BJ's Restaurants, Inc. (BJRI) Q4 2012 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the BJ's Restaurants Inc. Fourth Quarter and Fiscal 2012 Earnings Conference Call. [Operator Instructions] This conference is being recorded today Tuesday, February 19, 2013. And I would now like to the conference over to Jerry Deitchle, Chairman of the Board. Please go ahead, sir.

Thank you, operator. Hello, everybody. I'm Jerry Deitchle, Chairman of BJ's Restaurants, and welcome to our Fourth Quarter of 2012 Investor Conference Call, which we are also broadcasting live over the Internet. After the market closed today, we released our financial results for our fourth quarter of fiscal 2012 that ended on Tuesday, January 1, 2013. You can also view the full text of our earnings release on our website at www.bjsrestaurants.com. Joining me on our call today in the order of their prepared remarks are Greg Trojan, our President and newly-appointed Chief Executive Officer; Greg Lynds, our Executive VP and Chief Development Officer; and Greg Levin, our Executive VP and Chief Financial Officer. Wayne Jones, our Executive VP and Chief Restaurant Operations Officer, is on the road preparing to open our first new restaurant of 2013 so he won't be on our call today. We're going to begin with our prepared remarks right after Dianne Scott, our Director of Corporate Relations, provides our standard cautionary disclosure with respect to forward-looking statements. Dianne, go ahead please.

Thank you, Jerry. Our comments on the conference call today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Investors are cautioned that forward-looking statements are not guarantees of future performance and that undue reliance should not be placed on such statements. Our forward-looking statements speak only as of today's date, February 19, 2013. 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.

Okay, thanks, Diane. Before I introduce everybody to Greg Trojan and turn the call over to him, I'd like to take a few minutes and briefly comment on BJ's performance for the fourth quarter of 2012 that occurred on my final watch as your Chief Executive Officer. As we noted in our press release today, despite the continuing choppy operating environment for casual dining restaurants in general, BJ's has delivered yet another quarter of solid growth in total revenues and market share gains thanks in large part to the continuing successful execution of our new restaurant expansion program. After adjusting for the extra week of operations during the same quarter of last year, our total revenues increased about 17% to $184.8 million for the fourth quarter just ended. Additionally, we also delivered our 12th consecutive quarter of growth in comparable restaurant sales, with a solid 3% increase that successfully overcame the pressures of the current operating environment and also successfully hurdled a pretty tough comp sales comparison of 5.1% for the same quarter last year. But turning to our bottom line performance for the quarter on a non-GAAP basis, when excluding our CEO transition expenses, the estimated to settle the California sales tax audit and the gain on an investment settlement from the results from the fourth quarter of 2012, all of which we outlined in our press release today, in which net to about $0.03 a share and when also excluding the estimated impact of the extra week of operations in last week's fourth quarter -- I'm sorry, last year's fourth quarter, which represented about $0.06 a share our diluted net income per share would have been roughly in the same range for both comparative quarters despite the increased challenge of efficiently managing our restaurant's very choppy daily sales environment and incurring additional marketing related and restaurant preopening expenses compared to the same quarter last year. After Greg Levin, our CFO, reanalyzes all of this quarter's pushes and pulls for you later on our call today, I do believe that you'll share our view that both the BJ's Restaurant concept and company continue to perform very well in a very tough operating environment; that we're doing a solid job of controlling everything that we can control; that we are not going to sacrifice making necessary longer-term investments in the core at the BJ's concept just for the sake of maximizing our short-term performance; that BJ's continues to be very well-positioned to benefit from any improvement in the operating environment for Casual Dining restaurant traffic; and most importantly, that the visibility of our new restaurant development pipeline remains very solid as we enter 2013 and extend our pipeline into 2014. Now it is my distinct pleasure to introduce Greg Trojan, our new Chief Executive Officer. Greg succeeded me as BJ's CEO a few weeks ago upon my retirement after 8 years of service in that position, and I'm very pleased that I'll continue serving BJ's as Board Chairman going forward. Greg Trojan has many years of senior leadership experience in restaurant, hospitality, entertainment and chain store operations with prominent consumer companies and brands such as PepsiCo, Pizza Hut, California Pizza Kitchen, House of Booze and Guitar Center. In my mind he is absolutely the right leader at the right time to take the helm of BJ's and lead us forward from here. Greg, the ship is yours.

Thanks for those comments, Jerry. On behalf of our Board of Directors and shareholders, thank you for a tremendous 8 years of service to our company as Chief Executive Officer. I look forward to your continued contribution and partnership as Chairman. I thought I would take this opportunity now to comment on a few observations in my first 60 days as CEO at the company. Jerry was kind enough to let me take my first couple of months to spend time in our restaurants and with our management team, to learn our systems and processes; and most importantly, understand the culture of our company. Given that, let me speak to my early impressions. What I've have observed as strengths of the BJ's concept and point to a few of our opportunities going forward. Three of the 5 of BJ's strongest attributes I'm going to talk about today relate to its consumer positioning within the Casual Dining competitive set. Number one is our concepts' broad appeal. I am struck every time I'm in our restaurants how diverse our customers are in terms of almost any demographic, economic, psychographic dimension you might think of. This, I believe, explains the success of BJ's Restaurants in quite a different assortment of locations, including sites that succeed in low to middle income, densely populated trade areas to those that succeed along some of the most upscale retail destinations in the country. We have proven we do well in urban, suburban and small town USA. And we do well for any dining occasion whether it is everyday dining or special occasions. Our menu breadth helps us attract a wide swap of consumer, but most importantly, our second key strength is our value proposition, and that has remained strong throughout our concepts evolution. Our third key strength is delivering a high-quality guest dining experience in all aspects of the dining occasion, the food, our service and ambience as compared to traditional mass-market Casual Dining. Maintaining our relative pricing with mass-market competitors while delivering superior value to our food quality, service and venue ambience has been and will continue to be critical. That last statement is so important it bears repeating. Maintaining our relative pricing with mass-market competitors while delivering superior value through the food quality, service and venue ambience has been and will continue to be critical to our concept. Aside from these 3 consumer attributes, our broad appeal, value and quality, I would point to 2 other internal company strengths we need to protect at all cost. First is the culture Jerry has built around performance and execution. It allows BJ's to tackle a level of complexity, while growing at a rapid pace that drives a great deal of our success here. The underlying systems and reporting and, most importantly, the value system of our people are absolute key ingredients to our past and future success. Lastly, our 4-wall economics ultimately dictate our ability to grow and have historically been the key fuel to our growth. Maintaining 25% plus cash on cash returns and high teen operating cash flow margins in our restaurants are important metrics for us to maintain and are the ultimate scorecard in terms of taking the other strengths I mentioned and putting points on the board. So given these foundational pillars: Our concepts' broad appeal; our value proposition; our quality of food, service and venue ambience; our commitment to execution and 4 wall economics, what are the key opportunities going forward? I believe the next steps in our company is evolution, not really shortcomings as such, but areas as a young company that we need to develop and/or improve upon. I think our brand positioning and awareness, future development strategy options and further focus on our Human Resource strategy. I will not delve into these in detail at this time, but just briefly, we have an opportunity to raise the awareness of our concept in virtually every market we do business. Our research tells us that we lagged our larger competitors in awareness. Yet we know once our guests try us, they come back and they're ordering more off our menus than ever before as we evolve our offerings. As such, we need to refine our brand positioning and look to spend efficient marketing dollars to drive even more traffic into our restaurants. The diversity of our guests, which I alluded to a couple of minutes ago as a key strength along with the wide diversity of occasions for which concept is used make this far from a trivial objective. How do we communicate do and what BJ's is to such a varied constituency when it represents quite different experiences to so many? A difficult mission but essential to fully realizing our potential in my mind. Secondly, as we grow and open in new markets, I am convinced that we need more flexibility in the box that we are building. We need to be able to fit in smaller places in older established real estate constrained markets like the Northeast, for example. A smaller footprint will also make us more competitive in smaller markets, which dictate a lower upfront investment. We continue to think that our current 8,500 square foot layout will drive the majority of our near-term growth, however. But I think it's prudent to begin arming ourselves for future real estate challenges ahead. Last but not least, having been a part of the BJ's family for a couple of months, I come away with a steadfast belief that our single biggest challenge to growing our business is attracting and retaining superior human resource talent. We are fortunate to have a recent history of successful growth and a bright future, which has enabled us to recruit and develop strong managers. I believe to continue to do so will require an even greater focus on becoming the company of choice to work for at all levels of our team. Particularly given the challenges laid out by Health Care Reform and other regulations, we will look for opportunities to manage these changes in a way which widens our competitive advantages. In summary, I'm very happy to be back in the restaurant space and feel very fortunate to be leading a company with so much of its future ahead of it. Greg Lynds will now take us through an update on our progress on the development front. Greg?

