10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended April 4, 2017

OR

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                              to             

Commission file number 0-21423

BJ’S RESTAURANTS, INC.

(Exact name of registrant as specified in its charter)

California	33-0485615
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

7755 Center Avenue, Suite 300

Huntington Beach, California 92647

(714) 500-2400

(Address, including zip code, and telephone number, including

area code, of registrant’s principal executive offices)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☑ No ☐.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☑    Large accelerated filer	☐    Accelerated filer
☐    Non-accelerated filer (do not check if smaller reporting company)	☐    Smaller reporting company
	☐    Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐    No ☑.

As of May 5, 2017, there were 21,558,356 shares of Common Stock of the Registrant outstanding.

BJ’S RESTAURANTS, INC.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements
	Consolidated Balance Sheets – April  4, 2017 (Unaudited) and January 3, 2017		1
	Unaudited Consolidated Statements of Income – Thirteen Weeks Ended April 4, 2017 and March 29, 2016		2
	Unaudited Consolidated Statements of Cash Flows – Thirteen Weeks Ended April 4, 2017 and March 29, 2016		3
	Notes to Unaudited Consolidated Financial Statements		4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		9
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		17
Item 4.	Controls and Procedures		18
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings		18
Item 1A.	Risk Factors		18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		18
Item 6.	Exhibits		19
	SIGNATURES		19

PART I. FINANCIAL INFORMATION

Item 1. CONSOLIDATED FINANCIAL STATEMENTS

BJ’S RESTAURANTS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

	April 4,         2017		January 3,     2017
	(unaudited)
Assets
Current assets:
Cash and cash equivalents		$23,562		$22,761
Accounts and other receivables, net		12,668		14,698
Inventories, net		10,192		9,907
Prepaid expenses and other current assets		10,624		11,324
Total current assets		57,046		58,690
Property and equipment, net		609,836		601,324
Goodwill		4,673		4,673
Other assets, net		27,520		26,625
Total assets		$699,075		$691,312
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable (1)		$32,341		$31,145
Accrued expenses		82,416		94,553
Total current liabilities		114,757		125,698
Deferred income taxes		39,201		37,587
Deferred rent		31,038		30,424
Deferred lease incentives		53,654		54,119
Long-term debt		182,700		148,000
Other liabilities		20,931		20,587
Total liabilities		442,281		416,415
Commitments and contingencies
Shareholders’ equity:
Preferred stock, 5,000 shares authorized, none issued or outstanding		–		–
Common stock, no par value, 125,000 shares authorized and 21,572 and 22,332 shares issued and outstanding as of April 4, 2017 and January 3, 2017, respectively		–		–
Capital surplus		66,084		66,200
Retained earnings		190,710		208,697
Total shareholders’ equity		256,794		274,897
Total liabilities and shareholders’ equity		$699,075		$691,312

See accompanying notes to unaudited consolidated financial statements.

(1) Included in accounts payable as of April 4, 2017 and January 3, 2017 is $4,202 and $5,782, respectively, of related party trade payables. See Note 4 for further information.

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BJ’S RESTAURANTS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

	For The Thirteen Weeks Ended
	April 4, 2017		March 29, 2016
Revenues		$257,816		$243,401
Restaurant operating costs (excluding depreciation and amortization):
Cost of sales (1)		65,395		60,640
Labor and benefits		92,383		84,778
Occupancy and operating (1)		53,944		49,073
General and administrative		14,296		14,362
Depreciation and amortization		16,749		15,598
Restaurant opening		1,413		1,439
Loss on disposal and impairment of assets		687		749
Legal and other settlements		–		369
Total costs and expenses		244,867		227,008
Income from operations		12,949		16,393
Other (expense) income:
Interest expense, net		(888)		(387)
Other income, net		785		397
Total other (expense) income		(103)		10
Income before income taxes		12,846		16,403
Income tax expense		3,580		4,759
Net income		$9,266		$11,644
Net income per share:
Basic		$0.42		$0.48
Diluted		$0.42		$0.47
Weighted average number of shares outstanding:
Basic		21,932		24,278
Diluted		22,313		24,691

See accompanying notes to unaudited consolidated financial statements.

(1) Included in cost of sales for the thirteen weeks ended April 4, 2017 and March 29, 2016 are $20,077 and $20,119, respectively, of related party costs. Included in operating and occupancy for the thirteen weeks ended April 4, 2017 and March 29, 2016 are $2,279 and $2,159, respectively, of related party costs. See Note 4 for further information.

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BJ’S RESTAURANTS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	For The Thirteen Weeks Ended
	April 4, 2017		March 29, 2016
Cash flows from operating activities:
Net income		$9,266		$11,644
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		16,749		15,598
Deferred income taxes		1,614		1,891
Stock-based compensation expense		1,636		1,550
Loss on disposal and impairment of assets		687		749
Changes in assets and liabilities:
Accounts and other receivables		2,493		10,715
Landlord contribution for tenant improvements		(463)		1,589
Inventories, net		(285)		(333)
Prepaid expenses and other current assets		562		1,150
Other assets, net		(1,018)		(726)
Accounts payable		1,829		252
Accrued expenses		(12,137)		1,991
Deferred rent		614		652
Deferred lease incentives		(465)		(37)
Other liabilities		344		132
Net cash provided by operating activities		21,426		46,817
Cash flows from investing activities:
Purchases of property and equipment		(26,254)		(25,333)
Net cash used in investing activities		(26,254)		(25,333)
Cash flows from financing activities:
Borrowings on line of credit		528,400		200,000
Payments on line of credit		(493,700)		(205,000)
Excess tax benefit from stock-based compensation		–		45
Taxes paid on vested stock units under employee plans		(235)		(196)
Proceeds from exercise of stock options		159		543
Repurchases of common stock		(28,995)		(24,530)
Net cash provided by (used in) financing activities		5,629		(29,138)
Net increase (decrease) in cash and cash equivalents		801		(7,654)
Cash and cash equivalents, beginning of period		22,761		34,604
Cash and cash equivalents, end of period		$23,562		$26,950
Supplemental disclosure of cash flow information:
Cash paid for income taxes		$2,284		$2,106
Cash paid for interest, net of capitalized interest		$726		$325
Supplemental disclosure of non-cash investing and financing activities:
Property and equipment acquired and included in accounts payable		$7,852		$11,939
Stock-based compensation capitalized		$66		$78

See accompanying notes to unaudited consolidated financial statements.

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BJ’S RESTAURANTS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the accounts of BJ’s Restaurants, Inc. (referred to herein as the “Company,” “we,” “us” and “our”) and our wholly owned subsidiaries. The financial statements presented herein include all material adjustments which are, in the opinion of management, necessary for a fair presentation of our financial condition, results of operations and cash flows for the period. Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and footnote disclosures normally included in consolidated financial statements in accordance with U.S. GAAP have been omitted pursuant to the U.S. Securities and Exchange Commission (“SEC”) rules. The preparation of financial statements in accordance with U.S. GAAP requires us to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates.

A description of our accounting policies and other financial information is included in our audited consolidated financial statements filed with the SEC on Form 10-K for the year ended January 3, 2017. The disclosures included in our accompanying interim financial statements and footnotes should be read in conjunction with our consolidated financial statements and notes thereto included in the Annual Report on Form 10-K.

Reclassifications

Certain reclassifications of prior period’s financial statement amounts have been made to conform to the current period’s format.

Recently Issued Accounting Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). This guidance requires the recognition of most leases on the balance sheet to give investors, lenders, and other financial statement users a more comprehensive view of a company’s long-term financial obligations as well as the assets it owns versus leases. ASU 2016-02 will be effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Currently, all of our restaurant and our restaurant support center leases are accounted for as operating leases, and therefore are not recorded within our balance sheet. We are currently evaluating the impact that this guidance will have on our consolidated financial statements as well as the expected adoption method.

In April 2016, the FASB issued ASU 2016-10, an amendment to ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 provides a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services and expands related disclosure requirements. ASU 2016-10 clarifies ASU 2014-09 to address the potential for diversity in practice at the adoption. ASU 2016-10 is effective for annual and interim reporting periods beginning after December 15, 2017, and early application is permitted. We expect to adopt this standard using the full retrospective method.

The majority of the Company’s revenues are from food and beverage sales at our restaurants. ASU 2014-09 will not have an impact on revenue recognition related to food and beverage sales unless the sales are to a customer participating in our loyalty program. Currently, we measure our total loyalty rewards obligation based on the estimated number of customers who will earn and ultimately claim rewards under the program, and we record the estimated related expense as reward points accumulate. These expenses are accrued for and recorded as marketing expenses and are included in “Occupancy and operating” expenses on our Consolidated Statements of Income. Under ASU 2016-10, we will be required to allocate the transaction price between the goods delivered and the future goods that will be delivered, using the loyalty points earned, on a relative standalone selling price basis. The portion of the transaction price allocated to the future loyalty rewards will be deferred until the related loyalty rewards are redeemed. We will no longer record marketing expense related to loyalty points earned. The new standard will not impact the way we account for gift card breakage. We are in the process of quantifying the impact of adopting the new standard.

4

Recently Adopted Accounting Standards

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718). This guidance changed how companies account for certain aspects of share-based payments to employees. Companies are now required to recognize the difference between the estimated and the actual tax impact of awards within the income statement when the awards vest or are settled, and additional paid-in capital (“APIC”) pools are eliminated. This ASU also impacted the classification of awards as either equity or liabilities and the classification of share-based transactions within the statement of cash flows. We adopted ASU 2016-09 during the quarter. The impact of the adoption of this standard was $0.08 million of additional income tax expense within our consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes (Topic 740). This guidance requires deferred tax liabilities and assets to be classified as non-current in a classified balance sheet. We adopted ASU 2015-17 during the quarter. The adoption of this standard resulted in the reclassification of $18.4 million from current to long-term deferred taxes on April 4, 2017, and January 3, 2017.

2.  LONG-TERM DEBT

Line of Credit

Our Credit Facility, which matures on November 18, 2021, provides us with revolving loan commitments totaling $250 million, of which $50 million may be used for the issuance of letters of credit. Availability under the Credit Facility is reduced by outstanding letters of credit, which are used to support our self-insurance programs. Our obligations under the Credit Facility are unsecured. As of April 4, 2017, there were borrowings of $182.7 million and letters of credit totaling approximately $14.5 million outstanding under the Credit Facility. Available borrowings under the Credit Facility were $52.8 million as of April 4, 2017. The Credit Facility bears interest at our choice of LIBOR plus a percentage not to exceed 1.75%, or at a rate ranging from Bank of America’s prime rate to 0.75% above Bank of America’s prime rate, based on our level of lease and debt obligations as compared to EBITDA plus lease expenses. The weighted average interest rate during the thirteen weeks ended April 4, 2017 was approximately 1.90%.

The Credit Facility contains provisions requiring us to maintain compliance with certain covenants, including a Fixed Charge Coverage Ratio and a Lease Adjusted Leverage Ratio. At April 4, 2017, we were in compliance with these covenants.

Interest expense and commitment fees under the Credit Facility for the thirteen weeks ended April 4, 2017 and March 29, 2016 was approximately $0.9 million and $0.4 million, respectively. We capitalized approximately $0.04 million of interest expense related to new restaurant construction during the thirteen weeks ended March 29, 2016.

3.  NET INCOME PER SHARE

Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per share reflects the potential dilution that could occur if in-the-money stock options issued by us to sell common stock at set prices were exercised and if restrictions on restricted stock units issued by us were to lapse (collectively, equity awards) using the treasury stock method. Performance-based restricted stock units have been excluded from the diluted income per share computation because the performance-based criteria have not yet been met.

