Welcome to the BJ's Restaurants, Inc. Fourth Quarter 2020 Earnings Release and Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Greg Trojan, Chief Executive Officer. Please go ahead, sir. Thank you, operator. Good afternoon, everybody, welcome to BJ's Restaurants' fiscal 2020 fourth quarter investor conference call and webcast. I'm Greg Trojan, BJ's Chief Executive Officer. 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 closed today, we released our financial results for the fourth quarter of fiscal 2020, which ended on Tuesday, December 29, 2020. 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 will then provide an update on our business and current initiatives. Greg Levin will provide some commentary on the quarter and the current environment. After that, we'll open it up to questions. Rana, go ahead please. 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 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 cannot be placed on such statements. Our forward-looking statements speak only as of today's date, February 11, 2021. 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. Good afternoon, everyone, again. Given the broad increase in the dining restrictions that occurred in November and December, I'm very pleased with our team's accomplishments during the quarter. As we reported in last month's business update, the quarter began strongly in October, with weekly sales per restaurant averaging over $83,000, despite dining rooms in only 28 of our 62 California restaurants being open for the full month, and significant dining room capacity limitations across our system. Beginning in November, as you know, numerous states rolled back dine-in reopenings, and California in early December closed all outdoor patio seating, which limited our sales in the state to delivery and takeout only. As such, sales in November and December dropped from October's $83,000 weekly average to $78,000 in November and $60,000 per week in December. In the face of these challenges, our team once again demonstrated their ability to maximize sales and tightly control our operating expenses, allowing us to generate positive EBITDA for the quarter. In 2021, we have returned to growing our top line, and the momentum has continued to build each week. Gradually easing of restrictions, first outside of California, followed by the opening of outdoor dining again in California at the end of January, along with government stimulus payments and the continued implementation of our sales initiatives, helped us increase our average weekly sales to $66,000 in January and to more than $74,000 this past week. Although we are prepared for the pandemic recovery to continue to be uneven, we are optimistic that ongoing vaccination efforts and improved treatment protocols will continue to have a positive impact on sales. Our ability to take advantage of improvements in the sales environment will benefit from running the plays we have learned over the past year to maximize dine-in capacity through both indoor and outdoor seating. In addition, we continue to double down our efforts to maintain and grow our off-premise business. Our ability to prioritize the near- term while not neglecting the longer-term opportunities for our concept will pay dividends in the years ahead. Our first priority throughout all of this, though, has been to confront the daily challenges of operating our restaurants in this environment. The number of obstacles has been great, the pace of change related to the operating restrictions, supply chain disruptions, PPE regulations, et cetera, has been truly unprecedented. As we've navigated these challenges, we've also been very conscious to take advantage of the circumstances to improve our business for the long- term. There's a great opportunity for us to build stronger relationships with our guests, and as we work harder than ever to serve them in more ways than ever. Our steadfast commitment to operating as safely as possible and not bending or breaking the rules like many operators have chosen to do, we believe is building further confidence and trust in our brand. Building new muscles as an organization in virtually every functional aspect of our operations has been and continues to be our mindset. Key to operationalizing these improvements, however, is ensuring that we have a strong, flexible balance sheet to make the prudent investments that will enable us to be opportunistic in the months and quarters ahead. We adopted this mindset at the outset of the pandemic, which led us to execute an equity offering last May to raise $70 million. We recently raised an additional $30 million through an add-on at-the-market equity offering. Along with our previous extension and recent negotiation of our credit agreement, we're in a strong position to invest in the right growth initiatives while ramping up our new restaurant opening pace when the time is right. As a result, we've already made investments in high design quality partitions within our restaurants, experiential outdoor tents, heaters, and audiovisual upgrades, which are important head starts as we see restrictions easing and spring weather approaching. We have also made important physical improvements to our restaurants to better execute off-premise demand, such as kitchen system technology to improve order visibility and pacing, enabling our kitchens to sync both in-restaurant and off-premise demand with our restaurant capacity. Front-end order and pickup technology to drive convenience and order accuracy is also helping provide a better friction-reducing experience for our guests. We've been averaging approximately $28,000 per week in off-premise sales in the recent weeks, which is maintaining at more than double our pre-COVID levels, and we remain committed to growing this from its base. We're also pleased to see our guests increasingly engaging with our brand digitally. More than 25% of our dine-in checks are now paid digitally via mobile pay, and over 80% of our off-premise orders are placed through digital channels. Additionally, more than 80% of curbside orders are now using our easy digital check-in functionality to alert us that the guest has arrived. Our innovations that increase convenience and reduce friction will surely remain popular with our guests well after the pandemic has passed. In the fourth quarter, we also made good strides on several of our longer-term sales-building initiatives. First, our beer club membership program continued to show promise. Members were engaged with the program, enjoying both the special beer releases and taking advantage of the program's benefits, and they increased their visits to BJ's. We're very excited to build closer connections with our guests that love our beer and to further promote our world-class, award-winning brewing skills and creativity. Our pipeline includes some of the best beer from our