our branded craft beers, with approximately 59% of this amount brewed in our Temple, Texas brewpub locations. We also produce proprietary non-alcoholic craft sodas that are sold in our restaurants . Our craft soda flavors include root beer, ginger beer, cream, orange and black cherry soda.
During fiscal 2022, we internally brewed approximately 53% of our branded craft beers, with approximately 60% of this amount brewed in our Temple, Texas brewpub locations. We also produce proprietary non-alcoholic craft sodas that are sold in our restaurants. Our craft soda flavors include root beer, ginger beer, cream, orange and black cherry soda.
Additionally, in January 2020, we were awarded the Best Practices Award by Black Box Intelligence™. This award honors restaurant organizations that lead the industry in workforce diversity, community involvement and sustainable practices. Our normal restaurant hours of operations are generally from 11:00 a.m. to 12:00 a.m. Sunday through Thursday and 11:00 a.m. to 1:00 a.m.
In January 2020, we were awarded the Best Practices Award by Black Box Intelligence™, which honors restaurant organizations that lead the industry in workforce diversity, community involvement and sustainable practices. 7 Our normal restaurant hours of operations are generally from 11:00 a.m. to 11:00 p.m. Sunday through Thursday and 11:00 a.m. to 12:00 a.m. Friday and Saturday.
Our preopening expense averaged approximately $0.6 million per new restaurant in fiscal 2021, which is approximately $0.2 million higher than prior years due to increased costs from inflationary pressures, including costs of labor and commodities. We usually incur the most significant portion of preopening costs within the two-month period immediately preceding a restaurant’s opening.
Our preopening expense averaged approximately $0.6 million per new restaurant in fiscal 2022, which remains approximately $0.2 million higher than pre-pandemic averages due to increased costs from inflationary pressures, including costs of labor and commodities. We usually incur the most significant portion of preopening costs within the two-month period immediately preceding a restaurant’s opening.
He previously served as our Vice President of Strategy and Financial Planning and Analysis from July 2019 until August 2021. From January 2019 to June 2019, Mr. Houdek served as Director of Strategy at KFC. Prior to that, Mr.
HOUDEK has served as our Senior Vice President and Chief Financial Officer since September 2021. He previously served as our Vice President of Strategy and Financial Planning and Analysis from July 2019 until August 2021. From January 2019 to June 2019, Mr. Houdek served as Director of Strategy at KFC. Prior to that, Mr.
That said, one of the key insights of our guest research in 2021 was that there are over 10 million potential guests who share many of the characteristics of our most frequent guests who have never been to a BJ’s, yet live within 10 miles of our restaurants.
That said, one of the key insights of our guest research in 2021 found that over 10 million potential guests who share many of the characteristics of our most frequent guests and live within 10 miles of a BJ’s restaurant, yet who have never been to a BJ’s.
C onnection R espect A dvancement F un T rust We strive to be an inclusive brand that reflects the diversity of our communities and provides equal opportunity and access for all of our team members to develop and advance within our Company.
Our values are focused on CRAFTing an engaging experience for our team members through: C onnection R espect A dvancement F un T rust We strive to be an inclusive brand that reflects the diversity of our communities and provides equal opportunity and access for all of our team members to develop and advance within our Company.
The Executive Kitchen Manager is responsible for managing food quality and preparation, purchasing, inventories and kitchen labor costs as well as hiring, training and development of kitchen personnel. New restaurant managers are required to successfully complete an 8-week comprehensive advanced management training program dedicated to all operational aspects of our restaurants including both restaurateuring and restaurant business-related topics.
The Executive Kitchen Manager oversees managing food quality and preparation, purchasing, inventories and kitchen labor costs as well as hiring, training and development of kitchen personnel. New restaurant managers are required to successfully complete a 10-week comprehensive advanced management training program dedicated to all operational aspects of our restaurants including both restauranteuring and restaurant business-related topics.
To meet these new opportunities, we have invested in the off-premise sales channel by creating new off-premise menu items, expanding our catering menu, collaborating with third-party delivery partners to provide delivery service from our restaurants, and continuing to improve our take-out and curbside experience.
To meet these opportunities, we have invested in the off-premise sales channel by creating new off-premise menu items, expanding our catering menu, collaborating with third-party delivery partners to provide delivery service from our restaurants, updated our website to make ordering easier for our guests, and we continue to improve our take-out and curbside experience.
Team Member Wellbeing Initiatives We focus on providing health and financial wellbeing offerings that attract, retain, and engage BJ’s talent. In 2015, we launched our Enlightened Living Wellbeing Program, which includes educational resources, health fairs and incentives that inspire participation in preventive care and wellbeing activities.
Team Member Wellbeing Initiatives We focus on providing health and financial wellbeing offerings that attract, retain, and engage BJ’s talent. We provide an Enlightened Living Wellbeing Program that offers educational resources, health fairs and incentives that inspire participation in preventive care and wellbeing activities.
Community At BJ’s, we believe it is important to give back to the communities we serve and to do more good things for more people. In fiscal 2006, we started the Foundation, a 501(c)(3) qualified non-profit charitable organization, which is principally dedicated to supporting charities benefiting children’s healthcare and education, with a primary focus on the Cystic Fibrosis Foundation (“CFF”).
Community At BJ’s, we believe it is important to give back to the communities we serve and to do more good things for more people. Our Foundation, which is a 501(c)(3) qualified non-profit charitable organization, established in 2006, is principally dedicated to supporting charities benefiting children’s healthcare and education.
To win and retain our talent, we recognize we must maintain a workplace culture that encourages behaviors aligned with our values, helps our team members fulfill their career aspirations, and engages them throughout their careers. In furtherance of this goal, we invest significant resources to retain and develop our talent.
To win and retain our talent, we recognize we must maintain a workplace culture that encourages behaviors aligned with our values, helps our team members fulfill their career aspirations, and engages them throughout their careers.
Our high-quality, craft beers further differentiate BJ’s from many other restaurant concepts and complement our broad menu. Our beers have earned over 240 medals at different beer festivals and events, including 38 medals at the Great American Beer Festival and 11 medals at the World Beer Cup.
Our high-quality, craft beer further elevates BJ’s from many other restaurant concepts and complements our broad menu. Since 1996, our beers have earned over 250 medals at different beer festivals and events, including 38 medals at the Great American Beer Festival and 12 medals at the World Beer Cup.
We are also testing our BJ’s Brewhouse Beer Club in a majority of our California restaurants. Our club is a subscription service, which features unique beers and restaurant traffic-driving perks that are only available to club members. • Everyday Value Proposition – We strive to offer great everyday value throughout our menu, with diverse price points and unique flavor profiles.
Our club is a subscription service, which features special and unique beer from BJ’s brewers and restaurant traffic-driving perks that are only available to club members. • Everyday Value Proposition – We strive to offer great everyday value throughout our menu, with diverse price points and unique flavor profiles.
Levin was employed by California Pizza Kitchen, Inc., operator and licensor of casual dining restaurants, with his last position as Vice President, Chief Financial Officer and Secretary. Earlier in his career he served as an audit manager with Ernst & Young LLP. THOMAS A. HOUDEK has served as our Senior Vice President and Chief Financial Officer since September 2021.
Levin was employed by California Pizza Kitchen, Inc., operator and licensor of casual dining restaurants, with his last position as Vice President, Chief Financial Officer and Secretary. Earlier in his career he served as an audit manager with Ernst & Young LLP. BRIAN S. KRAKOWER has served as our Executive Vice President and Chief Information Officer since January 2023.
We have registered our BJ’s logo mark in a number of foreign countries. Additional domestic and foreign trademark applications are pending. We have also registered our ownership of the internet domain name “www.bjsrestaurants.com” and other internet domain names. We have in the past protected, and expect to continue to vigorously protect, our proprietary rights.
Additional domestic and foreign trademark applications are pending. We have also registered our ownership of the internet domain name “ www.bjsrestaurants.com ” and other internet domain names. We have in the past protected, and expect to continue to vigorously protect, our proprietary rights.
Our managerial leadership training includes coursework on creating a respectful and non-discriminatory workplace, identifying and eliminating bias, and promoting fair and equitable hiring We offer a variety of career development resources to help develop, grow and enable team members to make the most of their careers at the Company, including an Emerging Leader Program to promote management readiness in our hourly team members, a Career Development Conference for managers within their first or second year with the Company, and a Leadership Development Conference to develop emerging General Managers, Managing Directors and Directors of Operations.
We offer a variety of career development resources to help develop, grow and enable team members to make the most of their careers at the Company, including an Emerging Leader Program to promote management readiness in our hourly team members, a Career Development Conference for managers within their first or second year with the Company, and a Leadership Development Conference to develop emerging General Managers, Managing Directors and Directors of Operations.
In 1996, we introduced our own proprietary craft beers and expanded the BJ’s concept from its beginnings as a small pizzeria to a full-service, high-energy casual dining restaurant when we opened our first large format restaurant with our own internal brewing operations in Brea, California.
In 1996, we introduced our proprietary craft beers and expanded the BJ’s concept to a full-service, high-energy casual dining restaurant when we opened our first large format restaurant with an on-site brewing operation in Brea, California.
We monitor risks of sensitive information compromise at our business partners where relevant and reevaluate the risks at these partners periodically. We make strategic investments to address these risks and compliance requirements to keep Company, guest and team member data secure , including maintaining a n etwork p rivacy and s ecurity insurance p olicy .
We monitor risks relating to potential compromises of sensitive information at our business partners where relevant and reevaluate the risks at these partners periodically. We make strategic investments to address these risks and compliance requirements to keep company, guest and team member data secure, including maintaining a network privacy and security insurance policy.
We’ve made it a priority to work with our team members and vendor partners to reduce our carbon footprint and environmental impact. We are in the process of identifying consultants to assist us in measuring our emissions and developing additional programs to reduce our overall carbon footprint.
We have made it a priority to work with our team members and vendor partners to reduce our carbon footprint and environmental impact. We have retained a third-party consultant to assist us in measuring our emissions and developing additional programs to reduce our overall carbon footprint.
Additionally, we offer a series of take-out and delivery specific Family Meals and Bundles that serve 4 to 6 guests. These packages start at $40.00 and further enhance our strong value equation.
Additionally, we offer a series of take-out and delivery specific Family Meals and Bundles that serve 4 to 6 guests. These packages start at $45.00, make it easy to order for a family or larger group, and further enhance our value proposition.
Potential restaurant locations may not have a tenant improvement allowance available , and such allowances , when available, will vary in amount. In selecting sites for our restaurants, an important objective is to earn a suitable rate of return on our investment. However, this return often cannot be meaningfully measured until our restaurants reach their mature sales and profitability levels.
Potential restaurant locations may not have a tenant improvement allowance available, and such allowances, when available, will vary in amount. In selecting sites for our restaurants, an important objective is to earn a suitable rate of return on our investment that is in excess of our cost of capital.
In addition to procuring food ingredients, beverages, products and supplies for our restaurants, the supply chain department also manages the procurement agreements in the areas of energy, transportation and general corporate services.
For many of our menu ingredients, we have arranged for acceptable alternative manufacturers, vendors, growers and shippers in order to reduce risk in our supply chain. In addition to 10 procuring food ingredients, beverages, products and supplies for our restaurants, the supply chain department also manages the procurement agreements in the areas of energy, transportation and general corporate services.
We also have an agreement with the largest nationwide foodservice distributor of fresh produce in the United States to service most of our restaurants and, where licensed, to distribute our proprietary craft beer to our restaurants. This distributor currently delivers our proprietary craft beer to approximately 40% of our restaurants.
We also have an agreement with the largest nationwide foodservice distributor of fresh produce in the United States to service most of our restaurants and, where licensed, to distribute our proprietary craft beer to our restaurants. COMPETITION The domestic restaurant industry is highly competitive and generally considered to be mature.
Miller previously served as our Executive Vice President, General Counsel and Assistant Secretary from January 2019 until August 2021, and as our Senior Vice President, General Counsel and Assistant Secretary from March 2011 until December 2018. From August 2008 to February 2011, Ms. Miller practiced law as a partner at the international law firm of Crowell & Moring LLP.
She previously served as our Executive Vice President, General Counsel and Assistant Corporate Secretary from January 2019 until August 2021, and as our Senior Vice President, General Counsel and Assistant Corporate Secretary from March 2011 until December 2018. From August 2008 to February 2011, Ms.
We also utilize in-restaurant messaging and merchandising to promote our brand and drive our average check and also have a best-in-category loyalty program, BJ’s Premier Rewards Plus®, where our guests receive one to one communication and engagement programs to drive frequency and ambassadorship.
We also utilize in-restaurant messaging and merchandising to promote our brand and drive our average check and also have a loyalty program, BJ’s Premier Rewards Plus®, where our guests receive one-to-one communication and engagement programs to drive frequency and ambassadorship. Our marketing related expenditures were approximately 1.7%, 1.4%, and 1.7% of revenues for fiscal 2022, 2021 and 2020, respectively.
Our goal is to obtain the highest quality menu ingredients, products and supplies from reliable sources at competitive prices. In order to maximize operating efficiencies between purchase and usage, a restaurant manager determines daily usage requirements for food ingredients, products and supplies for their restaurant and places orders with vendors approved by our supply chain department.
In order to maximize operating efficiencies between purchase and usage, a restaurant manager determines daily usage requirements for food ingredients, products and supplies for their restaurant and places orders with vendors approved by our supply chain department. A manager also inspects our deliveries to ensure that the items received meet our quality specifications and negotiated prices.
Under the ADA and related state laws, when constructing new restaurants or undertaking significant remodeling of existing restaurants, we must make them readily accessible to disabled persons. We must also make reasonable accommodations for the employment of disabled persons. ENVIRONMENTAL SUSTAINABILITY We recognize that building a sustainable business is consistent with our goal of providing long-term shareholder value.
Under the ADA and related state laws, when constructing new restaurants or undertaking significant remodeling of existing restaurants, we must make them readily accessible to disabled persons. We must also make reasonable accommodations for the employment of disabled persons.