The following table presents a reconciliation of basic and diluted net income per share, including the number of dilutive equity awards that were included in the dilutive net income per share computation (in thousands):

	For The Thirteen Weeks Ended
	April 4, 2017		March 29, 2016
Numerator:
Net income		$9,266		$11,644
Denominator:
Weighted-average shares outstanding – basic		21,932		24,278
Dilutive effect of equity awards		381		413
Weighted-average shares outstanding – diluted		22,313		24,691

For the thirteen weeks ended April 4, 2017 and March 29, 2016, there were approximately 0.5 million and 0.3 million shares of common stock equivalents, respectively, that were excluded from the calculation of diluted net income per share because they are anti-dilutive.

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4.  RELATED PARTY

The Jacmar Companies and their affiliates (collectively referred to herein as “Jacmar”) is one of our shareholders and James Dal Pozzo, the Chief Executive Officer of Jacmar, is a member of our Board of Directors. Jacmar, through its affiliation with Distribution Market Advantage (“DMA”), a consortium of large, regional food distributors located throughout the United States, is currently our largest supplier of food, beverage, paper products and supplies. In July 2006, we began using DMA to deliver the majority of our food products to our restaurants. In July 2012, we finalized a new five-year agreement with DMA, after conducting another extensive competitive bidding process. We are currently in the final stages of renewing our existing agreement with DMA to extend our program an additional five years so as to expire in June 2022.

Jacmar services our restaurants in California and Nevada, while other DMA distributors service our restaurants in all other states. Under the terms of our agreement with DMA, Jacmar is required to sell products to us at the same prices as the other DMA distributors. Jacmar does not provide us with any produce, liquor, wine or beer products, all of which are provided by other third party vendors and are included in “Cost of sales” on the Consolidated Statements of Income.

The cost of food, beverage, paper products and supplies provided by Jacmar included within cost of sales and occupancy and operating expenses consisted of the following (in thousands):

	For The Thirteen Weeks Ended
	April 4, 2017			March 29, 2016
Cost of Sales:
Third party suppliers		$45,318	69.3%		$40,521	66.8%
Jacmar		20,077	30.7		20,119	33.2
Total Cost of Sales		$65,395	100.0%		$60,640	100.0%
Occupancy and Operating:
Third party suppliers		$51,665	95.8%		$46,914	95.6%
Jacmar		2,279	4.2		2,159	4.4
Total Occupancy and Operating		$53,944	100.0%		$49,073	100.0%

The amounts included in trade payables related to Jacmar consisted of the following (in thousands):

	April 4,       2017		January 3,     2017
Third party suppliers		$28,139		$25,363
Jacmar		4,202		5,782
Total Accounts Payable		$32,341		$31,145

5.  STOCK-BASED COMPENSATION

Our current shareholder approved stock-based compensation plan is the 2005 Equity Incentive Plan, (as amended from time to time, “the Plan”). Under the Plan, we may issue shares of our common stock to employees, officers, directors and consultants. We have granted incentive stock options, non-qualified stock options, and performance and time-based restricted stock units. Stock options and stock appreciation rights are charged against the Plan share reserve on the basis of one share for each share granted. Other types of grants, including restricted stock units (“RSUs”), are currently charged against the Plan share reserve on the basis of 1.5 shares for each share granted. The Plan also contains other limits on the terms of incentive grants such as limits on the number that can be granted to an employee during any fiscal year. All options granted under the Plan expire within 10 years of their date of grant.

Under the Plan, we issue stock options as well as time-based and performance-based RSUs to officers. We issue time-based RSUs and stock options to other support employees. We also issue RSUs and stock options in connection with the BJ’s Gold Standard Stock Ownership Program (the “GSSOP”). The GSSOP is a long-term equity incentive program for our restaurant general managers, executive kitchen managers and restaurant field supervision. GSSOP grants are dependent on the length of each participant’s service with us and position. All GSSOP participants must remain in good standing during their service period.

6

The Plan permits us to set the vesting terms and exercise period for awards at our discretion. Stock options and time-based RSUs generally vest ratably over three or five years for non-GSSOP participants and either cliff vest at five years or cliff vest at 33% on the third anniversary and 67% on the fifth anniversary for GSSOP participants. Performance-based RSUs generally cliff vest on the third anniversary of the grant date in an amount from 0% to 150% of the grant quantity, dependent on the level of target achievement.

The following table presents information related to stock-based compensation (in thousands):

	For The Thirteen Weeks Ended
	April 4, 2017		March 29, 2016
Labor and benefits		$468		$403
General and administrative		$1,168		$1,147
Capitalized (1)		$66		$78

(1) Capitalized stock-based compensation relates to our restaurant development personnel and is included in “Property and equipment, net” on the Consolidated Balance Sheets.

Stock Options

The fair value of each stock option grant issued is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	For the Thirteen Weeks Ended
	April 4, 2017		March 29, 2016
Expected volatility		34.7%		35.9%
Risk free interest rate		1.9%		1.5%
Expected option life		5 years		5 years
Dividend yield		0%		0%
Fair value of options granted		$12.03		$14.37

U.S. GAAP requires us to make certain assumptions and judgments regarding the grant date fair value. These judgments include expected volatility, risk free interest rate, expected option life, and dividend yield. These estimations and judgments are determined by us using assumptions that, in many cases, are outside of our control. The changes in these variables or trends, including stock price volatility and risk free interest rate, may significantly impact the grant date fair value, resulting in a significant impact to our financial results.

The exercise price of our stock options under our stock-based compensation plan is required to equal or exceed the fair market value of the shares on the option grant date or the most recent trading day when grants take place on market holidays. The following table represents stock option activity:

	Options Outstanding				Options Exercisable
	Shares   (in thousands)		Weighted Average Exercise Price		Shares    (in thousands)		Weighted     Average     Exercise     Price
Outstanding at January 3, 2017		1,227		$31.95		802		$27.73
Granted		153		35.95
Exercised		(7)		24.20
Forfeited		(3)		45.90
Outstanding at April 4, 2017		1,370		$32.40		901		$29.27

As of April 4, 2017, total unrecognized stock-based compensation expense related to non-vested stock options was $4.8 million, which is generally expected to be recognized over the next five years.

Restricted Stock Units

7

Time-Based Restricted Stock Units

The following table represents time-based restricted stock unit activity:

	Shares   (in thousands)		Weighted   Average   Fair Value
Outstanding at January 3, 2017		460		$39.75
Granted		90		35.95
Vested or released		(50)		44.77
Forfeited		(12)		39.03
Outstanding at April 4, 2017		488		$38.56

The fair value of our time-based RSUs is the quoted market value of our common stock on the date of grant or the most recent trading day when grants take place on market holidays. The fair value of each time-based RSU is expensed over the vesting period (e.g., three or five years). As of April 4, 2017, total unrecognized stock-based compensation expense related to non-vested RSUs was approximately $10.3 million, which is generally expected to be recognized over the next five years.

Performance-Based Restricted Stock Units

The following table represents performance-based restricted stock unit activity:

	Shares   (in thousands)		Weighted   Average   Fair Value
Outstanding at January 3, 2017		54		$37.87
Granted		40		35.95
Vested or released		–		–
Forfeited		(24)		32.49
Outstanding at April 4, 2017		70		$38.68

The fair value of our performance-based RSUs is the quoted market value of our common stock on the date of grant or the most recent trading day when grants take place on market holidays. The fair value of each performance-based RSU is recognized when it is probable the performance goal will be achieved. As of April 4, 2017, total unrecognized stock-based compensation expense related to non-vested performance-based RSUs was approximately $1.5 million, which is generally expected to be recognized over the next three years.

6.  INCOME TAXES

We calculate our interim income tax provision in accordance with ASC Topic 270, “Interim Reporting” and ASC Topic 740, “Accounting for Income Taxes.” At the end of each interim period, we estimate the annual effective tax rate and apply that rate to our ordinary year to date earnings. The related tax expense or benefit is recognized in the interim period in which it occurs. In addition, the effect of changes in enacted tax laws, rates or tax status is recognized in the interim period in which the change occurs. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including the expected operating income for the year, permanent and temporary differences as a result of differences between amounts measured and recognized in accordance with tax laws and financial accounting standards, and the likelihood of recovering deferred tax assets generated in the current fiscal year. The accounting estimates used to compute income tax expense may change as new events occur, additional information is obtained or the tax environment changes.

As of April 4, 2017, the unrecognized tax benefits recorded was approximately $1.3 million, of which approximately $1.0 million, if reversed would impact our effective tax rate.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

Balance at January 3, 2017	$1,245
Decrease for tax positions taken in prior years	(1)

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Increase for tax positions taken in current year	33
Balance at April 4, 2017	$1,277

Our uncertain tax positions are related to tax years that remain subject to examination by tax agencies. As of April 4, 2017, the earliest tax year still subject to examination by the Internal Revenue Service is 2013. The earliest year still subject to examination by a significant state or local taxing jurisdiction is 2012.

7.  LEGAL PROCEEDINGS

We are subject to lawsuits, administrative proceedings and demands that arise in the ordinary course of our business and which typically involve claims from customers, employees and others related to operational, employment, real estate and intellectual property issues common to the foodservice industry. A number of these claims may exist at any given time. We are self-insured for a portion of our general liability and our employee workers’ compensation requirements. We maintain coverage with a third party insurer to limit our total exposure. We believe that most of our customer claims will be covered by our general liability insurance, subject to coverage limits and the portion of such claims that are self-insured. Punitive damages awards and employee unfair practice claims, however, are not covered by our general liability insurance. To date, we have not been ordered to pay punitive damages with respect to any claims, but there can be no assurance that punitive damages will not be awarded with respect to any future claims. We could be affected by adverse publicity resulting from allegations in lawsuits, claims and proceedings, regardless of whether these allegations are valid or whether we are ultimately determined to be liable. We currently believe that the final disposition of these types of lawsuits, proceedings and claims will not have a material adverse effect on our financial position, results of operations or liquidity. It is possible, however, that our future results of operations for a particular quarter or fiscal year could be impacted by changes in circumstances relating to lawsuits, proceedings or claims.

8.  STOCK REPURCHASES

During the thirteen weeks ended April 4, 2017, we repurchased and retired approximately 0.8 million shares of our common stock at an average price of $36.39 per share for a total of $29.0 million, which is recorded as a reduction in common stock, with any excess charged to retained earnings. In March 2017, the Company’s Board of Directors approved an expansion of the share repurchase program by $50 million. As of April 4, 2017, approximately $80.5 million remains available for additional repurchases under our $400 million authorized share repurchase program.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE

Certain information included in this Form 10-Q and other filings with the Securities and Exchange Commission, in our press releases, in other written communications, and in oral statements made by or with the approval of one of our authorized officers may contain “forward-looking” statements about our current and expected performance trends, growth plans, business goals and other matters. Words or phrases such as “believe,” “plan,” “will likely result,” “expect,” “intend,” “will continue,” “is anticipated,” “estimate,” “project,” “may,” “could,” “would,” “should,” and similar expressions are intended to identify “forward-looking” statements. These statements, and any other statements that are not historical facts, are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, as codified in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended from time to time (the “Act”). The cautionary statements made in this Form 10-Q should be read as being applicable to all related “forward-looking” statements wherever they appear in this Form 10-Q.

The following discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere in this Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended January 3, 2017. Except for the historical information contained herein, the discussion in this Form 10-Q contains certain “forward-looking” statements that involve known and unknown risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. The risks described in this Form 10-Q, as well as the risks identified in Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 3, 2017, are not the only risks we face. These statements reflect our current perspectives and outlook with respect to the Company’s future expansion plans, key business initiatives, expected operating conditions and other factors. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. Additional risks and uncertainties that we are currently unaware of, or that we currently deem immaterial, also may become important factors that affect us. It is not possible for us to predict the impact of all of these factors on our business, financial condition or results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any “forward-looking” statements. Given the volatility of the operating environment and its associated risks and uncertainties, investors should not rely on “forward-looking” statements as any prediction or guarantee of actual results.

