Hello and welcome everyone to today's BJ's Restaurants Q3 2026 earnings release and conference call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. To register to ask a question at any time, please press star 1 on your telephone keypad. Please note that this call is being recorded and that we are standing by if you should need any assistance. It is now my pleasure to turn the conference over to Ronna Schrimmer, Director of SEC Reporting. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and welcome to our fiscal year 2026 third quarter investor conference call and webcast. After the market closed today, we released our financial results for our fiscal 2026 third quarter. You can view the full text of our earnings release on our website at www.bjsrestaurants.com. I will begin by reminding you that our comments on the conference call today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements are not guarantees of future performance and that undue reliance should not be placed on such statements. These statements are based on management's current business and market expectations and our actual results could differ materially from those projections in the forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events, or otherwise, unless required to do so by the securities laws. Investors are referred to the full discussion of risks and uncertainties associated with forward-looking statements contained in the company's filings with the Securities and Exchange Commission. We will start today's call with prepared remarks from Lyle Tick our Chief Executive Officer and President, followed by Todd Wilson, our Chief Financial Officer, after which we will take your questions. And with that, I will turn the call over to Lyle. Lyle?

Thank you, Rana. Good afternoon, everyone, and thank you for joining to discuss our third quarter financial results, operating performance, and outlook. Q3 was an outstanding quarter for BJs, outpacing internal expectations, and underscoring both the progress we've made over the past two years and the sustainability of our growth drivers. We delivered another quarter of strong traffic growth with moderating check compression as anticipated and importantly, continued profit growth as our operators efficiently converted top line gains into strong margin expansion. This was our ninth consecutive quarter of sales and traffic growth and our eighth consecutive quarter of profit growth. Same-store sales increased 8.1%, driven by 8.3% traffic growth. On the profit side, restaurant-level operating profits increased 11.5 million, and margin expanded 220 basis points to 14.7%. Adjusted EBITDA increased 10.3 million, and adjusted EBITDA margin increased 240 basis points to 8.8%. A few notable highlights from the quarter. First, our operators continue to elevate the guest experience, as demonstrated by ongoing improvements in our net promoter scores, while maintaining exceptional operational discipline reflected in the flow-through of our sales outperformance. Throughout the year, I have been very pleased with our team's discipline managing the controllables, labor, waste, and comp food and beverage, while remaining focused on executing our strategy. Second, Q3 reinforced the effectiveness of our growth drivers working together to drive performance. The Pizookie Meal Deal, or PMD, continues to resonate as a powerful everyday value platform, driving both new guest acquisition and repeat visits. Our seasonal Pizookie platform was anchored in two returning fan favorites, S'mores and the Spooky Pizookie, both in their third year, and we continued to support menu and product improvements, with a focus on our handheld category. Third, as previewed in our Q2 call, check compression moderated in Q3 as growth became more evenly distributed across our growth drivers. And fourth, our marketing plan continues to work effectively and efficiently. We continue to be agile, optimizing channel and messaging mix while maintaining a consistent reinvestment rate when looking at the year as a whole. The results continue to reflect the progress our marketing and culinary teams are making in aligning product, messaging, and go-to-market strategies. Overall, I'm proud of our third quarter performance and our outlook for the year. Our 2026 performance is delivering ahead of expectations. The shape of that performance throughout the year has been consistent with both what we expected and guided, all of which gives me further confidence in that our strategies are working and underscores the durability of our progress. Looking at Q4 specifically, performance to date has been in line with our expectations and guidance as we continue to drive growth, building on a strong Q4 2025. Looking at the consumer, demand remains resilient as we continue to grow traffic while moderating check compression and drive interest in new and renovated menu items. Over the past two years, we have clarified our positioning, organized behind our four strategic pillars, and refined our growth drivers, all focused on building stronger BJs and delivering sustainable and profitable growth. Over that timeframe, we have increased average unit volumes roughly 