Thank you, Greg. As mentioned earlier, our new restaurant development pipeline remains in excellent shape and we continue to be very pleased with the overall quality and quantity of the new sites that we are seeing. We worked hard to better position BJ's as a higher quality, more differentiated casual plus dining concept and our new restaurant designs and side selection strategy continue to strengthen this position. As we noted in our press release, all of our 2012 new restaurant development targets were successfully achieved. Our development team has worked very effectively during 2012 to open 16 new restaurants and grow our total restaurant operating lease in that low double digit range. In the fourth quarter, we opened 5 restaurants, Lubbock, Texas on October 8; Doral, Florida on the 15th; Pasadena, California on October 29; and then on November 5, we opened 2 restaurants, Albuquerque, New Mexico and Miami, Florida. Overall, we are very pleased with initial sales volumes and performance of our class of 2012 new restaurant openings. Geographically, we continue to cluster our restaurants, so we can gain further leverage within our supply chain and supervision teams, as well as driving increased consumer awareness and trial. We now have a strong base of restaurants from coast-to-coast, and we're very well-positioned to continue building our brand in our core Western states, the state of Texas, the Ohio Valley, Florida and other East Coast markets starting this year. As I mentioned in our last call, we have been working to secure prime sites in the mid-Atlantic region of the country, specifically Virginia and Maryland, and we plan to enter this region and open as many as 2 restaurants towards the end of this year. As we enter new markets we will stay with the same discipline and side selection strategy of securing AAA quality locations with premier co-tenants in densely populated, more mature trade areas with solid and predictable sales levels. As a result of our new restaurant development pipeline for the next 24 months or so, our growth goals will remain the same, and that's to achieve a low double-digit capacity increase per year as measured by total restaurant operating weeks, in the approximate range of 11% to 12%. So for this year, we are planning to open as many as 17 new restaurants, including the relocation of our smaller format pizza and grill restaurant in Eugene, Oregon, where we'll relocate this to a larger, more productive facility similar to what we did in 2012 with our Boulder restaurant. We essentially doubled the BJ's market share on Boulder as a result of that relocation. We have the same opportunity to do the same thing in Eugene this year. All the sites for our potential 2013 openings has now been identified and have been secured with either signed leases, letters of intent or purchase contracts. And we have preliminary sequenced our planned openings for this year. Of course, the number and timing of our new restaurant openings for any quarterly period have been and continued to be subject to many factors that are outside of our control. So with that, in mind, as of this date, we plan to open 1 new restaurant in the first quarter, as many as 4 new restaurants in the second quarter, as many as 6 new restaurants in the third quarter and as many as 6 new restaurants in the fourth quarter. Again, we will keep everyone advised of all future changes on our quarterly calls. Longer-term, and it's important for investors to remember, that in contrast to many of our more mature competitors, who depend more on comp sales increases to drive revenue growth. BJ's expects that during the next few years, over 3/4 of our sales growth will come from new restaurant openings. During 2012, about 80% of our total revenue growth was achieved from new openings on a 52-week comparative basis. We continue to believe that there's room for more than 425 large format BJ's Restaurants domestically that have the potential to perform at the current levels of our average unit economics. We ended 2012 with 130 restaurants opened in only 15 states, so we have plenty of quality growth opportunities and runway in front of us. Our development team is looking forward to this year, and I'm confident that BJ's should have many years of solid new restaurant growth to come. I will now turn the call over to Greg Levin, our Chief Financial Officer. Greg go ahead.

