Good day, everyone, and welcome to the BJ's Restaurants' Third Quarter 2018 Earnings Release and Conference Call. Today's conference call is being recorded. At this time, I'd like to turn it over to Greg Trojan, Chief Executive Officer. Please go ahead, sir.

Thank you, operator. Good afternoon, everyone, and welcome to BJ's Restaurants' fiscal 2018 third quarter investor conference call and webcast. I'm Greg Trojan, BJ's Chief Executive Officer, and joining me on the call today is Greg Levin, our President and Chief Financial Officer. We also have Greg Lynds, our Chief Development Officer, and Kevin Mayer, our Chief Marketing Officer, on hand for Q&A. After the market close today, we released our financial results for the third quarter of fiscal 2018, which ended Tuesday, October 2, 2018. You can view the full text of our earnings release on our website at www.bjsrestaurants.com. Our agenda today will start with Rana Schirmer, our Director of SEC Reporting, providing our standard cautionary disclosure with respect to forward-looking statements. I'll then provide an update on our business and current initiatives, and then Greg Levin will provide a recap of the quarter and some commentary regarding the balance of fiscal 2018. After that, we'll open it up to questions.

Thanks, 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 actual results, performance, or achievements of the company to be materially different from any future result, 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, October 30, 2018. 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, Rana. Our sales momentum drove another quarter of exceptional market share gains and fueled strong financial performance. Third quarter 2018 comparable restaurant sales and traffic increased 6.9% and 2.6% respectively, marking our highest absolute comparable sales increase in 29 quarters. BJ's third quarter sales outpaced an average of Knapp-Track and Black Box by over 500 basis points, driven primarily by our strong guest traffic levels which outpaced the industry on average by over 300 basis points. Our broad-based third quarter operating and financial strength again reflects our ability to offer everyday great value throughout our menu, which is as diverse in price points as it is in flavor profiles. Our newer, simpler loyalty program, a weekday Brewhouse Special, along with our lower priced Happy Hour offerings have worked to further enhance our strong value equation. Despite these value investments, we've been able to drive healthy check growth through the positive mix benefit of our slow-roasted menu, menu pricing, and continued moderation of our dollar-off discounting activity. As a result, Q3 marked another period of outperformance versus the industry and we again generated some of the largest quarterly market share gains in our concept's history. Our initiatives to strike a balance between higher check indulging options and value-oriented offerings, while capitalizing on new delivery and take-out sales channels, have driven our growth in 2018 and we expect continued progress on these fronts in the remainder of 2018 and into 2019. Our strong sales drove an impressive increase in overall profitability, as we grew net income and earnings per share by approximately 84% and 107% respectively and that's not taking into account the effect of this year's tax rate benefit, the new accounting revenue standard, and last year's charges resulting from our hurricane closures and organization restructuring, all of which Greg…

All right. Thanks, Greg. Before I get to more commentary around our third quarter and some thoughts regarding the remainder of the year, let me quickly reconcile the earnings per share effects of the accounting change and the tax benefit in Q3 2018, along with the hurricane and reorganization impact in last year's third quarter. Summarizing all these impacts, in Q3 2018, we realized a $0.08 cent benefit to our quarterly earnings per share, while in Q3 2017 earnings per share was impacted by $0.04. Adjusted for these factors, earnings per share in Q3 2018 is $0.31 and rose 107% from a pro forma EPS of $0.15 in Q3 2017, and that's compared to our GAAP earnings per share of $0.39 and the growth rate of 254%. As a reminder, in last year's Q3, we recorded a $1.3 million in pre-tax expenses or a $0.04 diluted net income charge related to hurricanes Harvey and Irma, as well as severance related expenses resulting from a reorganization of the company's restaurant support center. In Q3 2018, we had a net tax benefit of $1.4 million. This benefit was primarily related to stock option exercises which amounted to an excess tax benefit of $1.7 million or $0.08 on a per share basis. Excluding this year's benefits related to equity compensation, our annual effective tax rate would be around 10%. As previously noted, the adoption of ASU 2016-10 changed the way we account for our loyalty program, resulting in a deferral of $51,000 of Q3 revenue until those loyalty points are redeemed in the future. With three quarters of data now in hand, we expect the impact of ASU 2016-10 to be fairly immaterial to our future revenue. We, also like in the previous quarters, have reclassified gift card breakage income on our financial…

Thank you, sir. And we will take our first question from Matthew DiFrisco with Guggenheim Securities.