R&D brewing team, including our Bourbon Barrel Chocolate Stout and our Coffee Blonde, which was awarded a bronze medal at the most recent Great American Beer Festival. We plan to launch our beer club in most of our California restaurants in the next couple of months and are evaluating the expansion into other states later this year. Next, we began testing our virtual brand called Slo Roast in the fourth quarter and expanded the test to 13 restaurants last month. This is a delivery-only concept with a focused menu featuring our Slo Roast and other protein-centric products. Sales continue to build week over week, and our guest ratings were averaging 4.8 out of five stars. We will continue to closely monitor this test to ensure we are building incremental sales and profit while maintaining our kitchen efficiency, but early results are promising. Finally, we continue to believe there is significant growth potential in our catering business. We added individually boxed meals to our catering menu in September and have seen impressive demand, including some very large orders from companies leading the fight against COVID. We're extraordinarily proud of this business for its small role in helping the frontline workers battle the pandemic. Our strong balance sheet also enables us to accelerate new restaurant growth. We remain committed to limiting our 2021 growth to opening the two restaurants located in Merrillville, Indiana, and Lansing, Michigan, which were already under construction at the outset of the pandemic. We continue to believe it will take more time for the real estate landscape to reset in any meaningful way. When it does, we are confident it will open up attractive new locations for our concepts. While our real estate team is hard at work assembling a robust pipeline for 2022 and beyond, we are being cautious about committing to new leases until there is more clarity in regard to a more predictable dine-in environment. We do commence committing to new leases, we expect to build in flexibility regarding pandemic-related delays in regard to opening day commitments, rent commencement, et cetera. That said, we look forward to resuming an accelerated new restaurant opening cadence toward addressing and realizing the geographic potential of our concept. In summary, the point is clear. We're not standing still and playing defense only. We're spending time and making investments to improve our concept differentiation and competitive advantages as we emerge from this pandemic. Before I turn the call over to Greg, I wanted to take a moment to thank our team members for their ongoing commitment to serving our guests with gold standard service. I could not be prouder of their efforts. The pandemic has presented new challenges to all of us, and our teams have successfully navigated all of them. Our recent performance and future growth would not be possible without our dedicated team members that strive to deliver a great experience to every guest while supporting our business principles and goals. Now I'll turn it over to Greg to provide some commentary on our financial results. All right. Thanks, Greg. As detailed in our business update on January 21, sales continue to be largely dictated by capacity restrictions. My commentary on both Q4 and Q1 to date reflects where we are with the ever-changing national, state, and local restrictions and regulations regarding the dining room limitations. Please remember, this commentary is subject to the risks and uncertainties associated with forward-looking statements as discussed in our filings with the Securities and Exchange Commission. As Gregory Trojan mentioned, October started strong for BJ's, with 88% of our dining rooms open and comparable restaurant sales rebounding to down just 20.6%. Beginning in November, numerous states rolled back their dine-in reopenings. In December, California, where 62 of our 209 restaurants are located, closed all dining rooms and outdoor patio seating, limiting our sales in the state to only delivery and takeout. Comp sales in November and December decreased to - 27% and - 35.3% respectively. We finished the quarter with comparable restaurant sales down 32.3%. Our total revenues for Q4 were $197 million. We recorded a net loss of $18.1 million and diluted net loss per share of $0.81 on a GAAP basis. Our fourth quarter results include a net charge of about $200,000 asset for a gain related to the sale and lease back of our Orange Village, which is in Ohio. That was offset by an impairment charge for one of our restaurants in the Seattle area. While the Q4 results reflect the November and December reversals in dining capacity, our dedicated team members protected and served our guests while managing the negative leverage in our business, allowing us to generate positive adjusted EBITDA of $2.4 million for the quarter. Given the number of dining rooms and patios that were shut down, the need to discard food because capacity was significantly reduced, and the constant and ongoing labor adjustments we made to address the changing rules and regulations, this is a meaningful accomplishment by the industry's best restaurant and field operations management team. In regards to our operating results, the resumption of dining room restrictions during the quarter impacted several metrics. Cost of sales came in at 25.8% for the quarter, a 60 basis point increase over the prior year, driven primarily by increases in cheese and meat costs. On a quarterly sequential basis, Q4 cost of sales were 120 basis points higher than Q3, which is primarily due to higher meat costs. The higher meat cost is related to both higher seasonal inflation and our conscious decision to promote and discount our prime rib specials throughout the holiday period to move what could have resulted in significant excess inventory of our fresh prime rib as a result of California deciding to shut down all on-premise and patio dining in late November. Our culinary team came up with creative take-home family prime rib bundles for the holidays that, along with our other prime rib promotions, helped us sell approximately $1 million of prime rib products in the last two weeks of December alone. The demand for our prime rib items by our guests rebalanced our inventory, and as such, we did not have to discard any excess inventory. Labor came in at 38.4%, which was 200 basis points higher than the prior year. From a year-over-year perspective, we continue to leverage hourly labor by driving sales in the off-premise channel while benefiting from our smaller menus. These savings were offset by de-leveraging from the lower sales volumes of fixed manager labor, benefits, and restaurant-level equity compensation. Operating and occupancy costs were 29.1% for the quarter, inclusive of 1.6% of sales for marketing. Operating and occupancy costs average about $21,100 per restaurant operating