We currently target an approximate blended 20% return on our net cash invested to build a new restaurant and an approximate blended 15% return on total capital invested, which includes our net cash invested and a factor for the landlord’s invested capital (based on a capitalized value of minimum rents to be paid to the landlord) for each group of new restaurants to be opened each year, measured once the restaurants reach their mature level of operations.
Net cash invested includes our capital less tenant improvement allowances or proceeds from the sale of the underlying land, and total capital invested includes our net cash invested and a factor for the landlord’s invested capital (based on a capitalized value of minimum rents to be paid to the landlord) for each group of new restaurants to be opened each year, measured once the restaurants reach their mature level of operations.
In addition, in order to maintain our high standards, all new hourly restaurant team members participate in a formal training program and work with Team Member Instructors at each restaurant who help them master their new roles. 6 The General Manager of each restaurant reports to a Director of Operations or an Area Vice President, who reports to a Vice President of Operations.
Our restaurant management training program is led by our Vice President of Operations Talent Development and is closely monitored by our field supervision team. Additionally, in order to maintain our high standards, all new hourly restaurant team members participate in a formal training program and work with Team Member Instructors at each restaurant who help them master their new roles.
Additionally, all of our new restaurants usually require a year or longer after opening to reach their targeted restaurant-level operating margin due to cost of sales and labor inefficiencies commonly associated with opening more complex casual dining restaurants.
Additionally, all of our new restaurants usually require a year or longer after opening to reach their targeted restaurant-level operating margin due to cost of sales and labor inefficiencies commonly associated with opening more complex casual dining restaurants. 8 RESTAURANT OPENING EXPENSES Restaurant opening expenses (also referred to as “preopening” expenses) include incremental out-of-pocket costs that are directly related to the openings of new restaurants and may not be capitalized.
Krakower was employed by House of Blues Entertainment, Inc., an operator of restaurant and music venues, concerts and media properties, where he served as Senior Director of Information Systems and Technology from 1997 to 2003.
Krakower was employed by House of Blues Entertainment, Inc., an operator of restaurant and music venues, concerts and media properties, where he served as Senior Director of Information Systems and Technology from 1997 to 2003. AMY B. KRALLMAN has served as our Executive Vice President and Chief People Officer since October 2022. Prior to joining the Company, Ms.
IDEA Listening Circles give our team member s the opportunity to share their personal stories and provide feedback to the Company on how we can drive intentional, meaningful change to improve our team member experience for all, recognizing that we all grow in understanding and empathy when we listen to voices and stories which are different than our own.
IDEA Listening Circles give our team members the opportunity to share their personal stories and provide feedback to the Company on how we can drive intentional, meaningful change to improve our team member experience for all, recognizing that we all grow in understanding and empathy when we listen to voices and stories which are different than our own. 3 In addition, IDEA hosts periodic educational meetings with outside expert speakers and has curated a resource center and an internal intranet page for team members designed to support education and awareness and to celebrate our differences.
We have also registered with the United States Patent and Trademark Office many of our standard and seasonal beer logos and names, as well as many of our signature menu item names including “Great White” and “Sweet Pig” for our proprietary pizzas, “Pizookie” for our proprietary dessert and “Enlightened Entrees,” “Craft Matters” and “Wow, I Love This Place” for our branding.
We have also registered with the United States Patent and Trademark Office many of our standard and seasonal beer logos and names, as well as many of our signature menu item names including “Pizookie” for our proprietary dessert and “Enlightened Entrees” and “Craft Matters” for our branding. We have registered our BJ’s logo mark in a number of foreign countries.
After meeting remotely in 2020, we were able to host a 2021 General Manager Conference in a hybrid in-person and remote manner which gave our General Managers, field supervision team and select Restaurant Support Center team members the opportunity to connect and learn in person. We also continued our regularly quarterly manager calls and Restaurant Support Center meetings.
We also host an annual General Manager Conference, which gives our General Managers, field supervision team and select Restaurant Support Center team members the opportunity to connect and learn in person, as well as regularly quarterly manager calls and Restaurant Support Center meetings.
RESTAURANT OPERATIONS Based on internal and publicly available data and excluding the effects of the COVID-19 pandemic, we believe our restaurants, on average, generate relatively high guest traffic per square foot compared to many other casual dining concepts.
Puchner has been a nationally certified beer judge since 1990. RESTAURANT OPERATIONS Based on internal and publicly available data, we believe our restaurants, on average, generate high guest traffic per square foot compared to many other casual dining concepts.
During fiscal 2021, we opened two new restaurants and we re-opened our Richmond, Virginia restaurant which was temporarily closed due to the COVID-19 pandemic. As a result, we increased our overall total restaurant operating weeks by approximately 1.3% during the year. We expect to open as many as eight new restaurants in fiscal 2022.
During fiscal 2022, we opened six new restaurants and closed two restaurants. As a result, we increased our overall total restaurant operating weeks by approximately 3.1% during the year, including the effect of the 53rd week. We expect to open as many as five new restaurants in fiscal 2023.
The first BJ’s restaurant, which opened in 1978 in Orange County, California, was a small sit-down pizzeria that featured Chicago style deep-dish pizza with a unique California twist.
BJ’s is a national restaurant chain that, as of February 27, 2023, owns and operates 216 restaurants located in 30 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.
Our average per-guest check during fiscal 2021, including beverages, increased from approximately $18.00 in 2020 to approximately $19.00 in 2021, and was impacted by changes in our sales mix and higher item incidence per 2 guest , in addition to menu price increases to help mitigate higher costs due to inflationary pressures.
Our average per-guest check during fiscal 2022, including beverages, increased from approximately $19.00 in 2021 to approximately $20.00 in 2022, and was impacted by changes in our sales mix, higher item incidence per guest and menu price increases to help mitigate higher costs from inflationary pressures. • A Culture Committed to Gracious Service and Hospitality – Completely satisfying dining experiences start with engaged, knowledgeable and hospitable people.
Assuming that sales and margins will normalize to more historic trends as we recover from the COVID-19 pandemic, we generally target our new restaurants to achieve average annual sales at maturity of $5 million to $6 million, and we generally target an average “four wall” estimated operating cash flow margin in the range of 15% to 20% at maturity, after all occupancy expenses.
We generally target our new restaurants to achieve average annual sales at maturity of $6.0 million to $7.0 million, and we target an average “four wall” estimated operating cash flow margin in the range of 15% to 20% at maturity after all occupancy expenses, which includes the assumption of continued progress recovering profit margins in the years following the COVID-19 pandemic and related macroeconomic disruptions.
Krakower served as Senior Director of Information Technology - Corporate Systems for The Cheesecake Factory Incorporated, a publicly held operator of upscale casual dining restaurants. Prior to that, Mr.
Krakower was employed by California Pizza Kitchen, Inc., operator and licensor of casual dining restaurants, where his last position was Vice President of Information Technology. From 2003 to 2007, Mr. Krakower served as Senior Director of Information Technology – Corporate Systems for The Cheesecake Factory Incorporated, a publicly held operator of upscale casual dining restaurants. Prior to that, Mr.
Our Give A Slice program was created to help our fellow co-workers and their families in their times of need and is fully funded by voluntary team member contributions.
Caring about those in the communities we serve is only one aspect of this compassion. Caring for the BJ’s family of team members and loved ones is another. Our Give A Slice program was created to help our fellow co-workers and their families in their times of need and is fully funded by voluntary team member contributions.
We believe, however, that our ability to offer higher quality food and beverages at moderate prices with superior service in a distinctive dining environment provides us with the opportunity to capture additional market share in the casual dining segment. 10 FOOD QUALITY AND SAFETY Our revenues can be substantially affected by adverse publicity resulting from food quality, illness, or health concerns stemming from incidents occurring at our restaurants, as well as incidents that may occur at our competitors’ restaurants.
We believe, however, that our ability to offer higher quality food and beverages at moderate prices with superior service in a distinctive dining environment provides us with the opportunity to capture additional market share in the casual dining segment.
This includes contactless curbside pickup with short message service (“SMS”) text and email technology to keep our guests informed of the status of their menu order and allow them to notify the restaurant when they arrive. These ongoing system and operational improvements are designed to improve the guest experience and drive traffic, off-premise check growth and increased catering orders.
This includes web-based order tracker, contactless curbside pickup with short message service (“SMS”) text and email technology to keep our guests informed of the status of their order and allow them to notify the restaurant when they arrive.
Along with a variety of traditional benefit offerings, 401k and deferred compensation programs, and paid time off, we provide a variety of complimentary benefits and resources to support team members’ physical and mental health, including health and life assistance programs to our team members to provide counseling services, advocacy and billing support, and referrals, discounted fitness memberships, and an on-site fitness center at our Restaurant Support Center, among other services.
Along with a variety of traditional benefit offerings, 401k and deferred compensation programs, and paid time off, we provide a variety of complimentary benefits and resources to support team members’ physical and mental health.
HUMAN CAPITAL As of December 28, 2021, we employed approximately 21,000 team members at our 212 restaurants.
HUMAN CAPITAL As of January 3, 2023, we employed approximately 22,000 team members at our 216 restaurants.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeNegative publicity about us, our restaurants, other restaurants, or others across the food supply chain, due to food borne illness or for other reasons, whether or not accurate, may adversely affect the reputation and popularity of our restaurants and our results of operations. The good reputation of our restaurants is a key factor to the success of our business.
Biggest changeIn addition, we cannot provide assurance that menu price increases will not deter guests from visiting our restaurants, reduce the frequency of their visits or affect their purchasing decisions. 14 Negative publicity about us, our restaurants, other restaurants, or others across the food supply chain, due to food borne illness or for other reasons, whether or not accurate, may adversely affect the reputation and popularity of our restaurants and our results of operations.
Those fluctuations may be based on various factors, including the following: • actual or anticipated fluctuations in comparable restaurant sales or operating results, whether in our operations or in those of our competitors; • changes in financial estimates or opinions by research analysts, either with respect to us or other casual dining companies; • any failure to meet investor or analyst expectations, particularly with respect to total restaurant operating weeks, number of restaurant openings, comparable restaurant sales, average weekly sales per restaurant, total revenues, operating margins and net income per share; • the public’s reaction to our press releases, other public announcements and our filings with the SEC; • actual or anticipated changes in domestic or worldwide economic, political or market conditions, such as recessions or international currency fluctuations; • changes in the consumer spending environment; • terrorist acts; • changes in laws or regulations, or new interpretations or applications of laws and regulations, that are applicable to our business; • changes in accounting standards, policies, guidance, interpretations or principles; • short sales, hedging and other derivative transactions in the shares of our common stock; • future sales or issuances of our common stock, including sales or issuances by us, our directors or executive officers and our significant shareholders; • our dividend policy; • changes in the market valuations of other restaurant companies; • actions by shareholders, including actions of activist investors or unsolicited takeover proposals; • various market factors or perceived market factors, including rumors, involving us, our suppliers and distributors, whether accurate or not; • announcements by us or our competitors of new locations, menu items, technological advances, significant acquisitions, strategic partnerships, divestitures, joint ventures or other strategic initiatives; • the addition or loss of a key member of management; and • changes in the costs or availability of key inputs to our operations.
Those fluctuations may be based on various factors, including the following: • actual or anticipated fluctuations in comparable restaurant sales or operating results, whether in our operations or in those of our competitors; • changes in financial estimates or opinions by research analysts, either with respect to us or other casual dining companies; • any failure to meet investor or analyst expectations, particularly with respect to total restaurant operating weeks, number of restaurant openings, comparable restaurant sales, average weekly sales per restaurant, total revenues, operating margins and net income per share; • the public’s reaction to our press releases, other public announcements and our filings with the SEC; • actual or anticipated changes in domestic or worldwide economic, political or market conditions, such as recessions or international currency fluctuations; • changes in the consumer spending environment; • terrorist acts; • union organization; • changes in laws or regulations, or new interpretations or applications of laws and regulations, that are applicable to our business; • changes in accounting standards, policies, guidance, interpretations or principles; • short sales, hedging and other derivative transactions in the shares of our common stock; • future sales or issuances of our common stock, including sales or issuances by us, our directors or executive officers and our significant shareholders; • our dividend policy; • changes in the market valuations of other restaurant companies; • actions by shareholders, including actions of activist investors or unsolicited takeover proposals; • various market factors or perceived market factors, including rumors, involving us, our suppliers and distributors, whether accurate or not; • announcements by us or our competitors of new locations, menu items, technological advances, significant acquisitions, strategic partnerships, divestitures, joint ventures or other strategic initiatives; • the addition or loss of a key member of management; and • changes in the costs or availability of key inputs to our operations.
Our business is subject to large number of federal, state, and laws and regulations, including those relating to: • the production, distribution and sale of alcoholic beverages; 23 • employment practices and working conditions, including, among others, minimum wage and other wage and benefit requirements, overtime pay, meal and rest breaks, predictive scheduling, paid leave requirements, work eligibility requirements, team member classification as exempt/non-exempt for overtime and other purposes, immigration status, workplace safety, discrimination, and harassment; • public accommodations and safety conditions, including the Americans with Disabilities Act and similar state laws that give protections to individuals with disabilities in the context of employment, public accommodations, and other areas; • environmental matters, such as emissions and air quality, water consumption, and the discharge, storage, handling, release, and disposal of hazardous or toxic substances; • preparation, sale and labeling of food, including regulations of the Food and Drug Administration, including those relating to inspections and food recalls, menu labeling and nutritional content; • data privacy laws and standards for the protection of personal information, including social security numbers, financial information (including credit card numbers), and health information, and payment card industry standards and requirements; • building and zoning requirements, including state and local licensing and regulation governing the design and operation of facilities and land use, • health, sanitation, safety and fire standards; and • public company compliance, disclosure and governance matters, including accounting regulations, SEC and NASDAQ disclosure requirements.