Thanks, Greg. Before I begin, I just want to let everybody know on the call that I've been fighting a cough here. So I'm going to do my best to get through the formal remarks without coughing too many times into the telephone, I guess. So let me go ahead and get started here, I'm going to take a couple of minutes to go through some of the highlights for the fourth quarter and provide some forward-looking commentary for fiscal 2013. All such commentary is subject to the risks and uncertainties regarding forward-looking statements that are included in our SEC filings. Additionally, my commentary may also refer to certain non-GAAP financial measures that we use in our internal review of the business and that we believe will help provide insights into our ongoing operation. Before we begin, I do want to remind investors that last year's fourth quarter included one additional operating week. This additional operating week contributed $13.9 million in sales and, based on estimates, approximately $0.06 in net income per diluted share. Additionally, as we mentioned, our press release today, excluding the nonrecurring cost of our CEO transition and the sales tax accrual, as well as the gain on our invested settlement, our results came in as we have internally expected during the quarter. Our revenues increased approximately 8% to approximately $184.8 million from $171.8 million in the prior year's comparable quarter. This increase is due to an approximate 4.8% or 5% increase in operating week and an approximate 2.7% increase in average weekly sales. After adjusting for the extra operating week from last year, our revenues increased approximately 17% due to our continued double digit increases in operating weeks and our solid increases in comparable restaurant sales. Comparable sales for each month of the quarter were positive. However, as we've mentioned before, there was a lot of choppiness in the quarter. What we noticed in the quarter and it appears to be continuing this year is, consumers need a catalyst or an event to dine out. For instance, the first 3 weeks of December were generally very slow. However, as the Christmas and New Year's holiday became closer, and just began finishing up the last minute shopping and gathering with friends and family, we saw a marked acceleration of sales. This same sales pattern appears to be continuing into 2013, which I will comment on shortly. From a geographic standpoint, in regards to comparable restaurant sales, there was no specific area that stood out. All dayparts, lunch, mid afternoon, dinner and late night were positive during the quarter. However, the middle of the week, that is a Monday through Thursday daypart, was softer than the weekends. Our 3% comparable sales increase for the fourth quarter consisted primarily of an approximate 3% in benefits from menu pricing and an approximate 0.9% decreased in estimated guest traffic, offset by favorable mix and incident rates trend. In our view, maintaining 99% of our guest traffic in our comparable restaurant sales base was really a solid achievement for the fourth quarter in light of all the headwinds we faced, as well as the headwinds faced by the Casual Dining industry. The positive menu mix as a result of an increase in our Steak & Seafood Entrée rates and our 2 Can Dine promotion. All of these items have the intended effects of increasing our average check, slightly reducing our gross margin percentage and, most importantly, driving more dollars to restaurant level cash flow. In regards to the middle of our P&L, our cost of sales of 25% of sales was up about 70 basis points compared to last year and, sequentially, was up about 30 basis points. The increase in cost of sales compared to last year and the third quarter is primarily due to changes in the menu mix that I just mentioned. As most of our commodity pressures have been offset by menu pricing and our restaurant operators continue to effectively manage waste via theoretical food cost system. Labor during the fourth quarter was 34.3% compared to 34.9% in last year's fourth quarter. The decrease in labor was primarily due to lower restaurant incentive compensation, payroll taxes and workers' compensation, offset by slightly higher hourly labor. In regards to hourly labor, we continue to see higher kitchen wages and some kitchen inefficiencies related to the complexity of our menu. However, Wayne and his operations team continue to work through our productivity metrics, and we have seen some solid improvement over the last 3 months of the year compared to where we were earlier in 2012. Our operating and occupancy cost increased by about 140 basis points to 21.7% of sales compared to last year's fourth quarter. Our fourth quarter of 2011 operating occupancy cost benefited the most from the extra sales week last year. In fact, I mentioned on last year's fourth quarter call that due to the fixed and semi fixed nature of these operating and occupancy cost that the extra sales week benefited this category by approximately 90 basis points last year. Therefore, adjusting for the effect of the extra week from last year, our operating and occupancy cost increased about 50 basis points compared to last year. This increase was primarily due to higher marketing cost and higher insurance costs for general liability insurance. Our general and administrative expenses for the fourth quarter were approximately $12.8 million or 6.9% of sales. Included in the G&A is $962,000 and $833,000 of equity compensation for both 2012 and 2011, respectively, or 0.5% of sales for both years. As we mentioned in our press release today, we incurred approximately $800,000 of CEO transition cost that were included in G&A for the fourth quarter of 2012. Excluding the CEO transition costs, our G&A would have been around $12 million and that includes equity compensation or approximately 6.5% of sales compared to 6.3% of sales last year. Our restaurant opening expense we're approximately $2.4 million during the fourth quarter of 2012, which is primarily related to the 5 restaurants we opened during the quarter. Plus some opening expenses for restaurants that will open in the first half of 2013. On average our preopening cost continue to be around $500,000 per restaurant. As we mentioned in our press release today, we also accrued $600,000 for potential sales tax audit settlement in the state of California. This is an estimated settlement at this point and is subject to final negotiations with the state. We also recorded a pretax gain of approximately $500,000 pursuant to the settlement agreement with our former broker-dealer related to the liquidation of our auction rate securities portfolio back in December of 2009. Under the terms of that settlement agreement, we were entitled to potential future recoveries based on the performance of the securities through December 2012. We are pleased to report that the company recovered 100 cents on the dollar on that portfolio. Our tax rate for the fourth quarter was approximately 20% as we are able to utilize more FICA tax tip credits in our full year tax provision than we originally estimated. As a result, our full year effective tax rate for 2012 was about 26.4%. In regards to our liquidity, we ended the year with a little over $40 million of cash and investments. A line of credit is for $75 million and does not expire until June -- until January 2017. Our total gross capital expenditures for 2012 was approximately $109 million. We received approximately $8 million in tender approval allowances and proceeds from the sale-leaseback of one of our restaurants this year. Before I turn the call back over to Greg Trojan, let me spend a couple of minutes providing some forward-looking commentary for 2013. All of this commentary is subject to the risks and uncertainties associated with the forward-looking statements as discussed in our filings with the SEC. As we enter 2013, consumers are already gearing with the pressures of a slow economy, the U.S. economy shrank at about 0.1% annual rate in the December quarter and the unemployment rate rose approximately 0.1 percentage point to 7.9% in January. The conference board's measure of consumer confidence declined in January to its lowest level since November 2011. And on top of that, consumers now face higher payroll taxes and delayed tax refunds in addition to higher gasoline taxes. Clearly, consumers have less discretionary income to spend on restaurant occasions right now and likely for the foreseeable future. We have our comments from other restaurant operators and some retailers as to the softening sales trends so far this quarter and our sales trends are also currently softer than what we would like. For the first 7 weeks of the first fiscal quarter of 2013, our comparable restaurant sales are negative, approximately 0.5% compared to a positive 4% for the same period last year. What we have noticed, as I mentioned earlier, is that consumers have generally pulled back on the middle of the week dine out occasion. In fact, the first quarter feels a lot like 2008, in which the middle of the week has become soft with weekends and special events holding up relatively well. For example, we had a very successful Valentine's Day and Presidents' Day weekend. I believe right now consumers are still trying to adjust to having less money in their pocket due to the payroll tax increase and other changes to the tax regulations including delays in tax refunds. As I mentioned this is causing them to hold back on their everyday dining out occasion and may last for the first couple of quarters until consumers adjust to this new reality. In light of the current slow sales environment, similar to what we did back in 2008, we have slightly increased our marketing spend and promotional executions for the remainder of the quarter in order to revise for a prudent competitive response. Additionally, because of the pressure on the consumer, we're going to be very prudent on menu pricing this year. Our menu pricing strategy this year will be focused on everyday affordability within the entire menu. Over the last couple of years, we have worked more in the barbels of the menu with our Snacks & Small Bites and our Signature Entrées and more recently our Seafood & Steaks. I would therefore, expect our total menu pricing for 2013 to be in the low 2% range. Specifically, for Q1, I am anticipating menu pricing of about 3% and then mid to low 2% range in the second and third quarters. For the first quarter, I would expect 1,690 restaurant weeks as we expect our first restaurant of 2013 to open right at the end of the quarter. Even though we will be increasing our marketing and promotional activity during the first quarter, we cannot predict whether or not the first 7 weeks of the quarter will be indicative of the entire quarter. We therefore, encourage investors and analysts to be conservative in setting their expectations on this key metric particularly in this challenging and choppy operating environment. In regards to cost of sales for 2013, we are currently expecting our market commodity basket to be up around 2.5% to 3% for the full year. We are currently locked in about 40% of our commodities for the entire year. In the first quarter, we'll be promoting our Seafood Celebration around the Lent season and we also just recently began promoting our 2 can dine for $14.95 lunch special. As a result, I'm anticipating that these promotions will continue to have an effect on our overall menu mix, resulting in a little bit higher cost of sales, probably somewhere in the 25% range, much like this past fourth quarter. In regards to labor, as in the past, the first quarter of each year is our highest labor cost as a percent of sale, primarily due to higher payroll taxes and benefits. In Q1 of 2011 and 2012, labor as a percent of sales was 34.8% and 34.9%, respectively, despite the fact that in Q1 of 2011 and 2012, our comparable restaurant sales were a positive 7.8% and a positive 3.3% respectively, which is greater than our current comparable restaurant sales trend to date in Q1. So for the first quarter this year, I expect total labor to be in the range of 35%. Obviously, this percentage is significantly influenced by comparable sale increases or decreases. I expect our operating occupancy cost as a percent of sales to be in the mid- to upper 21% range for the first quarter. This is based in our planned marketing spend of around 1.8% of sales in Q1 as opposed to about 1.3% of sales in last year's first quarter. For all of fiscal 2013, we expect our marketing spend to be around 1.6% of sales with is pretty consistent with 2012. However, Q1 and Q4, are planned to be heavier marketing spend quarters at the current time. Specifically in Q1, we plan on expanding our TV test to 6 small markets, which will cover approximately 28 restaurants in addition to our normal digital and print media event. I want to remind everyone that this is just a continuation of our television test based on the successful results we have seen specifically in low-awareness markets like San Antonio. At this time, we have not committed to a sustained television advertising strategy. We are discontinuing to increase our learning here as to the ability of TV to drive increased awareness and trial for the BJ's concept. I'm expecting our absolute G&A dollars spend this year to increase about 16% to around $48 million in total. However, G&A can vary from quarter-to-quarter due to the number of managers in our advanced management training program, travel and other related costs due to the timing of openings of new restaurants and other factors. As I've already mentioned, we currently expect restaurant opening cost to be about 500,000 per restaurant. However, we'll incur preopening noncash trends as much as 5 or 6 months before a restaurant opens. And therefore, preopening costs for any quarter may not be indicative of a number of restaurants that opened in that quarter. I anticipate opening cost to be in the 700,000 to $1 million range in the first quarter. We currently anticipated our income tax rate for 2013 to be around 28% and our diluted shares outstanding to be around $29 million. Our CapEx budget for 2013 contemplates opening as many as 17 new restaurants, including the closing and relocation of one of our older, smaller-format [indiscernible] restaurants in Eugene, Oregon as Greg Lynds mentioned. In addition, we will continue to invest in our core restaurants to make sure our restaurants remain in a light new and first-class manner and remain relevant with our guest. It's really a challenging operating environment where casual dining is used more as a part of the enjoyment at the evening, as opposed to just pop-in dining. It's extremely important that we continue to raise the bar to provide a higher-quality, more differentiated dining experience for our guests. Therefore, our total gross CapEx before expected tenant approval allowances and sale-leaseback proceeds is expected to be approximately $115 million to $120 million, and increase the purchase of the underlying land for 2 of our expected 2013 restaurants. As we mentioned in the past, our expansion strategy is predicated on leasing our restaurant locations. However, from time to time, we may decide to purchase the underlying land for a new restaurant that is the only way to secure a highly desirable site. In these cases, we generally will sell the underlying land once the restaurant is open. In 2013, we expect to receive proceeds from tenant allowances and sale-leaseback transactions of approximately $15 million to $20 million, so our plan net CapEx is currently expected to be in $100 million range, and will be roughly equivalent to our net CapEx spend this last year. We currently expect to fund our expansion and capital expenditures from our cash and investments on our balance sheet, our cash flow from operations and from the proceeds from our tenant-approved [ph] allowances and sale-leaseback transactions. And finally, for those of you building your models based on the industry information to date, it appears that 2013 will likely be a net or tough year for guest traffic in general for the Casual Dining industry. However, the opportunity for BJ's is to continue to take market share as strong as it's ever been. This is a company that has only 130 restaurants opened as of today. The value in this business is about the opportunity to go from 130 restaurants to 425 restaurants. The sales volumes of our new restaurants are excellent and our concept is proving to work in locations from Miami to Gainesville, Florida to Houston to Tyler, Texas. Therefore, while the macro environment will remain challenging and this may create challenges in the short term, we'll continue to prudently expand the BJ's concept at a rate that, when compared to our peers, delivers quality execution and quality returns to our investors over the long run. Therefore, our expectation for the next few years continue to grow our total operating weeks in the 11% to 12% range, and assuming a more normalized consumer discretionary spending environment at some future point, for us to drive annual comparable restaurant sales increases in the 2% to 3% range. We do expect to gradually leverage our G&A cost over time and thereby gradually improve our consolidated operating margin over the long term. Therefore, when you put it all together and assuming no material changes in the current operating environment as it impacts consumer confidence and discretionary spending, we continue to believe we have a good opportunity to drive revenue growth in the mid-teen range and achieve some additional operating leverage to help drive our overall earnings growth over the long run. Now I'm going to turn the call over to Greg Trojan for some closing remarks. Greg?

