BJ’s Pizookie Pass Drives Traffic But Hurts Profits

The Pizookie, a giant cookie covered in ice cream, is a signature item at BJ’s. | Photo courtesy of BJ’s Restaurants

BJ’s restaurants were a little too generous with the Pizookie Pass.

The $4.99 monthly subscription, which entitles customers to a free serving of BJ’s giant cookie dessert every day from late June through October, has helped boost traffic at the 218-unit casual dining chain in the third trimester.

But the deal also hurt sales and profits. Customers who only came to free Pizookies lowered check averages and added complexity for employees, which hurt the chain’s bottom line.

The chain began selling a limited number of subscriptions on June 27. They sold out quickly. as they have done in years past.

“I would characterize this program as efficient, but not efficient,” said Lyle Tick, BJ’s newly hired president and chief concept officer, during an earnings call Thursday. “Going forward, this program will need structural review if it continues, and all of our programs will go through a similar filter.”

Overall, BJ’s same-store sales rose 1.7 percent on a 1.3 percent increase in traffic — its best traffic performance since 2018, excluding the pandemic recovery period. But restaurant-wide margins fell 20 basis points to 11.7 percent, below the chain’s midpoint guidance of 12 percent for the quarter.

As the Pizookie Pass expires, BJ’s has shifted its promotional focus to a Pizookie Meal Deal, which includes an entree, fries and Pizookie for $13 weekdays only. The deal has a better cost profile and helped boost same-store sales by 4 percent in the first four weeks of the fourth quarter, Chief Financial Officer Thomas Houdek said.

BJ’s in Huntington Beach, California is in a period of transition. It fired CEO Greg Levin in August and replaced him with board member Brad Richmond on an interim basis. Tick ​​was hired a week later.

They were tasked with helping BJ’s reach more customers and improve shareholder value. The chain has recently struggled with declining sales and traffic.

Richmond and Tick said they are currently in the “discovery” stage at BJ’s, taking stock of the brand’s strengths and determining where it could do better.

On the plus side, they said BJ’s is a unique concept with broad appeal. Its large menu and brasserie atmosphere make it a destination for a variety of occasions, including holidays, family dinners, happy hour or a night out with friends, Tick said. But this differentiation may require some clarification.

“We’re uniquely the only national brewery and we have an opportunity to reinforce our uniqueness and what makes us really special and not be pigeonholed as a generalist, casual dining brand,” he said.

BJ’s menu could be streamlined, both in terms of what’s offered and how it’s prepared, Tick said. It was an achievement he had while working some shifts in restaurants since joining the chain.

“You may or may not know it, but we have three different ways to put the ice cream on a Pizookie,” he said. “We might be better off if we do that somehow.”

The menu will likely be scaled back, though Tick said he doesn’t yet know by how much. The chain cut its menu by about 10 percent last year to reduce costs.

Promotional activity could also be reduced. “My initial observation When we look at our overall discount and promotion footprint, we have an opportunity to streamline our programs,” Tick said.

The new regime also takes a more disciplined approach to capital allocation. New openings have not always performed as well as expected, and the chain plans to slow development while it reevaluates its strategy, Richmond said. But unit growth is still part of its long-term plans.

“We need the growth of the new facility,” Richmond said. “And each of those is a pretty big bet, if you will. And so, we have to make sure that we feel comfortable that we have all the right elements.”

He noted that the change in the pace of new openings likely won’t be felt until 2026 or 2027, given the long lead times for openings. BJ’s has opened three new restaurants this year.

BJ’s stock was down more than 5% Friday afternoon.

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