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“Forward-looking” statements include, among others, statements concerning:

• our restaurant concept, its competitive advantages and our strategies for its continued evolution and expansion;

• the rate and scope of our future restaurant development;

• the total domestic capacity for our restaurants;

• dates on which we will commence or complete the development and opening of new restaurants;

• expectations for consumer spending on casual dining restaurant occasions;

• the availability and cost of key commodities used in our restaurants and brewing operations;

• menu price increases and their effect, if any, on revenue and results of operations;

• the effectiveness of our planned operational, menu, marketing and capital expenditure initiatives;

• capital requirement expectations and actual or available borrowings on our line of credit;

• projected revenues, operating costs and expenses; and

• other statements of expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts.

These “forward-looking” statements are subject to risks and uncertainties, including financial, regulatory, consumer behavior, demographic, industry growth and trend projections, that could cause actual events or results to differ materially from those expressed or implied by the statements. Some, but not all, significant factors that could prevent us from achieving our stated goals include, but are not limited to:

• Failure to maintain a favorable image, credibility and the value of the BJ’s brand and our reputation for offering customers a higher quality more differentiated total dining experience at a good value could adversely affect our business.

• Our inability or failure to recognize, respond to and effectively manage the accelerated impact of social media could adversely impact our business.

• Any deterioration in general economic conditions may affect consumer spending and may adversely affect our revenues, operating results and liquidity.

• Any deterioration in general economic conditions could also have a material adverse impact on our landlords or on businesses neighboring our locations, which could adversely affect our revenues and results of operations.

• If we do not successfully expand our restaurant operations, our growth rate and results of operations will be adversely affected.

• Our ability to open new restaurants on schedule in accordance with our targeted capacity growth rate may be adversely affected by delays or problems associated with securing suitable restaurant locations, leases and licenses, recruiting and training qualified managers and hourly employees and by other factors, some of which are beyond our control and difficult to forecast accurately.

• Access to sources of capital and our ability to raise capital in the future may be limited, which may adversely affect our business and our expansion plans.

• Any failure of our existing or new restaurants to achieve expected results may have a negative impact on our consolidated revenues and financial results, including the potential impairment of long-lived assets.

• Our growth may strain our infrastructure and resources, which could slow our development of new restaurants and adversely affect our ability to manage our existing restaurants.

• Any decision to either reduce or accelerate the pace of openings may positively or adversely affect our comparative financial performance.

• Our future operating results may fluctuate significantly due to the expenditures required to open new restaurants.

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• A significant number of our restaurants are concentrated in California, Texas and Florida, which makes us particularly sensitive to economic, regulatory, weather and other risk factors and conditions that are more prevalent in those states.

• Negative publicity about us, our restaurants, other restaurants, or others across the food supply chain, due to food borne illness or other reasons, whether or not accurate, could adversely affect the reputation and popularity of our restaurants and our results of operations.

• Our operations are susceptible to changes in the cost of food, labor and related employee benefits (including, but not limited to, group health insurance coverage for our employees), brewing and energy which may adversely affect our profitability.

• Our dependence on independent third party brewers and manufacturers for some of our beer could have an adverse effect on our operations if they cease to supply us with our proprietary craft beer.

• Our internal brewing, independent third party brewing and beer distribution arrangements are subject to periodic reviews and audits by various federal, state and local governmental and regulatory agencies and could be adversely affected by different interpretations of the laws and regulations that govern such arrangements or by new laws and regulations.

• Government laws and regulations affecting the operation of our restaurants, including but not limited to those that apply to the acquisition and maintenance of our brewing and retail liquor licenses, minimum wages, federal or state exemption rules, consumer health and safety, health insurance coverage, or other employment benefits such as paid time off, nutritional disclosures, and employment eligibility-related documentation requirements could increase our operating costs, cause unexpected disruptions to our operations and restrict our growth.

• Our operations, including our loyalty and employee engagement programs, are heavily dependent on information technology. Any material failure of such technology, including but not limited to cyber-attacks, could adversely affect our revenues and impair our ability to efficiently operate our business.

• Unsolicited takeover proposals, governance change proposals, proxy contests and certain proposals/actions by activist investors may create additional risks and uncertainties with respect to the Company’s financial position, operations, strategies and management, and may adversely affect our ability to attract and retain key employees. Any perceived uncertainties may affect the market price and volatility of our securities.

• Any suspension of, or failure to repurchase the Company’s stock up to the maximum amounts permitted under, our previously announced repurchase program may negatively impact investor perceptions of us and could therefore affect the market price and volatility of our stock.

For a more detailed description of these risk factors and other considerations, see Part II, Item 1A – “Risk Factors” of this Form 10-Q and the risk factors identified in Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 3, 2017.

GENERAL

As of May 8, 2017, we owned and operated 192 restaurants located in the 24 states of Alabama, Arizona, Arkansas, California, Colorado, Florida, Indiana, Kansas, Kentucky, Louisiana, Maryland, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Virginia and Washington. Each of our restaurants is operated either as a BJ’s Restaurant & Brewhouse®, a BJ’s Restaurant & Brewery®, a BJ’s Pizza & Grill®, or a BJ’s Grill® restaurant. Currently, the BJ’s Restaurant & Brewhouse® format represents our primary future expansion vehicle. Our proprietary craft beer is produced at several of our BJ’s Restaurant & Brewery® locations, our Temple, Texas brewpub location and by independent third party brewers using our proprietary recipes. Our BJ’s Pizza & Grill® restaurants are smaller format, full-service restaurants relative to our BJ’s Restaurant & Brewhouse® and BJ’s Restaurant & Brewery® locations and reflect the original format of the BJ’s restaurant concept that was first introduced in 1978. Our BJ’s Grill® restaurant is a slightly smaller footprint restaurant, compared to our BJ’s Restaurant & Brewhouse® format, featuring all the amenities of our Brewhouse locations.

The first BJ’s restaurant opened in 1978 in Orange County, California, featuring Chicago style deep-dish pizza with a unique California twist. Over the years we expanded the BJ’s concept from its beginnings as a small pizzeria to a full-service, high energy casual dining restaurant with a broad menu including our BJ’s award-winning, signature deep-dish pizza, our proprietary craft and other beers, as well as a large selection of appetizers, entrées, pastas, burgers and sandwiches, specialty salads and desserts, including our made to order, warm pizza cookie dessert, the Pizookie®.

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Our revenues are comprised of food and beverage sales at our restaurants. Revenues from restaurant sales are recognized when payment is tendered at the point of sale. Amounts paid with a credit card are recorded in accounts and other receivables until payment is collected. Revenues from our gift cards are recognized upon redemption in our restaurants. Gift card breakage is recognized as a component of “Other income, net” on our Consolidated Statements of Income. Gift card breakage is recorded when the likelihood of redemption becomes remote, which is typically after 24 months from the original gift card issuance date.

In calculating comparable company-owned restaurant sales, we include a restaurant in the comparable base once it has been open for 18 months. Customer traffic for our restaurants is estimated based on individual customer checks.

Cost of sales is comprised of food and beverage costs, including the cost to produce and distribute our proprietary craft beer, soda and ciders. The components of cost of sales are variable and typically fluctuate directly with sales volumes, but may be impacted by changes in commodity prices or varying levels of promotional activities.

Labor and benefit costs include direct hourly and management wages, bonuses, payroll taxes, fringe benefits and stock-based compensation and workers’ compensation expense that is directly related to restaurant level employees.

Occupancy and operating expenses include restaurant supplies, credit card fees, marketing costs, fixed rent, percentage rent, common area maintenance charges, utilities, real estate taxes, repairs and maintenance and other related restaurant costs.

General and administrative costs include all corporate, field supervision and administrative functions that support existing operations and provide infrastructure to facilitate our future growth. Components of this category include corporate management, field supervision and corporate hourly staff salaries and related employee benefits (including stock-based compensation expense and cash-based incentive compensation), travel and relocation costs, information systems, the cost to recruit and train new restaurant management employees, corporate rent, certain brand marketing-related expenses and legal, professional and consulting fees.

Depreciation and amortization are composed primarily of depreciation on capital expenditures for restaurant and brewing equipment and leasehold improvements.

Restaurant opening expenses, which are expensed as incurred, consist of the costs of hiring and training the initial hourly work force for each new restaurant, travel, the cost of food and supplies used in training, grand opening promotional costs, the cost of the initial stock of operating supplies and other direct costs related to the opening of a restaurant, including rent during the construction and in-restaurant training period.

While we currently expect to pursue the renewal of substantially all of our expiring restaurant leases, there is no guarantee that we can mutually agree to a new lease that is satisfactory to our landlord and us or that, if renewed, rents will not increase substantially.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, our unaudited Consolidated Statements of Income expressed as percentages of total revenues. The results of operations for the thirteen weeks ended April 4, 2017 and March 29, 2016, are not necessarily indicative of the results to be expected for the full fiscal year. Percentages below may not reconcile due to rounding.

	For The Thirteen Weeks Ended
	April 4, 2017	March 29, 2016
Revenues	100.0%	100.0%
Restaurant operating costs (excluding depreciation and amortization):
Cost of sales	25.4	24.9
Labor and benefits	35.8	34.8
Occupancy and operating	20.9	20.2
General and administrative	5.5	5.9
Depreciation and amortization	6.5	6.4
Restaurant opening	0.5	0.6

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Loss on disposal of assets and impairments	0.3	0.3
Legal and other settlements	–	0.2
Total costs and expenses	95.0	93.3
Income from operations	5.0	6.7
Other (expense) income:
Interest expense, net	(0.3)	(0.2)
Other income, net	0.3	0.2
Total other (expense) income	–	–
Income before income taxes	5.0	6.7
Income tax expense	1.4	2.0
Net income	3.6%	4.8%

Thirteen Weeks Ended April 4, 2017 Compared to Thirteen Weeks Ended March 29, 2016.

Revenues. Total revenues increased by $14.4 million, or 5.9%, to $257.8 million during the thirteen weeks ended April 4, 2017, from $243.4 million during the comparable thirteen week period of 2016. The increase in revenues primarily consisted of an approximate $18.6 million increase in sales from new restaurants not yet in our comparable restaurant sales base, partially offset by an approximate 1.3%, or $3.0 million decrease in comparable restaurant sales, a $0.8 million decrease related to the shift in weeks as a result of our 53^rd week in fiscal 2016 and a $0.4 million decrease in restaurant sales due to the closure of our Century City, California restaurant in January 2016. The decrease in comparable restaurant sales resulted from a reduction in customer traffic of approximately 4.0%, partially offset by an increase in the average check of 2.7%.

Cost of Sales. Cost of sales increased by $4.8 million, or 7.8%, to $65.4 million during the thirteen weeks ended April 4, 2017, from $60.6 million during the comparable thirteen week period of 2016. This increase was primarily due to the opening of 16 new restaurants since the thirteen weeks ended March 29, 2016. As a percentage of revenues, cost of sales increased to 25.4% for the current thirteen week period from 24.9% for the prior year comparable period. The increase in cost of sales, as a percentage of revenues, was primarily due to an increase in commodity costs coupled increased promotional activities and menu mix shifts.

Labor and Benefits. Labor and benefit costs for our restaurants increased by $7.6 million, or 9.0%, to $92.4 million during the thirteen weeks ended April 4, 2017, from $84.8 million during the comparable thirteen week period of 2016. This increase was primarily due to the opening of 16 new restaurants since the thirteen weeks ended March 29, 2016. As a percentage of revenues, labor and benefit costs increased to 35.8% for the current thirteen week period from 34.8% for the prior year comparable period. The percentage increase was driven by higher hourly labor and increased training labor related to our sales building initiatives. Included in labor and benefits for the thirteen weeks ended April 4, 2017 and March 29, 2016, was approximately $0.5 million and $0.4 million, respectively, or 0.2% of revenues, of stock-based compensation expense related to equity awards granted in accordance with our Gold Standard Stock Ownership Program for certain restaurant management team members.