Our business is subject to large number of federal, state, and laws and regulations, including those relating to: • the production, distribution and sale of alcoholic beverages; • employment practices and working conditions, including, among others, minimum wage and other wage and benefit requirements, overtime pay, meal and rest breaks, predictive scheduling, paid leave requirements, work eligibility requirements, team member classification as exempt/non-exempt for overtime and other purposes, immigration status, workplace safety, discrimination, and harassment; 21 • public accommodations and safety conditions, including the Americans with Disabilities Act and similar state laws that give protections to individuals with disabilities in the context of employment, public accommodations, and other areas; • environmental matters, such as emissions and air quality, water consumption, and the discharge, storage, handling, release, and disposal of hazardous or toxic substances; • preparation, sale and labeling of food, including regulations of the Food and Drug Administration, including those relating to inspections and food recalls, menu labeling and nutritional content; • data privacy laws and standards for the protection of personal information, including social security numbers, financial information (including credit card numbers), and health information, and payment card industry standards and requirements; • building and zoning requirements, including state and local licensing and regulation governing the design and operation of facilities and land use, • health, sanitation, safety and fire standards; and • public company compliance, disclosure and governance matters, including accounting regulations, SEC and NASDAQ disclosure requirements.
However, if we are unable to fully implement our disaster recovery plans, we may experience delays in recovery of data, inability to perform vital corporate functions, tardiness in required reporting and compliance, failures to adequately support field operations and other breakdowns in normal communication and operating procedures that may have a material adverse effect on our financial condition, results of operation and exposure to administrative and other legal claims.
However, if we are unable to fully implement our disaster recovery plans, we may experience delays in recovery of data, inability to perform vital corporate functions, tardiness in required reporting and compliance, failures to adequately 19 support field operations and other breakdowns in normal communication and operating procedures that may have a material adverse effect on our financial condition, results of operation and exposure to administrative and other legal claims.
We also test new technology platforms to improve our level of digital engagement with our guests and team members to help strengthen our marketing and 16 related consumer analytics capabilities. These initiatives may not prove to be successful and may result in expenses incurred without the benefit of higher revenues or increased engagement.
We also test new technology platforms to improve our level of digital engagement with our guests and team members to help strengthen our marketing and related consumer analytics capabilities. These initiatives may not prove to be successful and may result in expenses incurred without the benefit of higher revenues or increased engagement.
Although we currently have arrangements with a sufficient number of beer distributors in all markets where we operate restaurants, our continued national expansion will require us to enter into agreements with additional beer distributors. No assurance can be given that we will be able to maintain or secure additional beer distributors on terms favorable to us.
Although we currently have arrangements with a sufficient number of beer distributors in all markets where we 18 operate restaurants, our continued national expansion will require us to enter into agreements with additional beer distributors. No assurance can be given that we will be able to maintain or secure additional beer distributors on terms favorable to us.
ITEM 1A. RISK FACTORS The risk factors presented below may affect our future operating results, financial position and cash flows. The risks described in this Item 1A and other sections of this Annual Report on Form 10-K are not exhaustive and are not the only risks we may ever face in our business.
ITEM 1A. RIS K FACTORS The risk factors presented below may affect our future operating results, financial position and cash flows. The risks described in this Item 1A and other sections of this Annual Report on Form 10-K are not exhaustive and are not the only risks we may ever face in our business.
Failure to comply with federal, state or local regulations may cause our licenses to be revoked and force us to cease the brewing or sale of alcoholic beverages, or both, or the serving of food at our restaurants. Additionally, state liquor laws may prevent or impede the expansion of our restaurants into certain markets.
Failure to comply with federal, state or local regulations may cause our licenses to be revoked and force us to cease the brewing or sale of alcoholic beverages, or both, or the serving of 20 food at our restaurants. Additionally, state liquor laws may prevent or impede the expansion of our restaurants into certain markets.
If consumers perceive or experience any reduction in our food or beverage quality, service or facility ambiance, or in any way 14 believe we failed to deliver a consistently positive dining experience, our ability to compete and the value of the BJ’s brand may be impaired.
If consumers perceive or experience any reduction in our food or beverage quality, service or facility ambiance, or in any way believe we failed to deliver a consistently positive dining experience, our ability to compete and the value of the BJ’s brand may be impaired.
Department of Treasury, as well as the laws and licensing requirements 22 for alcoholic beverages of states and municipalities where our restaurants are or will be located. In addition, each restaurant must obtain a food service license from local authorities.
Department of Treasury, as well as the laws and licensing requirements for alcoholic beverages of states and municipalities where our restaurants are or will be located. In addition, each restaurant must obtain a food service license from local authorities.
As part of our marketing efforts, we use a variety of digital platforms including search engines, mobile, online videos and social media platforms such as Facebook®, Twitter® and Instagram® to attract and retain guests.
As part of our marketing efforts, we use a variety of digital platforms including search engines, mobile, online videos and social media platforms such as Facebook®, Twitter®, Instagram® and TikTok to attract and retain guests.
Some of our co-tenants have ceased or may cease operations in the future or have deferred openings or fail to open in a retail development after committing to do so.
Some of our co-tenants have ceased or may cease operations 15 in the future or have deferred openings or fail to open in a retail development after committing to do so.
During fiscal 2020 and 2021, state and local governments imposed a variety of restrictions on people and businesses, and public health authorities offered regular guidance on health and safety , which have caused and may continue to cause consumers to avoid or limit gatherings in public places or social interactions.
During fiscal 2020, 2021, and early fiscal 2022, state and local governments imposed a variety of restrictions on people and businesses, and public health authorities offered regular guidance on health and safety, which have caused and may continue to cause consumers to avoid or limit gatherings in public places or social interactions.
Our suppliers also may be affected by higher costs to produce and transport commodities used in our restaurants and brewpubs, higher minimum wage and benefit costs, and other expenses that they pass through to their customers, which may result in higher costs for goods and services supplied to us.
Our suppliers also may be affected by higher costs to produce and transport commodities used in our restaurants and brewpubs, labor shortages, higher minimum wage and benefit costs, and other expenses that they pass through to their customers, which may result in higher costs for goods and services supplied to us.
If we fail to properly respond to security breaches of our or third-party’s information technology systems or fail to properly respond to consumer requests under the CCPA or any similar laws adopted in other states, our reputation and results of operations may be adversely affected.
If we fail to properly respond to security breaches of our or third-party’s information technology systems or fail to properly respond to consumer requests under the CPRA or any similar laws adopted in other states, our reputation and results of operations may be adversely affected.
In addition, t here has been increasing focus by the United States and overseas governmental authorities and investors on other environmental matters, such as climate change, which may increase the frequency and severity of weather-related events and conditions, such as drought and forest fires .
In addition, there has been increasing focus by the United States and overseas governmental authorities and investors on other environmental matters, such as climate change, which may increase the frequency and severity of weather-related events and conditions, such as drought and forest fires.
Our inability or failure to successfully and sufficiently raise menu prices to offset rising costs and expenses may adversely affect our results of operations.
Our inability or failure to successfully and sufficiently raise menu prices to offset rising costs and expenses may adversely affect guest traffic and our results of operations.
In addition, we cannot assure that an active trading market for our common stock will continue which may affect our stock price and the liquidity of any investment in our common stock. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
In addition, we cannot assure that an active trading market for our common stock will continue which may affect our stock price and the liquidity of any investment in our common stock. ITEM 1B. UNRESOLVE D STAFF COMMENTS None.
We anticipate that our new restaurants will generally take several months or even longer to reach targeted productivity levels due to the inefficiencies typically associated with new restaurants, including lack of initial market and consumer awareness, the need to hire and train sufficient management and restaurant personnel and other factors.
We anticipate that our new restaurants will generally take several months or even longer to reach targeted productivity levels due to the inefficiencies typically associated with new restaurants, including lack of initial market and consumer awareness, the need to hire and train sufficient management and 16 restaurant team members and other factors.
If our existing beer distribution agreements are terminated, we may not be able to enter into new distribution agreements on substantially similar terms or it may take some time to enter into a replacement agreement, which may result in an increase in the delivered cost of beer to our restaurants.
If our existing beer distribution agreements are terminated, we may not be able to enter into new distribution agreements on substantially similar terms or it may take some time to enter into a replacement agreement, which may result in a disruption in the supply of our proprietary craft beer or an increase in the delivered cost of beer to our restaurants.
Compliance with the CCPA and other current and future privacy, cybersecurity and related laws may be involve significant costs.
Compliance with the CPRA and other current and future privacy, cybersecurity and related laws may be involve significant costs.
Additionally, changes in state and municipal-level regulatory requirements, such as increases to the minimum wage rate, income taxes, unemployment insurance, as well as other taxes, mandatory healthcare coverage or paid leave where we operate or may desire to operate restaurants, may adversely impact our financial results.
Additionally, changes in state and municipal-level regulatory requirements, such as increases to the minimum wage rate, scheduling or other labor constraints not experienced in other locations, income taxes, unemployment insurance, as well as other taxes, mandatory healthcare coverage or paid leave where we operate or may desire to operate restaurants, may adversely impact our financial results.
The market price of our common stock may be volatile and our shareholders may lose all or part of their investment. The market price of our common stock may fluctuate significantly, as it has during the COVID-19 pandemic, and our shareholders may not be able to resell their shares at or above the price they paid for them.
The market price of our common stock may fluctuate significantly, as it has during the COVID-19 pandemic, and our shareholders may not be able to resell their shares at or above the price they paid for them.
I n addition, i f other restaurants are able to promote and deliver a higher degree of perceived value through heavy discounting or other methods, our guest traffic levels may suffer which would adversely impact our revenues and profitability.
In addition, if other restaurants are able to promote and deliver a higher degree of perceived value through heavy discounting or other methods, our guest traffic levels may suffer which would adversely impact our revenues and profitability.
Delivery from our restaurants is primarily accomplished by utilizing third-party delivery companies. These third-party delivery companies require us to pay them a commission, which adversely affects our profit margin on those sales. Off-premise sales could cannibalize dine-in sales, or our systems and procedures may not be sufficient to handle off-premise sales, which require additional investments in technology or people.
These third-party delivery companies require us to pay them a commission, which adversely affects our profit margin on those sales. Off-premise sales could cannibalize dine-in sales, or our systems and procedures may not be sufficient to handle off-premise sales, which require additional investments in technology or people.
In addition, the California Consumer Privacy Act of 2018 (“CCPA”), which became effective in 2020, provides a private right of action for data breaches and requires companies that process information on California residents to make new disclosures to consumers about their data collection, use and sharing practices and allow consumers to opt out of certain data sharing with third parties and request deletion of personal information (subject to certain exceptions).
In addition, the California Privacy Rights Act (“CPRA”) provides a private right of action for data breaches and requires companies that process information on California residents to make new disclosures to consumers about their data collection, use and sharing practices and allow consumers to opt out of certain data sharing with third parties and request deletion of personal information (subject to certain exceptions).
General Risk Factors Any inability to access sources of capital and/or to raise capital in the future on favorable terms may adversely affect our business and results of operations. There can be no guarantee that additional financing will be readily available or available on favorable terms, or it all, especially the longer the COVID-19 pandemic lasts.
General Risk Factors Any inability to access sources of capital and/or to raise capital in the future on favorable terms may adversely affect our business and results of operations. There can be no guarantee that additional financing will be readily available or available on favorable terms, or at all.
We intend to open new restaurants in both established and new markets. Opening new restaurants in established markets generally provides some advantages in the form of stronger levels of initial consumer awareness, trial and usage, as well as greater leverage of certain supply chain and field supervision resources.
In order to achieve our targeted capacity rate of new restaurant growth, we intend to open new restaurants in both established and new markets. Opening new restaurants in established markets generally provides some advantages in the form of stronger levels of initial consumer awareness, trial and usage, as well as greater leverage of certain supply chain and field supervision resources.
Risks Related to our Restaurant Business, Operations and Future Growth The restaurant industry is highly competitive. Any inability to maintain our brand image and compete effectively in the restaurant industry may adversely affect our revenues, profitability and financial results. The restaurant industry is highly competitive.
Any inability to maintain our brand image and compete effectively in the restaurant industry may adversely affect our revenues, profitability and financial results. The restaurant industry is highly competitive.
The overall cost environment for food commodities can be volatile primarily due to domestic and worldwide agricultural supply/demand and other macroeconomic factors that are outside of our control.
The overall cost environment for food commodities can be volatile primarily due to domestic and worldwide agricultural supply/demand and other macroeconomic factors that are outside of our control, including recent inflationary trends, military, and geopolitical conflicts.
As part of our ongoing restaurant expansion and growth strategy, we may consider the internal development or acquisition of additional restaurant concepts. We may not be able to internally develop or acquire additional concepts that are as profitable as our existing restaurants.
As part of our ongoing restaurant expansion and growth strategy, we may consider the internal development or acquisition of additional restaurant concepts. We may not be able to internally develop or acquire additional concepts that are as profitable as our existing restaurants. Additionally, growth through acquisitions will also involve additional financial and operational risks.
Any adverse weather conditions, seasonal fluctuations, natural disasters and effects of climate change may adversely affect our results of operations. The occurrence of natural disasters, such as fires, hurricanes, freezing weather or earthquakes (particularly in California where our centralized operating systems and Restaurant Support Center administrative personnel are located) may unfavorably affect our operations and financial performance.
The occurrence of natural disasters, such as fires, hurricanes, freezing weather or earthquakes (particularly in California where our centralized operating systems and Restaurant Support Center administrative personnel are located) may unfavorably affect our operations and financial performance.
However, they may ultimately adversely affect our business, financial condition and/or operating results. In addition to the risk factors presented below, changes in general economic conditions, credit markets, consumer tastes, discretionary spending patterns, demographic trends, and consumer confidence in the economy, all of which affect consumer behavior and spending for restaurant dining occasions, may have a material impact on us.
In addition to the risk factors presented below, changes in general economic conditions, credit markets, consumer tastes, discretionary spending patterns, demographic trends, 13 and consumer confidence in the economy, all of which affect consumer behavior and spending for restaurant dining occasions, may have a material impact on us.