week, and that represents a decrease of about 13% compared to last year. Included in operating occupancy costs was over $1.4 million of operating expense for temporary patios and approximately $150,000 for personal protective equipment and cleaning supplies to ensure the safety of our team members and guests. Our temporary patios generated over $16 million in revenues for the quarter, making the $1.4 million incremental expense a very high ROI. G&A for the quarter came in at $13.3 million. On a trend basis, G&A was down approximately $2 million compared to the prior quarter, and that's primarily due to the reversal of incentive compensation in the first quarter. Turning to the balance sheet. During the quarter, we paid down an additional $10 million of debt. As a result, we finished the year with approximately $54 million of cash on our balance sheet and funded debt of approximately $172 million. Even though we have been generating positive cash flow, paying down debt, and have a solid financial position, we felt it prudent to raise an additional $30 million of equity capital last month. As Greg said, with vaccinations underway, and as we look to the future, BJ's has the capital necessary to more aggressively pursue both new restaurant expansion and further invest in our sales-driving initiatives. Now, shifting to today, as I said at the beginning of my prepared remarks, our sales continue to be governed by the varying capacity limitations imposed by local and state regulators. We started January with all of our California restaurants limited to takeout or delivery only. Also had dining rooms shut down in our restaurants in the Pacific Northwest, Michigan, and a few other states and locations. As such, we had approximately 64% of our dining rooms open in January and finished January with our weekly sales average of approximately $66,400 per restaurant week. In February to date, California dining rooms remain closed, while patios have reopened. Restrictions have also eased in Michigan, Washington, and Maryland. As such, our weekly sales average for the first two weeks of February has increased to around $74,000 per week. At our current weekly sales level of approximately $74,000 per week, we expect to be a modest user of cash of less than $500,000 a week, which is inclusive of restaurant level manager bonuses, full rent, interest expense, and also full maintenance CapEx and some other investments in our business to drive sales. As we think about this year, it is very difficult to provide sales ranges due to the ever-changing capacity restrictions, curfews, and other regulations we face. At present, capacity restrictions are loosening, which will lead to higher sales. Like everyone, we are hopeful that increasing vaccinations should allow us to get back to 100% capacity sometime in the second half of this year, and we see the opportunity for sales more fully recovering given our differentiation and value, as well as the broad health and safety measures we've implemented across our platform. With regard to the middle of the P&L, right now, we anticipate commodity inflation between 1% and 2%, with cost of sales in the mid-25% range. However, the level of open dining rooms may result in different promotions or menu mix, and that could drive cost of sales somewhat higher or lower. We are targeting G&A of approximately $67 million for 2021, which includes more than $6 million for incentive compensation compared to less than $500,000 in 2020 due to the impact of COVID. The G&A budget also includes $7.8 million related to equity compensation compared to $7 million in 2020. Therefore, if you look at what I would call controllable G&A or G&A excluding incentive and equity compensation, we expect G&A to increase by approximately $6 million from 2020. I think the right way to look at this would be to compare it to 2019, which takes into consideration more normalized operations. As such, compared to fiscal 2019, our controllable G&A would increase by approximately $500,000 or less. At the current time, we expect to open two restaurants in 2021, as Greg noted, one in Merrillville, Indiana, in early May and the other in Lansing, Michigan, in early June. We also anticipate reopening our Richmond, Virginia restaurant sometime during 2021, which has been temporarily closed. Our goal is to open 7- 10 restaurants in 2022 by taking advantage of some of the real estate opportunities to come to drive high ROI expansion. Our 2021 capital plan will include our CapEx dollars for 2022 for restaurants that will open in fiscal 2022. Overall, I expect our fiscal 2021 CapEx to be between $35 million and $50 million, depending on when we start construction for restaurants we plan to open in fiscal 2022. It is important to note that 2021 CapEx will also support our sales-driving initiatives, including the beer club, catering, and off-premise. As in the past, we continue to have the flexibility to pull back on these cash expenditures based on the operating environment as many of these efforts are discretionary and variable. As we reflect on 2020, we couldn't be more proud of the resiliency and determination of our team members. Though we endured unprecedented challenges to our business, they successfully created and implemented enhanced safety protocols for our team members and guests, reimagined our in-restaurant patio delivery and takeout functions, modified our menus, engaged guests with unique marketing and loyalty offerings, and leveraged our technology investments to bring the best BJ's experience possible to our loyal guests. Our teams are battle-proven and have always been the core of our success and long-term growth. Throughout the pandemic, our customers have remained very loyal and attracted to the great food, drinks, service, hospitality, and fun times with family, friends, and coworkers, teammates, and others that BJ's delivers. Whenever we had reopenings or expanded capacity, guests responded enthusiastically with strong volumes, traffic, and check. Despite the challenges, we continue to execute on our long-term strategy by reevaluating and reimagining our operational protocols and menu offerings while building on our technology investments to position the company for its next significant growth phase. Trends in February are encouraging, and we believe the rollout of vaccinations will lead to loosened capacity restrictions and encourage even more guests to return to our restaurants over the coming quarter. Given the service enhancements and operational changes we have implemented, we stand to achieve meaningful growth as our volumes continue to approach previous levels. We are highly confident that once the post-COVID normalization materializes, we will realize a sustained margin uplift and resume a more aggressive expansion phase complemented by our range of share-building initiatives. With that, I will go ahead