Occupancy and Operating. Occupancy and operating expenses increased by $4.9 million, or 9.9%, to $53.9 million during the thirteen weeks ended April 4, 2017, from $49.1 million during the comparable thirteen week period of 2016. This increase was primarily due to the opening of 16 new restaurants since the thirteen weeks ended March 29, 2016. As a percentage of revenues, occupancy and operating expenses increased to 20.9% for the current thirteen week period from 20.2% for the prior year comparable period. This percentage increase was due to the deleveraging of the fixed component of these expenses as a result of negative comparable restaurant sales.

General and Administrative. General and administrative expenses decreased by $0.07 million, or 0.5%, to $14.3 million during the thirteen weeks ended April 4, 2017, from $14.4 million during the comparable thirteen week period of 2016. The slight decrease in general and administrative costs was primarily due to lower personnel expenses. Also included in general and administrative costs for the thirteen weeks ended April 4, 2017 and March 29, 2016, was approximately $1.2 million and $1.1 million, respectively, or 0.5% and of revenues, of stock-based compensation expense. As a percentage of revenues, general and administrative expenses decreased to 5.5% for the current thirteen week period from 5.9% for the prior year comparable period. This percentage decrease was primarily due to lower costs over a higher revenue base.

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Depreciation and Amortization. Depreciation and amortization increased by $1.2 million, or 7.4%, to $16.7 million during the thirteen weeks ended April 4, 2017, compared to $15.6 million during the comparable thirteen week period of 2016. This increase was primarily due to depreciation expense related to the 16 new restaurants opened since the thirteen weeks ended March 29, 2016. As a percentage of revenues, depreciation and amortization increased to 6.5% for the current thirteen week period from 6.4% for the prior year comparable period. This increase is primarily due to the deleveraging of the fixed component of these expenses as a result of negative comparable restaurant sales.

Restaurant Opening. Restaurant opening expense was $1.4 million for both the thirteen weeks ended April 4, 2017, and the comparable thirteen week period of 2016.

Loss on Disposal and Impairment of Assets. The loss on disposal and impairment of assets was $0.7 million for both the thirteen weeks ended April 4, 2017, and the comparable thirteen week period of 2016. These costs primarily related to the disposal of certain unproductive restaurant assets.

Interest Expense, Net. Interest expense, net increased by $0.5 million, or 129.7%, to $0.9 million during the thirteen weeks ended April 4, 2017, compared to $0.4 million during the comparable thirteen week period of 2016. This increase was due to increased borrowings under our Credit Facility.

Other Income, Net. Other income, net increased by $0.4 million, or 97.7%, to $0.8 million during the thirteen weeks ended April 4, 2017, compared to $0.4 million during the comparable thirteen week period of 2016. This increase was primarily due to greater gift card breakage income coupled with an increase in the cash surrender value of certain life insurance programs under our deferred compensation plan.

Income Tax Expense. Our effective income tax rate for the thirteen weeks ended April 4, 2017, was 27.9% compared to 29.0% for the comparable thirteen week period of 2016. The effective income tax rate for the thirteen weeks ended April 4, 2017, differed from the statutory income tax rate primarily due to the level of tax credits.

LIQUIDITY AND CAPITAL RESOURCES

The following tables set forth, for the periods indicated, a summary of our key liquidity measurements (dollar amounts in thousands):

	April 4, 2017	January 3, 2017
Cash and cash equivalents	$23,562	$22,761
Net working capital	$(57,711)	$(67,008)
Current ratio	0.5:1.0	0.5:1.0
	For The Thirteen Weeks Ended
	April 4, 2017	March 29, 2016
Cash provided by operating activities	$21,426	$46,817
Capital expenditures	$26,254	$25,333

Our capital requirements are driven by our fundamental financial objective to improve total shareholder return through new restaurant expansion plans and restaurant enhancements and initiatives. In addition, we want to maintain a flexible and prudent balance sheet to provide the financial resources necessary to manage the risks and uncertainty of conducting our business operations in a mature segment of the restaurant industry. In order to achieve these objectives, we use a combination of operating cash flows, funded debt and landlord allowances. Over the last several years we have been augmenting our cash flow from operations by increasing our funded debt and using these proceeds to return capital to shareholders in the form of share repurchases.

We currently estimate the total domestic capacity for BJ’s restaurants to be at least 425, given the size of our current restaurant prototype and the current structure of the BJ’s concept and menu. We expect to fund our growth plans from our ongoing operations, our cash balance on hand, proceeds from employee stock option exercises, tenant improvement allowances from our landlords and our $250 million Credit Facility. However, depending on the expected level of new restaurant development, tenant improvement allowances that we receive from our landlords, other planned capital investments including ongoing maintenance capital expenditures, and results from our ongoing operations, we may not generate enough cash flow from operations to completely fund our plans. In addition, any significant increase in our share repurchase activity may impact our capital resources available. Accordingly, we continue to actively monitor overall conditions in the capital and credit markets with respect to the potential sources and the timing of additional financing in order to enhance total shareholder return. However, there can be no assurance that such financing will be available when required or available on terms acceptable to us. If we are unable to secure additional capital resources, we may be required to reduce our planned rate of expansion, share repurchase activity or other shareholder return initiatives.

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Similar to many restaurant chains, we typically utilize operating lease arrangements (principally ground leases) for the majority of our restaurant locations. We believe our operating lease arrangements provide appropriate leverage for our capital structure in a financially efficient manner. However, we are not limited to the use of lease arrangements as our only method of opening new restaurants and from time to time have purchased the underlying land for new restaurants. While our operating lease obligations are not required to be reflected as indebtedness on our Consolidated Balance Sheets, the minimum rents and other related lease obligations, such as common area expenses, under our lease agreements must be satisfied by cash flows from our ongoing operations. Accordingly, our lease arrangements reduce, to some extent, our capacity to utilize debt in our capital structure.

We typically lease our restaurant locations for periods of 10 to 20 years under operating lease arrangements. Our rent structures vary from lease to lease, but generally provide for the payment of both minimum and contingent (percentage) rent based on sales, as well as other expenses related to the leases (for example, our pro-rata share of common area maintenance, property tax and insurance expenses). Many of our lease arrangements include the opportunity to secure tenant improvement allowances to partially offset the cost of developing and opening the related restaurants. Generally, landlords recover the cost of such allowances from increased minimum rents. However, there can be no assurance that such allowances will be available to us on each project. From time to time, we may also decide to purchase the underlying land for a new restaurant if that is the only way to secure a highly desirable site. Currently, we own the underlying land for five of our operating restaurants and our Texas brewpub locations. We also own two parcels of land adjacent to two of our operating restaurants. It is not our current strategy to own a large number of land parcels that underlie our restaurants. Therefore, in many cases we subsequently enter into sale-leaseback arrangements for land parcels that we may purchase. We disburse cash for certain site-related work, buildings, leasehold improvements, furnishings, fixtures and equipment to build our leased and owned premises. We own substantially all of the equipment, furniture and trade fixtures in our restaurants and currently plan to do so in the future.

We also require capital resources to evolve, maintain and increase the productive capacity of our existing base of restaurants and brewing operations and to further expand and strengthen the capabilities of our corporate and information technology infrastructures. Our requirement for working capital is not significant since our restaurant customers pay for their food and beverage purchases in cash or credit cards at the time of the sale. Thus, we are able to sell many of our inventory items before we are required to pay our suppliers for such items.

Our cash flows from operating activities, as detailed in the Consolidated Statements of Cash Flows, provided $21.4 million during the thirteen weeks ended April 4, 2017, representing a $25.4 million decrease from the $46.8 million provided during the thirteen weeks ended March 29, 2016. The decrease in cash from operating activities for the thirteen weeks ended April 4, 2017, in comparison the thirteen weeks ended March 29, 2016, is primarily due to the collection of our $6.0 million lease termination fee in the prior year, coupled with a reduction in payroll related accruals as a result of the impact of the 53^rd week in fiscal 2016.

For the thirteen weeks ended April 4, 2017, total capital expenditures were approximately $26.3 million, of which expenditures for the purchase of the underlying land for new restaurants as well as the acquisition of restaurant and brewing equipment and leasehold improvements to construct new restaurants were $12.6 million. These expenditures were primarily related to the construction of our three new restaurants that opened during the thirteen weeks ended April 4, 2017, as well as expenditures related to restaurants expected to open later in fiscal 2017. In addition, total capital expenditures related to the maintenance and key productivity initiatives of existing restaurants and expenditures for restaurant and corporate systems were $13.2 million and $0.5 million, respectively.

We have a $250 million unsecured revolving line of credit that expires on November 18, 2021, and may be used for working capital and other general corporate purposes. We utilize the Credit Facility principally for letters of credit that are required to support certain of our self-insurance programs, to fund a portion of the Company’s announced stock repurchase program and for working capital and construction requirements as needed.

We expect to open 10 new restaurants in fiscal 2017, and we have entered into signed leases, land purchase agreements or letters of intent for all of our potential 2017 restaurant locations. While we expect our capital expenditures to remain significant, the reduction of restaurant openings in fiscal 2017 will reduce our capital expenditure spend as compared to fiscal 2016. The decision to reduce our pace of expansion will generate increased free cash flow and provide added financial flexibility. It will also allow us to allocate greater resources to our core base of established restaurants to improve sales and profitability. While our new restaurant unit economics remain solid and warrant continued capital allocation, we will also opportunistically repurchase shares funded by our excess cash flow from operations, combined with a prudent amount of funded debt, to support our commitment to drive total shareholder returns.

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We currently anticipate our total capital expenditures for fiscal 2017, including all expenditure categories, to be approximately $80 million to $85 million. We expect to fund our anticipated capital expenditures for fiscal 2017 with our current cash balance on hand, expected cash flows from operations, proceeds from sale-leaseback transactions, expected tenant improvement allowances and our line of credit. Our future cash requirements will depend on many factors, including the pace of our expansion, conditions in the retail property development market, construction costs, the nature of the specific sites selected for new restaurants, and the nature of the specific leases and associated tenant improvement allowances available, if any, as negotiated with landlords.

From time to time, we will evaluate opportunities to acquire and convert other restaurant locations or entire restaurant chains to the BJ’s restaurant concept. In the future we may consider joint venture arrangements to augment BJ’s expansion into new markets or we may evaluate non-controlling investments in other emerging restaurant concepts that offer complementary growth opportunities to our BJ’s restaurant operations. Currently, we have no binding commitments (other than the signed leases or land purchase agreements set forth in Item 1 - Business - “Restaurant Site Selection and Expansion Objectives” in our Annual Report on Form 10-K for the fiscal year ended January 3, 2017) or agreements to acquire or convert any other restaurant locations or chains to our concept, or to enter into any joint ventures or non-controlling investments. However, we would likely require additional capital resources to take advantage of any of these growth opportunities should they become feasible.

We depend on our expected cash flows from operations, coupled with agreed-upon landlord tenant improvement allowances and sale-leaseback proceeds, to fund the majority of our planned capital expenditures. If our business does not generate enough cash flows from operations as expected, or if our landlords are unable to honor their agreements with us, or if we are unable to successfully enter in a sale-leaseback transaction and replacement funding sources are not otherwise available to us from borrowings under our Credit Facility or other alternatives, we may not be able to expand our operations at the pace currently planned.

We currently do not pay any dividends to our shareholders. Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon our financial condition, operating results, contractual restrictions, restrictions imposed by applicable law and other factors our Board of Directors deems relevant. Our Credit Facility contains, and debt instruments that we enter into in the future may contain, covenants that place limitations on the amount of dividends we may pay.

