Good day, ladies and gentlemen. Thank you for standing by. Welcome to the BJ's Restaurants, Inc. Fourth Quarter and Fiscal 2013 Results Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions) This conference is being recorded today, Wednesday, February 19 of 2014. I would now like to turn the conference over to Greg Trojan, President and Chief Executive Officer. Please go ahead, sir.

Thank you, operator. Good afternoon, everyone. Welcome to BJ's Restaurants fourth quarter 2013 investor conference call and webcast. I'm Greg Trojan, BJ's Chief Executive Officer; and joining me on the call today are Greg Levin, our Chief Financial Officer, and Greg Lynds, our Chief Development Officer. After the market closed today, we released our financial results for the fourth quarter of fiscal 2013 that ended on Tuesday, December 31, 2013. You can also view the full text of our earnings release on our website at www.bjsrestaurants.com. Our agenda today will start with Dianne Scott, our Director of Corporate Relations, providing our standard cautionary disclosure with respect to forward-looking statements. I will then provide an update on our business and current initiatives, and then Greg Levin, our Chief Financial Officer, will provide a recap of the quarter and some commentary for 2014. And then after that, we'll open it up to questions. So, Dianne, go ahead please.

Thank you, Greg. 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, 2014. 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.

Thanks Dianne. As we noted in our January 16th Q4 business update release, our fourth quarter sales fell short of our expectations with comparable restaurant sales coming in at a negative 2.7%. In general, our sales and traffic trends were in line with our expectations leading us to Black Friday weekend, but from that point through the end of the year we experienced a meaningful slowdown versus prior year. As you know there are many other consumer and retail businesses that have reported similar experiences, and in the casual dining industry, our sales trends were generally in line with our peers with better traffic performance offset by less pricing and negative mix, which I'll address more fully in a few moments. So there's been a great deal of recent commentary from retail and restaurant companies recounting the impact of the shorter number of shopping days, accelerating Internet sales, continued headwinds in middle-class American non-durable spending, severe weather, et cetera. Greg Levin in his commentary will provide some additional color on this and then we are happy to answer any questions regarding them, but most of these factors represent issues that are for the most part beyond our control. As such, I think it's more productive to focus my comments on what is in our control, primarily what initiatives we have implemented to set the stage for improved momentum and what we plan on making happen in 2014. As difficult as it is out there, we embrace the challenge and look at it as an opportunity to further differentiate our concepts from the competition, and I think we have some exciting things in store for our guests, all of which we look forward to sharing in detail for those of you planning on joining us next week for our Analyst day…

Alright, thanks Greg. As we noted in our press release today, fourth quarter revenues increased approximately 8.1% to $199.8 million and net income and diluted net income per share were $500,000 and $0.02 respectively. During the fourth quarter, we incurred approximately $3.9 million in pre-tax charges as follows; $3.1 million in a write-down of an FSI of our Mesquite Texas restaurant. This restaurant was opened five years ago in [indiscernible] location and was a lease frankly that we signed back in 2008. While the restaurant has and is continuing to actually come positive, its sales levels currently are below our expectations. We incurred about $350,000 related to the separation with our Chief Marketing Officer and about $460,000 in estimated settlement costs related to a California sales tax audit and a settlement cost with the Texas Alcoholic Beverage Commission related to our beer model in that state. In regards to the TABC or the Texas Alcoholic Beverage Commission, we successfully utilized an independent third-party brewing distributor to satisfy the vast majority of our proprietary beer requirement for our Texas restaurant operations since the inspection in 2002. The Texas Alcoholic Beverage Commission took a position this past year that this method of supply was not in full compliance with the rules and regulations of the Texas Alcoholic Beverage Code and as such we entered into a settlement agreement and a waiver with the TABC pursuant to which we agreed to brew our proprietary beers for our Texas restaurants in two Texas based brew pub facilities to be constructed and opened by us no later than June 2015. We don't expect this change to have a meaningful impact on our business and frankly if anything the cost of our beer in Texas could actually be less, to be slightly less now that we…

(Operator Instructions) Our first question comes from the line of Will Slabaugh with Stephens Inc. Please go ahead.

This is jay R. here on for Will. Greg Levin, the first one here for you, I know you said geography it's tough to kind of talk about performance but in certain regions I wonder if could tell us kind of an idea of what it was like in your Texas markets and your Midwest, I mean how much did California outperformed those markets?