and open it up for questions, operator. Thank you. We'll now begin the question and answer session. We'll go to David Tarantino of Baird. Hi, good afternoon. I have two questions. First for Greg Levin. Greg, I'm wondering if you could give us a little bit of help in thinking about restaurant margin and how that might progress as the volumes rebuild, and specifically as you get back to 100% capacity and the sales level you'd expect at that level. Where would you expect restaurant margin to be in that scenario, given all the changes that have occurred since the start of the pandemic? David, I think we've got an opportunity as sales start to recover to get back to margins that we saw really much more in 2018 and so forth from that standpoint. That takes us back into 18+%. I think there's a good opportunity for that, if not better. You continue to drive off-premise sales, which have shown to be very profitable because of the labor benefit there, not having to put a server against that part of your sales, so you really leverage the kitchen. I think the investments we've made in digital have proven to be really good for us and for our guests. That'll save in regards to expenses around menu printing, other point-of-purchase materials. I think our cost of sales will continue to bounce around a little bit, but as we have less items out there, we get more efficient, and we'll see some opportunity in that. We've talked all along about just hourly labor, the fact that we continue to see less hourly labor being used in the back of the house, in our kitchen, just because of less menu items. I think all of those give us a really good opportunity to drive margins to where they were previously, if not better, as sales continue to recover. Great. On that, Greg, would that assume average weekly sales back at that $107, $110 type of range that you were in at that time, or would you be able to accomplish that margin profile on a lower sales volume? I don't know if I know the answer to that quite yet, Dave. As we start to ramp up, just seeing some nice leverage come through our business, I think we have the ability to actually get back to our historical margins at maybe a lower weekly sales average. That's kind of based on the fact that, again, less menu items. We continue to drive the takeout part of our business. I think that's a very highly leverageable part of our business. I think there's an opportunity to get there at a lower sales volume, per se. We really, to be perfectly honest, haven't gone through and tried to model out what our sales volume is going to look like in 2022 post-COVID, as much as we continue to think about the things right in front of us right now in regards to the daily tackling and blocking, so to speak. The only thing I'd add in is as we're thinking about this margin opportunity is really in the context of establishing weekly sales averages that are more than our historical levels because we continue to firmly believe the dine-in business is going to come back. I think we will see pent-up demand and passion around dining with friends and family like we've never seen before for some time. The reason we're so focused on keeping and growing this off-premise business is that becomes incremental to those historical sales averages. We say this all the time, but the easiest way for us to drive higher percentage margins is to leverage a bigger number on the top line for the fixed cost elements of our business. I do think Greg is accurate in saying, given all the mix and advantages, we see an opportunity to have margins return at maybe lower volumes or, said differently, a little higher margin at the same sales levels. The eye on the prize here is let's establish new levels of weekly sales in our concepts to leverage everything. That's really the intention. Yeah, makes sense. If I could slide one more in on the strategy, Greg, why are you pursuing the concept of a virtual brand at this point? I guess it's not obvious that you have excess capacity in the kitchen and I'm just wondering why you wouldn't be more focused on growing the core business. Yeah. I think that's obviously a good and fair question, look, as busy as our restaurants are, we get that question a lot from a number of different perspectives of, "Well, why wouldn't you prioritize," I think your question is essentially, "higher margin business given how busy your restaurants are?" I always remind people that we flex capacity during the week and during the year all the time. When we look at our P&Ls in May and June, when we're running some of our highest weekly sales volumes or in traditional sense, November, December, we're flexing a lot of growth there. Essentially, the answer to your question is we do have "excess capacity," and we see this as a way to drive incremental dollars through our system and through, again, the fixed cost structure that we have. As I alluded to in my remarks, we want to make sure these are truly incremental for the reasons you're asking. If that ends up being the conclusion, and obviously we suspect it is, or we wouldn't be doing this, then it is adding incremental value to our business and to our shareholders. The other element I'd add is, and again, I alluded to this in the remarks, but just to accentuate is we are pursuing this concept perhaps a little differently than others in that we're doing so and engineering it from the kitchen, starting with the kitchen more than almost starting with the guest. By that I mean we're minimizing disruption in the kitchen first and seeing if that will sell versus what do we think is the optimal guest menu, et cetera. Even in protecting our kitchens first and foremost, if that makes sense, so that we don't end up impacting the productivity and efficiency of our kitchens and impacting capacity even more. Our point of view is, look, we're not going to do this if we start impacting kitchens in a way that's disproportionate to the volume. We'll see what kind of sales we drive with that constraint in place first. Great. Thank you for that detail. You're welcome. We'll go to our next question from Jeffrey Bernstein from Barclays. Great. Thank you very much. Two questions as well. The first one, just on the unit growth, which I know comes up pretty regularly in discussion. I think you said doing two in 2021, similar to 2020, but encouragingly ramping that to 7-10, I guess, in 2022. Just looking back at our models, I know you had done 15-20 a year just a few years ago, so I'm just wondering your thought process, especially as you talk about the contraction that casual dining supply, it would just seem like a huge opportunity, whether or not you're able to turn it on that quickly and do it in 2021, or why not maybe 2022 wouldn't be a lot more than maybe achieving new highs relative to prior. I'm wondering whether there's any view from your perspective that there's just a quality of