10% to 6.7 million, expanded average unit profit by roughly 24%, and improved NPS by more than 600 basis points. strengthening a robust foundation for enduring growth. Looking ahead, our strategy remains centered around ensuring our restaurants continue to be places our team members are proud to work in and our guests are excited to return to. Everything starts with our team members. They bring our brand promise to life every day, and we're committed to ensuring they have the tools they need to deliver for our guests. We just returned from our General Manager Conference and the energy and enthusiasm were palpable. Our managers are aligned, engaged and committed to getting better every day, one of our core foundational values. We spent our time together focused on leadership development, driving one BJ's way consistently across our restaurants, aligning around clear expectations of what great looks like at BJ's and ensuring our teams have the operational support they need. From point-of-sale upgrades to a new learning management system, we continue to invest in practical tools that make our operators more efficient and consistent. On the menu front, our three core pillars, Pizookies, PMD, and Product News, continue to drive our calendar as we optimize to balance traffic and mix. The team has done a fantastic job of building a craveable Pizookie pipeline with clear visibility through 2027, while also developing the supply chain agility to capitalize quickly on emerging cultural trends as they present themselves. I would encourage everyone to try our holiday lineup featuring our Nutella Gone Bananas Pizookie and our Brown Butter Biscoff Pizookie. They are both absolutely delicious and out now. The Pizookie meal deal continues to deliver, driving both new customer acquisition and repeat visits. It is a BJ's ownable everyday value platform that reinforces two of our signature equities, menu variety and pizookie. Across our core menu categories, I remain pleased with the work completed to date and excited about what lies ahead. Across pizza, burgers, and chicken sandwiches, each revamped category is generating higher incidence, increased sales, higher average checks, and stronger dollar margins. This is inclusive of more than $1.5 million reinvested back into product quality. This holiday season, we're excited to feature a 16-ounce Hawaiian ribeye, which is a delicious upgrade and twist on our most popular steak for the holidays, alongside a shareable sides platform led by Truffle Mac and Cheese. Based on initial guest resonance during testing, we believe this shareable side platform has runway as we continue our menu work into 2027. As we advance our work across the menu, we will continue delivering a more craveable, compelling, consistent, and profitable offering over time. I look forward to sharing further updates in the coming months as items move through testing and validation. Ensuring the atmosphere across our 219 existing restaurants remains a competitive advantage is an imperative for BJ's. We continue to invest in the existing fleet to ensure our team members have the facility and equipment they need to deliver on our high standards and that our guests visit restaurants they're excited to come back to. We've made material progress on our deferred facilities work with a focus on sharpening our replace versus repair strategy to ensure we are solving and not band-aiding problems. This is supported by a diligent preventative maintenance program as we continue to drive a shift towards planned versus unplanned repairs and maintenance. Turning to new unit development, we are just a few weeks away from opening our Joliet, Illinois location, followed by Buckeye, Arizona in Q1. Both will showcase a meaningfully refreshed expression of the BJ's brand. These markets represent a balanced mix as Buckeye expands our footprint in an established high-performing market, while Joliet provides an opportunity to build brand awareness and drive operational leverage in a developing market. We continue to build our pipeline and expect to open a handful of additional units in 2027 as we continue to refine the prototype and apply a right size, right place, right cost approach to our next chapter of unit growth. In closing, two years into our journey to unlock the full potential of BJ's Restaurant and Brewhouse, our results reflect clear and measurable progress. With AUVs up over $500,000, and average unit profit up $220,000, BJ's now averages over $1.1 million in restaurant-level profit per restaurant, and we're building from a significantly stronger foundation. We remain guided by our four strategic pillars and focus on making BJ's better every day as we enter our next chapter of growth. Before closing, I want to thank all of our BJ's team members. across our restaurants and the Restaurant Support Center for their passion and commitment. We talk often about being better every day and stronger together, and once again in Q3, our teams took care of each other, took care of our guests and our restaurants, and delivered another great result for BJ's. Thank you, and I will now turn it over to Todd for more color on our financial results and outlook.