Furthermore, various factors beyond our control, including adverse weather conditions and governmental regulations, including stricter health regulations and guidelines as well as increased public concern over food safety standards and local and state governmental requirements could materially harm our business and may also cause our food and supply costs to increase.
Furthermore, various factors beyond our control, including the lingering effects of the 17 COVID-19 pandemic, adverse weather conditions and governmental regulations, as well as increased public concern over food safety standards and local and state governmental requirements, could materially harm our business and may also cause our food and supply costs to increase.
Risks Related to the COVID-19 Pandemic The COVID-19 pandemic has materially disrupted and may continue to disrupt our business, operations, financial condition and results of operations. Federal, state and local government responses to the COVID-19 pandemic have disrupted our industry and have had a material adverse effect on our business.
Risks Related to the COVID-19 Pandemic The COVID-19 pandemic has disrupted and may continue to disrupt our business, operations, financial condition and results of operations. Federal, state and local government responses to the COVID-19 pandemic have disrupted and may continue to disrupt our business.
If we change our menu in response to such concerns, we may lose guests who do not prefer the new menu, and we may not be able to sufficiently attract new guests to produce the revenue needed to restore the profitability of our restaurant operations. Increases or changes in off-premise sales may adversely affect our operating results.
If we change our menu in response to such concerns, we may lose guests who do not prefer the new menu, and we may not be able to sufficiently attract new guests to produce the revenue needed to restore the profitability of our restaurant operations.
In addition to other casual dining restaurants, we face competition from an array of food-away-from-home alternatives, including fast casual restaurants, single-serve operations, quick-service restaurants and the trend toward convergence in grocery, deli and restaurant services, particularly in the supermarket industry which offers “convenient meals” in the form of improved entrées and side dishes from the deli section, combined with the continuing pressure on consumer discretionary spending for restaurant occasions, consumers may choose less expensive alternatives to BJ’s.
In addition to other casual dining restaurants, we face competition from an array of food-away-from-home alternatives, including fast casual restaurants, single-serve operations, quick-service restaurants and the trend toward convergence in grocery, deli and restaurant services, particularly in the supermarket industry which offers “convenient meals” in the form of improved entrées and side dishes from the deli section.
Pursuant to various laws and regulations, the majority of our proprietary craft beer must be distributed to our restaurants through independent wholesale beer distributors, whether we produce the beer or it is produced by independent third-party brewers.
Any inability of us to secure or maintain third-party beer distribution arrangements may adversely affect our operating results. Pursuant to various laws and regulations, the majority of our proprietary craft beer must be distributed to our restaurants through independent wholesale beer distributors, whether we produce the beer or it is produced by independent third-party brewers.
However, there is no guarantee that our menu price increases will be accepted by our guests. If our costs increase, our operating margins and results of operations will be adversely affected if we are unable to increase our menu prices to offset such increased costs or if our increased menu prices result in less guest traffic.
If our costs increase, our operating margins and results of operations will be adversely affected if we are unable to increase our menu prices to offset such increased costs or if our increased menu prices result in less guest traffic.
In the past, we have experienced dramatic price increases of certain items necessary to operate our restaurants and brewing operations, including increases in the cost of food, commodities, labor, team member benefits, insurance arrangements, construction, energy and other costs. We utilize menu price increases to help offset the increased cost of commodities, minimum wage and other costs.
In the past, including as a result of the COVID-19 pandemic, we have experienced dramatic price increases of certain items necessary to operate our restaurants and brewing operations, including increases in the cost of food, commodities, labor, team member benefits, insurance arrangements, construction, energy and other costs.
A critical factor in our future success is our ability to expand our restaurant operations successfully, which will depend in large part on our ability to open new restaurants in a profitable manner.
Any inability or failure to successfully expand our restaurant operations or open and adequately staff new restaurants may adversely affect our growth rate and results of operations. A critical factor in our future success is our ability to expand our restaurant operations successfully, which will depend in large part on our ability to open new restaurants in a profitable manner.
In addition, if third-party delivery services cease doing business with us, or cannot make their scheduled deliveries, or do not continue their relationship with us on favorable terms, it would have a negative impact on sales or result in increased third-party delivery fees. 15 Any deterioration in general economic conditions which adversely affects consumer spending, our landlords or businesses neighboring our locations, may adversely affect our results of operations.
In addition, if third-party delivery services cease doing business with us, or cannot make their scheduled deliveries, or do not continue their relationship with us on favorable terms, it would have a negative impact on sales or result in increased third-party delivery fees.
While we do our best to avoid business interruptions in our operating restaurants, as well as delays in opening our new restaurants, there is no guarantee or assurance that we can avoid this in the future. 19 Any adverse changes in the supply or cost of food, brewing, energy and other expense s may adversely affect our operating results.
While we do our best to avoid business interruptions in our operating restaurants, as well as delays in opening our new restaurants, there is no guarantee or assurance that we can avoid this in the future.
The increased operating costs from wage increases could adversely affect our results of operations, especially if we are to effectively implement price increases to offset such additional costs. Any inability or failure of distributors or suppliers to provide food and beverages to us in a timely fashion may adversely affect our reputation, guest patronage, revenues and results of operations.
Any inability or failure of distributors or suppliers to provide food and beverages to us in a timely fashion may adversely affect our reputation, guest patronage, revenues and results of operations.
In addition, future increases in cases or further localized or widespread outbreaks of COVID-19 pandemic could negatively impact our suppliers, and we could face shortages of food items or other supplies at our restaurants, and our operations and sales could be adversely impacted by such supply interruptions.
In addition, any resurgence of COVID-19 or variants thereof could negatively impact our suppliers, and we could face shortages of food items or other supplies at our restaurants, and our operations and sales could be adversely impacted by such supply interruptions. Risks Related to our Restaurant Business, Operations and Future Growth The restaurant industry is highly competitive.
The dissemination of information online regarding our Company or our restaurants, together with any resulting negative publicity, may harm our business, prospects, financial condition and results of operations, regardless of the information’s accuracy.
Consumers value readily available information concerning goods and services that they have or plan to purchase and may act on such information without further investigation or authentication. The dissemination of information online regarding our Company or our restaurants, together with any resulting negative publicity, may harm our business, prospects, financial condition and results of operations, regardless of the information’s accuracy.
We believe that we have built a favorable reputation for the quality and differentiation of our restaurant concept. Any incident that erodes consumer trust in or affinity for the BJ’s brand may significantly reduce its value.
Any incident that erodes consumer trust in or affinity for the BJ’s brand may significantly reduce its value.
We also are dependent upon high consumer traffic rates at the sites surrounding our restaurants, which are primarily located in high-activity areas such as urban, retail, mixed-use and lifestyle centers, to attract guests to our restaurants.
Due to the nature of the restaurant industry, we are dependent upon consumer trends with respect to the public’s tastes, eating habits, public perception toward alcohol consumption and discretionary spending priorities, as well as consumer traffic rates at the sites surrounding our restaurants, which are primarily located in high-activity areas such as urban, retail, mixed-use and lifestyle centers.
Virtually all commodities purchased and used in the restaurant industry (meats, grains, oils, dairy products, and energy) have varying amounts of inherent price volatility associated with them.
The availability and prices of food commodities are also influenced by energy prices, droughts, animal-related diseases, natural disasters, the relationship of the dollar to other currencies, government regulated tariffs and other issues. Virtually all commodities purchased and used in the restaurant industry (meats, grains, oils, dairy products, and energy) have varying amounts of inherent price volatility associated with them.
If alternative suppliers cannot meet our current product specifications, the consistency and quality of our food and beverage offerings, and thus our reputation, guest patronage, revenues and results of operations, may be adversely affected. 20 Any inability of us to secure or maintain third-party beer distribution arrangements may adversely affect our operating results.
We may also be forced to temporarily remove popular items from the menu offering of our restaurants. If alternative suppliers cannot meet our current product specifications, the consistency and quality of our food and beverage offerings, and thus our reputation, guest patronage, revenues and results of operations, may be adversely affected.
We also have a single or a limited number of suppliers for certain of our commodity and supply items. Accordingly, supply chain risk may increase our costs and limit the availability of some products that are critical to our restaurant and brewing operations.
Accordingly, supply chain risk may increase our costs and limit the availability of some products that are critical to our restaurant and brewing operations, which may adversely affect our operating results or cash flows from operations.
Legislative, regulatory or other efforts to combat climate change or other environmental concerns could result in future increases in the cost of raw materials, taxes, transportation and utilities, which could affect our results of operations and necessitate future investments in facilities and equipment. 21 We have disaster recovery procedures and business continuity plans in place to address most events of a crisis nature, including hurricanes and other natural disasters, including back up and off-site locations for recovery of electronic and other forms of data and information.
Legislative, regulatory or other efforts to combat climate change or other environmental concerns could result in future increases in the cost of raw materials, taxes, transportation and utilities, which could affect our results of operations and necessitate future investments in facilities and equipment.
Any adverse change in any of the above factors and our inability to respond to such changes may cause our restaurant volumes to decline and adversely affect our business, revenues and results of operations. Any inability or failure to recognize, respond to and effectively manage the accelerated impact of social media may adversely affect our business.
Any adverse change in any of the above factors and our inability to respond to such changes may cause our restaurant volumes to decline and adversely affect our business, revenues and results of operations. Changes in off-premise sales or costs may adversely affect our operating results. Delivery from our restaurants is primarily accomplished by utilizing third-party delivery companies.
The unavailability of financing when needed may adversely affect our growth and other plans, as well as our financial condition. Even if available, additional financing may involve significant cash payment obligations, covenants and financial ratios that restrict our ability to operate and grow our business, and would cause us to incur 24 additional inter est expense and financing costs.
Even if available, additional financing may involve significant cash payment obligations, covenants and financial ratios that restrict our ability to operate and grow our business, and would cause us to incur additional interest expense and financing costs. 22 The market price of our common stock may be volatile and our shareholders may lose all or part of their investment.
We cannot predict whether we will be able to anticipate and react to changing food and supply costs or safety incidents by adjusting our purchasing practices. A failure to do so may adversely affect our operating results or cash flows from operations.
We cannot predict whether we will be able to anticipate and react to changing food and supply costs or safety incidents by adjusting our purchasing practices. s. We also have a single or a limited number of suppliers for certain of our commodity and supply items.
As of the date of this report, all of our restaurants are able to open their dining rooms and few capacity restrictions or other COVID-19 restrictions remain in place; however, it is possible that future increases in cases or further localized or widespread outbreaks of COVID-19 could require us to again reduce our capacity or suspend our in-restaurant dining operations.
It is possible that a resurgence in cases or further localized or widespread outbreaks of COVID-19 or new variants thereof could require us to reduce our capacity or suspend our in-restaurant dining operations.
Any adverse change in consumer trends or traffic levels may adversely affect our business, revenues and results of operations. Due to the nature of the restaurant industry, we are dependent upon consumer trends with respect to the public’s tastes, eating habits, public perception toward alcohol consumption and discretionary spending priorities, all of which can shift rapidly.
Any adverse change in consumer trends or traffic levels may adversely affect our business, revenues and results of operations.
Our profitability depends, in part, on our ability to anticipate and effectively react to changes in food, labor, utilities and supply costs. Our supply chain department negotiates prices for all of our ingredients and supplies through contracts (with terms of one month up to one year, or longer in a few cases), spot market purchases or commodity pricing formulas.
Any adverse changes in the cost of food , brewing commodities and other materials, including cost increases caused by inflation, or global conflicts may adversely affect our operating results. Our supply chain department negotiates prices for all of our ingredients and supplies through contracts, spot market purchases or commodity pricing formulas.
There has been a significant increase in the use of social media and similar platforms. Consumers value readily available information concerning goods and services that they have or plan to purchase and may act on such information without further investigation or authentication.
Any inability or failure to recognize, respond to and effectively manage the accelerated impact of social media may adversely affect our business. There has been a significant increase in the use of social media and similar platforms.
Removed
We may also need to evolve the BJ’s restaurant concept in order to compete with popular new restaurant formats or concepts that emerge from time to time, and we cannot provide any assurance that we will be successful in doing so, or that any changes we make to our concept in response will be successful or not adversely affect our profitability.
Added
However, they may ultimately adversely affect our business, financial condition and/or operating results.
Removed
In addition, we cannot provide assurance that menu price increases will not deter guests from visiting our restaurants, reduce the frequency of their visits or affect their purchasing decisions. Our past and recent trends in average restaurant sales or comparable restaurant sales may not be indicative of future trends or future operating results.
Added
We also continue to face pressure for consumer discretionary spending on restaurant occasions, as well as, less expensive alternatives to BJ’s.
Removed
Our past average restaurant sales and comparable restaurant sales trends prior to the COVID-19 pandemic may not be indicative of future trends or future operating results. Additionally, there is no guarantee that we may return to pre-COVID-19 pandemic average restaurant sales or comparable restaurant sales trends.
Added
We utilize menu price increases to help offset the increased cost of commodities, minimum wage and other costs. However, there is no guarantee that our menu price increases will be accepted by our guests.
Removed
Our ability to operate new restaurants profitably and increase average restaurant sales and comparable restaurant sales will depend on many factors, some of which are beyond our control, including: • our ability to operate our restaurants in full capacity and without local or state restrictions; • our ability to execute our business strategy effectively; • our ability to execute productively and efficiently within the “four walls” of each restaurant; • our menu development and pricing strategy; • our ability to continue deploying menu, beverage, capital expenditure and technological innovations that have the opportunity to increase guest visit frequency and spending per visit; • initial sales performance by new restaurants, some of which may be unusually strong and thus difficult to increase further; • intrusions into our restaurant trade areas by new restaurants operated by competitors; • the timing of new restaurant openings and related expenses; • changing demographics, consumer tastes or discretionary spending; • our ability to develop restaurants in geographic locations that do not compete with or otherwise adversely affect the sales of our existing restaurants; • overall brand awareness in new markets or existing markets where we may develop new restaurants; • maturation of the casual dining segment; • changes in the trade area, retail development or surrounding area in which we operate; • levels of competition in one or more of our markets; and • general economic conditions, credit markets and consumer confidence.