As of April 4, 2017, we have cumulatively repurchased approximately $319.5 million shares in accordance with our approved share repurchase plan. We repurchased approximately $29.0 million of these shares during the thirteen weeks ended April 4, 2017. The share repurchases were executed through open market purchases, and future share repurchases may be completed through the combination of individually negotiated transactions, accelerated share buyback, and/or open market purchases. In March 2017, the Company’s Board of Directors approved an expansion of the share repurchase program by $50 million. As of April 4, 2017, we have approximately $80.5 million available under our current $400 million share repurchase plan approved by our Board of Directors. Our Credit Facility does not contain any restrictions on the amount of borrowings that can be used to make share repurchases as long as we are in compliance with our financial and non-financial covenants.

OFF-BALANCE SHEET ARRANGEMENTS

We do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or variable interest entities (“VIEs”), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow limited purposes. As of April 4, 2017, we are not involved in any off-balance sheet arrangements.

IMPACT OF INFLATION

Inflation on food, labor, energy and occupancy costs can significantly affect the profitability of our restaurant operations. Our profitability is dependent, among other things, on our ability to anticipate and react to changes in the cost of key operating resources, including food and other raw materials, labor, energy and other supplies and services. Substantial increases in costs and expenses could impact our operating results to the extent that such increases cannot be passed along to our restaurant customers. While we have taken steps to enter into agreements for some of the commodities used in our restaurant operations, there can be no assurance that future supplies and costs for such commodities will not fluctuate due to weather or other market conditions outside of our control. We are currently unable to contract for certain commodities, such as fluid dairy, fresh seafood and most fresh produce items for long periods of time. Consequently, such commodities can be subject to unforeseen supply and cost fluctuations.

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Many of our restaurant employees are paid hourly rates subject to the federal, state or local minimum wage requirements. Numerous state and local governments have their own minimum wage requirements that are generally greater than the federal minimum wage and are subject to annual increases based on changes in their local consumer price indices. Additionally, a general shortage in the availability of qualified restaurant management and hourly workers in certain geographic areas in which we operate has caused increases in the costs of recruiting and compensating such employees. Certain operating and other costs, including health benefits in compliance with the Patient Protection and Affordable Care Act, taxes, insurance, federal and state exemption rules, and regulatory requirements relating to employees and other outside services, continue to increase with the general level of inflation and may also be subject to other cost and supply fluctuations outside of our control.

While we have been able to partially offset inflation and other changes in the costs of key operating resources by gradually increasing prices of our menu items, coupled with more efficient purchasing practices, productivity improvements and greater economies of scale, there can be no assurance that we will be able to continue to do so in the future. From time to time, competitive conditions will limit our menu pricing flexibility. In addition, macroeconomic conditions that impact consumer discretionary spending for food away from home could make additional menu price increases imprudent. There can be no assurance that all of our future cost increases can be offset by higher menu prices or that higher menu prices will be accepted by our restaurant customers without any resulting changes in their visit frequencies or purchasing patterns. Many of the leases for our restaurants provide for contingent rent obligations based on a percentage of sales. As a result, rent expense will absorb a proportionate share of any menu price increases in our restaurants. There can be no assurance that we will continue to generate increases in comparable restaurant sales in amounts sufficient to offset inflationary or other cost pressures.

SEASONALITY AND ADVERSE WEATHER

Our business is impacted by weather and other seasonal factors that typically impact other restaurant operations. Holidays (and shifts in the holiday calendar) and severe weather including hurricanes, tornados, thunderstorms and similar conditions may impact restaurant sales volumes in some of the markets where we operate. Many of our restaurants are located in or near shopping centers and malls that typically experience seasonal fluctuations in sales. Quarterly results have been and will continue to be significantly impacted by the timing of new restaurant openings and their associated restaurant opening expenses. As a result of these and other factors, our financial results for any given quarter may not be indicative of the results that may be achieved for a full fiscal year.

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discussion of market risks contains “forward-looking” statements. Actual results may differ materially from the following discussion based on general conditions in the financial and commodity markets.

Interest Rate Risk

We have a $250 million unsecured Credit Facility of which $182.7 million is currently outstanding that carries interest at a floating rate. We utilize the Credit Facility principally for letters of credit that are required to support our self-insurance programs, to fund a portion of our announced stock repurchase program and for working capital and construction requirements, as needed. We are exposed to interest rate risk through fluctuations in interest rates on our obligations under the Credit Facility. Based on our current outstanding balance, a hypothetical 1% adverse change in the interest rates under our Credit Facility would have an approximate $1.8 million annual impact on our business, which we believe would not have a material adverse impact on our results of operation or financial condition.

Food and Commodity Price Risks

We purchase food and other commodities for use in our operations based upon market prices established with our suppliers. Many of the commodities purchased by us can be subject to volatility due to market supply and demand factors outside of our control, whether contracted for or not. Dairy costs also can fluctuate due to government regulation. To manage this risk in part, we attempt to enter into fixed-price purchase commitments, with terms typically up to one year, for some of our commodity requirements. However, it may not be possible for us to enter into fixed-price contracts for certain commodities or we may choose not to enter into fixed-price contracts for certain commodities. We believe that substantially all of our food and supplies are available from several sources, which helps to diversify our overall commodity cost risk. We also believe that we have some flexibility and ability to increase certain menu prices, or vary certain menu items offered or promoted, in response to food commodity price increases. Some of our commodity purchase arrangements may contain contractual features that limit the price paid by establishing certain price floors or caps. We do not use financial instruments to hedge commodity prices, since our purchase arrangements with suppliers, to the extent that we can enter into such arrangements, help control the ultimate cost that we pay.

17

Item 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 promulgated under the Securities Exchange Act of 1934 as amended, as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of April 4, 2017, our disclosure controls and procedures are designed and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has not been any change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our first fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.  OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

See Note 7 of Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this report for a summary of legal proceedings.

Item 1A.  RISK FACTORS

A discussion of the significant risks associated with investments in our securities, as well as other matters, is set forth in Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 3, 2017. A summary of these risks and certain related information is included under “Statement Regarding Forward-Looking Disclosure” in Part I, Item 2 of this Form 10-Q and is incorporated herein by this reference. These cautionary statements are to be used as a reference in connection with any “forward-looking” statements. The factors, risks and uncertainties identified in these cautionary statements are in addition to those contained in any other cautionary statements, written or oral, which may be made or otherwise addressed in connection with a “forward-looking” statement or contained in any of our subsequent filings with the SEC. The risks described in this Form 10-Q and in our Annual Report on Form 10-K are not the only risks we face. New risks and uncertainties arise from time to time, and we cannot predict those events or how they may affect us. There may be other risks and uncertainties that are not currently known or that are currently deemed by us to be immaterial; however, they may ultimately adversely affect our business, financial condition and/or operating results.

Item 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

As of April 4, 2017, we have cumulatively repurchased shares valued at approximately $319.5 million in accordance with our approved share repurchase plan. Approximately $29.0 million of these shares were repurchased during the thirteen weeks ended April 4, 2017. The share repurchases were executed through open market purchases, and future share repurchases may be completed through the combination of individually-negotiated transactions, accelerated share buyback, and/or open market purchases. In March 2017, the Company’s Board of Directors approved an expansion of the share repurchase program by $50 million. As of April 4, 2017, we have approximately $80.5 million available under the current $400 million share repurchase plan approved by our Board of Directors. Our Credit Facility does not contain any restrictions on the amount of borrowings that can be used to make share repurchases as long as we are in compliance with our financial and non-financial covenants.

18

The following table sets forth information with respect to the repurchase of common shares during the thirteen weeks ended April 4, 2017:

Period (1)	Total Number of Shares Purchased		Average Price Paid Per Share		Total   Number of   Shares   Purchased   as Part of   the Publicly   Announced   Plans		Increase in Dollars for Share Repurchase Authorization		Approximate   Dollar Value   of Shares that   May Yet Be   Purchased   Under the   Plans or   Programs
01/04/17 – 01/31/17		309,677		$36.56		309,677		$–		$48,279,389
02/01/17 – 02/28/17		316,423		$36.00		316,423		$–		$36,977,187
03/01/17 – 04/04/17		170,689		$38.35		170,689		$50,000,000		$80,469,746
Total		796,789		$36.39		796,789

(1) Period information is presented in accordance with our fiscal months during the thirteen weeks ended April 4, 2017.

Item 6.  EXHIBITS

Exhibit   Number	Description
3.1	Amended and Restated Articles of Incorporation of the Company, as amended, incorporated by reference to Exhibit 3.1 to the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on September 27, 1996, as amended by the Company’s Registration Statement on Form SB-2/A filed with the Commission on August 1, 1996, and the Company’s Registration Statement on Form SB-2A filed with the Commission on August 22, 1996, (File No. 3335182-LA) (as amended, the “Registration Statement”).
3.2	Amended and Restated Bylaws of the Company, incorporated by reference to Exhibits 3.1 of the Form 8-K filed on June 4, 2007.
3.3	Certificate of Amendment of Articles of Incorporation, incorporated by reference to Exhibit 3.3 of the Annual Report on Form 10-K for fiscal 2004.
3.4	Certificate of Amendment of Articles of Incorporation, incorporated by reference to Exhibit 3.4 of the Annual Report on Form 10-K for fiscal 2010.
4.1	Specimen Common Stock Certificate of the Company, incorporated by reference to Exhibit 4.1 of the Registration Statement.
31	Section 302 Certification of Chief Executive Officer and Chief Financial Officer.
32	Section 906 Certification of Chief Executive Officer and Chief Financial Officer.
101	The following materials from BJ’s Restaurants, Inc.’s Quarterly Report on Form 10-Q for the quarter ended April 4, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Unaudited Consolidated Statements of Income; (iii) Unaudited Consolidated Statements of Cash Flows; and (iv) Notes to Unaudited Consolidated Financial Statements.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

19

	BJ’S RESTAURANTS, INC.
	(Registrant)
May 9, 2017	By:	/s/ GREGORY A. TROJAN
		Gregory A. Trojan
		President and Chief Executive Officer
		(Principal Executive Officer)
	By:	/s/ GREGORY S. LEVIN
		Gregory S. Levin
		Executive Vice President,
		Chief Financial Officer and Secretary
		(Principal Financial and Accounting Officer)

20

EX-31

Exhibit 31

BJ’S RESTAURANTS, INC.

Certification of Chief Executive Officer

I, Gregory A. Trojan, certify that:

1. I have reviewed this quarterly report on Form 10-Q for BJ’s Restaurants, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and,

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and,

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2017

/s/ GREGORY A. TROJAN

Gregory A. Trojan

President and Chief Executive Officer

(Principal Executive Officer)

BJ’S RESTAURANTS, INC.

Certification of Chief Financial Officer

I, Gregory S. Levin, certify that:

1. I have reviewed this quarterly report on Form 10-Q for BJ’s Restaurants, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and,

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and,

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2017

/s/ GREGORY S. LEVIN

Gregory S. Levin

Executive Vice President,

Chief Financial Officer and Secretary

(Principal Financial and Accounting Officer)

EX-32

Exhibit 32

BJ’S RESTAURANTS, INC.

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Gregory A. Trojan, Chief Executive Officer of the Company, and Gregory S. Levin, Chief Financial Officer of the Company, certify to their knowledge:

(1)    The Quarterly Report on Form 10-Q of the Company for the quarter ended April 4, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

In Witness Whereof, each of the undersigned has signed this Certification as of this May 9, 2017.