Thanks, Greg. before we open up the call to questions, I would summarize our plan going forward this year amidst the clear top line uncertainty in a few ways. First, we will seek to minimize pricing to the extent possible in order to maintain and grow our value advantage in the marketplace. We have and will continue to minimize major operational initiatives during this time, so our restaurant team is going to focus on executing many of the training and product investments we made in 2012, as well as maximize profitability of each guest coming through our doors. We do envision having to maintain a higher degree of promotional activity and will look to our loyalty and digital initiatives to provide efficient means to drive traffic. Lastly, we remain committed to continuing our quality pace of opening new restaurants as we believe it has and will continue to be the main driver of shareholder value moving forward. I'll now turn the call over to our operator for questions.

[Operator Instructions] Our first question comes from the line of Matthew DiFrisco with Lazard Capital Markets.

Greg, I guess this is easier -- probably a question for Greg Levin. You mentioned in your prepared remarks the extension of the marketing dollars. I guess in the first and fourth quarter being heavier, just to clarify them -- then during the summer, in the second and third quarter, will there be less weight on the marketing dollars? And then also just want to know the small -- the 6 small markets are expanding to. Can you tell us how many stores that covers versus how many stores are being covered now by TV advertising?

Matt, I'll do my best to answer the question. I don't have the fixed market sitting here in front of me, but it looks like we're going to end up having 28 restaurants in the first quarter. Last year, we only hit about, I want to say, 3 in Reno and I think it was 4 in San Antonio or 5 in the San Antonio market. And we did a little bit of that testing in Sacramento market in the first quarter -- middle of second quarter last year, which was about 6 restaurants. So this first quarter, as we start the marketing, it will actually blend a little bit from the end of the first quarter into the second quarter because of carry on the March, April timeframe, but that'll be about 28 restaurants. Taking the first part of your question, it will be a little bit less marketing spend in Q2 and Q3 where we think we will ultimately get to about 1.6% total marketing spend. But as I mentioned, we're going to probably be closer to 1.8% here in the first quarter.

So just to, I guess, tie the loop there, the 28 in 1Q, but you're not at the 6 market ships. So the 28 goes higher as we get into 2Q?

No, the 6 markets equal 28 restaurants.

Okay. And I guess, as far as your remarks when you said there's no disparity between regional trends, is that a little counterintuitive though to the fact that TV advertising is showing some positive signs, or we're just not getting to the granularity as far as seeing San Antonio is doing better or Sacramento is doing better?

Well I think there's a little bit of a confusion there, Matt. One is, we don't -- [indiscernible] on TV right now, and we weren't on TV in the fourth quarter. We did some testing at the end of the third quarter. And based on that testing at the end of the third quarter, which was Reno and it was San Antonio, we saw some nice lift at the end of the third quarter. Obviously, some of that went into the fourth quarter because of the tail in the San Antonio market, where we end up actually having some of our lowest awareness. So what we decided to do here going into the end of the first quarter and in the second quarter was look at specific markets, fixed markets where we tend to have a little bit lower awareness and see if we could go ahead and expand that television testing like we did last year at the end of the third quarter to see if that'll increase the sales volumes for those 28 restaurants.

Excellent. Okay. That helps a lot. And then just the last question on development, is there anything that we should consider different as far as this class, the '13 class versus '12, as far as market openings? I know you guys have done a great balance of expanding in markets where you have brand equity like Texas and Southern California into new markets like Florida. As far as the balance of stores, when you look at that 17, is it going to be overweight, one of those markets, versus -- or is it going to be similar to '12 as far as a good balance more in the developing markets, maybe 1/3 in the developing markets and more into the 2/3 in the ones that you have a legacy and a brand equity?

Matt, this is Greg Lynds. We're pretty well continuing to cluster our major markets for 2013. We'll have 3 or 4 in California, we'll continue to open in Florida. We're looking in 4 and 5 in Florida. We'll continue up in the Northwest. The one new market that we're entering that we talked about was the Virginia-Maryland market. Towards the end of 2013, we're work on a couple of sites there. Typically, we're opening in Texas. This year we're a little lighter in Texas but the first quarter of 2014, we have some additional restaurants coming in Texas.

And then just for average weekly sales to get into the [indiscernible] issue here, Greg Levin I guess, with falling -- with Easter falling in the first quarter versus falling in the second quarter of last year, I'd assume Easter is not favorable to your average weekly sales as far as that Sunday?