site issue or a labor constraint issue, because again, I know you did it successfully a few years ago, and now it would seem like more of an opportunity than even then. No, it's a good question, Jeffrey. Really the bottom line is, we say this all the time, is the constraint is in sites. It really is people and the pipeline timing really is another one, specifically in the context of COVID, because we have not yet gotten to the point where we have, frankly, the level of confidence that the COVID coast is clear enough where we want to commit to this level of sites. We're feeling better and better about that, but it takes at least typically 18 months of pipeline before we identify a site and it opens. Can be more, can be a little less at times here. So first and foremost, it's around quality and having the people and the bench strength developed and ready to open that many restaurants. There also is, like I said, a timing consideration here where given that it's 18 months, if we wanted to do more than that, we'd have to start yesterday or before to be opening more restaurants than we're describing here. We're just not quite at the point where we're ready to flip the switch and go, we have a level of confidence from a COVID timing perspective. We're getting closer, but we're there. Now, one last thing, and I think I could close the loop here is, that is to say, though, that we are as confident as ever that we can get back to those kind of numbers. It's a matter of ramping. We are excited about the environment and the opportunity clearly here. For years and years, people have asked us, "Why can't you go faster?" We're going to err on opening with quality than quantity overall. Yeah. The only thing I was going to add to that, Jeff, is everybody thinks that the floodgates have opened in regards to sites, they just haven't quite opened yet. We continue to believe they will in that regard, our real estate team's already put together a good pipeline, we want to make sure that at the same time, we can be opportunistic when sites open. When we think about really the good AAA sites, we're not quite seeing the softening that maybe people expect in certain of those markets. If we want to go into B and C sites, we can go into those all day long and open 15- 20 restaurants. As Greg Trojan said, we want to do it with quality. That's been a hallmark of BJ's. We have not had to close a restaurant because of performance in that regard. Even now, even though we've taken some impairment on restaurants, we've had to do that mainly because around COVID and the accounting rules versus where those restaurants were operating a year ago. Again, we've always been quality first, and we'll continue with that. At the same time, we're going to be opportunistic when those availability of new sites come about. Understood. I guess it's encouraging to hear Greg Trojan say you can get back to that 15-20. Maybe it's not in 2022, but that's on the radar and well within your capabilities. Absolutely. My follow-up was just on the labor cost side of things. Clearly you faced a couple hundred basis points of pressure this quarter. It seems like a lot of people are talking about these opposing forces, whether it's national minimum wage potentially going up. On the flip side, unemployment high, which often implies ample labor. I'm just wondering, with that kind of context, love your outlook on the labor cost outlook and availability, maybe your confidence in offsetting the pressures, whether it's through cost savings or technology, or whether you have to revert to menu pricing. Obviously, you operate a lot of restaurants in California. You have a head start versus many others in how to deal with this. Just trying to get your sense for the labor outlook, maybe your mix of no-wage versus tip credit workers, any color would be great. Thank you. I'll take the first part, then I'll see if Greg has anything to add to it. Because of our geographic setup today, even as minimum wage increases, if it passes and moves through there, I want to say less than 50% of our restaurants would be impacted in the first couple of years because of the minimum wage increase, the federal minimum wage increase, obviously, if you figure out California and some of the other ones from that standpoint. We're already in a lot of our restaurants significantly above the federal minimum wage. There's less impact maybe to BJ's versus a more regional competitor in some of those lower cost states from that standpoint. I think that kind of puts us in a better footing maybe than some of the others. As we think about in general, we said this before, that prior to COVID, the real issue on wage rate was not minimum wage increases in California and other states. It would be, at that time, low unemployment. Unemployment, I think, was in the mid 3% range or so, and everybody was fighting for good line cooks and good people in their restaurants overall. That, as we've seen, Jeff, I know you cover a lot of restaurant companies, we're seeing kind of 5%, 6%, 7% increases in wage rates across the board, both kitchen and obviously the dining room. As we went through this year, we've seen that obviously flatten out. We're not seeing quite the increases that you'd see in the kitchen right now that we saw earlier in the year. However, I would say at least currently, it's still somewhat challenging to get team members back into the restaurants. Some may have gone to new industries, but others are really just not necessarily comfortable coming back into the working environment yet. I think that'll ease over time as vaccinations get out there. As a result, we're going to see, I think, a better labor market than we've seen over the last couple of years, and that'll help manage some of the costs within the kitchen and some of the other areas. We will always invest in technology. We always have at BJ's. We've got handhelds out there. We're moving to tablets and other things for guests to use. We're not going to sacrifice the service and hospitality that our guests demand. In fact, we're doing a lot of research right now on our guests, what they really respect and admire and why they come to BJ's. Frankly, service and hospitality sit at the top of that. I wouldn't be sitting here trying to build a model on your end saying, "Okay, with wages going up, BJ's is going to take servers from three and four table stations to eight, nine, 10 table stations." That they're going to cut their menu down to 50 items and have everything come through our KDS. That's not how we're going to grow top-line sales. It's ultimately the best way to manage labor. We're going to take more of that authentic approach, but we'll always invest in technology. If we know what our sales are each week, we can drive or manage really good labor. The challenge that we've seen through COVID is those schedules go up and down each week. When