Thanks. I had a question and also just clarification. The 4% quarter-to-date comp that is the absolute number you're seeing quarter-to-date, that's not reversing out anything from the promotion that you mentioned, that's inclusive of the promotion, correct?

Yeah, that excludes the promotion, that's some of our recent trend.

Okay. And you're holding that 4%, it appears, I mean that wasn't – that seems to be a flattish throughout the month?

So, again, now without getting into all those specifics, we pulled out that one day which saw double-digit plus increase in comp sales for Free Pizookie Day, we just got this iconic brand around the Pizookie that people like our iconic item. Pulling that out and looking at our trends, our trends tend to be kind of in the 4-plus-percent range.

Okay. And then just a question about the regional throughout the quarter, any regional differences that you saw as far as California, I think some people in the Malcolm Knapp numbers began to see a little bit of it coming back to the pack after outperforming for over a year, has that – have you seen that as well, or is it relatively flat throughout that 6-plus-percent comp?

California has been consistently a solid comp number for us in that regard, but we haven't seen any real change in California over that timeframe. The only thing I would say is, in general, California was not our best performing comp sales area. We've had a lot of strong areas that are doing solid comps for us.

So, Matt, I'd say it's actually been pretty consistent for us throughout the given what it looks like throughout the year, even more recently aside from the usual weather disruptions of hurricanes and weather in East Coast and Southeast, all of it, but besides that, it's been – we haven't seen a change.

Okay. And then last question, with respect there was a comment there I think about expanding the Slow Roast, is that going to be a meaningful expansion onto the menu? How should we view this as far as you've done a lot of work on trimming the menu and even testing maybe the smaller menu in smaller markets, how should we think about that as far as the level of expansion, is it replacing things or is it incremental purely?

Well, first of all, the reason we are expanding capacity is, we continue to grow sales on items that are on the menu today as I mentioned, right. And that's – I'd reinforce it's not because we're promoting or disproportionately marketing those products, that word of mouth and momentum of those products. So, it's to serve the capacity – increase the capacity to accommodate that growth. But we also do see a bright future for other protein-centric items that I think take advantage of that Slow Roast cooking platform that is working so well. So, the reason for that investment is both of those reasons. And then, in general, we're always looking at ways to reduce complexity and continue our Project Q initiative and we'll balance any new product introduction with where we can and we think it's prudent trimming the menu in other places or generally keeping in balance. What we don't want to do is to have that slow growth to increasing complexity, overall. So, yeah, you are right, as we are adding items, we're going to look hard at maintaining the balance where we're at and still pushing ourselves to reduce where we can.

Great. Thank you so much.

Welcome.

And our next question comes from Brian Bittner with Oppenheimer & Company. Brian Bittner - Oppenheimer & Co., Inc.: Thanks. Good afternoon, guys. Question on sales and then one on margins. On sales, just as you analyze your market share gains and you see your gap versus industry being one of the best in memory here, what real, like exact pockets of your business are you seeing the most growth that's really driving this gap. Everyone seemed pretty solid off-premise growth. So, what are the top two themes or three things separating you from the pack here?