Thank you, Lyle, and good afternoon, everyone. We delivered another strong quarter of results, led by 8.1% comparable restaurant sales growth. Revenue increased by $28.5 million, and restaurant-level operating profit increased $11.5 million, delivering more than 40% incremental flow-through and 220 basis points of margin expansion. And adjusted EBITDA increased by $10.3 million. Total revenue for the quarter was $358.6 million, and 8.6% increase versus last year. The comparable restaurant sales increase of 8.1% was led by 8.3% traffic growth, partially offset by a 0.2% decline in average check. Our sales and traffic momentum was driven by continued execution against the proven growth drivers Lyle highlighted earlier. Growth was broad-based with gains across every day of the week, day part and revenue center. We outperformed the Black Box Casual Dining national benchmarks on both sales and traffic, led by traffic outperformance of more than 800 basis points, with our outperformance extending across all geographic regions. The average check decline of 0.2% was in line with our expectations and a meaningful step forward from the 1.8% decline reported in the second quarter. We are seeing our menu renovation work lead favorable shifts toward pizzas, burgers, and chicken sandwiches, where check contribution improved 40 basis points from the second quarter to the third. Combined with initial stabilization and our higher tier steaks and slow roast offerings, these efforts are driving clear sequential momentum in our check trajectory. Turning to restaurant profitability, restaurant level operating profit was 52.9 million, and margins increased 220 basis points to 14.7%. Continued progress on our gross to net initiative contributed to restaurant level margin expansion. Total comps and discounts declined 50 basis points as a percentage of revenue, reflecting stronger operational execution and more effective deployment of promotional offers while supporting strong traffic growth. Cost of sales was 25.3%, a 40 basis point improvement versus last year. Commodity inflation eased to approximately 2% in the third quarter, a reduction from the 5% we experienced in the second quarter. Operationally, we continue to reduce comped food and beverage incidents, contributing to the overall gross to net improvement. Our menu renovation work also contributed to the gains, as the new pizza, burgers, and chicken sandwiches deliver an improved margin profile. Total labor expense improved by 90 basis points to 36.2%. Our operators continue to execute with discipline, delivering the leverage we expect with the gains in sales while continuing to improve guest satisfaction measures. These results include an increased restaurant bonus expense of 10 basis points. This additional compensation is well earned and deserved as our operators continue to deliver great work and results. Occupancy and operating expenses were 23.8%, a 90 basis point improvement versus last year. I would highlight two items within this category. First, overall the margin improvement was led by leveraging our fixed costs over the significant increase in sales. Second, marketing spend in the quarter increased 0.9 million, a 13% increase versus last year, and a 10 basis point increase as a percent of revenue. However, as Lyle noted, We expect our marketing investment as a percent of revenue on a full year basis to be consistent year over year. The increased dollars supported our proven growth drivers, TMD, Pizookies, and Product News. Our marketing team has continued to drive significant traffic growth with improved efficiency and investment return. General and administrative expenses were 6.6% of revenue, a reduction of 20 basis points versus last year. On a dollar basis, G&A increased $1.3 million, primarily reflecting higher incentive compensation expense connected to our strong performance, partially offset by lower deferred compensation expense. Driven by our strong financial results through the first three quarters, we now expect full year results to exceed target for incentive compensation. As a result, we recorded an incremental $1.7 million expense in the third quarter, compared with a $0.6 million reduction in the quarter last year. This represents a $2.3 million year-over-year increase in expense. Based on our current outlook, we anticipate $0.6 million of incremental expense in the fourth quarter. Partially offsetting this increase, deferred compensation expense declined approximately $1.2 million. As a reminder, this expense reflects changes in the value of the program's underlying investments in which there is exposure to the broader equity markets and is generally offset in other income. Adjusted EBITDA increased to $31.4 million compared to $21.1 million last year, representing approximately 36% flow-through on incremental revenue. Turning to capital allocation, our strong cash generation supported investment in the business, share repurchases, and debt reduction. First, we invested $19.9 million in capital expenditures focused on supporting our current 219 restaurants. We remodeled two restaurants during the quarter, bringing our total for the year to 12, and expect one more in the fourth quarter as we prepare to accelerate the pace in 2027. In addition, we are investing in the two new restaurants that are under construction. Second, we repurchased and retired approximately 17,000 common shares for $1 million. Third, we repaid $28 million of debt. We ended the quarter with net debt of approximately $4 million, a substantial reduction from the $61 million we carried at the start of the year. Turning to our 2026 financial outlook, led by our consistently strong results, we are again raising guidance for select financial metrics. We now expect comparable restaurant sales growth of approximately 4.7% compared with our previous range of growth of 3 to 4%. Restaurant-level operating profit in the range of $233 to $237 million compared with $228 to $235 million previously. Adjusted EBITDA in the range of $149 to $154 million up from $145 to $152 million previously. We now expect capital expenditures to be approximately $80 million compared to our prior range of 85 to 95 million. Our share repurchase guidance remains unchanged at up to 50 million subject to market conditions and reflects our financial ability and willingness to increase purchases meaningfully if market conditions warrant. We repurchased approximately 9 million of shares through the third quarter and an additional 1.6 million in the fourth quarter to date. I'll also provide additional color for modeling purposes, starting with our raised guidance for comparable restaurant sales growth to approximately 4.7%. As we discussed last quarter, we expect to grow comparable traffic and sales in the fourth quarter, even as we lap strong traffic growth last year. Our outlook includes an approximately 100 basis point headwind in the fourth quarter from unfavorable shifts for Halloween and Christmas, as many others in the industry have noted. Additionally, we expect occupancy and operating expenses to be approximately 23% of revenue in the fourth quarter compared with 22.6% last year. Approximately 20 basis points of the anticipated increase versus last year reflects higher marketing spend with the remaining increase driven by general liability costs and repair and maintenance expense as we make progress toward our gold standard facility target. In summary, our third quarter results were excellent. Year-to-date, comparable restaurant sales have grown 5.6%, restaurant-level margin expanded 80 basis points, and adjusted EBITDA has increased $15 million. These results demonstrate our strategies are working and our team is executing at a high level. We are converting strong traffic and sale growth into higher profitability while continuing to invest in our restaurants and strengthen our balance sheets. These results are only possible because of the hard work of our restaurant, field leadership, and support center teams. Thank you and congratulations. As we work to close a great year in 2026, we remain focused on executing our core strategies to continue our growth in 2027 and beyond to deliver value for shareholders. With that, we will now open the line for questions. Operator?