I'll take that. The California one was slightly better in that regard and we have said this for in general for the BJ's business with the amount of restaurants we have in California, we're generally not going to see for instance California up 6% and the rest of our restaurants down 6% get to a flat number. It's usually been pretty close to overall. So it we come in at 0% comp, California is going to be around that in the 0% to 1% range. When I think about California in the fourth quarter, it was slightly better than the 2.7% but it was still negative. Texas jumps around a lot when I look at it from that standpoint in the fourth quarter, and without getting into all the specifics, Texas was probably slightly better, probably in the range of California but it was still negative and frankly Texas has been an area for us that has been positive over the last many years and really we saw that impact in Texas in the first two weeks of December with just some really big days that impacted our business.

Right, thanks for the detail. Switching gears, in your cost structure at the restaurant corporate level and I guess more specifically does it still take that 1.75% comp which you kind of spoke to in previous quarters to hold the restaurant level margin flat?

I don't know if I know the specifics on that. We talked about holding restaurant level margins flat. And the reason I'm hesitating is, if I say to hold restaurant level margins flat at where we just finished at 15%, 16%, I don't think we need that type of comp there. I think we can take those numbers frankly as I mentioned in my prepared remarks at a negative comp sales number. I think ultimately our goal is to get our restaurant level margins back to where they were a year ago from that standpoint. And I think to some degree the things that we have made in place especially around the operating occupancy, you see those lines trying to coming down if you exclude out the marketing, I believe comp sales start to come back in line here in the first quarter, they did definitely in January because of what we saw in the fourth quarter, putting those things back to where we'd expect them to be. Labor will be a little bit more of a challenge getting it back into that 35% range with the negative comp but I think there's an opportunity at lower comp sales, meaning 0, 1 to 2, to start to get our sales back around that 18 plus percent margin, in the newer business maybe 18%, because we will have a little bit more marketing spend this year as we are trying to introduce the new brand and the new menu tied to drive that top line sales.

Okay thanks, and last one for me on this, I know you spoke to promotions, the Two for $19.99 and some other items, I'm just wondering of those if you could kind of go through maybe the promotions you had and which ones resonated more with the guests than say some other ones and why you think that works and how are you going to use that going forward?

A couple of things. It definitely resonated well with the guests as we saw high instant rates on them, but the goal as I mentioned in the prepared remarks on those was to drive frequency or drive add-on purchases. A couple of things that we changed in this fourth quarter is we promoted the Two Can Dine for $19.99 inside our restaurant and we have not really done that before, that was more of an external message and therefore the people thought externally when they would come in would use that and that would drive that frequency. Instead of promoting within the restaurants we ended up trading people down versus driving the frequency. The thing that's been the most successful for us and will continue to grow for us has really been the loyalty program. It's something that has a high redemption rate, it drives our royalty guests in which tends to spend more and have a higher frequency. I think we'll continue down that path more going forward. The other thing as we go into holiday or different seasonal areas, it provides us a little bit more opportunities to trade our guests up and this time around we didn't really trade our guests up and when we look at some of the things that we promoted in the past, whether it's been the steak line, Steaks and Seafood, and some of those other things, that allows us to drive that higher check average especially at the holiday season and this time we didn't drive that higher check average at the holiday season when guests frankly come to our restaurants.

Our next question comes from the line of Mathew DiFrisco with Buckingham Research. Please go ahead.

Just one bookkeeping one that I have a question, regarding the G&A guidance, the $13 million, that was all-inclusive including the $5 million – the quarterly proportion of the $5 million of equity-based stock compensation?

That is, that's right, that is, but that's kind of a full-year number from that standpoint and obviously we will always continue to evaluate that based on the performance of the Company.

And I read through the release relatively quickly but where was the closure, where was that embedded, was that in the G&A side or outside of the impairment?

The impairment is a separate line item on the press release.

So your G&A looks like it's going to accelerate pretty heavily then in the back half of the year, is there anything going on aside from I guess – what is driving that G&A in the back half of the year to go up on a year-over-year basis?

Based on that incentive comp, Matt, so if you look at our G&A from a quarterly perspective, I think in Q3 of last year we reversed over probably close to $2 million incentive compensation bonuses in Q3 and it brought down our Q3 G&A to about $11.4 million. If you look at Q1 and Q2 G&A of 2013, we were running closer to $12.7 million, $12.6 million range.

Okay. And then looking at the new menu items and sort of the – I guess you have surprised me a little bit that you are adding 15 new items yet it doesn't sound like you're meaningfully taking off things off of the menu which I thought there would be an opportunity maybe to reduce fixed costs in the back of the kitchen through removing things off the menu or simplifying things. Is there another step where aside from getting better sales leverage from positive comps that you could see that you could accelerate the path back to 19% restaurant margins if you were to reduce some fixed cost structures that this new menu might allow you to do?