Well, we tried to lay that out in the remarks, Brian. I think it's not just one thing which gives us and it's not just one area in terms of geography. It is broad based. But when I tried to emphasize in early part of my remarks is, fundamentally it gets down to value and delivering value and I think the balance that we've created across improving value around Brewhouse, Specials, Happy Hours has been an important part of what we're doing, loyalty, have all been important value additions that I think fundamentally drive traffic. And we've been able to invest in those initiatives because of the success on the other side of our menu, Slow Roast initiative and other things that we've done to create guest check growth, while at the same time we've invested in this value. So, at the core, aside from the off-premise growth that I think is driving broad-based improvement in our business, that's the foundation of which is traffic. And so, that's the best way I can answer the question. It's not one pocket as you described there but it always gets back to value and execution, and it's not just price point, it's around, I think in today's world where everyone is pressing a larger level of guest check growth but face it (00:32:30) to offset the inflationary pressures, everyone in our industry is under more pressure to provide a guest experience that's worth that guest check. And I think that given the concept that we have, we have the ability to drive some check growth to pay for that inflation in a way that people perceive it still as a great value. Brian Bittner - Oppenheimer & Co., Inc.: No, that's a great recap, I appreciate it. And then just the question on margins, as you guys are doing a great job of improving your margins this year in obviously a very tough environment to do so, it looks like based on Greg's guidance for the fourth quarter, you'll be in that 17%-ish range on the restaurant-level margins this year. Again, that's up from last year, which I guess is kind of more of an investment year for you, but it was only in 2016 when you were at that 19%-ish range, so the question is, despite all the inflation we see coming, where do you think ultimately restaurant margins can check out for this brand as we look over the next couple of years?

Brian, we haven't changed our thought on moving our margins back into where they've historically been, and not something that we strive for every day in regards to looking at our business. We do know at least currently I think in the current environment with where labor inflation is, that's become probably more challenging line when you drive some of these comp sales to get the type of leverage or flow-through all the way down to your business. But I still think as we continue to drive our business and drive people in, we will have time, we'll have the ability to leverage the overall margins there, and bring in overall more restaurant profitable dollars down to the bottom line. So, we're looking at both of those things. We even made a comment, I want to say, a couple of quarters back that we're not looking to get our margins back right this minute, meaning we want to invest in value and drive this business for the long time. At 200 restaurants, or 201 restaurants today, we've got a lot more road ahead of us and we're going to take that road ahead of us to build new restaurants and slowly continue to move our margins north. Brian Bittner - Oppenheimer & Co., Inc.: Thank you.

Your next question comes from Nicole Miller with Piper Jaffray. Nicole M. Miller Regan - Piper Jaffray & Co.: Thank you, good afternoon. I may have missed it but what was price versus mix in the quarter?

Nicole, we don't get into all that specifics on the pricing because we've just seen so much movement around the Brewhouse Specials and Slow Roast, et cetera. But in general, our average check pre-incident rates and stuff like that was kind of a mid-3% range. Nicole M. Miller Regan - Piper Jaffray & Co.: Okay. So, some partially positive mix then, right?

I think it's kind of flattish, when we look at it. What's really – it depends on when we look at the – across the board, we're getting the favorable mix coming from Slow Roast, but it's generally being offset by the Brewhouse Specials. So, what we're getting is people that take more items, so our incident rates are up and our incident rates plus a little bit of discounting helps to move that overall average check-up. But if you take out incident rates and you take out discounting, probably kind of flattish. Nicole M. Miller Regan - Piper Jaffray & Co.: Okay. And then you talked about the prior year October being a plus 2%, would November-December the same or more difficult or easier in terms of compares as we look forward to the remainder of this quarter?

Well, we were plus 2% in October and we finished at 1.6% for the quarter. You get a slowdown... Nicole M. Miller Regan - Piper Jaffray & Co.: Yeah.

...in comps that we're going to have in November and December, not that much of a slowdown because obviously a plus 2% to 1.6% not that much, in all three periods last year I mean October and November and December were all solidly positive from a comp sales perspective. Nicole M. Miller Regan - Piper Jaffray & Co.: Okay. Thanks. Thanks for doing the math for me, sorry about that. Then, thinking about the comp, which is great, and off-premise being up which is great, to get that comp, you clearly must have also driven in-restaurant traffic. So, can you talk about lunch versus dinner, weekday versus weekend, maybe there's something in beverage incident, what's driving in-restaurant traffic?