/s/ GREGORY A. TROJAN	/s/ GREGORY S. LEVIN
Gregory A. Trojan	Gregory S. Levin
President and Chief Executive	Executive Vice President, Chief
Officer	Financial Officer and Secretary
(Principal Executive Officer)	(Principal Financial and Accounting Officer)

XML

Document and Entity Information - shares	3 Months Ended
	Apr. 04, 2017	May 05, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Apr. 04, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Trading Symbol	BJRI
Entity Registrant Name	BJs RESTAURANTS INC
Entity Central Index Key	0001013488
Current Fiscal Year End Date	--12-30
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		21,558,356

XML

Consolidated Balance Sheets - USD ($) $ in Thousands		Apr. 04, 2017	Jan. 03, 2017
Current assets:
Cash and cash equivalents		$ 23,562	$ 22,761
Accounts and other receivables, net		12,668	14,698
Inventories, net		10,192	9,907
Prepaid expenses and other current assets		10,624	11,324
Total current assets		57,046	58,690
Property and equipment, net		609,836	601,324
Goodwill		4,673	4,673
Other assets, net		27,520	26,625
Total assets		699,075	691,312
Current liabilities:
Accounts payable	[1]	32,341	31,145
Accrued expenses		82,416	94,553
Total current liabilities		114,757	125,698
Deferred income taxes		39,201	37,587
Deferred rent		31,038	30,424
Deferred lease incentives		53,654	54,119
Long-term debt		182,700	148,000
Other liabilities		20,931	20,587
Total liabilities		442,281	416,415
Commitments and contingencies
Shareholders' equity:
Preferred stock, 5,000 shares authorized, none issued or outstanding
Common stock, no par value, 125,000 shares authorized and 21,572 and 22,332 shares issued and outstanding as of April 4, 2017 and January 3, 2017, respectively		0	0
Capital surplus		66,084	66,200
Retained earnings		190,710	208,697
Total shareholders' equity		256,794	274,897
Total liabilities and shareholders' equity		$ 699,075	$ 691,312

[1] Included in accounts payable as of April 4, 2017 and January 3, 2017 is $4,202 and $5,782, respectively, of related party trade payables. See Note 4 for further information.

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Apr. 04, 2017	Jan. 03, 2017
Statement of Financial Position [Abstract]
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, issued	0	0
Preferred stock, outstanding	0	0
Common stock, par value
Common stock, shares authorized	125,000,000	125,000,000
Common stock, shares issued	21,572,000	22,332,000
Common stock, shares outstanding	21,572,000	22,332,000
Accounts payable, related party trade payables	$ 4,202	$ 5,782

XML

Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands		3 Months Ended
		Apr. 04, 2017	Mar. 29, 2016
Income Statement [Abstract]
Revenues		$ 257,816	$ 243,401
Restaurant operating costs (excluding depreciation and amortization):
Cost of sales	[1]	65,395	60,640
Labor and benefits		92,383	84,778
Occupancy and operating	[1]	53,944	49,073
General and administrative		14,296	14,362
Depreciation and amortization		16,749	15,598
Restaurant opening		1,413	1,439
Loss on disposal and impairment of assets		687	749
Legal and other settlements			369
Total costs and expenses		244,867	227,008
Income from operations		12,949	16,393
Other (expense) income:
Interest expense, net		(888)	(387)
Other income, net		785	397
Total other (expense) income		(103)	10
Income before income taxes		12,846	16,403
Income tax expense		3,580	4,759
Net income		$ 9,266	$ 11,644
Net income per share:
Basic		$ 0.42	$ 0.48
Diluted		$ 0.42	$ 0.47
Weighted average number of shares outstanding:
Basic		21,932	24,278
Diluted		22,313	24,691

[1] Included in cost of sales for the thirteen weeks ended April 4, 2017 and March 29, 2016 are $20,077 and $20,119, respectively, of related party costs. Included in operating and occupancy for the thirteen weeks ended April 4, 2017 and March 29, 2016 are $2,279 and $2,159, respectively, of related party costs. See Note 4 for further information.

XML

Consolidated Statements of Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Apr. 04, 2017	Mar. 29, 2016
Income Statement [Abstract]
Cost of sales, related party costs	$ 20,077	$ 20,119
Related party operating and occupancy costs	$ 2,279	$ 2,159

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands		3 Months Ended
		Apr. 04, 2017	Mar. 29, 2016
Cash flows from operating activities:
Net income		$ 9,266	$ 11,644
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		16,749	15,598
Deferred income taxes		1,614	1,891
Stock-based compensation expense		1,636	1,550
Loss on disposal and impairment of assets		687	749
Changes in assets and liabilities:
Accounts and other receivables		2,493	10,715
Landlord contribution for tenant improvements		(463)	1,589
Inventories, net		(285)	(333)
Prepaid expenses and other current assets		562	1,150
Other assets, net		(1,018)	(726)
Accounts payable		1,829	252
Accrued expenses		(12,137)	1,991
Deferred rent		614	652
Deferred lease incentives		(465)	(37)
Other liabilities		344	132
Net cash provided by operating activities		21,426	46,817
Cash flows from investing activities:
Purchases of property and equipment		(26,254)	(25,333)
Net cash used in investing activities		(26,254)	(25,333)
Cash flows from financing activities:
Borrowings on line of credit		528,400	200,000
Payments on line of credit		(493,700)	(205,000)
Excess tax benefit from stock-based compensation			45
Taxes paid on vested stock units under employee plans		(235)	(196)
Proceeds from exercise of stock options		159	543
Repurchases of common stock		(28,995)	(24,530)
Net cash provided by (used in) financing activities		5,629	(29,138)
Net increase (decrease) in cash and cash equivalents		801	(7,654)
Cash and cash equivalents, beginning of period		22,761	34,604
Cash and cash equivalents, end of period		23,562	26,950
Supplemental disclosure of cash flow information:
Cash paid for income taxes		2,284	2,106
Cash paid for interest, net of capitalized interest		726	325
Supplemental disclosure of non-cash investing and financing activities:
Property and equipment acquired and included in accounts payable		7,852	11,939
Stock-based compensation capitalized	[1]	$ 66	$ 78

[1] Capitalized stock-based compensation relates to our restaurant development personnel and is included in "Property and equipment, net" on the Consolidated Balance Sheets.

XML

Basis of Presentation

3 Months Ended

Apr. 04, 2017

Accounting Policies [Abstract]

Basis of Presentation

1.  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the accounts of BJ’s Restaurants, Inc. (referred to herein as the “Company,” “we,” “us” and “our”) and our wholly owned subsidiaries. The financial statements presented herein include all material adjustments which are, in the opinion of management, necessary for a fair presentation of our financial condition, results of operations and cash flows for the period. Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and footnote disclosures normally included in consolidated financial statements in accordance with U.S. GAAP have been omitted pursuant to the U.S. Securities and Exchange Commission (“SEC”) rules. The preparation of financial statements in accordance with U.S. GAAP requires us to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates.

A description of our accounting policies and other financial information is included in our audited consolidated financial statements filed with the SEC on Form 10-K for the year ended January 3, 2017. The disclosures included in our accompanying interim financial statements and footnotes should be read in conjunction with our consolidated financial statements and notes thereto included in the Annual Report on Form 10-K.

Reclassifications

Certain reclassifications of prior period’s financial statement amounts have been made to conform to the current period’s format.

Recently Issued Accounting Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). This guidance requires the recognition of most leases on the balance sheet to give investors, lenders, and other financial statement users a more comprehensive view of a company’s long-term financial obligations as well as the assets it owns versus leases. ASU 2016-02 will be effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Currently, all of our restaurant and our restaurant support center leases are accounted for as operating leases, and therefore are not recorded within our balance sheet. We are currently evaluating the impact that this guidance will have on our consolidated financial statements as well as the expected adoption method.

In April 2016, the FASB issued ASU 2016-10, an amendment to ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 provides a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services and expands related disclosure requirements. ASU 2016-10 clarifies ASU 2014-09 to address the potential for diversity in practice at the adoption. ASU 2016-10 is effective for annual and interim reporting periods beginning after December 15, 2017, and early application is permitted. We expect to adopt this standard using the full retrospective method.

The majority of the Company’s revenues are from food and beverage sales at our restaurants. ASU 2014-09 will not have an impact on revenue recognition related to food and beverage sales unless the sales are to a customer participating in our loyalty program. Currently, we measure our total loyalty rewards obligation based on the estimated number of customers who will earn and ultimately claim rewards under the program, and we record the estimated related expense as reward points accumulate. These expenses are accrued for and recorded as marketing expenses and are included in “Occupancy and operating” expenses on our Consolidated Statements of Income. Under ASU 2016-10, we will be required to allocate the transaction price between the goods delivered and the future goods that will be delivered, using the loyalty points earned, on a relative standalone selling price basis. The portion of the transaction price allocated to the future loyalty rewards will be deferred until the related loyalty rewards are redeemed. We will no longer record marketing expense related to loyalty points earned. The new standard will not impact the way we account for gift card breakage. We are in the process of quantifying the impact of adopting the new standard.

Recently Adopted Accounting Standards

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718). This guidance changed how companies account for certain aspects of share-based payments to employees. Companies are now required to recognize the difference between the estimated and the actual tax impact of awards within the income statement when the awards vest or are settled, and additional paid-in capital (“APIC”) pools are eliminated. This ASU also impacted the classification of awards as either equity or liabilities and the classification of share-based transactions within the statement of cash flows. We adopted ASU 2016-09 during the quarter. The impact of the adoption of this standard was $0.08 million of additional income tax expense within our consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes (Topic 740). This guidance requires deferred tax liabilities and assets to be classified as non-current in a classified balance sheet. We adopted ASU 2015-17 during the quarter. The adoption of this standard resulted in the reclassification of $18.4 million from current to long-term deferred taxes on April 4, 2017, and January 3, 2017.

XML

Long-Term Debt

3 Months Ended

Apr. 04, 2017

Debt Disclosure [Abstract]

Long-Term Debt

2.  LONG-TERM DEBT

Line of Credit

Our Credit Facility, which matures on November 18, 2021, provides us with revolving loan commitments totaling $250 million, of which $50 million may be used for the issuance of letters of credit. Availability under the Credit Facility is reduced by outstanding letters of credit, which are used to support our self-insurance programs. Our obligations under the Credit Facility are unsecured. As of April 4, 2017, there were borrowings of $182.7 million and letters of credit totaling approximately $14.5 million outstanding under the Credit Facility. Available borrowings under the Credit Facility were $52.8 million as of April 4, 2017. The Credit Facility bears interest at our choice of LIBOR plus a percentage not to exceed 1.75%, or at a rate ranging from Bank of America’s prime rate to 0.75% above Bank of America’s prime rate, based on our level of lease and debt obligations as compared to EBITDA plus lease expenses. The weighted average interest rate during the thirteen weeks ended April 4, 2017 was approximately 1.90%.

The Credit Facility contains provisions requiring us to maintain compliance with certain covenants, including a Fixed Charge Coverage Ratio and a Lease Adjusted Leverage Ratio. At April 4, 2017, we were in compliance with these covenants.

Interest expense and commitment fees under the Credit Facility for the thirteen weeks ended April 4, 2017 and March 29, 2016 was approximately $0.9 million and $0.4 million, respectively. We capitalized approximately $0.04 million of interest expense related to new restaurant construction during the thirteen weeks ended March 29, 2016.

XML

Net Income Per Share

3 Months Ended

Apr. 04, 2017

Earnings Per Share [Abstract]

Net Income Per Share

3.  NET INCOME PER SHARE

Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per share reflects the potential dilution that could occur if in-the-money stock options issued by us to sell common stock at set prices were exercised and if restrictions on restricted stock units issued by us were to lapse (collectively, equity awards) using the treasury stock method. Performance-based restricted stock units have been excluded from the diluted income per share computation because the performance-based criteria have not yet been met.

The following table presents a reconciliation of basic and diluted net income per share, including the number of dilutive equity awards that were included in the dilutive net income per share computation (in thousands):

	For The Thirteen Weeks Ended
	April 4, 2017		March 29, 2016
Numerator:
Net income		$9,266		$11,644
Denominator:
Weighted-average shares outstanding – basic		21,932		24,278
Dilutive effect of equity awards		381		413
Weighted-average shares outstanding – diluted		22,313		24,691

For the thirteen weeks ended April 4, 2017 and March 29, 2016, there were approximately 0.5 million and 0.3 million shares of common stock equivalents, respectively, that were excluded from the calculation of diluted net income per share because they are anti-dilutive.