I'll take that one and thank you for asking that question because it [indiscernible] differentiation, net-net from where we started on projects, we'll still be down in the neighborhood of 12% to 15% on item count. So we are taking items off the menu and continuing to work that, test that and as part of Project Q as well along with the reduction complexity through just process improvement. So thanks for asking that question and on a net basis we are ending up at a lower item count level even with these additions.

And Matt, we're going to show a little bit more on Project Q next week at the Analyst Day just where it allows us, if you think about it from ramping up new restaurants, where we're seeing some of the improved test time as well as some cook time. So when we started Project Q, I think we were somewhere around 160, 165 menu items. We are going to be closer to 135 range right now as we continue to work that, even adding these new menu items coming on next week. And while they are coming on next week, there will be some menu items coming off.

So if we were to get to 2012 average weekly sales volumes again of around 112,000 or so, would you be able to – I guess the assumption is then with Project Q you would have a higher yield, you're more than offsetting the incremental inflationary pressures over the last two years?

I would think so.

Okay, excellent. Thank you.

Our next question comes from the line of Nicole Miller with Piper Jaffray. Please go ahead. Your line is open at this time. Please check if your phone is on mute. Our next question comes from the line of Andy Barish with Jefferies & Co. Please go ahead.

It's [Alice Chen] for Andy. A quick question on cost of sales, any changes here in terms of inflation given the drought in California?

No, [Alice] (ph), it doesn't appear. We're thinking that our commodities for the full year of 2014 is going to be somewhere between the 1% and 2% range. We haven't heard much on the drought there. We are taking a look at probably avocados, California avocados might be a thing hit the most. And we're seeing a little bit higher cheese prices right now but our supply chain group assures me, because I put them on the spot here, that cheese prices will start to come down in the second half of this year and we have been pretty good on our meat and poultry. So right now we think the 1% to 2% is going to be a reasonable range there, and as we mentioned on the call, we'll have 1.7% of menu pricing. That should be able to offset that 1% to 2% inflation going forward.

Got you. And then on the labor line, I guess so you have got some change coming in for the new menu and then kind of in the back half of the year, I'd assume would you pickup kind of on the minimum wage stuff and healthcare, when do you see the impact from the changing menu kind of coming out and how you're thinking about the line kind of through the year?

Unfortunately that line is dependent a lot on where sales go and the leverage that we get on that sales, but if I were to look specifically and think about hourly labor, starting in Q3 is where we're going to see some pressure in hourly labor in regards to the California Minimum Wage coming through. We're taking our menu pricing about 1.7% a little bit earlier, meaning we are taking it here in next week and that pricing should be enough to offset the California Minimum Wage based on what we have put together from an analysis standpoint. But I do think you'd see, tend to see a little bit pressure on hourly wages going into Q3 and Q4. The real issue that comes down there is where you think top line sales start to come through and what type of leverage you got in that regard.

Got you. And then if I could sneak one last one in, with top line menu branding campaign, you would be doing the TV sort of across all markets or is it going to be sort of in one theme just pressed it, and could you update us on the impact there in the test markets?

We are not going to go through for competitive reasons each of the markets. So I can tell you it will be in markets that matter for us and where we have restaurants that ultimately are going to move the needle ultimately about half our system.

Got you. Thanks guys.

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

Couple of questions. Just one on the unit growth, it sounds like you took down 14 to 15 units rather than maybe initial 17, and Greg, it sounds like in your comments they're not really married to the gross if things don't improve, it sounds like you said you could slow that down, so I was wondering kind of your outlook on how slow we should assume you could take it if sales don't improve and I think you mentioned that you would redeploy the capital elsewhere, I'm just wondering, also seemed like you echo that in the press release, about planning some strategy to build value for shareholders, I'm just wondering whether those two are tied together.

Sure, they are tied together. And look, just to be clear here, it is right now our plan and we are building the pipeline as I mentioned towards an opening of 15 restaurants, but in this kind of environment it is incumbent upon us to make sure that we balance that given the environment. So if we continue to see sales challenges at the level we are now, we're going to take a hard look at reducing that number. We don't have a magic number in mind, and look, we remain very optimistic about what we're doing and this is the first real offense we're playing on the sales front given the need for us to work on the Project Q initiative. But to be fair, we remain cautiously optimistic given the state of the consumer out there at this point in time. So we're not trying to give you guys [indiscernible] here, our current plan calls for 15 restaurants. We are just trying to make sure it's very clear that we realize it's rocky and we are going to alter our plans and change our plans as we think we need to, to maximize shareholder value and look at alternatives for that capital if we don't think the best place to put it is to open restaurants at any given point in time.