Thank you. At this time, if you'd like to ask a question, please press star 1 on your telephone keypad. To leave the queue at any time, press star 2. Once again, that is star 1 to ask a question. And our first question will come from Brian Bittner with Oppenheimer & Co. Please go ahead.

Hi, thanks. This is Mike Tamas on for Brian. So congratulations first on the strong results. The commentary on the fourth quarter so far being in line with the guidance, are you trying to say that it's in line with the full year guidance or in line that would get you to the full year guidance? Because I think the math would imply at the fourth quarter will be in like the high 1% range. So if you could just clarify that. And then maybe even with the holiday shift, it does, I think, suggest that the trends are maybe moderating a little bit. Is there anything that you're seeing that's giving you a little caution or are you just trying to play it a little bit safe right now? Thanks.

Yeah, sure. Look, I mean, I'll start and then Todd, I can talk to you. Look, this is Lyle, by the way. You know, I feel really good about Q4. You know, I feel great about the programs that we're putting into market, which actually just kind of landed today. We're building on what was obviously a really strong Q4 2025, and we're growing traffic, we're moderating check and building, you know, a stronger business. So I feel great about that. I think, you know, the thing that I also try and keep myself and the teams focused on is more importantly, when I take a step back, you know, I feel really good that over the past couple of years, what we've done is build multiple growth drivers that are now working together and to develop a stronger foundation, which has allowed us now over two plus years or nine quarters to be lapping positively and growing traffic and growing our business independent of what the lap looks like. And I don't see Q4 being any different. So overall, I feel good about it, particularly as you look at the one and then the two year stack.

Yeah, the only thing I'd add on top of that is just in terms of the guidance, we've tried to be really thoughtful about how we How we issue our guidance. We've raised it now twice this year and I think very thoughtful steps. And I think I'd say broadly all of our comments, see what you referred to with Lyle as well as mine. We feel good with the guidance that we put out for the full year. And obviously we'll do our best and our expectation is that we'll deliver that and take a step up from there.