That's correct. That Easter Sunday will actually be the last Sunday of our fiscal first quarter where last year, Easter Sunday right there at kind of the first part of the second quarter. So that's going to make it a challenge on the first quarter, I think, based on current trends. And I see Easter not helping out. Q1 will be a little bit more challenging in regards to how comp sales and how repeat sales play out. I would say though without getting to too much granularity, our average weekly sales have been a little bit behind comp sales not much. It's in the fourth quarter, they are all above 30 basis points between the two. And frankly, based on kind of the line up for next year, I would probably expect that to stay the same until maybe we get to the fourth quarter as we move into the mid-Atlantic. I think the density in the mid-Atlantic will probably end up driving some pretty high sales volumes at that time.

But that Easter effect should impact you by roughly 1% given that it's one day being lost basically?

I don't know the exact number out there, Matt.

Our next question comes from the line of Will Slabaugh with Stephens Inc.

Just with regard to the trend that you mentioned year-to-date, I wonder if there's anywhere on the menu that you're seeing consumers trade down, or is it just simply the commentary around -- reflective of fewer bodies coming in the door?

Well it's a great question and frankly our incident rates, our items per guest that we look at all the time has held up well. In fact, it's probably increased a little bit here in the fourth quarter and continue to basically seem to be in a positive trend here in the first quarter. It's really that middle of the week, both lunch and dinner, have become a little bit softer. From a geographic standpoint, I'd probably tend to say California is maybe a tad softer right now than where it was in the fourth quarter. But other than that, it's right in the middle of the week, dining out occasion. And again, as I have mentioned in the formal remarks, it feels a lot like 2008 to which when there's a reason to go out, we do really well. It's a tremendous Valentine's Day for us. Weekends continue to be better than the weekdays. Consumers are looking for a reason to dine out, I think, until they get used to the little bit less jingling in their pocket. Right now, it's going to be challenging at least through the first 2 quarters or so.

Got you, that's helpful. And then also curious on restaurant level margins going forward and what you feel like your ability is to leverage those in 2013 and then maybe beyond that. So word, if you had in your mind at what comp you'd feel like you could drive restaurant level operating margin expansion? And then maybe looking down the road, at what comp you think you should be able to reasonably do that over the next couple of years.

It's an interesting question. When I think about it this year and what we got lined up this year, we're going to be a little bit less intensive in regards to some of the rollout that we put out last year, which impacted the restaurant-level margins, specifically labor, last year. So we're pulling back a little bit there, as Greg Trojan mentioned on the call. We really want to get into the four-wall execution. And I think, based on that, we have the ability to improve upon a labor line this year. And if I had to take a little bit of a stab at it, thinking that cost of sales are going to be 2.5% to 3% up on commodity costs, you just have some of your normal inflationary pressures. As far as it's around 3%, is the ability to kind of maintain margins. I think you start having to go above that to really expand margins. I would want to reiterate that [indiscernible] some of that is, when I think about it, I really look towards the prime cost of business, cost of sales and labor. Some of the fluctuation that took out separately would be having spent on marketing from quarter-to-quarter.

Our next question comes from the line of Jeffrey Bernstein with Barclays Capital.

A couple of questions. First, just kind of figure out the mosaic, I guess, as you think of the consumer of late, and you highlighted kind of the higher tax rate starting with January, and the higher gas recently and delayed tax refunds. With most of those things happening more recently, I mean, can you look within your first 1.5 month and just -- and then sequentially, if things slowed, this would demonstrate [indiscernible] things having more of an impact, or has it been somewhat steady through the first 1.5 month or so?

Jeff, it has slowed. But I think it's slowed more from, I will say, a normal course. And what I mean by that is I think, as consumers got into the first couple of weeks of January, they're not quite impacting until you get your first paycheck, until you get your credit card receipt for how much you spent in the holiday time frame. It's reconciling kind of the holiday spend to that new paycheck. So we've seen that slowness there, but it really seems that, that and then maybe gas prices increasing more recently has kind of exacerbated those 2 things together.

Got it, okay. And then from the [indiscernible] perspective, you talked about new markets, and I know you talked about the goal as you expand beyond your core just to maintain the 25% cash on cash in the high-teens margin. I'm just wondering how you think about your ability to do that, I guess, without the clustering. I guess you lose some of the supply chain, some of the oversight, and the brand recognition. Is it reasonable to assume that you can still maintain those key metrics? So should we assume, as you push to the Virginia-Maryland and new markets next year that, that's going to be tougher to sustain?

No, absolutely not. I think there's a couple of things there. We talked about expanding into new markets. We're still picking markets that are going to allow us to cluster and grow around from that standpoint. Every time we go into a new market though, especially a new state, you want to pick main and main [ph]. So we're going in this heightened corner of Virginia, and frankly, that top line sales in Texas corner should be extremely strong. You're going to pay for it a little bit for some of those initial investment cost. But as you continue to cluster and build out that area, I expect our returns to be as good, if not better, from that standpoint.

Got it. And then just lastly, you guys have talked about cost-saving opportunities to help mitigate some of the pressures here. I know you talked about western initiative, maybe labor line gets some benefit. But how much and in what time frame should we assume from a cost-saving perspective whether it's all from supply chain or where it might be coming from?

I think it's -- I hate to say it but I think it's constant in regards to that. I don't think, as we look through our numbers and we look through our business, there's not necessarily 1 or 2 levers where we're going to go in and all of a sudden say, you know what, instead of linen napkins, starting June 1, we're going to have paper napkins in our restaurants, or starting July 1, we're going to go to plastic glasses instead of glasses in that regard. So we have a continued full-court press in regards to optimizing our restaurants, in regards to staffing, in regards to linens per guest. That's the way we look at it, janitorial chemicals per items sold, things like that, that we can continue to get better at. And frankly, we talked about this in the past, we always have a certain amount of restaurants that are lower-quartile restaurants. And those lower-quartile restaurants, whether they're new or existing and mature restaurants, need to get better. And that's where frankly Wayne Jones and our Vice President, as well as our Area Vice President, Structure of Operations, are spending a lot of time on it. And frankly, while you necessarily can't see it in all the numbers here, we have done a tremendous job [indiscernible] to the operators in regards to moving our labor numbers, specifically in the fourth quarter, and we're seeing in here in the first quarter. And as Jerry Deitchle touched upon earlier on in a couple of calls, Greg Trojan mentioned on today's call, we grew a lot of things in our teams over this last year. One of the things that we believe in at BJ's is we're not going to let events overwhelm us. We're going to overwhelm events. And as a result of that, we -- you know, it's true. As I mentioned, a lot of things that are operated that have the ability of adding labor and adding complexity to our business. Right now, we want to get more efficient because frankly, by becoming more efficient, we can drive more guests into our restaurants. We still have tremendous wait times in our restaurants, especially at peak lunch and peak dinner. And at the same time, we're still seeing 16-, 17-, 18-minute cook times and frankly that's too long. If we can reduce of those good times down toward a realistically and reasonably should be, I think that drives comp sales in our business and gets us back to improving guest counts and driving that top line. And that's where we're going to focus 2013 on.

And just lastly, you mentioned the labor potential opportunity in '13. I don't know if you've commented on health care as you think about that for '14 in terms of percentage your employees qualify and how many currently take, or what kind of your thought process is around the health care?