Got it. And of the 15, I think you had mentioned any ones that you could pull back that you haven't done yet, like how many of that 15 sales just stayed at these levels with the 15 turn into for 14?

So just to give you a range, the number of restaurants that we're committed to and under construction, the number under construction now is about seven I believe, right Greg?

Right, yes. And we have two or three ready to start construction in the next 30 to 60 days. So right now, 11.

Got it. And then just – hopefully the negative comps don't persist for you or everyone else but if they were to, if that was the new norm, what operation or adjustments can be made? I mean it sounds like you guys are staffing the restaurants, if the sales get back to kind of stronger levels and with the deleverage this past quarter was a lot larger than at least what we were anticipating, at what point do you start kind of pulling back on some of those costs assuming that the comp is going to be running flat to negative for the next number of quarters?

When Greg makes those comments on labor, we do adjust literally, we talk about adjusting labor every week and we are forecasting sales and trying to manage labor to sales levels, but when sales are as choppy as they are now, hitting those forecast is just next to impossible and that does lead to higher labor costs but it's not like we make a budgeted decision and say we are investing labor to X level. I mean we have a variable basis, we have pretty sophisticated labor scheduling systems and optimization system. So we saw our operators try their best. So we're not scheduling labor today at anticipated sales levels that are unrealistic, just to be clear, but if we were to scale back on unit development for example, there is a lot of cost embedded in our P&L that goes beyond free openings, that a part of our infrastructure cost and field cost that we would take a look at obviously there. We'll continue to look at every part of our cost structure if we continue in see this kind of environment.

I appreciate that. I'm much happier doing the modeling on this and we will test the balance with this weather and choppiness, but thank you very much.

Our next question comes from the line of Jeff D. Farmer with Wells Fargo. Please go ahead.

Just sort of keeping in line with the questions that Jeff was just talking about, just curious about the most recent two weeks of February, any better or worse than that down 4.2% quarter to date number, any reason to believe that we'll be getting to pull out of this a little bit?

Jeff, it's been pretty consistent to be perfectly honest to get hit with some weather, there are some good days and bad days in there. The best thing that I could probably say is we've lost a percent of pricing in February and frankly the numbers have been held up pretty consistent in that regard. So I haven't seen any real changes looking at January versus February.

Okay, and then again sort of following up on Jeff's question about really beyond weather, a lot of your peers are talking about the same thing just attributing the same-store sales volatility to a whole bunch of macro drivers but it keeps getting to be a longer and longer period we've been talking about this going way back up to last year, kind of through that new normal, but from a professional restaurant operators, A., have you seen anything like this before from an environment standpoint, and do you think there is light at the end of the tunnel or this is just going to be the way it is for the next several quarters maybe even into 2015?

It's a big question there, Jeff. I think when I look at BJ's specifically, I think the recession years, and I know we outperformed the recession years, meaning BJ's from a comp sales versus the industry back in 2008 and 2009 but I kind of felt that, I felt personally like that came on much faster. I still come back to the point that I think out of 2007, we were doing a 5% comp and then instantly right in 2008 comps went to flat or might even started off a little bit negative. And you saw specifically in patches how we're related to that housing bill, at least for the BJ's concept. What concerns me right now I think as we look out on the overall macro landscape is we continue to see because of the I think easy credit a lot of newer restaurants coming onboard that we haven't seen maybe through the last four or five years. I know we've talked about competitive intrusion that's come on board, and that's a little bit different there and you're seeing more people see a slowdown in sales, you're still seeing the same amount of growth, and I think there's going to have to be some adjustments that come onboard there. Ultimately though it still comes down to differentiation in quality and hospitality and that's the ability to take service or takeout market share, and I think as Greg Trojan mentioned, as we go forward here, one of our big areas that has hindered us over the last year really has been speed. I mean we look at some of the stuff we are doing right now that's coming back through some of our guests' feedback, we are slower to where we want to be for especially the quality we have out there, and I think that mobile technology platform as we continue to build on that and use that with the handheld device versus having something sitting on our table, but I don't know how you can sit on your table and order a large pizza and a pitcher of beer, but I think the mobile technology that we are doing provides that speed and that provides that walk-away individuals the opportunity to maybe dine at BJ's and drive guest traffic.