All right, thank you. And then I just want to make sure I heard you right, Lyle. I think you said you're going to have one unit opening in the fourth quarter and then another one in the first quarter from those initial set of units and then a total of a handful in 27. So, one, is that right? And then two, you know, how many handfuls? Is that, you know, two, three, four, five plus? You know, if you could just sort of help us frame that up. Thanks.

Yeah, yeah, sure. So, yes, you heard me right. There's one in Q4. There'll be one in Q1. And then, you know, as you look at a handful, and the only reason I'm cautious about this is because, you know, with development, you know, best laid plans and then permitting and construction and all that. But, you know, you're probably talking in that, you know, mid single digit range. So around that four or five is a good place to be thinking for next year.

Awesome. Thanks. Congrats, guys.

Thank you. Thank you.

Thank you. Our next question comes from Jeff Farmer with Gordon Haskett. Please go ahead.

Hey, Jeff. Thanks. Just wanted to quickly follow up on the Q4 same-shore sales. So I hear you loud and clear on most of the pieces of this, but having said that, are there sort of notable sequential shifts relative to Q3 that we should be aware of as it relates to Pricing, Traffic, Mix, anything that I heard you on the 100 basis point calendar shift, Edwin, but anything else that would sort of push that one year and two year number down?

I mean, the only thing you'd be looking at is obviously Q4. If you look at Q4 last year versus Q3 of last year, Q4 was, you know, we obviously had very strong performance in Q4 of last year. But So, I mean, I guess, you know, that would be the only thing. But again, you know, for me, at least, you know, I'm looking at the business as are we building a foundation of a business that independent of what the quarter we're lapping looks like, we have the tools and the ability to consistently grow our business over the course of, you know, the past two years plus the years to come. And that's what we're That's what we're focused on. I feel good about what we're seeing in Q4 so far, but the only thing would be the fact that the lap in Q4 is different than the lap in Q3.

I'll tip in one more time, Jeff. I'd make the point of our annual guidance, if you think about the change, the raise in our annual guide, it really reflects the way we beat our expectations in Q3 flowing forward. We really didn't make significant changes to our Q4 expectations. You know, our expectations for Q4 has been very consistent.

Okay, that's helpful. And then just as a follow-up, you touched on it, but you introduced the holiday menu today. And I'm just curious in terms of how you guys are sort of leveraging menu news. Obviously, you've seen your peers have had some success in doing that. But just as it relates to the strategy in leveraging menus, and many, many more.

We started on the menu work, and that together started to build and codify for us this strategy of Pazookies, PMD, and product, as we call it. And then as we connect that to our marketing and channel strategies, we refined and we see that particularly Pazookies and product work very strongly for us in the kind of social word-of-mouth influencer space, while the value platform works better in kind of broader paid media as well. as kind of air cover to that, right? And so we've been refining and moving that strategy forward. So we went from pizza, then we did, I think, the Wagyu burger, then we've leveraged chicken sandwiches in Q3. As we go into Q4, we obviously have the pizookie layer, continue to add that PMD air cover. And now with the Q4 platform, we have some shareable sides and and this kind of riff on the steak and slow roast category. And the only other thing I'd add for context for you guys is, you know, we try and leverage as many tools as we have to advance our learning, right? So earlier this year, similarly to what we're doing this holiday season, we use what we call a PMI, which is a national kind of window. to get a scaled test on the Wagyu burger, and it went really well. And so we're able to accelerate that onto the menu as we continue to refine that category. So this holiday season, we feel really good about this steak product and the shareable sides. So we're doing that in the kind of national promotional window. that'll be able to accelerate scale learning for us and inform and help us accelerate those category refreshes as we go forward. So try to leverage the tools that we have to learn and evolve our menu renovations. Thank you.

Thank you. Sorry, go ahead.

I wasn't sure if I interrupted Gordon.

No, I just said helpful. Thank you. Appreciate it. Cool. No worries.

Our next question will come from Alex Slagle with Jefferies. Please go ahead.

Hey, thanks, and congrats on the work. I wanted to ask, I guess on mix as a component of checkout, others have seen some softening mix like alcohol and desserts and things like that recently. wondering if you're seeing anything on that front and then related to the 4Q thoughts, are there any like capacity issues as you head up into the holidays that maybe add a bit of conservatism or is that not really an issue?