Added
The good reputation of our restaurants is a key factor to the success of our business.
Removed
We believe that certain of our restaurants operate at or near their effective productive capacities. As a result, we may be unable to grow or maintain comparable restaurant sales at those restaurants, particularly if additional restaurants are opened near the existing locations either by us or by our competitors.
Added
Any deterioration in general economic conditions which adversely affects consumer spending, our landlords or businesses neighboring our locations, may adversely affect our results of operations.
Removed
Any failure to drive both short-term and long-term profitable sales growth through continued enhancements to the BJ’s restaurant concept and brand, coupled with any slippage in restaurant operational execution, may result in poor financial performance. As part of our business strategy, we intend to drive profitable sales growth by increasing sales at existing restaurants and by opening new restaurants.
Added
The increased operating costs from wage related increases, or potential other benefit offerings to remain competitive in the labor market could adversely affect our results of operations, especially if we are to effectively implement price increases to offset such additional costs.
Removed
This strategy involves numerous risks, and we may not be able to achieve our growth objectives. If we are unable to maintain BJ’s brand relevance and restaurant operational excellence to achieve 17 sustainable comparable restaurant sales growth, we may have to consider slowing the pace of new restaurant openings.
Added
Any adverse weather conditions, seasonal fluctuations, natural disasters and environmental matters, including the effects of climate change, may adversely affect our results of operations.
Removed
BJ’s short-term sales growth may be impacted if we are unable to drive near-term growth in guest traffic, and long-term sales growth may be impacted if we fail to continue to evolve BJ’s to maintain its relevance, contemporary energy and overall value and appeal to the consumer.
Added
We have disaster recovery procedures and business continuity plans in place to address most events of a crisis nature, including hurricanes and other natural disasters, back up and off-site locations for recovery of electronic and other forms of data and information.
Removed
The casual dining segment has not seen any significant growth in guest traffic in several years. If this trend continues, our ability to grow guest traffic at our restaurants will depend on our ability to increase our market share within the casual dining segment.
Added
The unavailability of financing when needed may adversely affect our growth and other plans, as well as our financial condition.
Removed
Adverse changes in our average restaurant revenues and comparable restaurant sales may have an adverse effect on our common stock or increase the volatility of the price of our common stock. Any inability or failure to successfully expand our restaurant operations may adversely affect our growth rate and results of operations.
Removed
Additionally, growth through acquisitions will also involve additional financial and operational risks. 18 Any inability to open new restaurants on schedule in accordance with our targeted capacity growth or problems associated with securing suitable restaurant location s, leases and licenses, recruiting and training qualified managers and hourly team member s and other factors, some of which are beyond our control and difficult to forecast accurately may adversely affect our operations.
Removed
In order to achieve our targeted capacity rate of new restaurant growth, we must identify suitable restaurant locations and successfully negotiate and finalize the terms of restaurant leases at a number of these locations.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeMany of our restaurants also have outdoor patios that are utilized when weather conditions permit. We own the underlying land for one of our restaurants that we expect to open in fiscal 2022 and our Texas brewpub locations. We also own two parcels of land adjacent to two of our operating restaurants.
Biggest changeMany of our restaurants also have outdoor patios that are utilized when weather conditions permit. In addition to our restaurants, we operate two Texas brewpub locations. We own the underlying land for these brewpub locations, as well as two parcels of land adjacent to two of our operating restaurants.
PROPERTIES RESTAURANT LOCATIONS As of February 24, 2022, we owned and operated a total of 211 restaurants located in the following 29 states: 25 Number of Restaurants Alabama 2 Arizona 6 Arkansas 2 California 61 Colorado 6 Connecticut 1 Florida 22 Indiana 7 Kansas 1 Kentucky 3 Louisiana 3 Maryland 6 Massachusetts 1 Michigan 4 Nevada 5 New Jersey 2 New Mexico 2 New York 3 North Carolina 2 Ohio 14 Oklahoma 4 Oregon 3 Pennsylvania 4 Rhode Island 1 South Carolina 1 Tennessee 1 Texas 34 Virginia 6 Washington 4 211 All of our 211 existing restaurants are located on leased properties, and the average interior square footage is approximately 8,100 square feet.
PR OPERTIES RESTAURANT LOCATIONS As of February 27, 2023, we owned and operated a total of 216 restaurants located in the following 30 states: 23 Number of Restaurants Alabama 2 Arizona 7 Arkansas 2 California 60 Colorado 6 Connecticut 1 Florida 22 Illinois 1 Indiana 7 Kansas 1 Kentucky 3 Louisiana 3 Maryland 6 Massachusetts 2 Michigan 4 Nevada 7 New Jersey 2 New Mexico 2 New York 3 North Carolina 3 Ohio 14 Oklahoma 4 Oregon 2 Pennsylvania 4 Rhode Island 1 South Carolina 1 Tennessee 1 Texas 35 Virginia 6 Washington 4 216 All of our 216 existing restaurants are located on leased properties, and the average interior square footage is approximately 8,100 square feet.
Added
Additional information concerning our leased properties is included in Note 6 to the Consolidated Financial Statements appearing in Part II, Item 8 of this Annual Report on Form 10-K.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS See Note 7 of Notes to Consolidated Financial Statements in Part IV, Item 15 of this Annual Report on Form 10-K for a summary of legal proceedings. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 26 PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS See Note 7 of Notes to Consolidated Financial Statements in Part IV, Item 15 of this Annual Report on Form 10-K for a summary of legal proceedings. ITEM 4. MINE SAFE TY DISCLOSURES Not applicable. 24 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table provides information about the shares of our common stock that may be issued upon exercise of awards as of December 28, 2021 (share numbers in thousands): Number of Securities to be Issued Upon Exercise of Outstanding Stock Options Weighted Average Exercise Price of Outstanding Stock Options Number of Securities Remaining Available for Future Issuance Under Stock-Based Compensation Plans Stock-based compensation plans approved by shareholders 1,506 $ 41.77 2,222 Stock-based compensation plans not approved by shareholders — — — Total 1,506 2,222 DIVIDEND POLICY AND STOCK REPURCHASES We began paying quarterly cash dividends in the fourth quarter of fiscal 2017; however, due to the COVID-19 pandemic, the Company’s Board of Directors suspended quarterly cash dividends in fiscal 2020.
Biggest changeThe following table provides information about the shares of our common stock that may be issued upon exercise of awards as of January 3, 2023 (share numbers in thousands): Number of Securities to be Issued Upon Exercise of Outstanding Stock Options Weighted Average Exercise Price of Outstanding Stock Options Number of Securities Remaining Available for Future Issuance Under Stock-Based Compensation Plans Stock-based compensation plans approved by shareholders 1,676 $ 40.48 1,684 Stock-based compensation plans not approved by shareholders — — — Total 1,676 1,684 DIVIDEND POLICY AND STOCK REPURCHASES Due to the COVID-19 pandemic, we suspended quarterly cash dividends until such time as the Board of Directors determines that resumption of dividend payments is in the best interest of the Company and its shareholders.
Further information concerning shareholdings of our officers, directors and principal shareholders , as well as information regarding our stock-based compensation plans, is included or incorporated by reference in Part III, Item 12 of this Annual Report on Form 10-K.
Further information concerning shareholdings of our officers, directors and principal shareholders, 25 as well as information regarding our stock-based compensation plans, is included or incorporated by reference in Part III, Item 12 of this Annual Report on Form 10-K.
As many of our shares are held by brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of shareholders represented by these record holders. STOCK-PERFORMANCE GRAPH The Company has elected to use the S&P 600 Restaurant Group index as its peer group for fiscal 2021.
As many of our shares are held by brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of shareholders represented by these record holders. STOCK-PERFORMANCE GRAPH The Company has elected to use the S&P 600 Restaurant Group index as its peer group for fiscal 2022.
The following chart compares the five-year cumulative total stock performance of our common stock, the S&P 600 Restaurant Group index and the S&P 500 index. The graph assumes that $100 was invested on December 31, 2016, in our common stock and in each of the indices and that all dividends were reinvested.
The following chart compares the five-year cumulative total stock performance of our common stock, the S&P 600 Restaurant Group index and the S&P 500 index. The graph assumes that $100 was invested on December 31, 2017, in our common stock and in each of the indices and that all dividends were reinvested.
These assumptions should not be deemed to constitute an admission that all executive officers, directors and 27 5% or greater shareholders are, in fact, affiliates of our C ompany, or that there are no other persons who may be deemed to be affiliates of our C ompany.
These assumptions should not be deemed to constitute an admission that all executive officers, directors and 5% or greater shareholders are, in fact, affiliates of our Company, or that there are no other persons who may be deemed to be affiliates of our Company.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION Our common stock is traded on The NASDAQ Global Select Market under the symbol “BJRI.” As of February 24, 2022, we had approximately 140 shareholders of record.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHA REHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION Our common stock is traded on The NASDAQ Global Select Market under the symbol “BJRI.” As of February 27, 2023, we had approximately 138 shareholders of record.
In the case of 5% or greater shareholders, we have not deemed such shareholders to be affiliates unless there are facts and circumstances which would indicate that such shareholders exercise any control over our Company, or unless they hold 10% or more of our outstanding common stock.
In the case of 5% or greater shareholders, we have not deemed such shareholders to be affiliates unless there are facts and circumstances which would indicate that such shareholders exercise any control over our Company, or unless they hold 10% or more of our outstanding common stock and are not qualified institutional investors or passive investors who have filed a Schedule 13G with respect to their ownership.
Removed
Cash dividends will remain suspended until it is determined that resumption of dividend payments is in the best interest of the Company and its shareholders. Also due to the COVID-19 pandemic, our share repurchase program is currently suspended until it is in the best interest of the Company and its shareholders to resume.
Added
The only cash dividends paid during fiscal 2022 were related to dividends declared prior to fiscal 2020, which vested under our stock compensation plans. As of January 3, 2023, we have cumulatively repurchased shares valued at approximately $477.9 million in accordance with our approved share repurchase plan since its inception in 2014.
Removed
As of December 28, 2021, we have cumulatively repurchased shares valued at approximately $475.6 million in accordance with our approved share repurchase plan. We did not repurchase shares during fiscal 2021. As of December 28, 2021, we have approximately $24.4 million available under our share repurchase plan. ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA Reserved.
Added
We repurchased shares valued at approximately $2.4 million during fiscal 2022. The share repurchases were executed through open market purchases, and future share repurchases may be completed through a combination of individually negotiated transactions, accelerated share buyback, and/or open market purchases. As of January 3, 2023, we have approximately $22.1 million available under our share repurchase plan.
Added
The following table sets forth information with respect to the repurchase of common shares during fiscal 2022: Period (1) Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of the Publicly Announced Plans Increase in Dollars for Share Repurchase Authorization Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 12/29/22 - 01/25/22 — $ — — $ — $ 24,438,776 01/26/22 – 02/22/22 — $ — — $ — $ 24,438,776 02/23/22 – 03/29/22 — $ — — $ — $ 24,438,776 03/30/22 – 04/26/22 — $ — — $ — $ 24,438,776 04/27/22 – 05/24/22 — $ — — $ — $ 24,438,776 05/25/22 – 06/28/22 — $ — — $ — $ 24,438,776 06/29/22 – 07/26/22 — $ — — $ — $ 24,438,776 07/27/22 – 08/23/22 13,211 $ 27.51 13,211 $ — $ 24,075,364 08/24/22 – 09/27/22 78,091 $ 25.89 78,091 $ — $ 22,053,808 09/28/22 – 10/25/22 — $ — — $ — $ 22,053,808 10/26/22 – 11/22/22 — $ — — $ — $ 22,053,808 11/23/22 – 01/03/23 — $ — — $ — $ 22,053,808 Total 91,302 91,302 26 ITEM 6.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changePercentages below may not reconcile due to rounding. 32 Fiscal Year 2021 2020 2019 Revenues $ 1,087,038 100.0 % $ 778,510 100.0 % $ 1,161,450 100.0 % Restaurant operating costs (excluding depreciation and amortization): Cost of sales 288,110 26.5 195,573 25.1 295,009 25.4 Labor and benefits 401,408 36.9 305,628 39.3 424,370 36.5 Occupancy and operating 267,888 24.6 220,889 28.4 256,383 22.1 General and administrative 67,957 6.3 54,663 7.0 62,540 5.4 Depreciation and amortization 72,753 6.7 73,124 9.4 72,006 6.2 Restaurant opening 1,483 0.1 1,201 0.2 2,892 0.2 Loss on disposal and impairment of assets 3,946 0.4 17,141 2.2 3,862 0.3 Gain on lease transactions, net — — (3,278 ) (0.4 ) (4,731 ) (0.4 ) Total costs and expenses 1,103,545 101.5 864,941 111.1 1,112,331 95.8 (Loss) income from operations (16,507 ) (1.5 ) (86,431 ) (11.1 ) 49,119 4.2 Other (expense) income: Interest expense, net (5,002 ) (0.5 ) (7,078 ) (0.9 ) (4,613 ) (0.4 ) Gain from legal settlements — — 2,284 0.3 — — Other income, net 2,327 0.2 1,275 0.2 1,788 0.2 Total other expense (2,675 ) (0.2 ) (3,519 ) (0.5 ) (2,825 ) (0.2 ) (Loss) income before income taxes (19,182 ) (1.8 ) (89,950 ) (11.6 ) 46,294 4.0 Income tax (benefit) expense (15,576 ) (1.4 ) (32,065 ) (4.1 ) 1,056 0.1 Net (loss) income $ (3,606 ) (0.3 )% $ (57,885 ) (7.4 )% $ 45,238 3.9 % 52 WEEKS ENDED DECEMBER 28, 2021 (FISCAL 2021) COMPARED TO THE 52 WEEKS ENDED DECEMBER 29, 2020 (FISCAL 2020) Revenues .