And just on the question sort of to belabour this but on the development front I would say again pick a number, three, four, five years ago, if BJ's was going up against two or three other concepts in a new retail center, I get the impression that you guys won that battle pretty much every time based on sales volumes and just the productivity of the restaurant in general but is that getting harder meaning that some of these sites that you might have wanted couple of years ago, you still have the same sort of preference with these developers that you did in the past or again is it just sort of a higher bar for everyone right now?

This is Greg Lynds. We're still a preferred tenant, probably Cheesecake Factory is number one because they have bigger volume but we are right up there number two when you're talking about from a sales volume, from rent paying, we're one of the top restaurant concepts in the country.

I'll disagree with my colleague here for a moment, Jeff, is that what developers care the most about here is foot traffic. We are the number one foot traffic concept in the industry by a lot, not by a little. And you saw the retail numbers, you wrote about them over the holiday period, the ShopperTrak numbers being down 50% over the last three years, developers are dying for traffic and nobody can bring traffic to developments like we do in our state. So I know Greg would tell you we still get the first and second phone calls on mall re-dos and new developments and we're on all those projects land. Before they even talk to us, there's a little BJ's world on those development plans. So we feel like the least of our problems frankly is opportunity to develop in these new areas.

Okay.

And you can't forget that we are still doing 5.7 million average unit volume. Those are big numbers on 8,500 square feet on $14 average check. So there's a lot of opportunity for us to kind of leverage that and continue to move that number up.

Alright, I appreciate it, thanks. From all three of you, I appreciate it.

Our next question comes from the line of Brian Bittner with Oppenheimer & Co. Please go ahead.

Question on the average check, average check declines within the comp, I know they are not intentional but they are being driven by I think strategy, both promotions and discounting. There's two questions I guess here. One I think the [indiscernible] economy will persist given what the strategy is going to be going forward, and number two, is there something you can – is effective and something you should continue just given the fact that it doesn't seem to be driving a traffic rejuvenation into this pressuring margins here?

It's Greg Trojan. I would describe it in two parts. It's not all discounting and promotions. That was a heavy part of it in the fourth quarter. And the short answer is we want to continue to be more targeted in those promotions particularly using loyalty. And so you won't see discounting and promotions at the level on a recurring basis that you saw in the fourth quarter just to answer that part of your question. The other part of the question that's driving guest check down a bit is the introductory price point or the new price point for introducing in our everyday menu like the Brewhouse Burgers, that start at $6.95, or an average of just over $8 when people add what they want on that. You're going to see entree salads in this new menu at $9.50 kind of price point. So those will drive our guest check down a bit but it is not significant numbers where there are concepts altering. We think we need to be there in the middle of the menu kind of items at these competitive price points and we want that mix so that people reinforce the historical value equation of BJ's but we are talking about guest check changes and it is 0.5% to 1% kind of range here, not more than that.

Our next question comes from the line of David Tarantino with Robert W. Baird & Co. Please go ahead.

A couple of questions, first on the unit development commentary, I wanted to ask what you would need to see in order to pull the trigger on slowing down the unit growth. I know you cited that as a possibility and I guess I'm still not clear on what you need to see in order to make that decision.

I think as comp sales continued in this area frankly in the negative 4% as we roll out the menu, let that strategy with the brand messaging run its course. Because of the size of BJ's, we're not going to be able to rollout a new menu next week and be clustered on the TV over two weeks there and drive sales. We need to see this menu as guests come in, start to see the new items, start to go, 'you know what, I just want to eat that, that was a really good item' and start to put it back into their dining rotation to increase kind of the guest traffic. I think if we don't see an improvement coming out of that, we take a look at our overall development plan, we look at that versus kind of how we're doing from our balance sheet opinion, we're going to determine what's an appropriate number as we continue to work the business. I feel pretty confident about the plan that we have got in place. I like the new items coming on board. I think they fit that center of the menu affordability and fit kind of the BJ's Brewhouse mould there. I'm really excited about our mobile pay and mobile ordering that's coming down the pike as well. So we think those things are all great things to stay in our business. Also the new restaurants, I mean we just opened up at Virginia, Maryland, doing really well out in Gainesville and Frederick out there, so really excited about that. So we don't think there's an issue in regards to development and deploying capital that way, but at the same time we want to make sure this new strategy makes sense and starts to reinvigorate total top line sales.

Right, that's helpful. And then I guess a question about kind of the conceptual approach on some of the things you're doing with the menu and promotions and I guess my history with BJ's is the brand has been very well known for pizza and beer yet a lot of the things that you're talking about aren't really the pizza and beer and are more about extending the concept or extending the menu to other categories, and I realize you've had this broad menu all along but I'm wondering whether the lack of emphasis on some of the core competencies or core assets that you have might have led to maybe some of the sales softness that you have. I was just wondering what your thoughts on that are.