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Related Party

3 Months Ended

Apr. 04, 2017

Related Party Transactions [Abstract]

Related Party

4.  RELATED PARTY

The Jacmar Companies and their affiliates (collectively referred to herein as “Jacmar”) is one of our shareholders and James Dal Pozzo, the Chief Executive Officer of Jacmar, is a member of our Board of Directors. Jacmar, through its affiliation with Distribution Market Advantage (“DMA”), a consortium of large, regional food distributors located throughout the United States, is currently our largest supplier of food, beverage, paper products and supplies. In July 2006, we began using DMA to deliver the majority of our food products to our restaurants. In July 2012, we finalized a new five-year agreement with DMA, after conducting another extensive competitive bidding process. We are currently in the final stages of renewing our existing agreement with DMA to extend our program an additional five years so as to expire in June 2022.

Jacmar services our restaurants in California and Nevada, while other DMA distributors service our restaurants in all other states. Under the terms of our agreement with DMA, Jacmar is required to sell products to us at the same prices as the other DMA distributors. Jacmar does not provide us with any produce, liquor, wine or beer products, all of which are provided by other third party vendors and are included in “Cost of sales” on the Consolidated Statements of Income.

The cost of food, beverage, paper products and supplies provided by Jacmar included within cost of sales and occupancy and operating expenses consisted of the following (in thousands):

	For The Thirteen Weeks Ended
	April 4, 2017			March 29, 2016
Cost of Sales:
Third party suppliers		$45,318	69.3%		$40,521	66.8%
Jacmar		20,077	30.7		20,119	33.2
Total Cost of Sales		$65,395	100.0%		$60,640	100.0%
Occupancy and Operating:
Third party suppliers		$51,665	95.8%		$46,914	95.6%
Jacmar		2,279	4.2		2,159	4.4
Total Occupancy and Operating		$53,944	100.0%		$49,073	100.0%

The amounts included in trade payables related to Jacmar consisted of the following (in thousands):

	April 4,       2017		January 3,     2017
Third party suppliers		$28,139		$25,363
Jacmar		4,202		5,782
Total Accounts Payable		$32,341		$31,145

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Stock-Based Compensation

3 Months Ended

Apr. 04, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

5.  STOCK-BASED COMPENSATION

Our current shareholder approved stock-based compensation plan is the 2005 Equity Incentive Plan, (as amended from time to time, “the Plan”). Under the Plan, we may issue shares of our common stock to employees, officers, directors and consultants. We have granted incentive stock options, non-qualified stock options, and performance and time-based restricted stock units. Stock options and stock appreciation rights are charged against the Plan share reserve on the basis of one share for each share granted. Other types of grants, including restricted stock units (“RSUs”), are currently charged against the Plan share reserve on the basis of 1.5 shares for each share granted. The Plan also contains other limits on the terms of incentive grants such as limits on the number that can be granted to an employee during any fiscal year. All options granted under the Plan expire within 10 years of their date of grant.

Under the Plan, we issue stock options as well as time-based and performance-based RSUs to officers. We issue time-based RSUs and stock options to other support employees. We also issue RSUs and stock options in connection with the BJ’s Gold Standard Stock Ownership Program (the “GSSOP”). The GSSOP is a long-term equity incentive program for our restaurant general managers, executive kitchen managers and restaurant field supervision. GSSOP grants are dependent on the length of each participant’s service with us and position. All GSSOP participants must remain in good standing during their service period.

The Plan permits us to set the vesting terms and exercise period for awards at our discretion. Stock options and time-based RSUs generally vest ratably over three or five years for non-GSSOP participants and either cliff vest at five years or cliff vest at 33% on the third anniversary and 67% on the fifth anniversary for GSSOP participants. Performance-based RSUs generally cliff vest on the third anniversary of the grant date in an amount from 0% to 150% of the grant quantity, dependent on the level of target achievement.

The following table presents information related to stock-based compensation (in thousands):

	For The Thirteen Weeks Ended
	April 4, 2017		March 29, 2016
Labor and benefits		$468		$403
General and administrative		$1,168		$1,147
Capitalized (1)		$66		$78

(1) Capitalized stock-based compensation relates to our restaurant development personnel and is included in “Property and equipment, net” on the Consolidated Balance Sheets.

Stock Options

The fair value of each stock option grant issued is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	For the Thirteen Weeks Ended
	April 4, 2017		March 29, 2016
Expected volatility		34.7%		35.9%
Risk free interest rate		1.9%		1.5%
Expected option life		5 years		5 years
Dividend yield		0%		0%
Fair value of options granted		$12.03		$14.37

U.S. GAAP requires us to make certain assumptions and judgments regarding the grant date fair value. These judgments include expected volatility, risk free interest rate, expected option life, and dividend yield. These estimations and judgments are determined by us using assumptions that, in many cases, are outside of our control. The changes in these variables or trends, including stock price volatility and risk free interest rate, may significantly impact the grant date fair value, resulting in a significant impact to our financial results.

The exercise price of our stock options under our stock-based compensation plan is required to equal or exceed the fair market value of the shares on the option grant date or the most recent trading day when grants take place on market holidays. The following table represents stock option activity:

	Options Outstanding				Options Exercisable
	Shares   (in thousands)		Weighted Average Exercise Price		Shares    (in thousands)		Weighted     Average     Exercise     Price
Outstanding at January 3, 2017		1,227		$31.95		802		$27.73
Granted		153		35.95
Exercised		(7)		24.20
Forfeited		(3)		45.90
Outstanding at April 4, 2017		1,370		$32.40		901		$29.27

As of April 4, 2017, total unrecognized stock-based compensation expense related to non-vested stock options was $4.8 million, which is generally expected to be recognized over the next five years.

Restricted Stock Units

Time-Based Restricted Stock Units

The following table represents time-based restricted stock unit activity:

	Shares   (in thousands)		Weighted   Average   Fair Value
Outstanding at January 3, 2017		460		$39.75
Granted		90		35.95
Vested or released		(50)		44.77
Forfeited		(12)		39.03
Outstanding at April 4, 2017		488		$38.56

The fair value of our time-based RSUs is the quoted market value of our common stock on the date of grant or the most recent trading day when grants take place on market holidays. The fair value of each time-based RSU is expensed over the vesting period (e.g., three or five years). As of April 4, 2017, total unrecognized stock-based compensation expense related to non-vested RSUs was approximately $10.3 million, which is generally expected to be recognized over the next five years.

Performance-Based Restricted Stock Units

The following table represents performance-based restricted stock unit activity:

	Shares   (in thousands)		Weighted   Average   Fair Value
Outstanding at January 3, 2017		54		$37.87
Granted		40		35.95
Vested or released		–		–
Forfeited		(24)		32.49
Outstanding at April 4, 2017		70		$38.68

The fair value of our performance-based RSUs is the quoted market value of our common stock on the date of grant or the most recent trading day when grants take place on market holidays. The fair value of each performance-based RSU is recognized when it is probable the performance goal will be achieved. As of April 4, 2017, total unrecognized stock-based compensation expense related to non-vested performance-based RSUs was approximately $1.5 million, which is generally expected to be recognized over the next three years.

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Income Taxes

3 Months Ended

Apr. 04, 2017

Income Tax Disclosure [Abstract]

Income Taxes

6.  INCOME TAXES

We calculate our interim income tax provision in accordance with ASC Topic 270, “Interim Reporting” and ASC Topic 740, “Accounting for Income Taxes.” At the end of each interim period, we estimate the annual effective tax rate and apply that rate to our ordinary year to date earnings. The related tax expense or benefit is recognized in the interim period in which it occurs. In addition, the effect of changes in enacted tax laws, rates or tax status is recognized in the interim period in which the change occurs. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including the expected operating income for the year, permanent and temporary differences as a result of differences between amounts measured and recognized in accordance with tax laws and financial accounting standards, and the likelihood of recovering deferred tax assets generated in the current fiscal year. The accounting estimates used to compute income tax expense may change as new events occur, additional information is obtained or the tax environment changes.

As of April 4, 2017, the unrecognized tax benefits recorded was approximately $1.3 million, of which approximately $1.0 million, if reversed would impact our effective tax rate.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

Balance at January 3, 2017	$1,245
Decrease for tax positions taken in prior years	(1)
Increase for tax positions taken in current year	33
Balance at April 4, 2017	$1,277

Our uncertain tax positions are related to tax years that remain subject to examination by tax agencies. As of April 4, 2017, the earliest tax year still subject to examination by the Internal Revenue Service is 2013. The earliest year still subject to examination by a significant state or local taxing jurisdiction is 2012.

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Legal Proceedings

3 Months Ended

Apr. 04, 2017

Commitments and Contingencies Disclosure [Abstract]

Legal Proceedings

7.  LEGAL PROCEEDINGS

We are subject to lawsuits, administrative proceedings and demands that arise in the ordinary course of our business and which typically involve claims from customers, employees and others related to operational, employment, real estate and intellectual property issues common to the foodservice industry. A number of these claims may exist at any given time. We are self-insured for a portion of our general liability and our employee workers’ compensation requirements. We maintain coverage with a third party insurer to limit our total exposure. We believe that most of our customer claims will be covered by our general liability insurance, subject to coverage limits and the portion of such claims that are self-insured. Punitive damages awards and employee unfair practice claims, however, are not covered by our general liability insurance. To date, we have not been ordered to pay punitive damages with respect to any claims, but there can be no assurance that punitive damages will not be awarded with respect to any future claims. We could be affected by adverse publicity resulting from allegations in lawsuits, claims and proceedings, regardless of whether these allegations are valid or whether we are ultimately determined to be liable. We currently believe that the final disposition of these types of lawsuits, proceedings and claims will not have a material adverse effect on our financial position, results of operations or liquidity. It is possible, however, that our future results of operations for a particular quarter or fiscal year could be impacted by changes in circumstances relating to lawsuits, proceedings or claims.

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Stock Repurchases

3 Months Ended

Apr. 04, 2017

Equity [Abstract]

Stock Repurchases

8.  STOCK REPURCHASES

During the thirteen weeks ended April 4, 2017, we repurchased and retired approximately 0.8 million shares of our common stock at an average price of $36.39 per share for a total of $29.0 million, which is recorded as a reduction in common stock, with any excess charged to retained earnings. In March 2017, the Company’s Board of Directors approved an expansion of the share repurchase program by $50 million. As of April 4, 2017, approximately $80.5 million remains available for additional repurchases under our $400 million authorized share repurchase program.

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Basis of Presentation (Policies)

3 Months Ended

Apr. 04, 2017

Accounting Policies [Abstract]

Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of BJ’s Restaurants, Inc. (referred to herein as the “Company,” “we,” “us” and “our”) and our wholly owned subsidiaries. The financial statements presented herein include all material adjustments which are, in the opinion of management, necessary for a fair presentation of our financial condition, results of operations and cash flows for the period. Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and footnote disclosures normally included in consolidated financial statements in accordance with U.S. GAAP have been omitted pursuant to the U.S. Securities and Exchange Commission (“SEC”) rules. The preparation of financial statements in accordance with U.S. GAAP requires us to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates.

A description of our accounting policies and other financial information is included in our audited consolidated financial statements filed with the SEC on Form 10-K for the year ended January 3, 2017. The disclosures included in our accompanying interim financial statements and footnotes should be read in conjunction with our consolidated financial statements and notes thereto included in the Annual Report on Form 10-K.

Reclassifications

Reclassifications

Certain reclassifications of prior period’s financial statement amounts have been made to conform to the current period’s format.