Biggest changeFiscal Year 2022 2021 2020 Revenues $ 1,283,926 100.0 % $ 1,087,038 100.0 % $ 778,510 100.0 % Restaurant operating costs (excluding depreciation and amortization): Cost of sales 349,645 27.2 288,110 26.5 195,573 25.1 Labor and benefits 483,367 37.6 401,408 36.9 305,628 39.3 Occupancy and operating 306,150 23.8 267,888 24.6 220,889 28.4 General and administrative 73,333 5.7 67,957 6.3 54,663 7.0 Depreciation and amortization 70,385 5.5 72,753 6.7 73,124 9.4 Restaurant opening 3,644 0.3 1,483 0.1 1,201 0.2 Loss on disposal and impairment of assets, net 6,200 0.5 3,946 0.4 17,141 2.2 Gain on lease transactions, net (3,318 ) (0.3 ) — — (3,278 ) (0.4 ) Total costs and expenses 1,289,406 100.4 1,103,545 101.5 864,941 111.1 Loss from operations (5,480 ) (0.4 ) (16,507 ) (1.5 ) (86,431 ) (11.1 ) Other (expense) income: Interest expense, net (2,888 ) (0.2 ) (5,002 ) (0.5 ) (7,078 ) (0.9 ) Gain from legal settlements — — — — 2,284 0.3 Other income, net 60 — 2,327 0.2 1,275 0.2 Total other expense (2,828 ) (0.2 ) (2,675 ) (0.2 ) (3,519 ) (0.5 ) Loss before income taxes (8,308 ) (0.6 ) (19,182 ) (1.8 ) (89,950 ) (11.6 ) Income tax benefit (12,384 ) (1.0 ) (15,576 ) (1.4 ) (32,065 ) (4.1 ) Net income (loss) $ 4,076 0.3 % $ (3,606 ) (0.3 )% $ (57,885 ) (7.4 )% 53 WEEKS ENDED JANUARY 3, 2023 (FISCAL 2022) COMPARED TO THE 52 WEEKS ENDED DECEMBER 28, 2021 (FISCAL 2021) Revenues .
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 several of our locations, our Temple, Texas brewpub locations and by independent third-party brewers using our proprietary recipes.
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 several of our locations, our Texas brewpub locations and by independent third-party brewers using our proprietary recipes.
Factors considered include, but are not limited to, significant underperformance by the restaurant relative to expected historical or projected future operating results; significant changes in the manner of use of the assets or the strategy for the overall business; significant negative industry or economic trends; or our expectation to dispose of long-lived assets before the end of their previously estimated useful lives.
Factors considered include, but are not limited to, significant underperformance by the restaurant relative to historical or projected future operating results; significant changes in the manner of use of the assets or the strategy for the overall business; significant negative industry or economic trends; or our expectation to dispose of long-lived assets before the end of their previously estimated useful lives.
Many of our lease arrangements include the opportunity to secure tenant improvement allowances to partially offset the cost of developing and opening the related restaurants. Generally, landlords recover the cost of such allowances from increased minimum rents. However, there can be no assurance that such allowances will be available to us on each project.
Many of our lease arrangements include the opportunity to secure tenant improvement allowances to partially offset the cost of developing and opening the related restaurants. Generally, landlords recover the cost of such allowances from increased minimum rents. There can be no assurance that such allowances will be available to us on each project.
We allocate the transaction price between the goods delivered and the future 31 goods that will be delivered, on a relative standalone selling price basis, and defer the revenues allocated to the points until such points are redeemed . Comparable Sales and Guest Traffic . All of our restaurants are Company-owned.
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 until such points are redeemed. Comparable Sales and Guest Traffic . All of our restaurants are Company-owned.
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.
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 .
We use restaurant level operating margin as a supplemental measure of restaurant performance and believe restaurant level operating margin 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.
We, similar to most of our competitors, use restaurant level operating margin as a supplemental measure of restaurant performance and believe restaurant level operating margin 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.
While we have been able to partially offset inflation and other changes in the costs of key operating resources by gradually increasing prices of our menu items, coupled with more efficient purchasing practices, productivity improvements and greater economies of scale, there can be no assurance that we will be able to continue to do so in the future.
While we have been able to partially offset inflation and other changes in the costs of key operating inputs by gradually increasing menu prices, coupled with more efficient purchasing practices, productivity improvements and greater economies of scale, there can be no assurance that we will be able to continue to do so in the future.
Included in labor and benefits for fiscal 2021 and 2020 was approximately $2.7 million and $2.8 million, respectively, or 0.3% and 0.4%, of revenues, respectively, of stock-based compensation expense related to equity awards granted in accordance with our Gold Standard Stock Ownership Program for certain restaurant management team members. Occupancy and Operating .
Included in labor and benefits for fiscal 2022 and 2021 was approximately $2.9 million and $2.7 million, respectively, or 0.2% and 0.3%, of revenues, respectively, of stock-based compensation expense related to equity awards granted in accordance with our Gold Standard Stock Ownership Program for certain restaurant management team members. Occupancy and Operating .
We calculate each restaurant’s average weekly revenue to understand and manage the business trends and expectations. Our weekly sales average was approximately $99,000, $72,000 and $109,000 for fiscal 2021, 2020 and 2019, respectively. Known or Anticipated Trends Sales Growth .
We calculate each restaurant’s average weekly revenue to understand and manage the business trends and expectations. Our weekly sales average was approximately $113,000, $99,000 and $72,000 for fiscal 2022, 2021 and 2020, respectively. Known or Anticipated Trends Sales Growth .
Included in general and administrative costs for fiscal 2021 and 2020 was approximately $7.6 million and $7.0 million, respectively, or 0.7% and 0.9% of revenues, respectively, of stock-based compensation expense. As a percentage of revenues, general and administrative expenses decreased to 6.3% for fiscal 2021 from 7.0% for the prior fiscal year.
Included in general and administrative costs for fiscal 2022 and 2021 was approximately $7.2 million and $7.6 million, respectively, or 0.6% and 0.7% of revenues, respectively, of stock-based compensation expense. As a percentage of revenues, general and administrative expenses decreased to 5.7% for fiscal 2022 from 6.3% for the prior fiscal year.
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.
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.
Our MD&A consists of the following sections: • Overview - a brief description of our business, financial highlights for 2021, key performance indicators, known and anticipated trends, and a COVID-19 pandemic update • Results of Operations - an analysis of our Consolidated Statements of Operations for fiscal year 2021 compared to fiscal year 2020 • 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 • Critical Accounting Policies and Estimates - a discussion of accounting policies that require critical judgments and estimates, including new accounting standards 28 OVERVIEW As of February 24, 2022, we owned and operated 211 restaurants located in 29 states as described in Item 2 - Properties - “Restaurant Locations” in this Form 10-K.
Our MD&A consists of the following sections: • Overview - a brief description of our business, financial highlights, key performance indicators, known and anticipated trends • Results of Operations - an analysis of our Consolidated Statements of Operations for fiscal year 2022 compared to fiscal year 2021 • 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 • Critical Accounting Policies and Estimates - a discussion of accounting policies that require critical judgments and estimates, including new accounting standards OVERVIEW As of February 27, 2023, we owned and operated 216 restaurants located in 30 states as described in Item 2 - Properties - “Restaurant Locations” in this Form 10-K.
Significant judgment is required to estimate IBNR claims as parties have yet to assert such claims. Should a greater number of claims occur compared to what was estimated, or should medical costs increase beyond what was expected, accruals might not be sufficient, and additional expense may be recorded.
Significant judgment is required to estimate claims incurred but not yet reported to us (“IBNR claims”) as parties have yet to assert such claims. Should a greater number of claims occur compared to what was estimated, or should medical costs increase beyond what was expected, accruals might not be sufficient, and additional expense may be recorded.
As of December 28, 2021, we are not involved in any off-balance sheet arrangements. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our significant accounting policies are more fully described in Note 1 of Notes to Consolidated Financial Statements in Part IV, Item 15 .
As of January 3, 2023, we are not involved in any off-balance sheet arrangements. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our significant accounting policies are more fully described in Note 1 of Notes to Consolidated Financial Statements in Part IV, Item 15.
This estimate includes costs to open up to eight new restaurants and remodel several existing locations. Total capital expenditures exclude anticipated proceeds from tenant improvement allowances and sale-leasebacks. We expect to fund our net capital expenditures with our current cash balance on hand, cash flows from operations and our line of credit.
This estimate includes costs to open five new restaurants and remodel more than 30 existing locations. Total capital expenditures exclude anticipated proceeds from tenant improvement allowances. We expect to fund our net capital expenditures with our current cash balance on hand, cash flows from operations and our line of credit.
Gain on Lease Transactions, Net . Gain on lease transactions, net, was $3.3 million during fiscal 2020 and it related to the sale of the land underlying two of our restaurants. Interest Expense, Net . Interest expense, net, decreased by $2.1 million to $5.0 million during fiscal 2021, compared to $7.1 million during fiscal 2020.
Gain on Lease Transactions, Net . Gain on lease transactions, net, was $3.3 million during fiscal 2022, which related to the sale of the land underlying one of our restaurants. Interest Expense, Net . Interest expense, net, decreased by $2.1 million to $2.9 million during fiscal 2022, compared to $5.0 million during fiscal 2021.
A reconciliation of net 29 (loss) income to adjusted EBITDA for fiscal 2021, 2020 and 2019 is set forth below : Fiscal Year 2021 2020 2019 Net (loss) income $ (3,606 ) (0.3 )% $ (57,885 ) (7.4 )% $ 45,238 3.9 % Interest expense, net 5,002 0.5 7,078 0.9 4,613 0.4 Income tax (benefit) expense (15,576 ) (1.4 ) (32,065 ) (4.1 ) 1,056 0.1 Depreciation and amortization 72,753 6.7 73,124 9.4 72,006 6.2 Stock-based compensation expense 10,331 1.0 9,791 1.3 8,918 0.8 Other income, net (2,327 ) (0.2 ) (1,275 ) (0.2 ) (1,788 ) (0.2 ) Loss on disposal and impairment of assets 3,946 0.4 17,141 2.2 3,862 0.3 Gain from legal settlements — — (2,284 ) (0.3 ) — — Gain on lease transactions, net — — (3,278 ) (0.4 ) (4,731 ) (0.4 ) Adjusted EBITDA $ 70,523 6.5 % $ 10,347 1.3 % $ 129,174 11.1 % Weekly Sales Average.
A reconciliation of net income (loss) to adjusted EBITDA for fiscal 2022, 2021 and 2020 is set forth below: Fiscal Year 2022 2021 2020 Net income (loss) $ 4,076 0.3 % $ (3,606 ) (0.3 )% $ (57,885 ) (7.4 )% Interest expense, net 2,888 0.2 5,002 0.5 7,078 0.9 Income tax benefit (12,384 ) (1.0 ) (15,576 ) (1.4 ) (32,065 ) (4.1 ) Depreciation and amortization 70,385 5.5 72,753 6.7 73,124 9.4 Stock-based compensation expense 10,098 0.8 10,331 1.0 9,791 1.3 Other income, net (60 ) — (2,327 ) (0.2 ) (1,275 ) (0.2 ) Loss on disposal and impairment of assets, net 6,200 0.5 3,946 0.4 17,141 2.2 Gain from legal settlements — — — — (2,284 ) (0.3 ) Gain on lease transactions, net (3,318 ) (0.3 ) — — (3,278 ) (0.4 ) Adjusted EBITDA $ 77,885 6.1 % $ 70,523 6.5 % $ 10,347 1.3 % Weekly Sales Average.
A reconciliation of (loss) income from operations to restaurant level operating margin for fiscal 2021, 2020 and 2019 is set forth below: Fiscal Year 2021 2020 2019 (Loss) income from operations $ (16,507 ) (1.5 )% $ (86,431 ) (11.1 )% $ 49,119 4.2 % General and administrative 67,957 6.3 54,663 7.0 62,540 5.4 Depreciation and amortization 72,753 6.7 73,124 9.4 72,006 6.2 Restaurant opening 1,483 0.1 1,201 0.2 2,892 0.2 Loss on disposal and impairment of assets 3,946 0.4 17,141 2.2 3,862 0.3 Gain on lease transactions, net — — (3,278 ) (0.4 ) (4,731 ) (0.4 ) Restaurant level operating margin $ 129,632 11.9 % $ 56,420 7.2 % $ 185,688 16.0 % Adjusted EBITDA.
A reconciliation of loss from operations to restaurant level operating margin for fiscal 2022, 2021 and 2020 is set forth below: 27 Fiscal Year 2022 2021 2020 Loss from operations $ (5,480 ) (0.4 )% $ (16,507 ) (1.5 )% $ (86,431 ) (11.1 )% General and administrative 73,333 5.7 67,957 6.3 54,663 7.0 Depreciation and amortization 70,385 5.5 72,753 6.7 73,124 9.4 Restaurant opening 3,644 0.3 1,483 0.1 1,201 0.2 Loss on disposal and impairment of assets, net 6,200 0.5 3,946 0.4 17,141 2.2 Gain on lease transactions, net (3,318 ) (0.3 ) — — (3,278 ) (0.4 ) Restaurant level operating margin $ 144,764 11.3 % $ 129,632 11.9 % $ 56,420 7.2 % Adjusted EBITDA.
From time to time, we may also decide to purchase the underlying land for a new restaurant if that is the only way to secure a highly desirable site. Currently, we own the underlying land for one of our restaurants that will be opened in fiscal 2022 and our Texas brewpub locations.
From time to time, we may also decide to purchase the underlying land for a new restaurant if that is the only way to secure a highly desirable site. Currently, we own the underlying land for our Texas brewpub locations. We also own two parcels of land adjacent to two of our restaurants.