So, again, I'll start at a high level and Todd, you can, you know, from a mixed point of view, we actually haven't seen, you know, any sort of negative mix increase, you know, If anything, we're seeing some balancing out of that mix in moderation of check as we've kind of managed the multiple growth drivers going into Q3 and in Q4. And so we'd still expect that check to moderate as we flagged in Q2. So we have not been Thank you so much for joining us. and what we kind of see every Valentine's Day and Mother's Day, it gives me confidence that as we focus on being as efficient and as effective as we can, managing the shoulders and the transitions, that we have the capacity to grow the business. So I feel good about our ability to do that as we head into Q4.

Okay, can you remind us what sort of those that strongest cohort of restaurants looks like in terms of like what kind of restaurant level margins they're producing and if there are like commonalities about how they execute or staff up or leverage tools or things like that?

Yeah, I mean, look, when you look at them, I mean, the nice part about it is, you know, as you're looking at that kind of 10-plus-million-dollar AUV cohort of restaurants, right? They exist across the country, right? So we have probably the highest concentration of them on the West Coast, but we have those restaurants across the country. And then, you know, from a margin profile, you know, obviously they all at that level are throwing off great cash flow, but... but the specific margin will vary a little bit depending on the operating dynamic of the market that they're operating in is what I would say. But what we are always looking at as we talk about our outlier program is how do we take what the top cohorts are doing in terms of managing their business effectively and share that across and how do we continue to bring the bottom cohort up? I don't know if, Todd, you have any other specifics there.

Yeah, Alex, the only thing I'd add on is, you know, I talked a little bit in my prepared remarks about the breadth of our performance. You know, obviously our top performer, top quartile, you know, as a group, those restaurants are pushing $10 million AEVs. And so, you know, that's a very high performing group. What I think, you know, equally encouraging to us is we see growth across all of the quartiles, right? And I mean growth in terms of sales. I also mean the growth in terms of restaurant level profitability. So just kind of reiterating the point of we're seeing positive movements across the entirety of the portfolio. Great, thanks.

Thank you. Our last question will come from Sharon Zakthia with William Blair. Please go ahead.

Hi, thanks for taking the question. I guess I'm curious, you know, as we're maybe settling into kind of a more normalized comp run rate, what do you think that means for unit level margin expansion? You've done A tremendous amount of recovery in the last few years. I mean, what do you, what does a low single-digit comp kind of get you going forward in unit-level margin?

Again, I'll start, you know, so I guess, like, you know, importantly, I think the thing that underpins all of that, Sharon, is the growth, right? And I feel really confident in the engine we've built over the past two-plus years, and as we go into Q4, our ability to continue to drive traffic growth and drive top line growth as we continue to lap previous performance. So I think my confidence in the foundations we built and our ability to drive that traffic growth are the foundations of everything. And then I think as we continue to do that, our focus as we've always kind of talked about is going to be about how do we make sure that we're dropping more dollars to the bottom line and over time expand margin, but not let just expanding percentage margin get in the way of doing the right thing to make sure we continue to drive that traffic and drive more dollars to the bottom line. I also think the only other color I give is I think it's also connected to the menu work that we're doing. So as we continue to drive traffic and then moderate check and continue to evolve the menu work and see people exploring the categories that we're renovating like they have with pizza, like they have with burgers and chicken. As we've seen there, that tends to have a benefit to us from both a dollar and a percentage margin point of view as we renovate the categories. So, you know, at kind of a high strategic level, I feel really good about the roadmap there.

Yeah, Sharon, I'll add some color of, I mean, if you look at our guide for this year, I mean, we're clearly guiding to grow restaurant level dollars and restaurant level percentage versus a year ago. And, you know, the companies, to your point, the company's done that for many years. Yeah, I think there's always different dynamics at play. You know, we've talked on prior calls about the different dynamics of commodities or whatever it may be. But I think, to many of Lyle's comments. You've seen us be able to navigate all of those things, still grow the top line, still grow the bottom line, so a high degree of confidence that we can continue to make those gains.

Thank you.

Thank you.

Thank you. Ladies and gentlemen, this brings us to the end of today's meeting. We appreciate your time and participation, and you may now disconnect.