Well, we've said this before and it's been I think I guess the softest area for us and that's really just been mid-week lunch, has probably been softer for us. When I think about taking that aside, I think we're seeing good numbers coming out of the mid-afternoon, the late night dinner. One of the things that makes BJ so special and we talked about this and it's one of the reasons we have some of the best AUVs in the industry is we drive 25% of our business in the mid-afternoon and the late night. And that's an area that's been doing well for us. I think that probably has a lot to do with the macro environment as well. People are working or maybe they're celebrating coming a little bit more in the mid-afternoon and late night and we put initiatives around that, whether it's our offerings in regards to alcohol, or as Greg Trojan mentioned earlier some changes that we made to happy hours. So, those have been the strength within the dining room, of course, that's really been that mid-dinner and late night and a little bit softer at lunchtime. Nicole M. Miller Regan - Piper Jaffray & Co.: And then just a last question you have in the press release about the strength of the guest satisfaction scores. Which metrics in particular is that around value, service, et cetera, and which is the leading indicator? Thank you.

We think the most powerful is the overall NPS measure of recommend score, Nicole, and – but what's driving that is improvement across all the metrics that you're mentioning. So, it's not one or two of them as we look at the sub-metrics, so to speak. They're all helping drive an overall improvement in the recommend score. Nicole M. Miller Regan - Piper Jaffray & Co.: Thank you.

Welcome.

And our next question comes from Alex Slagle with Jefferies.

Hey, thanks, just a follow-up on Nicole's last question, if you could offer any perspective on the speed of service metrics you're seeing, like dining times or time for food to get to the table, how those have sort of changed in the last year or two?

Well, I think, Alex, the introduction last year of handheld has greatly improved the time for that first drink or food item to get to the table. So, those order times have helped we think the guest experience quite significantly. And we've said this before, what we haven't really seen as a change in the duration of that guest visit, which we frankly – we'd love to see in all of our restaurants being as busy as they are, we could improve turns as a result of that initial speed, we'd love that. But we're not going to do that at the expense of the guest experience, and it just seems like the guest wants to have a social dining experience in our restaurant and we haven't seen material decreases in that metric per se, which is great, because I mean they are ordering more, so we are seeing incident level of beverage and desserts, for example, appetizers being helped and that is helping us drive that check growth that Greg was describing as well. But not so much on the overall speed and duration of the on-premise dining experience.

And Alex, we said this before, that is our biggest opportunity. We've never been a fast concept with a 140 plus menu items, and I think the social nature of the BJ's restaurant concept, we probably never will be a superfast concept. But I think, as Greg Trojan mentioned, handhelds have helped and we're continuing to look at ways specifically around Project Q that we've done before, that'll help to enhance the speed side of our business.

And Alex, on the other component of that, particularly at lunches where we're still focused on, where we think obviously speed is more important than the dinner dining occasion, but also utilizing and continuing to leverage on technology. And so, we haven't given up on this goal of actually speeding the experience up when people want to, but we just – we haven't seen that yet.

Thanks. That makes sense. And I was wondering if you could comment on some of the key markets where you feel like the density and awareness needs a boost and how you plan to address that in 2019, I guess on a marketing front, and also whether you plan to fill in any areas or markets from a development perspective as well?

Yeah, we're not going to tip our hat too discreetly around market strategies there. But I think it goes a little bit without saying but I'll say it anyway is, we have a lot of younger markets, given the vast majority of our development over the last three, four years has been outside of our core markets, particularly in California and Texas markets, and even Florida, right? So – and we've been doing quite a bit of work this year on testing different media forms and ways to go about driving awareness, and some of these newer less dense developed markets for us that where we can efficiently look to mass media to drive that awareness. So, we are focused on, I guess, the next generation of local marketing and ways to do that realizing that it's going to be a while before those markets are seeing some of the broader marketing capabilities around mass media. At the same time, as our sales increase and we are developing more and more scale in some of these, I call them secondary still reasonably developed markets for us, where we are able to look at digital media and slightly closer to mass media – medium that we're seeing some good results in those markets. So when we talk about increasing the spend in some of these selected markets, that's what we're talking about.

Thanks.

Thank you.