there's predictability in our business, we'll get leverage in that, and that's what we need to do, and we'll continue to invest on that aspect of it. Great. Thank you. You're welcome. We'll go for next question from Nicole Miller of Piper Sandler. Thank you. Good afternoon. Greg and Greg, thanks for the time. I thought since you offered up Kevin in marketing as also joining, I might ask a question headed in his direction. I was wondering about marketing from the perspective, number one, of positioning. This is a local favorite brand, but also with a national opportunity to grow and scale. What's the messaging and what's the ideal channel? Part two, the full service or casual dining segment has been able to really pull back on discounting in the current environment. Do you see any, I guess, change in tactics to succumb to discount marketing again anytime soon? Thanks. Greg, you want me to jump in on this? No, I think Nicole was asking you, Kevin. Thanks, Nicole. I appreciate the question. I guess first on the position area, as Greg was saying, a lot of what we do from a messaging perspective first starts at the experience or the relationship our guests have with our brand. A lot of what we do there starts, we also of course have, we'll call it use cases in the areas of dine-in and catering and delivery. Our message starts really first with that connection, then secondarily, we try to extend that into the areas of the need state or the use case. We have positioning not at the brand level, everything from catering to our beer messaging to what we do with delivery, et cetera. Greg mentioned we're doing some research right now in what we call the concept essence. We're still learning a lot more from our guests, and we think there's still more to cultivate there nationally against the experience and the feeling that people have at BJ's. That's your answer to number one. In the discounting space, we have done a lot less here, for obvious reasons. What we're actually leaning into more is tactically is in the value space. Things like our Brewhouse Specials have done so well for us and continue to get played back to us from our guests. What we do in some of the happy hour areas, some of the bundles we put together in the off-premise space have all been highly interesting to our guests and taken advantage of. What we're doing now is looking at more opportunities there as well as we still leverage a lot of our digital to get that message out. We do a lot of programmatic targeting. We do a lot of social marketing, and of course, our email for our loyalty. Those tend to be our strongest channels right now. Okay. Just to make sure I understand that then. The other thing that Nicole. It's a lot about the value proposition, right? About the value proposition, I was just going to say, versus actual discounting. I'm sorry, I interrupted. Thank you. Yes, the value proposition. Okay. The other element that has grown and been, I think intrinsic to the value proposition is the popularity of our loyalty program and the frequency that it drives and the engagement of our loyalty guest. Nicole give us an ability to drive value. I think it's somewhat of a unique way. I think all of the above is our mindset is around continuing to pull back on quote unquote, "Conventional discounting" to the extent that the competitive environment permits us to. I think we've got more weapons to keep it that way than we have in the past that are more productive, but also more unique to BJ's. That's a very good point. Thanks for taking my question. It's a very helpful update this afternoon. Thanks again. Thank you. We'll go next to John Glass of Morgan Stanley. Thanks very much. Gregory Trojan, just first, you talked a lot about how sales have declined rapidly and everything you've done. How are you now preparing for that rebound in sales? As you mentioned, that may be just as unpredictable as the decline. I'm thinking specifically about how long it takes you to recapture bring back the labor and is there a lag or a need to retrain folks, for example. Maybe there's other areas like supply chain that you need to make sure you got visibility on good supply. I suspect everyone's going to be looking for the same supply and same labor at the same time. What are some of the steps you're now preparing for, as you said, to see the other side of this? You know what, John? We've seen such ups and downs in our business here and during the past year. That's not something I lose sleep over, honestly, is like, our operations ability to train and hire folks and adapt to higher volume. That's obviously a problem we look forward to having. Obviously, COVID's presented some challenges from a supply chain. We've had disruptions here and there and have had to work around those. In a normalized environment, we have great vendors and a great distribution system. That's what we do. I don't envision It's not gonna happen overnight. We're not gonna be at 110,000 a week in three weeks. I think we've demonstrated as we've opened up dining rooms, you know this, but we've gotten notifications on a regular basis on a Thursday that we can open on a Friday. Sometimes we say, "Look, we want to make sure we can open well, and we need to gather the troops and make sure we have some of our veteran servers ready, so we'll wait a day or two." We've been able to ramp up. When you go from carry to off-premise only in California to opening up sit down dining and dining rooms, et cetera, that's a pretty big increase in a short period of time. Our operators have been able to do that. I don't mean to be dismissive about it. It's a good question, but I can't wait to have that to think about some more. Yes, John. Yeah. It's a nice problem to have when sales start to come back to that, which they will. I think there are always going to be some of those issues. We go back to Q4, and I think it was in yesterday's The Wall Street Journal, was the cost of propane gas. Propane tanks went from $40 to $90. Those are the things that we will see and continue to see, I think, as restaurants open up, there will be those incremental costs, just like there were with PPE and getting propane gas or getting tents put up. Thankfully, we've got a great supply chain team that works that. We also try to do forecasts for our supply chain team to work with our suppliers to make sure they're thinking down the road in regards to their supply chain to have things in place. I would probably say those are more like bumps in the night because they do happen here or there. In that regard, the other side of it is we've done a really nice job keeping in touch with our hourly team members, trying to make sure we're letting them know when we think things will change and be able to bring those back. Generally, I think what you're going to see in this business, though, is as sales go up, businesses will leverage the heck