Notable 2021 financial highlights compared to fiscal 2020 include: • Total revenues increased 39.6% to $1.1 billion • Total restaurant operating weeks increased 1.3% • Comparable restaurant sales increased 38.3% • Net loss of $3.6 million compared to net loss of $57.9 million • Diluted net loss per share of $0.16 compared to net loss per share of $2.74 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.
Financial Highlights for Fiscal 2022 Notable fiscal 2022 financial highlights compared to fiscal 2021 include: • Total revenues increased 18.1% to $1.3 billion (53 weeks vs. 52 weeks) • Total restaurant operating weeks increased 3.1% (53 weeks vs. 52 weeks) • Comparable restaurant sales increased 14.0% (53 weeks vs. 53 weeks) • Net income of $4.1 million compared to net loss of $3.6 million (53 weeks vs. 52 weeks) • Diluted net income per share of $0.17 compared to diluted net loss per share of $0.16 (53 weeks vs. 52 weeks) 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.
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. In 2021 we conducted an in-depth consumer research project to discover and better understand our guest preferences.
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.
Utilizing the insights from this research, we have launched a series of 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 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.
In calculating comparable restaurant sales, we include a restaurant in the comparable base once 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.
In calculating comparable restaurant sales, we include a restaurant in the comparable base once 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 14.0% for fiscal 2022 on a 53 week basis. Restaurant Level Operating Margin .
This decrease was primarily due to a higher revenue base. Depreciation and Amortization . Depreciation and amortization decreased by $0.4 million, or 0.5%, to $72.8 million during fiscal 2021, compared to $73.1 million during fiscal 2020.
This decrease was primarily due to a higher revenue base. Depreciation and Amortization . Depreciation and amortization decreased by $2.4 million, or 3.3%, to $70.4 million during fiscal 2022, compared to $72.8 million during fiscal 2021.
From time to time, competitive conditions will limit our menu pricing flexibility. In addition, macroeconomic conditions that impact consumer discretionary spending for food away from home could make additional menu price increases imprudent.
In addition, macroeconomic conditions that impact consumer discretionary spending for food away from home could make additional menu price increases imprudent.
Management ’ s Discussion and Analysis of Financial Condition and Results of Operations in our fiscal 2020 Form 10-K, which was filed with the United States Securities and Exchange Commission on March 1 , 2021 .
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our fiscal 2021 Form 10-K, which was filed with the United States Securities and Exchange Commission on February 25, 2022.
CASH FLOWS The following tables set forth, for the years indicated, our cash flows from operating, investing, and financing activities (dollar amounts in thousands): Fiscal Year 2021 2020 2019 Cash provided by operating activities $ 64,285 $ 40,541 $ 115,999 Net cash used in investing activities (42,168 ) (35,716 ) (78,118 ) Net cash (used in) provided by financing activities (35,254 ) 24,445 (44,711 ) Net (decrease) increase in cash and cash equivalents $ (13,137 ) $ 29,270 $ (6,830 ) 35 Operating Cash Flows Net cash provided by operating activities was $64.3 million during fiscal 2021, representing a $23.7 million increase from the $40.5 million provided during fiscal 2020.
CASH FLOWS The following tables set forth, for the years indicated, our cash flows from operating, investing, and financing activities (dollar amounts in thousands): Fiscal Year 2022 2021 2020 Net cash provided by operating activities $ 51,122 $ 64,285 $ 40,541 Net cash used in investing activities (71,907 ) (42,168 ) (35,716 ) Net cash provided by (used in) financing activities 7,131 (35,254 ) 24,445 Net (decrease) increase in cash and cash equivalents $ (13,654 ) $ (13,137 ) $ 29,270 32 Operating Cash Flows Net cash provided by operating activities was $51.1 million during fiscal 2022, representing a $13.2 million decrease from the $64.3 million provided during fiscal 2021.
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 during the construction and in-restaurant training period.
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 during the construction and in-restaurant training period. 29 RESULTS OF OPERATIONS The following table sets forth, for the years indicated, our Consolidated Statements of Operations both in dollars and as percentages of total revenues.
Any adverse change in these factors could have a significant impact on the recoverability of these assets and could have a material impact on our consolidated financial statements . 37 Self-Insurance Liability Our estimated liability is based on information provided by a third-party actuary, combined with our judgments regarding a number of assumptions and factors, including the frequency and severity of claims, our loss development factors, loss costs, history, case jurisdiction, related legislation, and our claims settlement practice.
Self-Insurance Liability Our estimated liability is based on information provided by a third-party actuary, combined with our judgments regarding a number of assumptions and factors, including the frequency and severity of claims, our loss development factors, loss costs, history, case jurisdiction, related legislation, and our claims settlement practice.
The prior year effective tax rate was different than the statutory tax rate primarily due to FICA tax tip credits and the incremental benefit arising from the ability to carryback the 2020 loss to prior years when the tax rate was at 35%. 52 WEEKS ENDED DECEMBER 29, 2020 (FISCAL 2020) COMPARED TO THE 52 WEEKS ENDED DECEMBER 31, 2019 (FISCAL 2019) 34 For discussion related to the results of operations and changes in financial condition for fiscal 2020 compared to fiscal 2019 refer to Part II, Item 7.
The effective tax rate benefit for fiscal 2022 and 2021 was different than the statutory tax rate primarily due to FICA tax tip credits. 31 52 WEEKS ENDED DECEMBER 28, 2021 (FISCAL 2021) COMPARED TO THE 52 WEEKS ENDED DECEMBER 29, 2020 (FISCAL 2020) For discussion related to the results of operations and changes in financial condition for fiscal 2021 compared to fiscal 2020 refer to Part II, Item 7.
We currently plan to open as many as eight restaurants in fiscal 2022, and we have entered into signed leases, land purchase agreements or letters of intent for all of our 2022 new restaurant locations.
We currently plan to open as many as five new restaurants in fiscal 2023, and we have entered into signed leases, land purchase agreements or letters of intent for all of our 2023 new restaurant locations. We currently anticipate our total capital expenditures for fiscal 2023 to be approximately $90 million to $95 million.
In calculating comparable restaurant sales, we include a restaurant in the comparable base once it has been open for 18 months. Guest traffic for our restaurants is estimated based on guest checks. Cost of Sales . Cost of sales is comprised of food and beverage costs, including the cost to produce and distribute our proprietary craft beer, soda and ciders.
In calculating comparable restaurant sales, we include a restaurant in the comparable base once it has been open for 18 months. Guest traffic for our restaurants is estimated based on the number of guest checks. Cost of Sales .
There can be no assurance that all of our future cost increases can be offset by higher menu prices or that higher menu prices will be accepted by our restaurant customers without any resulting changes in their visit frequencies or purchasing patterns. Many of the leases for our restaurants provide for contingent rent obligations based on a percentage of sales.
There can be no assurance that all of our future cost increases can be offset by higher menu prices or that higher menu prices will be accepted by our restaurant 28 guests without any resulting changes in their visit frequencies or purchasing patterns.
The following table provides, for the years indicated, the components of capital expenditures (dollar amounts in thousands): Fiscal Year 2021 2020 2019 New restaurants $ 20,167 $ 17,780 $ 51,534 Restaurant maintenance and key productivity initiatives 19,539 23,219 26,995 Restaurant and corporate systems 2,483 2,326 3,628 Total capital expenditures $ 42,189 $ 43,325 $ 82,157 During fiscal 2021, we opened two new restaurants and re-opened our Richmond, Virginia restaurant, our only restaurant location that remained temporarily closed due to the COVID-19 pandemic .
The following table provides, for the years indicated, the components of capital expenditures (dollar amounts in thousands): Fiscal Year 2022 2021 2020 New restaurants $ 43,778 $ 20,167 $ 17,780 Restaurant maintenance and remodels, and key productivity initiatives 31,471 19,539 23,219 Restaurant and corporate systems 3,357 2,483 2,326 Total capital expenditures $ 78,606 $ 42,189 $ 43,325 During fiscal 2022, we opened six new restaurants and closed two restaurants.
We also own two parcels of land adjacent to two of our restaurants. It is not our current strategy to own a large number of land parcels that underlie our restaurants. Therefore, in many cases we have subsequently entered into sale-leaseback arrangements for land parcels that we previously purchased.
It is not our current strategy to own a large number of land parcels that underlie our restaurants. Therefore, in many cases we have subsequently entered into sale-leaseback arrangements for land parcels that we previously purchased. We disburse cash for certain site-related work, buildings, leasehold improvements, furnishings, fixtures and equipment to build our leased and owned premises.
Total revenues increased by $308.5 million, or 39.6%, to $1.1 billion during fiscal 2021, compared to $778.5 million during fiscal 2020. The increase in revenues primarily consisted of a 38.3%, or $294.6 million, increase in comparable restaurant sales, coupled with a $13.4 million increase in sales from new restaurants not yet in our comparable restaurant sales base.
Total revenues increased by $197.0 million, or 18.1%, to $1.3 billion during fiscal 2022, compared to $1.1 billion during fiscal 2021. The increase in revenues primarily consisted of a $172.8 million increase in sales from our restaurants in our comparable sales base, and a $21.0 million increase in sales from new restaurants not yet in our comparable restaurant sales base.
Financing Cash Flows Net cash used by financing activities was $35.3 million during fiscal 2021, representing a $59.7 million decrease from the $24.4 million provided in fiscal 2020. This decrease was primarily due to the pay down of our Line of Credit and lower proceeds from the issuance of common stock.
Financing Cash Flows Net cash provided by financing activities was $7.1 million during fiscal 2022, representing a $42.4 million increase from the $35.3 million used in fiscal 2021. This increase was primarily due to lower payments on our line of credit, partially offset by no common stock issuances or stock option exercises and repurchases of common stock.
However, we are not limited to the use of lease arrangements as our only method of opening new restaurants and from time to time have purchased the underlying land for new restaurants. We typically lease our restaurant locations for periods of 10 to 20 years under operating lease arrangements.
We believe our operating lease arrangements provide appropriate leverage for our capital structure in a financially efficient manner. However, we are not limited to the use of lease arrangements as our only method of opening new restaurants and from time to time have purchased the underlying land for new restaurants.
As a percentage of revenues, depreciation and amortization decreased to 6.7% for fiscal 2021 from 9.4% for the prior fiscal year. This decrease was primarily due to a higher revenue base. Restaurant Opening . Restaurant opening expense increased by $0.3 million, or 23.6%, to $1.5 million during fiscal 2021, compared to $1.2 million during fiscal 2020.
This decrease was primarily due to a higher revenue base and lower depreciation and amortization. Restaurant Opening . Restaurant opening expense increased by $2.2 million, or 145.6%, to $3.6 million during fiscal 2022, compared to $1.5 million during fiscal 2021. This increase was primarily due to the timing of our openings and increased costs.
The increase over the prior year is primarily due to a lower net loss, offset by higher operating lease obligation payments as a result of prior year rent deferrals. Investing Cash Flows Net cash used in investing activities was $42.2 million during fiscal 2021, representing a $6.5 million increase from the $35.7 million used in fiscal 2020.
The decrease over the prior year is primarily due to the timing of payments for accrued expenses, offset by current year net income as compared to the prior year net loss. Investing Cash Flows Net cash used in investing activities was $71.9 million during fiscal 2022, representing a $29.7 million increase from the $42.2 million used in fiscal 2021.
We disburse cash for certain site-related work, buildings, leasehold improvements, furnishings, fixtures and equipment to build our leased and owned premises. We own substantially all of the equipment, furniture and trade fixtures in our restaurants and currently plan to do so in the future.
We own substantially all of the equipment, furniture and trade fixtures in our restaurants and currently plan to do so in the future.
Based on the current level of operations, we believe that our current cash and cash equivalents will be adequate to meet our capital expenditure and working capital needs for at least the next twelve months. Our future operating performance will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control.
Based on the current level of operations, we believe that our current cash and cash equivalents, coupled with cash generated from operations and availability under our credit agreement will be adequate to meet our capital expenditure and working capital needs for at least the next twelve months.
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. The estimated gift card breakage is based on when the likelihood of redemption becomes remote, which has typically been 24 months after the original gift card issuance date.
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.
Loss on disposal and impairment of assets was $3.9 million during fiscal 2021, compared to $17.1 million during fiscal 2020.
We opened six new restaurants during fiscal 2022, compared to two new restaurants during fiscal 2021. Loss on Disposal and Impairment of Assets, Net . Loss on disposal and impairment of assets, net, was $6.2 million during fiscal 2022, compared to $3.9 million during fiscal 2021.
LIQUIDITY AND CAPITAL RESOURCES The following table provides, for the periods indicated, a summary of our key liquidity measurements (dollar amounts in thousands): December 28, 2021 December 29, 2020 Cash and cash equivalents $ 38,527 $ 51,664 Net working capital $ (109,619 ) $ (82,609 ) Current ratio 0.5:1.0 0.5:1.0 As a result of uncertainties in the near-term outlook for our business caused by the COVID-19 pandemic, we continue to focus on cash flow generation.
LIQUIDITY AND CAPITAL RESOURCES The following table provides, for the periods indicated, a summary of our key liquidity measurements (dollar amounts in thousands): January 3, 2023 December 28, 2021 Cash and cash equivalents $ 24,873 $ 38,527 Net working capital $ (114,600 ) $ (109,619 ) Current ratio 0.4:1.0 0.5:1.0 As a result of uncertainties in the near-term macro environment, including supply chain challenges, and commodity and labor inflation, we continue to focus on cash flow generation and maintaining a solid and flexible financial position to execute our long-term strategy of investing in our business and opening new restaurants.
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” over time.
Gift card sales are recorded as a liability and recognized as revenues upon redemption in our restaurants.
The following table summarizes our future estimated cash payments under existing contractual obligations as of December 28, 2021, including estimated cash payments due by period (in thousands).
Contractual Obligations and Commitments We believe we have sufficient liquidity to fund our operations and meet our short-term and long-term obligations. The following table summarizes our future estimated cash payments under existing contractual obligations as of January 3, 2023, including estimated cash payments due by period (in thousands).