You know, we made some general comments on it. A couple of things. First and foremost, we haven't been able to quantify. We haven't made a comment that there is going to be a cost there for our team members or for -- in the labor line there, for putting the Affordable Care Act into play. Right now, without even looking at the numbers, we're probably somewhere at about 20% of our restaurant -- our restaurant hourly team members work over 30 hours a week. In our general view, we want to have the best hourly team members and the best team members in our restaurants that are hourly or manned from that standpoint. So we're not taking any major action to try and all of a sudden have those people that are working over 30 hours down to 30 hours. We're not trying to end up having 2 sets of part-time staff or anything like that. We think it's critically important that the individuals that are working on our restaurants a total of more than 30 hours are usually our most productive employees in the restaurant. And we want to make sure that we take care of them. I think Greg Trojan mentioned and some the for BJ's in closing remarks that we want to continue to make sure we're hiring the best and brightest. We're working on our human resource attributes at BJ's. So we're going to go into this knowing that we're going to be offering insurance to our team members, and we're going to go into knowing that we're going to be able to retain the best team members. And I think ultimately, that's going to provide better productivity for us.

Our next question comes from the line of David Dorfman with Morgan Stanley.

It's John Glass in for David. Greg, how normal were the cost in the fourth quarter? I'm just trying to get my arms around the comp you need to leverage expenses, and you had 3% comp, and x the food cost you still lost 70 or 80 basis points in margins. So how much of that is attributable to maybe some of the final labor initiative that you're putting into the labor initiatives that you had 2012 that won't recur in '13?

John, when I look at the fourth quarter and I look through how it came out, I think there's still inefficiency in our kitchen. There's no doubt about it. Probably inefficient in our dining room from that standpoint. This is the first full quarter where people had the, what we call, the IPLates [ph] in place. And we saw just really, really nice improvement from there. The choppiness of the quarter did make it very challenging to optimally staff your restaurants in that regard. So I still think there's probably, if I could just take a guess, that we probably got maybe, you know, 20 bps or so in labor and benefits that could have been better. We start to really see some of that improvement kind of coming in the later part. We're still in the midst of the pizza rollout at the beginning of the fourth quarter. Now it's pretty intensive for us. We put a new proofer system in our restaurants. We had to change the way we basically take and proof our pizzas, how we set them up on the line. And that really impacted us. And we've really been able to work through that. The other side of it, John, and it's like a little bit more challenging for you, is that operating the occupancy line. And we did see a bigger increase in the marketing spend. There was -- I think it was 1.8% of sales. Last year, we were in kind of 1.2% range of sales. So it's kind of a 50 or 60 basis points increase in marketing spend that accrued as we try to drive top line sales. I think we got to continue to work through the operating occupancy line to get more productive there and manage that line. I think there's some opportunity to start to bring that number down.

Okay, that's helpful. And you talked about dialing up the marketing this quarter in order to help drive sales. And you talked about people needing an excuse or an event to go to your restaurants. So what kind of marketing is this? Is this more as a side? Is this a more action-oriented price point oriented? Or are you talking about just dialing up the TV portion? Or was it that you're going to increase?

Well, it's really going to be the television -- testing of increased television as I mentioned on the formal remarks and I think Matt DiFrisco was talking about in his first comment. So we're going to go ahead and price some TV, television testing in 6 markets, 28 restaurants that will hit the end of the first quarter. We also are introducing our lunch special for $14.95, we're going to do some marketing around that. We've also done some additional marketing just around the lent season as well in regards to seafood. So it's getting a little bit more promotional out there it's going to be a little bit more top of mind awareness but the biggest increase is really the television advertising that's going to start in mid-March and roll through a little bit in the first week of April.

Okay. And therefore we probably should not expect that to really drive your comps, right? Since the limited number of stores that's going to impact -- but that is probably not going to really influence the faster rollout of price?

It's really not. In the formal remarks, as I mentioned, it's an extension of the TV testing. And I think one of Greg Trojan's comments, looking at either from where you want to go going forward, he talked about the fact that we've got to figure out how to increase awareness and Jerry Deitchle talked about that over just last year. We got a very good restaurant concept that when users become aware of us and they try us, they turn into everyday users or loyal users at the BJ's concept. And when we've done our ATU studies, our awareness, trial and usage studies, we have pretty low awareness ratings in most of the market because frankly we're not on television or we're not marketing as much as some of the other mass-market restaurant concepts out there. So that doesn't mean that all of a sudden, BJ's is going to be 5% marketing spend in television in that regards. In fact, we're just trying to get additional awareness to see -- or additional testing to see what increased awareness will do for us. And some of that might be explored through digital and other ways to try and figure out where exactly we want to spend in regards to marketing dollars. But we have been able to prove the fact that increased awareness does drive people into the BJ's concept.

The other thing, John, is that we need to use the growing database on loyalty to market directly to folks and really leverage that investment that we've made in loyalty and understand the upside there. So in between digital, loyalty, understanding TV, we need to lay the groundwork to really understand the levers on the awareness front on a multiple media. And start really spending some more time on the front end of what the messaging really should be, which is something we haven't had the time as a concept to spend a lot of time doing. So...

Our next question comes from line of David Tarantino with Robert W. Baird. David E. Tarantino - Robert W. Baird & Co. Incorporated, Research Division: Just a follow-up question on the environment that you're in here in the first quarter with the slowdown on the comp. Just wondering, it seems like the slowdown you've seen might be a little bit more severe than what others have either talked about or what we've seen. And I'm just wondering if you think maybe competitive forces could be causing some of the weakness at BJ's. If there's anything in your data that would suggest competition in the promotional environment might be impacting the trendline.

I don't think so, David. In fact, frankly, it's an interesting comment because we look at both the Knapp-Track data. We also look at Black Box data in that regards. And I think both in the fourth quarter, we outperformed the Knapp-Track. I want to say 200 basis points or so, coming in to 300, we're coming in to 3% comp, I have to get exactly where Knapp-Track came in, in that regards. And then when I looked through the Knapp-Track data, as well as the Black Box data going into January and February, frankly, our numbers still, even being down 0.5% as I mentioned on the call, seemed to be outperforming at least Knapp-Track was at negative 0.6 in January and some of the preliminary data I've seen in the industry for February seems to be a little bit -- seems to be worse, I guess, in January and well, maybe our trends are mimicking that a little bit, they still seem to be outperforming the industry overall. So I'm not sure I see ourselves facing this any worse than some of our restaurant companies that have already reported. I think we've all just kind of seen a little bit of a January slow down. David E. Tarantino - Robert W. Baird & Co. Incorporated, Research Division: Okay, fair enough, but I guess Greg, the question is, has your GAAP versus the industry which seems fairly wide in Q4? Is that -- that seems to have narrowed here a little bit. Is that not a fair statement, or do you think the industry is flying by the same magnitude that you're seeing?

I think the industry will be close to the same magnitude. It's hard to judge sometimes 1 month because we are certain people's quarters end versus other restaurants' quarters end play into it. We go into January for -- and if you read the Knapp-Track data he talked about the fact that the end of December, and the first week of January, they're kind of all messed up based on kind of New Year's move to the Tuesday, et cetera from that standpoint. So I think when you start to pull those things out, I think what we will show at BJ's or we will continue to outperform the industry in the season. David E. Tarantino - Robert W. Baird & Co. Incorporated, Research Division: Got it, that's helpful. And then maybe one for Greg Trojan. You mentioned that you need to do or you like to do some work on brand positioning and strategy. I'm just wondering what the idea there is in terms of scope and whether you plan to hire any marketing talent to support that effort and how long do you think you'd take in the preliminary phase before you're ready to roll out a broader communications strategy?

I'm still assessing all those things. All good questions, David, but we've got a really good core team at BJ's, given the size of our company, our resources to pursue, to go down in some of these roads. Well, we'll end up relying on having third-party somewhat, agency, et cetera that help us go down the road. And this is a year, this isn't a 1 month or a 3-month project as you probably well know. So that I think we will of a better sense of that in the early part of this year what's really entailed but we started the conversations and including putting some of those plans in place. But it's still too early to talk about it.