out of those sales because you're just behind it a little bit in regards to keep getting the expenses in timely. Much like the opposite happened to us in Q4, as sales got shut down, we had incremental costs in our business that we normally wouldn't have had if we were always running at X, so-called $73,000 a week. I think you're going to see some really nice early-on margins for companies, and then they'll slowly get ahead of it a little bit in regards to bringing back the right staffing levels, the right manager levels, and so forth, and you'll start to see those flatten out. Thank you. One other question. When you paused development, you probably had a chance to rethink the format of the stores, perhaps, as you think about 2022. What has changed, right? I mean, when your competitor is thinking about actually adding a drive-through. Do you include permanent social distancing or larger partitions in the restaurant as this may be something that lingers? Do you think about a smaller dining room? Have you changed any fundamental aspects of the prototype as you think about 2022? No, another great question. A couple of those are good examples where we didn't do the quick and cheap version of partitions. We did what I think I referred to here as high design or whatever you want to call it. Our partitions, A, look like they were there from the beginning, and they don't obstruct a really important part of our restaurant, which is this open feel to them, and the fact that you can see our bar statement through just about every seat in the restaurant. We were very careful about how we approached the design and actually did some tests and different versions on partitions, because I believe they're here to stay for some time to come, years, not months. Most of them have been thinking around the off-premise capacity perspective. Some kitchen engineering and placement of line elements and where we can stage more of the product in the kitchen versus in takeout. Those kind of ergonomic productivity elements, I think, are big. There is space, more physical space to accommodate third-party delivery, et cetera, things like that. I put them all in the capacity bucket, if you will. Thank you for putting on your list shrinking dining rooms. We believe dine-in is going to come back bigger, and for all the capacity reasons, that we're going to need every seat in our dine-in restaurants that we have today. That is not on our list. A lot of the others you speak of are good examples of things we're looking at. Drive-through is not one of them. I wouldn't say no, never. Our current thinking is that we can execute the takeout experience in a concierge kind of way, actually more effectively and faster, given the advantage we have in large parking capabilities that we do than sequentially fulfilling orders through a drive-through. We're open-minded and are looking at a lot of possibilities there. At the moment, that's not highest on our list anyway. Thank you. You're welcome. Moving on, we'll go to a question from Brian Bittner of Oppenheimer. Thanks. Hey, guys. When we think about the recent improvement in your average weekly sales volumes that you talked to getting to around $74,000 last week or for February, can you give us some context as to what the capacity availability on average is across your portfolio in February to achieve that average weekly sales level? I think that would just help us better understand the relationship between capacity and sales. Brian, I have to get back to you on that. Honestly, I don't have that in there. I tend to think about our business. Frankly, a little bit of the way you talked about it, but I was tending to look at our business versus, let's call it October, where we were doing $83,000, $84,000+. In that month, we had, I want to say, 48 of our California dining rooms open at 25%, and now we don't have any of those California dining rooms open. When we can get our dining rooms open in California with our patio, we get effectively to 50% in that regard, from that standpoint. Right now, with just patios, I think about California is probably around a 25% effective capacity or even a little bit less than that. I don't know if that really helps you. I'm sorry, I just don't necessarily have it broken out in that way for the first couple of weeks. It's also, there is no dining, and then the effective capacity of outdoor seating is very tricky, obviously, this time of year and with restrictions too. Even defining capacity, like I said, it's tricky with weather. Regulatory is easier to figure out, obviously. That's a good It is safe to say your capacity in February is less than it was in October, correct? Oh, yeah. Oh, yeah. Yeah. Okay. If you look at our January 21 release, at least at that time, I think we said we had 88% of our dining rooms open. That's also going to have patios. Obviously, we went down to 64%. Even getting California patios doesn't put us anywhere close to where we were in October. Also, I think places like New Mexico were closed. Oregon and Washington just recently opened. It's a lot less than the October timeframe. Okay. Just in a scenario where you do get all your capacity back via restrictions going completely away, which I guess you suggest it could happen maybe sometime in the second half. In that scenario, would you expect to fully restore your volumes in lockstep with getting to 100% capacity, or is there some reasons we should be aware of to expect a lag in how your sales volumes follow the capacity increases? No, I think our sales volumes will be greater than our capacity because of the off-premise and because we will still maintain a certain amount of patios in our business. You're effectively increasing overall capacity versus, let's call it 2019. The other element to it, the upside is, and we'll see how long this lasts, but when people are going out, and I think this will be for some time, they are spending more. Our incident rates on all elements of our menu when people are dining out, including alcohol, we're driving higher check in every element of our business. Because takeout check's lower on an absolute basis, our check is still growing, but not as much as the percentage increase in each of those channels, if that makes sense. More important point is just overall, I think you're going to see Greg's point, we'll have more effective capacity. People have told us by their actions that they like sitting outside, at least in certain parts of the year, in certain parts of the country, particularly California. We're not envisioning all of that going away post-COVID. Yeah, coupled with off-premise. Yeah. Just the things that we created specifically for the off-premise channel, I think there's that opportunity to, as we said, to keep that number up, if not grow it. I think effectively, you've got an increasing off-premise, which is a capacity increase. In the way we