That's a great question, David, and thank you for asking it because we do think there's an opportunity in some ways to go back to our roots specifically as it pertains as you mentioned to both beer and our expertise on the quality of our products there and our deep dish, foundational deep dish product. When you see the introductory brand version of our FSI around this menu launch, you're going to see it's a fold-out. The right side of it once you fold it out is going to feature the new items but almost all of the left side of it will feature beer and pizza because I think – and just to be clear, that menu expansion, particularly in terms of protein entrees and lunch specials and appetizers and snacks of small base were foundational in growing the sales level that we have attained. So we don't regret any of that but the fact of the matter is when you are adding those categories, it's hard to pay the same amount of attention to those foundational parts of our menu, mainly beer and pizza, that we need to. So you'll be seeing quite a bit of that in the branding and product messaging that you see from us going forward as we think that's really important.

Okay, that's helpful. Then last one, Greg Levin, I think you mentioned 16% restaurant margins or so could be achieved on negative comps, could you maybe get a little more granular with that comment in the sense of what type of negative comp or what type of comp is needed to get to that kind of margin so that would help us with our models for this year?

Let me answer the question I think you asked but it could be wrong. I think we're seeing the numbers where they are currently in the negative 4% range if you just kind of went through here, at least through the first couple of weeks, the first I guess six weeks of the new year, if comp stays somewhere in that range and frankly I think they will get better with, first of all we're going to have additional menu pricing starting to come through and new menu items that we can really market and celebrate around which we didn't have as much last year as we kick on Project Q, so I think if comp sales remain in that negative 2% to negative 4% range, I think your margins in that 16% range are probably regional margins.

Okay, and just so I understand, even in the second half if you were to see that kind of negative comp, you would be able to – potentially the second half of 2013 was in that 15% to 16% range, you'd be able to hold margins flat in the second half with that kind of comp trend? I just want to make sure I understand that.

I think we would. Again, some of it is based on the 1.7% of menu pricing as that offsets some of the inflationary cost in that regards. When you look at Q3 and Q4 specifically, the big impacts there was really the increase in marketing spend and we have to contemplate marketing spend as we go into that second half. I mean in this third quarter or in this fourth quarter, marketing turned out to be 2.9% of sales or $5.8 million versus 1.8% last year. That is 100 basis points right there that if we ended up dialling downmarket a little bit, because we didn't like the results that we were seeing, we get that right back into your operating and occupancy costs line going up. The other thing as we mentioned, and you kind of can feel it a little bit, is you do see the operating occupancy on a cost per week basis [from] (ph) our market where we are getting the efficiencies there. Greg Trojan talked about that a little bit with the fact that our supply chain theme is going after utility spend, is going after smaller spend by outsourcing it and other things where we are seeing some really good efficiencies for our business. It is challenging I will say to get your labor nailed when you do see declining comp sales. That's probably the biggest area that tended to have variability even though as Greg had mentioned earlier, each day and each week our restaurant operators submit what they think the sales are going to be for the week, how many items they think are going to be billed, and they produce a labor based on that. So it's not a fixed labor in that regard but I think as we go into next year with some of the things we're doing in regards to the middle of the P&L, I believe we can hold those numbers.

But look, just to be clear, and Greg was mentioning this, if you just take weather and pricing and have reasonable weather overlap and add the pricing that we have been [indiscernible] on in the last several weeks, you end up with a trend that's a lot different than minus 4%, it's not where we want to be but – so it would take a whole another step function change in the environment out there in my mind anyway for us to be averaging negative 4% for the year.

Makes sense. Thank you very much.

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

Greg Levin, a question for Greg Levin, did you say that we are going to see I think 1.7% pricing next week or is it incremental 1% pricing?

It's incremental 1.7% pricing. I think the 1% pricing is what we need to cover California minimum wage.

Got it.

I think Greg [indiscernible] we misspoke during the front-end comment that the gross pricing is 1.7% that's coming into this menu.

Got it. So the total pricing given that we are already coming in with 1.3% is going to be above 2%, is that a correct assumption?

No, 1.3% of pricing rolled off our lap about two weeks ago. So right now we have zero pricing and starting next week on basically 2/25, next Wednesday, we'll have 1.7% pricing.

Okay, and just answering the minimum wage question previously, it sounded like you guys aren't contemplating taking another round of price later in the year?