Our next question comes from the line of Nick Setyan with Wedbush Securities.

Greg, I just kind of want to better understand how to think about the average check this year. But it seems like pricing overall for the year is going to be in the low 2% range. It sounds like with the increased focus on the everyday value instead of a more of a barbell strategy, maybe mix becomes a little bit more of a headwind than a tailwind like it has been in the past. And then if that's true, how should we think about sort of the cost of sales and even the labor line going forward particularly as pricing goes sequentially to be low, sort of annual commodity inflation expectation even as this year some of that was back end weighted? And then as we look out to sort of the end of next year, I mean how early are you guys going to start to see the impact around healthcare, and as it shows up to labor, and I'm sure there's going to be some -- some of debt that starts hitting in late 2013 as you get prepared for 2014. Maybe just some commentary on that.

[indiscernible] comment on a lot of different things out there. I'm going to try and see if I can remember all of them. I don't think you're going to see much of an impact on your Affordable Care Act this year for us. What we're going to continue to make sure, we have the right people in our restaurants that are managing our restaurants correctly from that standpoint and most of that cost will kick in next year when our open enrollment basically comes to fruition, which is January of each year. So I'm not sure that we're going to see much this year. We'll probably go and give a little bit more details on the Affordable Care Act going into the end of our second quarter call as we get into the July timeframe because, well, at that time we should have some definitive quotes I would hope from our insurance brokers. And to give us an idea of what the cost of these programs look like. So that's the big wild card out there in regards to the Affordable Care Act. And your first part of your question in regards to average check and how that plays out in working on the everyday affordability. So I don't think it's going to have that much of an impact overall on our average guest check from that standpoint. When I look specifically at this first quarter, we're continuing to promote around seafood and other things at a great value. That's why the overall average value or the average check upped a little bit. I think it's more when it comes down to the menu innovation, it's not about putting a new steak on as much as it's more about some of the things that are in the core of the menu, which guests are already ordering anyways but then to get them to try some of these new things that end up providing that what would appeal to be everyday affordability to drive everyday dining in that regard. So I will continue to see our average check probably increase a little bit with normal menu pricing from that standpoint. But I don't think we're going to a spend lot of time trying to necessarily move them around the mix as much as we have over the last year. Additionally, as we look at some of these menu items, they're going to help us in regards to speed and productivity within the 4 walls of the restaurant and yet it can help drive guest count.

Nick, the only thing I'd add is the momentum we have from an incident perspective is helping us on a -- in a top line basis and we don't see that turning into a headwind. I think the -- as Greg alluded to earlier, once folks are -- walk in the door, they're buying more than ever from our restaurants. So that positive momentum we see continuing.

And if you noticed, of which I did mention in my formal remarks, it actually comes in a couple of weeks. We'll be introducing a -- we mentioned before had couple of investor conferences, we are going to be introducing a new reserve line of beer in that regard, continue to move the beer which has been trending nicely for us recently around our seasons and specials. Some of those reserve lines will be a little bit of a higher priced item as well. But I think there's other areas outside of just pure food that continue to work really well for us.

And just one more question on Q4. The tax rate I think going into the quarter, the guidance was already implied, the guidance was about 27% or so. What is that big difference there? Was that all the tip credit?

It was. In fact, what ended up happening at the tip credit is you had $1 amount no matter what. As your interim goes up, then that's tip credit as a percent of your tax rate, it lowers as your income goes down. Income's down a little bit because of the CEO transition cost, as well as the settlement with the state of California or the proposed settlement going down on national net income, but we're still able to use 100% of that tip credit and as a result, that ends up bringing down that number more than we expected.

Our next question comes from the line of Nicole Miller with Piper Jaffray.

Can I -- a couple of quick ones. Did the comparison in terms of comps, like what they were year-over-year, are they easier or more difficult as you exit the quarter?

They would be a little bit easier. I think we finished Q1 at 3.3%. I mentioned on today's call that we are seeing it at 4% comps right now. So one challenge to that, Nicole, is at Easter week. Easter Sunday will be in the first quarter of this year, it will be the last Sunday of the quarter where last year it was in Q2. So technically it gets easier from a cost standpoint. That last week can get slower a little bit.

Okay, fair enough. And you talked about the pricing strategy going from a barbell to maybe what sounds like it's going to be tiered. But is that the case and also, how are you going to execute that? Are you using a third-party or is this something you're doing internally?

I don't know necessarily about the tiered side of it. We've got a great internal research and development team in regards to the menu we've got a kind of a test kitchen or culinary kitchen innovation downstairs. Our chief marketing officer leads that up in that regard. So we're going to do most of it internal at this time. When we think about it, it's more just where we want to place our focus this year. We're making going to make some of the switch last year. Nicole, you've been covering for us for a long time and as you know, in 2010, we rolled out Snacks & Small Bites, and we continue to evolve that area, and we've always felt that BJ's is underrepresented at the signature menu items. Kind of the center of the plate chicken, seafood and steak menu items. And frankly, we were waiting to get out of the recession years of 2008 and 2009 before we went after the signature menu items. We've done that over the last couple of years and they've done really, really well for us. Now when you start to look back at your menu overall, I mean, you know it's the time, let's just go back to that core focus of some of the menu items that are kind of in there for in the everyday dining occasion.

And then one last one. You talked and explained quite well, 425 total domestic unit opportunities. What about international? And if that's in the future, how would you execute that, meaning company-owned or with partners?

We are all looking around at each other. Frankly, we think that down the road, international is probably a viable option for BJ's. It's not something that we've kicked around today because frankly, we're only in the third inning of where BJ's is today. We're only in 15 states, soon-to-be 16 states, soon to maybe even more given that as we continue our national expansion. I think if we remain closer to the fifth or sixth inning, we will expect to hit that one more seriously. In regards to whether it be a joint venture or franchise, et cetera, from that standpoint, it's hard to call right now. I mean, we don't have that expertise, and we have to think about it as we continue to build that BJ's. Does it make sense to bring that in-house or make sense to outsource that or joint venture franchise that. But I think critically over the next several years, we have so much opportunity at BJ's from 130 to 425. Frankly, and I understand everybody in the call gets very concerned with comp sales, and that's the question that everybody is going to ask in regards to this current trends, what are you saying, extension from that standpoint, ultimately this is to give this concept from 130 to 425 plus restaurants. It's not about pricing, our way to success, it's about prudently and productively growing our weight better. And that's where the value's going to come at BJ's. And what we shared in early 2008 and 2009 by holding steady, preserving the uniqueness and the differentiation of BJ's to come our of that as a stronger concept. It's where we are today. It's a difficult operating environment there, and we're going to get a little bit more efficient within the 4 walls. We're going to back off on some initiatives I think that got us a little bit inefficient at times. But we don't want to destroy what we have at BJ's. We don't want to try to save our way to success. This is a concept that is in its third inning, and we're going to continue to prudently build BJ's Restaurants and generate 25% cash on cash returns and drive value for our shareholders over the long-term.

Our next question comes from line of Sharon Zackfia with William Blair. Sharon Zackfia - William Blair & Company L.L.C., Research Division: I'm just curious on the middle of the week weakness. Are you hearing from customers that that's more of a price point value issue or a seat issue? And obviously, maybe the $14.95 lunch special addresses some of the this on a value perspective. But is it your sense that speed of service and more of a secular issue is kind of eating away at that middle of the week business and how do you kind of address the relevancy of BJ's longer-term middle of the week, particularly for lunch?