structure some of these patios, I think that puts us above that. Frankly, with patios comes the better weather. To kind of Greg's question or your question earlier, Brian, it's sometimes hard to measure our capacity where we have a patio open, but it's cold out and nobody's sitting on the patio. Makes sense. Thanks for all the color, guys. Sure. We'll go to our next question from James Rutherford with Stephens Inc.. Hey, thanks for taking the questions. It comes up in every call in the space. Just a different angle on that question, if I may. You have a meaningful bar business inside your restaurants, and that many bar-only concepts have been under more pressure than restaurants, given they can't do the off-premise as significantly. Have you observed any meaningful supply contraction from bars in your markets? Just what do you think about the real opportunity is to gain market share in that category of your business, and if that kind of beer subscription could play into that as well? In fact, even in normal times, our industry doesn't do a great job of tracking this, so it's all anecdotal. Particularly, we're spending less time out and about than we'd like, but here in California, there's definitely been a pullback. To your point, I'd say the hardest hit have been bars for probably obvious reasons. Except for those that are totally ignoring the rules and laws, as I was referring to, and are remaining open with indoor service. I do think that element of the restaurant business is and going to be the hardest hit there. It's interesting you say we're developing and working on our beer subscription program, not related to that, but that could be a fortuitous coincidence for us, an opportunity in that regard. James, it is hard to try and get the correct numbers around the closures. Knowing Southern California and driving around this area, I think Greg said it well. You see a lot of independent restaurants that are maybe more of a sports bar related, just kind of one-off, that don't have patios out there, have shut their doors. We don't know if it'll be permanent or if it's temporary. There's a lot of what I would call the independent, more bar-centric restaurants that definitely are closed. It's fairly obvious driving around, but it doesn't get quantified in a lot of the national information, so to speak. That color is helpful. The second question is a bit of a follow-up on a previous question, just digging into state level trends a little bit. You gave some helpful detail in your business update a few weeks ago on what you were seeing in some of the, I guess, less restrictive states, Texas, Florida, and so forth, and the comps they were doing in, I think, negative mid-teens in January. I'm just curious, what's the bridge to get back to flat there? Do you think in those states at this point in time it's purely a capacity constraint? We've got customers just waiting during peak times to get a seat, or is there still some demand hurdles that it really will take full vaccination or something close to it to get back to normalized or better sales levels compared to pre-COVID? It's all about capacity. You have to remember, it's not just number of seats, but it's curfews, curtailing late night, day parts. In California, you can't have TVs on in the restaurant. People aren't showing up to watch a game. It's all about the lifting of restrictions and establishing capacity. Understood. Thank you very much. Thank you. We have time for one more question. We'll go to Brian Mullan of Deutsche Bank. Hi. Thanks. Just a question about the subscription beer club you just mentioned. What kind of lift in traffic are you seeing where you put it in place, if you'd be willing to quantify or provide color on that? Are you seeing good food attach on that traffic? Maybe just remind us, is this a program you see eventually across the entire base of stores, or is it something you think maybe only works in certain locations? Thanks. I'm sorry, Brian, I missed the, couldn't hear the middle question of, it was what kind of traffic are we seeing, and then there was something between that and the national expansion question. Yeah. Sorry. It was just, are you seeing good food attach on traffic that comes in due to the program? Does this program work everywhere, or is it only maybe certain states where you have ambitions for it? Look, we're not in a position, given its early stage here, to start citing specific metrics. I'll give you a few general observations, though. The first indicator is, are people willing to sign up and give you their credit card and subscribe? Look, all of these are caveated of, we launched this program September of last year in the midst of all of this, with full awareness. We've had ups and downs of, we need at least outdoor dining in some form in dining rooms here. Even despite those hurdles, we've seen sign-ups at rates that have been encouraging, is what I'd tell you. We're exceeding our expectations in the interest level. Not just interest level, but actually sales levels at the outset. That was happening and has been happening faster than we anticipated. We're also encouraged by the attach rate you're asking about, is people are using these benefits. I'll give you an example. One of them is the ability to refill a growler for $5 if you're a member. People love refilling growlers for $5. The good news is, over half the people that are doing that are actually buying food or, again, an attach rate of an appetizer or whatever to go along with that growler, for example. We like what we're seeing in terms of overall activity. It's sort of like the health club business. We want people to use the health club and get on the treadmill. We want people to take advantage of these offers because we want them to stay members. Again, I say all of this with a super caveat. We're in eight restaurants in weeks, not years here, or months, not years. We like what we're seeing on those key metrics. In terms of the national question, we are limited from a TABC or state and local alcohol and tied- house laws of where we can implement the program today. We like the fact that COVID has initiated a number of states or sometimes they're kind of wherever tied- house laws to be eased in terms of carryout. We are advocates of maintaining that flexibility in those states. The plan is if we continue to see these kind of results after California is to start approaching those states. Yeah, I think it covers somewhere in the neighborhood of about 70% of our restaurants where we'd be able to move the beer club to. Depending on if other states open up, we might be able to get that number a number higher. Okay, thank you. You're welcome. All right. I believe that was our last question. Is that correct, operator? Yes, sir. At this time, I'll advise that this concludes today's call. Thank you, everyone, for your participation. You may now disconnect.