We'll analyze the business trends as we go through. We generally have a menu print somewhere in that kind of early spring or summer time and depending on kind of current trends and what we're seeing we may or may not take additional pricing.

Okay, and then last year you guys had commented that the way you guys have kind of rolled out the loyalty program as part of the marketing expense that we are seeing as part of that headwind, it might evolve in such a way that it would become less of a headwind. It sounds like with the payment option now going through loyalty, it may actually be getting more entrenched. How should we think about the loyalty program going forward and the kind of sort of cost headwind that's exempt so far?

Nick, in regards to the loyalty program, frankly it gives us some really good feedback because of loyalty program but definitely it has allowed us to now engage with our guests. We put in something we haven't necessarily talked about it directly, but anybody on a loyalty program after they've dined with us can actually fill out an eight question survey which we use to rank our restaurants to see how they're doing, and providing kind of an additional level of engagement that we haven't used prior. So at least for the current time with the mobile pay as well as the mobile ordering as well as this ability to kind of doing net promoter score, I think we're pretty happy with some of the results we're seeing from the loyalty program, and frankly as we mentioned earlier, the ability to target them in regards to coming back to our restaurants providing frequency and spend, we've actually been pretty successful on the loyalty group. What we have got to do better is frankly just operate it better. Execution-wise it's not where we want it to be. I think we would admit that some restaurants do it really well, some don't. One of the big things that we always look at in the restaurants is the ability to see somebody quickly and all of a sudden it's a little bit of a challenge when people are walking up with a loyalty ID at the front desk because that's where we want it to be, we want the host to recognize it, to get it to our server, that goes down the hospitality desk a little bit and that's something that we are working through to improve the consistency on it, but realistically, the things that we are getting out of loyalty are actually working pretty well for us especially the ability to have them rate the dining experience.

Got it. And just last question again on the marketing, it sounds like [2014] (ph) week is already a little bit of a step down from Q4 and in your commentary you indicated that Q1 is probably going to be the highest marketing spend. So can you kind of maybe talk about the cadence of the marketing going forward, is Q2 going to be – should we think about Q2 as sort of the second-highest demand just kind of coming down from there as the year progresses?

I think Q2 would probably be the second, and yes, it will come down a little bit from there. We're targeting [summer](ph) all in right now in the $20 million range with Q1 being the highest. We have got a couple of other things that as they roll out you might see a small turnaround and [indiscernible] on success as is marketing where that number may go.

$20 million is probably a high range at this build level, but that is your range.

And just one last question, sorry to take a lot of time, how do you guys measure the success of the marketing initiatives? I mean we've seen kind of how the marketing expenses have gone up, accounts have decelerated further. So when you guys look at whether it's TV or loyalty or whatever else it is, what are some of the metrics that you're looking at to justify the increased marketing spend when comps continue to be lower and lower?

We use testing controls because a lot of these marketing initiatives we are doing different, slightly different programs or not doing TV versus TV. So where we can we're pretty scientific about it. We measure every single promotion in terms of incident rates and measure breakeven level of incremental traffic on each of those promotions. So the never-ending question on some general advertising is, what it would have been if you hadn't spent those marketing dollars, and the best way to do that is we need to do a lot of testing and control in different markets to understand that and we do that where we can.

Our next question comes from the line of Tony Brenner with Roth Capital Partners. Please go ahead.

Another question regarding your casual fast initiative, as you're getting ready to roll out that mobile option, what is your estimate for the proportion of diners that utilize that?

Tony, we don't have a specific target. The adoption rate is one of the bigger – is a bigger question but we know that given – the disadvantage that we have a bit is we're early out there. There's no one that we know of, of any scale anyway, that is utilizing this kind of functionality through mobile devices. As you know there's a lot of tablet based programs that people are embarking on, by tablet I mean on the tabletop versions of this. So I think it's going to take a while for people to understand. Even with mobile pay what we're finding in the early days is people don't understand that they can pay at any time they want to basically. When they are done ordering, they could pay. Their initial reaction is, while I can do this instead of using a credit card, that's the same point in the service cycle, right. And the whole benefit of it is, you don't have to wait for a server to give you anything. When you're done ordering you could pay. It's going to take a little while for us to communicate and for people to understand those kinds of benefits but we think they are pretty compelling. And we feel pretty well with millennial when some of the recent research that we've seen is, we have enough tech savvy folks coming in and out of our restaurants that we think people will get this but we don't have an official target out there. We think it saves enough time here and convenient that people are used to doing this in other applications that people will use it and we are seeing people use it.