I'll start off here and it looks like Greg Trojan has got some comments on it as well. So in my view, it's really a perceived value issue with the consumer not a perceived value at BJ's but the fact that the consumers just got less jingle in their pockets right now. They're still kind of rectifying a paycheck that is lower now in January than it was in December even though they might have gotten a raise in that regard. And we thought that same thing in 2008 and 2009 where it's just become less stark in the sheet, from that standpoint. I think what we've got to do out there is get that awareness out there, that you can come to BJ's and spend just a little bit amount of money, so to speak and get a great meal. So your comment about the lunch special by the way, 2 can dine for $14.95, not just lunch special $14.95. But in getting that value message out there. So there's a reason for them to come into the restaurant during the middle of week from an everyday affordability and not just to use it as a special occasion. I think some of it also comes from the fact that fast casual, they have a good value equation during the middle of the week but when consumers want to sit down and talk and have that kind of enjoyment aspect of it, it's going to look like differentiating, it's the experience with high quality and good value. So I think that's kind of on the right where I see it. We're not seeing it as just managing our check by trading on incidence rate or trading down on the check. It's really kind of driving the guests into the restaurants.

I think -- I don't think it's anything that we've done, Sharon, particularly weakness of BJ's. I think there's the -- it's the most marginal occasion that's going to get lopped off when budgets are -- when family budgets are tighter. And look, we can't just sit here and do anything about it that's why they've gotten more value-oriented. I think the lunch special, and things like that are going to -- and that's where we're seeing the softness, and we're going to drive demand where we have capacity. So driving a bunch of demand that have either have gone up on a Friday or Saturday night, is not going to help us that much. We're already running wait times in most of our restaurants. So that's where it's softer and that's where we're going to go after the business, but it's not reflective of something that what you've done or feel like we've got a correct weakness per se. Sharon Zackfia - William Blair & Company L.L.C., Research Division: Yes. I mean, I guess that was not where I was going, I was just wondering, I guess, if you looked at your weekday launch business as a percent of overall sales today versus where it was 10 years ago, are you seeing more secular challenges with the advent of fast casual and something that is eating, that is high-quality and how do you address that? If it's a secular issue and not just a payroll tax issue? And then secondarily, I just feel that -- you may have said this but if there are -- are you using the loyalty program to try to drive different day parts and have you tried to reach out to folks to come in and try weekday lunch? I apologize if you already mentioned that.

We are using that. We're not as effective as we want to be on our loyalty program in regards to one-to-one marketing. And yes, Greg Trojan have mentioned that earlier. But we do have some kind of lunch loyalty program and some other things for kind of our heavy lunch eaters but it's an area that we just have to get better at in regards to that middle of the week whether its earning double points or other things to get an incentive to get in there. In regards to your question from a secular standpoint, I think casual dining overall in the bigger picture has lost some guests to fast casual. I think we talked about that in the past. I think that's due to the less innovation that we saw in casual dining. At the same time though, when I think about BJ's comp sales, at least over 2010 and 2011, we were driving some tremendous comp sales at that lunchtime business. And I think the opportunity for BJ's is the fact of taking that market share from other casual dining concepts in that regards, people want to sit down and enjoy lunch. They want to be served, it's still $100 billion industry in that regards, and it's not disappearing at anytime soon. So we got to continue to look at what fast casual is doing, as well as QSR from that standpoint but we also got to look at what casual dining is doing to make sure we're continuing to put market share in the casual dining industry, that's $100 billion and frankly isn't going away.

Our next question comes from the line of Conrad Lyon with B. Riley. Conrad Lyon - B. Riley & Co., LLC, Research Division: Just a high-level question perhaps. How is the consumer viewing you or what does your data tell you about how the consumer views you and how does that jive or how does that drive or how does that -- is that congruent with what you would like them -- how you would like them to view you, if that makes sense?

It does and again, I think back a little bit towards our last consumer research, which frankly is over a year old. I think it's on our plan this year to do some updated research in focus groups for our consumer. When I look back and think about it, Conrad, frankly the value or pricing was never an issue from that standpoint from the consumer. We get so little complaints about long lines in that regard. We get a little bit as we go into new markets about people trying to understand the BJ's concept. We have greater opportunity with families in newer markets than we do in our existing markets from that standpoint. We get a lot of people that want to come to BJ's for the social aspect. That was very high in our consumer research in regards to our reason to come to BJ's was a great place to gather with friends in that regards. So everything from a consumer research, it continues to be I think in the positive direction of where we want it to go. Frankly, though, to be perfectly honest, the data is about a year plus old and as I mentioned we're going to do some more research this year, Greg Trojan said earlier about building the brand and he looked and he's shaking his head. Yes, we're doing more research this year. That will probably give us a better idea of where consumers see us. Conrad Lyon - B. Riley & Co., LLC, Research Division: Got you. And let me touch upon this, and I thought it was interesting, and it sounds -- I mean, you said that you basically like to go back to kind of your core offerings. Does that imply that we're going to see a more simple menu, fewer SKUs in implying that maybe even waste going forward?

I know he said we want to go back to our core offerings. What we want to do is make sure we can get the speed of service and the quality fast as we call it improved in our restaurants from that standpoint. We've evolved the menu tremendously over the last couple of years, and we like to have diversity and breadth in our menu. Having looked at that broad menu, at least to some of the consumer attributes that Greg Trojan talked about earlier and that is consumers coming to us for special occasions as well as everyday dining, young people, old people, dense blue-collar markets versus upscale market. And I think that's important to maintain that broad menu in that regard. However, I think what we continue to do over the last couple of years as we continue to evolve that menu to the point where operators just really want to be able to digest it so they can execute it and that's where we want to spend I think this year going is working on executing that menu better going forward.

And we do have a follow-up question from the line of Matthew DiFrisco with Lazard Capital Markets.

My question is with G&A. I guess, did you say in the comments it was $48 million, is that inclusive of equity-based stock compensation for the full year?

That is inclusive of equity compensation.

So, I guess, going through the line items and everything it would infer that you are below your planned on EPS growth. Looks like it's around I know you don't give EPS growth, but it's around 5% to 10% EPS growth or so if I'm doing the numbers quickly right. Just curious, does that $48 million then imply lower overall compensation as far as incentive based compensation first '12, and I'm just trying to think of the cadence of that. Is this a year where you're sort of offsetting some of the underperformance expected in the operating numbers at the restaurant level in the G&A line to be a little bit of an offset there and maybe coming back in '14 and things normalize?

A couple of things. I might get lost in some of the things you're talking about here. So you might follow-up. But first of all, your point about G&A is correct in regards to incentive compensation. If you remember in the third quarter we talked about reversing about $1 million but I think it was $900,000 incentive compensation. Right now, our G&A plan that $48 million would assume 100% payout just based on plans and that standpoint where we're not going to payout 100% in 2012. So that's part of the difference there. We also are kind of in a little bit of a CEO transition from that standpoint as well. We're going to have some double up of expenses and share a little bit in the first quarter with both Jerry Deitchle still the CEO for at least one part of the quarter, as well as Greg Trojan. And then on top of that we've expanded our RSA as we move into this location over 5 years ago. It was basically when we moved in. It was 60 restaurants versus 130 restaurants. So we've got a little bit more of that step up in G&A this year and maybe where we were in the past. But ultimately our goal is to continue to drive G&A below our top line revenues. And depending on where comp sales might normalize, we might be able to get there. But I think overall right now it's probably going to be a little bit higher than a normal G&A year.

Thank you. Ladies and gentlemen, that does conclude the BJ's Restaurants Inc. Fourth Quarter and Fiscal 2012 Earnings Conference Call. We thank you for your participation. You may now disconnect.