Our next question comes from Mary Hodes with Baird. Mary Hodes - Robert W. Baird & Co., Inc.: Good afternoon. Thanks for taking the question. Appreciate the outlook on the inflation for 2019, particularly on the labor line. As of now, are there any kind of productivity levers that you think that you'll be able to pull to mitigate some of those inflation pressures, anything on labor tools or anything like that?

Mary, it's a great question, and we have a couple of things that we're actually working on right now. We're not there in almost what I would call beta-type look at, just in the way our kitchens are arranged and see if there's things we could do a little bit better. So we're always obviously looking at our staffing tool which really rolled out this year, some changes to our staffing tool earlier this year to get a little bit more specific, also look at our revenue channels meaning dine-in versus off-premise. But right now going into 2019, there is not a wholesale plan there in regards to labor changes. And like as we just talked about a minute ago, what I said on the formal remarks, the best way for us to drive labor improvement frankly is driving top line sales, knowing that our Net Promoter Scores are up, it is also an indicator guests like what we're doing. So, as much as we all get caught up on percentages in this business, it's much easier to manage percentages while you're driving top-line sales and trying to save your way to success which you can always look at for one or two quarters, but that's about it. So that's kind of where we are right now looking on a couple of things, but there is nothing that I'd consider as that material that I'd be putting into our initiatives for next year. Mary Hodes - Robert W. Baird & Co., Inc.: Makes sense. And then, as you think about the puts and takes coming into next year, the inflation that you mentioned, what level of comps do you think theoretically would be needed to hold restaurant margins flat in 2019?

Well, I think the way to probably look at, it's going to be a little bit similar to this year and that would be that if you see labor kind of going up where it is, you're going need comps kind of get close to maybe offsetting labor. If you see less on the operating and occupancy and less on the cost of sales, we get some leverage there. So, you kind of got some push and pulls there. You're probably looking somewhere in the mid-3s, 3-plus or so. Mary Hodes - Robert W. Baird & Co., Inc.: All right. Thank you. That's all for me.

Thank you.

Our next question comes from Will Slabaugh with Stephens Inc.

Yeah. Thanks, guys. Congrats on the quarter. These results imply you accelerated fairly meaningfully from the July results that you talked about last quarter and especially since I believe the year-over-year comparisons became more difficult as the quarter went on. Did you see the incremental comp driven more by traffic as that acceleration was occurring, or was it more fairly balanced as the quarter progressed, and then was there anywhere either on the menu or days of the week that really stood out for you?

I'm kind of looking at our numbers here. When you look at it, you look at the delta, I guess, between sales and traffic. The delta is about the same coming through there, meaning as comps accelerated in the quarter which obviously happened in (00:47:11), we got an improvement in traffic that came with it. But they came together from that standpoint. That's probably the best I can say, Will, from that standpoint. I don't think it was anything that specific, I'd probably note one area there which we didn't talk about, and that is we did obviously get the benefit of lapping the hurricanes from a year ago. So, some of our acceleration going into the end of PA (00:47:38) is going to happen in Texas, I think the numbers probably proved out both on the Black Box or Knapp-Track type data. But when you take those days out, from that standpoint, or those weeks out, we still saw the same kind of trends in our business.

Got it. And then switching over to delivery in off-premise, last quarter I think you talked about delivery, which obviously is growing at a fast clip but cannibalizing some of your to-go business, I assume that's still the case. So, I was wondering if you could speak to that dynamic if you feel like delivery is eating more into that to-go business or staying relatively the same, and if you're still okay with that dynamic?

Will, I'd take that – it's a good question and interestingly as we lap, think about our big push in delivery of expanding third party distribution really started occurring late August into September of last year. So, as we lap that, we're pleased that we're continuing to see growth in our off-premise, and from a percentage growth perspective, delivery, now lapping that initiative starting a year ago has slowed down on a percentage basis, but the cannibalization of take-out, which was never monstrous, but was there, has slowed. So, the overall growth had kept going, if you will, at pretty steady pace even though we're lapping the initiative launching just a bit over a year ago, deliveries kept growing obviously, with less cannibalization from take-out. Does that make sense? And take-out, just to remind you, is a much bigger business for us still than delivery is, so that's meaningful.