The benefit obviously is it grows people with time restrictions, it potentially increases your turnover, but I'm wondering if a reasonable percentage of people actually take advantage of this, how it might affect your labor cost and staffing requirements?

We think it's a table-turn dynamic, it will leverage our labor, right.

Yes, but some portion of your wait staff turns into servers rather than waiters and they are order takers and those servers, I mean they are less required, their time is less required, isn't it?

That's what I mean. Not for that reason, it's just that our sales per hour will increase by definition of turning tables more quickly. So we'll leverage front-of-house labor just through that old modeling, and it's an important differentiation because we are not considering this as replacing the traditional rollover server in this exchange. Now look, if people order ahead and show up at the restaurant, I think that saves the guest for sure but we don't want people using this phone to dictate their experience throughout the dine-in. Actually that's why we don't want to go through the kiosk road here because we want to increase the level of connection and hospitality in the BJ's experience here, we're not trying to automate the server. What we're trying to do is alleviate two of the biggest end points. If you're in a hurry when you dine-in at a restaurant, that is getting your order placed and at the end of your experience, and if you have a tight lunch period or you're up to a movie and dinner, those two save a lot of time but the rest of it is just more engaging and we still feel hospitable because it frees up our servers to pay even more attention to what you need throughout your dining experience.

Our next question comes from the line of Sharon Zackfia with William Blair & Company. Please go ahead. Sharon Zackfia - William Blair & Company: My questions were answered, thanks.

Our next question comes from the line of Courtney O'Brien with Morgan Stanley. Please go ahead.

Just quickly you mentioned that you're still a preferred tenant for malls, I was just curious what percent of your restaurants are in malls and shopping centers versus freestanding and if you have anything different between the two?

I think we have got about 20 of our restaurants are actually in line in a mall.

Yes, I mean we are really about – we break down to about 40% total if we consider in-line and in a freestanding mall, about 36% of them are in a power center and the rest are in kind of shopping center.

And did you see a difference in the sales turn?

No, we didn't. The first thing I looked at from that standpoint, I think weather played a bigger impact on it. I know Greg said about 40% are in line or in mall, I think only 20 are actually in-line at pure regional malls in that regard and then the other ones are like [indiscernible] at malls and other things which as a result kind of acts as freestanding restaurant, but even looking at the difference, actually got it right here, even looking at the difference between the mall – yes, 20 in-line at a mall, that number versus the rest of our restaurants is not that materially different.

Okay, got you. And then I know you mentioned that you are pretty early in the testing for the mobile payments and the mobile ordering but it sounds like most of your competitors who were using these tablets have focused more on increase in check and it sounds like you guys are focusing more on the decrease in time and the table turns, and so I think Greg, you mentioned even something moving from an hour to close to 40 minutes. Is that the goal or is that something you guys have seen in testing and maybe you can talk about any other learnings you had from your testing?

I think that's a fair statement is that we are focused on the time element and it comes from the perspective of ours and certainly of mine that the greater competitive set that we're dealing with in our business is people are looking to eat out and sometimes frankly we consider the relevant competitors as much as fast casual just as we do traditional casual dining, and the big advantage of that casual versus what we do given the occasion and time and speed. And so that and given the long waits that you can experience out of BJ's, it were particularly sensitive to, and we've never been particularly fast. So for all those reasons I think speed is the right objective here competitively.

And then is there any ability for takeout or anything pickup?

Absolutely and the applications definitely include takeout or order ahead and pay at the table. I did it the other day when we ordered from the office on Monday. I called a nearby restaurant and paid from my office using mobile pay, and we had – just given the early days of our testing, we're looking at all these transactions and we saw a rather large one, close to $1,000 transaction, and we wanted to make sure it wasn't an error. It turns out a sales rep who used mobile pay and thought it was the greatest thing since sliced bread because we could e-mail him as we speak, he could get the order all organized and use [indiscernible] take-out to pick up the order and bring it to our meeting. So we think people will figure out lots of ways to use it. Another one that you wouldn't think of off the top of your head is when we're running waits in our restaurant on a Friday night and you have got kids and you are in a bit of a hurry but you're willing to wait 15 or 20 minutes, you could actually place your order in the lobby of our restaurant using your phone, so the minute you sit down that order is placed and it's fired to the kitchen and your drinks and food are well on their way.

Thank you. Ladies and gentlemen, this is all the time we have for today's conference. This does conclude the BJ's Restaurants, Inc. fourth quarter and fiscal 2013 results conference call. We thank you for your participation today and you may now disconnect.