As a result, rent expense will absorb a proportionate share of any menu price increases in our restaurants. There can be no assurance that we will continue to generate increases in comparable restaurant sales in amounts sufficient to offset inflationary or other cost pressures.
There can be no assurance that we will continue to generate increases in comparable restaurant sales in amounts sufficient to offset inflationary or other cost pressures. Accounting Terms and Characteristics Revenues . Our revenues are comprised of food and beverage sales from our restaurants. Revenues from restaurant sales are recognized when payment is tendered.
We will review and, when appropriate, adjust our overall approach to capital allocation as we know more about the ultimate duration of the COVID-19 pandemic and how the post-pandemic recovery will unfold and affect our cash flow from operating activities. We are taking what we believe to be reasonably necessary and appropriate measures to control costs and maximize liquidity.
We continue to monitor the macro environment and will adjust our overall approach to capital allocation, including share repurchases and dividends, as the post-pandemic recovery unfolds. We are taking what we believe to be reasonably necessary and appropriate measures to control costs and maximize liquidity.
Occupancy and operating expenses increased by $47.0 million, or 21.3%, to $267.9 million during fiscal 2021, compared to $220.9 million during fiscal 2020. This increase was primarily due to costs related to the re-opening of our dining rooms, which were closed or restricted in operation during the majority of the same period in 2020.
The increase in guest traffic was primarily due to the re-opening of our dining rooms, which were closed or restricted in operation during portions of the same period in 2021. Cost of Sales . Cost of sales increased by $61.5 million, or 21.4%, to $349.6 million during fiscal 2022, compared to $288.1 million during fiscal 2021.
As a percentage of revenues, occupancy and operating expenses decreased to 24.6% for fiscal 2021 from 28.4% for the prior fiscal year. This decrease was primarily due to our ability to leverage certain fixed operating and occupancy costs over a higher revenue base. General and Administrative .
This decrease was primarily due to our ability to leverage certain fixed operating and occupancy costs over a higher revenue base. General and Administrative . General and administrative expenses increased by $5.4 million, or 7.9%, to $73.3 million during fiscal 2022, compared to $68.0 million during fiscal 2021.
Our effective income tax rate for fiscal 2021 reflected an 81.2% tax benefit compared to a 35.6% tax benefit for fiscal 2020. The effective tax rate benefit for fiscal 2021 was different than the statutory tax rate primarily due to FICA tax tip credits.
This decrease was primarily due to lower average debt balance during fiscal 2022, compared to fiscal 2021. Income Tax (Benefit) Expense . Our effective income tax rate for fiscal 2022 reflected a 149.1% tax benefit compared to an 81.2% tax benefit for fiscal 2021.
(4) We have assumed $50.0 million remains outstanding under our Credit Facility until the maturity date of November 3, 2026, using the interest rate in effect on December 28, 2021, which was approximately 2.1%. Additionally, we have entered into lease agreements related to future restaurants with commencement dates subsequent to December 28, 2021.
(2) Amounts represent non-cancelable commitments for the purchase of goods and other services. (3) We have assumed that $60.0 million remains outstanding under our Credit Facility until the maturity date of November 3, 2026, using the interest rate in effect on January 3, 2023, which was approximately 6.4%.
This non-GAAP financial measure represents the sum of net (loss) income adjusted for expenses and gains/losses from interest expense, income taxes, depreciation and amortization, stock-based compensation expense, other income, loss on disposal and impairment of assets, and certain legal settlements and lease transactions.
This non-GAAP financial measure represents the sum of net income (loss) adjusted for certain expenses and gains/losses detailed within the reconciliation below.
As a percentage of revenues, cost of sales increased to 26.5% for fiscal 2021 from 25.1% for the prior fiscal year. This increase was primarily due to overall menu mix and an increase in meat and seafood costs. Labor and Benefits .
This increase was primarily due to the increase in revenue, commodity cost increases and costs related to our six new restaurants opened during fiscal 2022, coupled with the impact of the 53rd week. As a percentage of revenues, cost of sales increased to 27.2% for fiscal 2022 from 26.5% for the prior fiscal year.
Our aggregate future commitment relating to these leases is $14.4 million and is not included in operating leases above.
Additionally, we have entered into lease agreements related to future restaurants with commencement dates subsequent to January 3, 2023. Our aggregate future commitment relating to these leases is $10.9 million and is not included in operating leases above.
This slight decrease is primarily related to the impairment and reduction of carrying value related to five restaurants in 2020 and one restaurant in 2021 , offset by depreciation expense related to the two new restaurants opened in fiscal 2021.
This decrease was primarily related to impairment and disposal charges taken in fiscal 2021, including the impairment and reduction of carrying value related to the closure of one restaurant at the beginning of the current fiscal year.
Payments Due by Period Total Less Than 1 Year 2-3 Years 4-5 Years After 5 Years Contractual Obligations: Operating leases (1) $ 607,310 $ 66,737 $ 118,078 $ 102,397 $ 320,098 CARES Act payroll tax deferral (2) 7,697 7,697 — — — Purchase obligations (3) 21,140 16,898 4,242 — — Total $ 636,147 $ 91,332 $ 122,320 $ 102,397 $ 320,098 Other Obligations: Long-term debt $ 50,000 $ — $ — $ 50,000 $ — Interest (4) 5,035 1,054 2,070 1,911 — Standby letters of credit 17,164 — — 17,164 — Total $ 72,199 $ 1,054 $ 2,070 $ 69,075 $ — (1) For a more detailed description of our operating leases, refer to Note 6 in the accompanying Consolidated Financial Statements.
Payments Due by Period Total Less Than 1 Year 2-3 Years 4-5 Years After 5 Years Contractual Obligations: Operating leases (1) $ 597,279 $ 66,032 $ 120,715 $ 110,156 $ 300,376 Purchase obligations (2) 15,104 14,769 335 — — Total $ 612,383 $ 80,801 $ 121,050 $ 110,156 $ 300,376 Other Obligations: Long-term debt $ 60,000 $ — $ — $ 60,000 $ — Interest (3) 14,635 3,803 7,616 3,216 — Standby letters of credit 16,214 — — 16,214 — Total $ 90,849 $ 3,803 $ 7,616 $ 79,430 $ — 33 (1) For a more detailed description of our operating leases, refer to Note 6 in the accompanying Consolidated Financial Statements.
Similar to many restaurant chains, we typically utilize operating lease arrangements (principally ground leases) for the majority of our restaurant locations. We believe our operating lease arrangements provide appropriate leverage for our capital structure in a financially efficient manner.
Our future operating performance will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. Similar to many restaurant chains, we typically utilize operating lease arrangements (principally ground leases) for the majority of our restaurant locations.
This increase was primarily due to the re-opening of our dining rooms, which were closed or restricted in operation during the majority of the same period in 2020, coupled with higher incentive compensation, higher training and overtime costs due to the full re-opening of our dining rooms, and expenses related to the two new restaurants and one re-opened restaurant during fiscal 2021, partially offset by our Employee Retention Tax Credit in conjunction with the CARES Act.
This increase was primarily due to an increase in the number of team members, $64.4 million related to higher wages, $14.4 million related to taxes and benefits, and $3.7 million related to higher training costs due to the re-opening of our dining rooms, which were closed or had restricted operations during a portion of the same period in 2021, offset by lower workers compensation related costs.
Labor and benefit costs for our restaurants increased by $95.8 million, or 31.3%, to $401.4 million during fiscal 2021, compared to $305.6 million during fiscal 2020.
This increase was primarily due to inflationary pressure on food costs, partially mitigated by menu price increases. Labor and Benefits . Labor and benefit costs for our restaurants increased by $82.0 million, or 20.4%, to $483.4 million during fiscal 2022, compared to $401.4 million during fiscal 2021.
The increase over prior year is primarily due to lower proceeds from sale of assets.
The increase over prior year is primarily due to an increase in the number of new restaurant openings, new restaurants under construction and key productivity initiatives.
Removed
Financial Highlights for Fiscal 2021 While fiscal 2021 was a challenging year, we met these challenges with sales building initiatives, raising $30 million (before commissions and other fees) from the sale of our common stock through an at-the-market (“ATM”) offering program , amending our credit agreement, opening new restaurants and investing back into our existing restaurants.
Added
During fiscal 2021 and 2022, heightened inflation had a material impact on our operations, new restaurant construction and corresponding return on invested capital.
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Comparable restaurant sales increased 38.3% for fiscal 2021 with much of this improvement being due to lower sales in 2020 resulting from effects of the COVID-19 pandemic. Restaurant Level Operating Margin .
Added
Increases in inflation could have a severe impact on the United States and global economies, which will have an adverse impact on our business, financial condition and results of operations. From time to time, competitive conditions will limit our menu pricing flexibility.
Removed
Although we currently expect our weekly sales averages during the first half of fiscal 2022 to remain challenging due to residual pandemic-related staffing and inflationary pressure, we do expect to begin experiencing a more favorable operating and sales building environment toward the latter half of the year. Restaurant Opening .
Added
Many of the leases for our restaurants provide for contingent rent obligations based on a percentage of sales. As a result, rent expense will absorb a proportionate share of any menu price increases in our restaurants.
Removed
Inflation on food, labor, energy and occupancy costs can significantly affect the profitability of our restaurant operations. Our profitability is dependent, among other things, on our ability to anticipate and react to changes in the cost of key operating resources, including food and other raw materials, labor, energy and other supplies and services.
Added
Cost of sales is comprised of food and beverage costs, including the cost to produce and distribute our proprietary craft beer, soda and ciders.
Removed
Substantial increases in costs and expenses could impact our operating results to the extent that such increases cannot be passed along to our restaurant customers.
Added
All fiscal years presented consist of 52 weeks with the exception of fiscal year 2022, which consists of 53 weeks. Percentages below may not reconcile due to rounding.
Removed
While we have taken steps to enter into agreements for some of the commodities used in our restaurant operations, there can be no assurance that future supplies and costs for such commodities will not fluctuate due to weather or other market conditions outside of our control.
Added
This increase was partially offset by $3.4 million related to the closure of two restaurants in fiscal 2022. The effect of the 53rd week in fiscal 2022 was $26.5 million in additional revenues. On a 53 week basis, comparable restaurant sales increased 14.0%.
Removed
We are currently unable to contract for certain commodities, such as fluid dairy, fresh meat or seafood, and most fresh produce items, for long periods of time. Consequently, such commodities can be subject to unforeseen supply and cost fluctuations.
Added
This increase in comparable restaurant sales was the result of an increase in guest traffic of approximately 9.3% and an increase in average check of approximately 4.7%, due to menu price increases partially offset by changes in mix.
Removed
While we have not had significant disruptions in our supply chain, we have experienced some product shortages and higher costs and inflationary pressures, which have affected our average per-guest check. During fiscal 2021, our average per-guest check increased to approximately $19.00 from $18.00.
Added
These increases include the impact related to the six new restaurants opened during fiscal 2022, and the 53rd week. Increases in labor and benefit costs were offset in part by the closure of two restaurants during fiscal 2022. As a percentage of revenues, labor and benefit costs increased to 37.6% for fiscal 2022 from 36.9% for the prior fiscal year.
Removed
While this increase was primarily due to changes in our sales mix and higher item incidence per guest, we also increased our menu prices to help mitigate higher costs due to inflationary pressures.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeBased on our current outstanding balance, a hypothetical 1% change in the interest rates under our Credit Facility would have an approximate $0.4 million annual impact on our net (loss) income. Food and Commodity Price Risks We purchase food, supplies and other commodities for use in our operations based upon market prices established with our suppliers.
Biggest changeWe are exposed to interest rate risk through fluctuations in interest rates on 34 our obligations under the Credit Facility. Based on our current outstanding balance, a hypothetical 1% change in the interest rates under our Credit Facility would have an approximate $0.5 million annual impact on our net income.
As a result of the COVID-19 pandemic, we have experienced and expect to continue to experience distribution disruptions, commodity cost inflation and certain food and supply shortages. To manage this risk in part, we attempt to enter into fixed-price purchase commitments, with terms typically up to one year, for some of our commodity requirements.
As a result of the lingering effects of the COVID-19 pandemic, we continue to experience distribution disruptions, commodity cost inflation and certain food and supply shortages. To manage this risk in part, we attempt to enter into fixed-price purchase commitments, with terms typically up to one year, for some of our commodity requirements.
Our business is dependent on frequent and consistent deliveries of these items. We may experience shortages, delays or interruptions due to inclement weather, natural disasters, labor issues or other operational disruptions or other conditions beyond our control such as cyber breaches or ransomware attacks at our suppliers, distributors or transportation providers.
We may experience shortages, delays or interruptions due to inclement weather, natural disasters, labor issues or other operational disruptions or other conditions beyond our control such as cyber breaches or ransomware attacks at our suppliers, distributors or transportation providers.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The following discussion of market risks contains “forward-looking” statements. Actual results may differ materially from the following discussion based on general conditions in the financial and commodity markets.
ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK The following discussion of market risks contains “forward-looking” statements. Actual results may differ materially from the following discussion based on general conditions in the financial and commodity markets. Interest Rate Risk Our Credit Facility provides us with revolving loan commitments totaling $215 million.
We utilize the Credit Facility principally for letters of credit that are required to support our self-insurance programs, to fund a portion of our announced share repurchase program, which is currently suspended, and for working capital and construction requirements, as needed. We are exposed to interest rate risk through fluctuations in interest rates on our obligations under the Credit Facility.
As of January 3, 2023, $60 million was outstanding and carries interest at a floating rate. We utilize the Credit Facility principally for letters of credit that are required to support our self-insurance programs, to fund a portion of our announced share repurchase program, and for working capital and construction requirements, as needed.
Removed
Interest Rate Risk As of December 28, 2021, we have a $215 million Credit Facility, of which $50 million is currently outstanding and carries interest at a floating rate.
Added
Food and Commodity Price Risks We purchase food, supplies and other commodities for use in our operations based upon market prices established with our suppliers. Our business is dependent on frequent and consistent deliveries of these items.

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