Got it. Thanks, guys.

Okay.

Our next question comes from Stephen Anderson with Maxim Group.

So, good afternoon. I wanted to – well, as you look at your 2019 pipeline, so I'll ask (00:49:39) about your construction costs, whether you're seeing an increase as you go into sort of the non-California market that you've actually seen some of the costs decline?

Hey, Stephen, it's Greg Levin here. We're seeing, and I think everybody is, we're seeing construction costs increase across the board. You don't have as many people in the trade as you used to have. So you've seen less people in the trade which is driving up kind of this supply and demand issue, just like we see in hourly labor. Whether that's in California or not, it's across the board. We haven't added a new restaurant in California since, I want to say about three years ago, when we opened Victorville. So, I don't have comparisons what it would be to build in California today. But generally speaking, when we look into some of the areas that we built this year versus what it cost us three or four years ago, we're seeing somewhere in the 5% to 10% increase.

Yeah, just add to that, the impact that we're really seeing are extending the schedules, decrease in contract reliability, those kinds of things as well.

(00:50:54)

Okay. Thank you.

And our last question today comes from John Glass with Morgan Stanley. Brian Harbour - Morgan Stanley & Co. LLC: Hi guys. This is Brian on for John. You had mentioned some of the marketing kind of in new cities that you entered. I'm just curious kind of about the sales performance that you've seen for those units. Are you pleased with kind of how they're opening? Is it quite strong, or is this something that kind of builds over time? How does that look?

Brian, just be clear. Are you asking about our new restaurant opening units or the brand new restaurants that are opening? Brian Harbour - Morgan Stanley & Co. LLC: Yeah. Thinking about like some of kind of new units in new cities you've entered, like I think, for example Providence?

Yeah. Okay. We've been extremely pleased with a very strong year this year in our NRO, our four, soon to be five NROs that have all been outside those core markets and Warwick in Rhode Island is a good example Albany, two in – one in Detroit, and Livonia just recently opened up. They're all doing very, very well, and real pleased with the starts in those restaurants.

Yeah. I think, Brian, we've talked about this in the past and that is our restaurants generally open up with high honeymoons as Greg Trojan mentioned. So, we're really happy with those numbers there. They're going to the comp base at 18 months and our restaurants going to comp base negative. By the way, it's that way today. Even with our 6.9%, we have a little bit of a drag on comp sales from our restaurants that opened really at the end of 2016 or 2017. And by usually around month 30th, so another 12 months there, they start to pull themselves out and build up on comp sales. So, I think one of the things that we're looking at is does it make sense to see if we can figure out additional marketing in some of those newer markets as they start to hit 18 months out, and see if we can shorten that growth timeframe in regards to becoming positive comp sooner versus kind of somewhere in the 30 months out timeframe. So, that's what we're looking at doing and that's where some of that additional spend is going. Brian Harbour - Morgan Stanley & Co. LLC: Okay, great, makes sense. And I guess one more, just you mentioned you're kind of investing more in digital and mobile, what is that you're kind of planning to do next year, and kind of how do you feel like you compare to some of your peers on those – in that way?

Well, there's I think two elements of it, one is the marketing element where we are continuing to look at digital mediums, particularly video obviously, and social that we – a good parameter for us is some of the – when come one-off event, but promotional events that we do like our Free Pizookie Days continue to do better and better. We just had a record setting one at the beginning of this quarter, as Greg alluded to. And I think a good part of that is attributed to how we're able to, and Kevin and his team have worked on refining the market communication around those kind of events primarily, almost exclusively frankly, through digital and social channels. So that's the marketing element, but we're also talking about how we can use digital technology from an ordering perspective, and actual in-restaurant and ordering to go experience that of course is digital in nature, but very different than that. So we use the terms digital and technology in both context, and I think both are important to our future. Brian Harbour - Morgan Stanley & Co. LLC: Okay. Thank you.

Okay.

And that concludes the call for today. Thank you all for your participation. You may now disconnect your lines.

Okay. Thank you, operator.