Recently Issued and Adopted Accounting Standards

Recently Issued Accounting Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). This guidance requires the recognition of most leases on the balance sheet to give investors, lenders, and other financial statement users a more comprehensive view of a company’s long-term financial obligations as well as the assets it owns versus leases. ASU 2016-02 will be effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Currently, all of our restaurant and our restaurant support center leases are accounted for as operating leases, and therefore are not recorded within our balance sheet. We are currently evaluating the impact that this guidance will have on our consolidated financial statements as well as the expected adoption method.

In April 2016, the FASB issued ASU 2016-10, an amendment to ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 provides a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services and expands related disclosure requirements. ASU 2016-10 clarifies ASU 2014-09 to address the potential for diversity in practice at the adoption. ASU 2016-10 is effective for annual and interim reporting periods beginning after December 15, 2017, and early application is permitted. We expect to adopt this standard using the full retrospective method.

The majority of the Company’s revenues are from food and beverage sales at our restaurants. ASU 2014-09 will not have an impact on revenue recognition related to food and beverage sales unless the sales are to a customer participating in our loyalty program. Currently, we measure our total loyalty rewards obligation based on the estimated number of customers who will earn and ultimately claim rewards under the program, and we record the estimated related expense as reward points accumulate. These expenses are accrued for and recorded as marketing expenses and are included in “Occupancy and operating” expenses on our Consolidated Statements of Income. Under ASU 2016-10, we will be required to allocate the transaction price between the goods delivered and the future goods that will be delivered, using the loyalty points earned, on a relative standalone selling price basis. The portion of the transaction price allocated to the future loyalty rewards will be deferred until the related loyalty rewards are redeemed. We will no longer record marketing expense related to loyalty points earned. The new standard will not impact the way we account for gift card breakage. We are in the process of quantifying the impact of adopting the new standard.

Recently Adopted Accounting Standards

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718). This guidance changed how companies account for certain aspects of share-based payments to employees. Companies are now required to recognize the difference between the estimated and the actual tax impact of awards within the income statement when the awards vest or are settled, and additional paid-in capital (“APIC”) pools are eliminated. This ASU also impacted the classification of awards as either equity or liabilities and the classification of share-based transactions within the statement of cash flows. We adopted ASU 2016-09 during the quarter. The impact of the adoption of this standard was $0.08 million of additional income tax expense within our consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes (Topic 740). This guidance requires deferred tax liabilities and assets to be classified as non-current in a classified balance sheet. We adopted ASU 2015-17 during the quarter. The adoption of this standard resulted in the reclassification of $18.4 million from current to long-term deferred taxes on April 4, 2017, and January 3, 2017.

Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per share reflects the potential dilution that could occur if in-the-money stock options issued by us to sell common stock at set prices were exercised and if restrictions on restricted stock units issued by us were to lapse (collectively, equity awards) using the treasury stock method. Performance-based restricted stock units have been excluded from the diluted income per share computation because the performance-based criteria have not yet been met.

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Net Income Per Share (Tables)

3 Months Ended

Apr. 04, 2017

Earnings Per Share [Abstract]

Reconciliation of Basic and Diluted Net Income Per Share Computations and Number of Dilutive Equity Awards Included in Dilutive Net Income Per Share Computation

The following table presents a reconciliation of basic and diluted net income per share, including the number of dilutive equity awards that were included in the dilutive net income per share computation (in thousands):

	For The Thirteen Weeks Ended
	April 4, 2017		March 29, 2016
Numerator:
Net income		$9,266		$11,644
Denominator:
Weighted-average shares outstanding – basic		21,932		24,278
Dilutive effect of equity awards		381		413
Weighted-average shares outstanding – diluted		22,313		24,691

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Related Party (Tables)

3 Months Ended

Apr. 04, 2017

Cost of Sales, Occupancy and Operating Expenses

Summary of Amounts Included in Cost of Sales and Occupancy and Operating Expenses and in Trade Payables Related to Jacmar

The cost of food, beverage, paper products and supplies provided by Jacmar included within cost of sales and occupancy and operating expenses consisted of the following (in thousands):

	For The Thirteen Weeks Ended
	April 4, 2017			March 29, 2016
Cost of Sales:
Third party suppliers		$45,318	69.3%		$40,521	66.8%
Jacmar		20,077	30.7		20,119	33.2
Total Cost of Sales		$65,395	100.0%		$60,640	100.0%
Occupancy and Operating:
Third party suppliers		$51,665	95.8%		$46,914	95.6%
Jacmar		2,279	4.2		2,159	4.4
Total Occupancy and Operating		$53,944	100.0%		$49,073	100.0%

Trade Payables

Summary of Amounts Included in Cost of Sales and Occupancy and Operating Expenses and in Trade Payables Related to Jacmar

The amounts included in trade payables related to Jacmar consisted of the following (in thousands):

	April 4,       2017		January 3,     2017
Third party suppliers		$28,139		$25,363
Jacmar		4,202		5,782
Total Accounts Payable		$32,341		$31,145

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Stock-Based Compensation (Tables)

3 Months Ended

Apr. 04, 2017

Information Related to Stock-Based compensation

The following table presents information related to stock-based compensation (in thousands):

	For The Thirteen Weeks Ended
	April 4, 2017		March 29, 2016
Labor and benefits		$468		$403
General and administrative		$1,168		$1,147
Capitalized (1)		$66		$78

(1) Capitalized stock-based compensation relates to our restaurant development personnel and is included in “Property and equipment, net” on the Consolidated Balance Sheets.

Black-Scholes Option-Pricing Model, Weighted Average Assumptions and Fair Value of Option Grant Issued

The fair value of each stock option grant issued is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	For the Thirteen Weeks Ended
	April 4, 2017		March 29, 2016
Expected volatility		34.7%		35.9%
Risk free interest rate		1.9%		1.5%
Expected option life		5 years		5 years
Dividend yield		0%		0%
Fair value of options granted		$12.03		$14.37

Stock Option Activity

The following table represents stock option activity:

	Options Outstanding				Options Exercisable
	Shares   (in thousands)		Weighted Average Exercise Price		Shares    (in thousands)		Weighted     Average     Exercise     Price
Outstanding at January 3, 2017		1,227		$31.95		802		$27.73
Granted		153		35.95
Exercised		(7)		24.20
Forfeited		(3)		45.90
Outstanding at April 4, 2017		1,370		$32.40		901		$29.27

Time-Vested Restricted Stock Units

Restricted Stock Unit Activity

The following table represents time-based restricted stock unit activity:

	Shares   (in thousands)		Weighted   Average   Fair Value
Outstanding at January 3, 2017		460		$39.75
Granted		90		35.95
Vested or released		(50)		44.77
Forfeited		(12)		39.03
Outstanding at April 4, 2017		488		$38.56

Performance Based Restricted Stock Units

Restricted Stock Unit Activity

The following table represents performance-based restricted stock unit activity:

	Shares   (in thousands)		Weighted   Average   Fair Value
Outstanding at January 3, 2017		54		$37.87
Granted		40		35.95
Vested or released		–		–
Forfeited		(24)		32.49
Outstanding at April 4, 2017		70		$38.68

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Income Taxes (Tables)

3 Months Ended

Apr. 04, 2017

Income Tax Disclosure [Abstract]

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

Balance at January 3, 2017	$1,245
Decrease for tax positions taken in prior years	(1)
Increase for tax positions taken in current year	33
Balance at April 4, 2017	$1,277

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Basis of Presentation - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Apr. 04, 2017	Mar. 29, 2016
Basis Of Preparation [Line Items]
Income tax expense as the part of adoption	$ 3,580	$ 4,759
Accounting Standards Update 2016-09 [Member]
Basis Of Preparation [Line Items]
Income tax expense as the part of adoption	80
Accounting Standards Update 2015-17 [Member]
Basis Of Preparation [Line Items]
Reclassification of deferred taxes from current to long-term, due to adoption of ASU 2015-17	$ 18,400

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Long-Term Debt - Additional Information (Detail) - Credit Facility [Member] - USD ($)	3 Months Ended
	Apr. 04, 2017	Mar. 29, 2016
Line of Credit Facility [Line Items]
Revolving loan commitments under loan agreement	$ 250,000,000
Loan agreement, expiration date	Nov. 18, 2021
Letters of credit outstanding amount	$ 14,500,000
Line of credit outstanding amount	182,700,000
Available borrowings under credit facility	$ 52,800,000
Weighted average interest rate	1.90%
Interest expense and commitment fees	$ 900,000	$ 400,000
Interest expense on line of credit		$ 40,000
Letter of Credit
Line of Credit Facility [Line Items]
Revolving loan commitments under loan agreement	$ 50,000,000
Maximum | LIBOR
Line of Credit Facility [Line Items]
Line of credit, adjustment to interest rate	1.75%
Minimum | Prime Rate
Line of Credit Facility [Line Items]
Line of credit, adjustment to interest rate	0.75%

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Reconciliation of Basic and Diluted Net Income Per Share Computations and Number of Dilutive Equity Awards Included in Dilutive Net Income Per Share Computation (Detail) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Apr. 04, 2017	Mar. 29, 2016
Earnings Per Share [Abstract]
Net income	$ 9,266	$ 11,644
Weighted-average shares outstanding - basic	21,932	24,278
Dilutive effect of equity awards	381	413
Weighted-average shares outstanding - diluted	22,313	24,691

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Net Income Per Share - Additional Information (Detail) - shares shares in Millions	3 Months Ended
	Apr. 04, 2017	Mar. 29, 2016
Earnings Per Share [Abstract]
Common stock equivalents excluded from calculation of diluted net income per share	0.5	0.3

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Related Party - Additional Information (Detail) - Jacmar	3 Months Ended
	Apr. 04, 2017
Related Party Transaction [Line Items]
New agreement terms	5 years
Agreement terms	5 years
New agreement maturing date	2022-06

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Related Party - Summary of Amounts Included in Cost of Sales and Occupancy and Operating Expenses Related to Jacmar (Detail) - USD ($) $ in Thousands		3 Months Ended
		Apr. 04, 2017	Mar. 29, 2016
Related Party Transaction [Line Items]
Total Cost of Sales	[1]	$ 65,395	$ 60,640
Total Occupancy and Operating	[1]	53,944	49,073
Jacmar
Related Party Transaction [Line Items]
Total Cost of Sales		20,077	20,119
Total Occupancy and Operating		2,279	2,159
Third Party Suppliers [Member]
Related Party Transaction [Line Items]
Total Cost of Sales		45,318	40,521
Total Occupancy and Operating		$ 51,665	$ 46,914
Cost of Sales | Supplier Concentration Risk
Related Party Transaction [Line Items]
Concentration percentage		100.00%	100.00%
Cost of Sales | Supplier Concentration Risk | Jacmar
Related Party Transaction [Line Items]
Concentration percentage		30.70%	33.20%
Cost of Sales | Supplier Concentration Risk | Third Party Suppliers [Member]
Related Party Transaction [Line Items]
Concentration percentage		69.30%	66.80%
Occupancy and Operating | Supplier Concentration Risk
Related Party Transaction [Line Items]
Concentration percentage		100.00%	100.00%
Occupancy and Operating | Supplier Concentration Risk | Jacmar
Related Party Transaction [Line Items]
Concentration percentage		4.20%	4.40%
Occupancy and Operating | Supplier Concentration Risk | Third Party Suppliers [Member]
Related Party Transaction [Line Items]
Concentration percentage		95.80%	95.60%

[1] Included in cost of sales for the thirteen weeks ended April 4, 2017 and March 29, 2016 are $20,077 and $20,119, respectively, of related party costs. Included in operating and occupancy for the thirteen weeks ended April 4, 2017 and March 29, 2016 are $2,279 and $2,159, respectively, of related party costs. See Note 4 for further information.

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Related Party - Summary of Amounts Included in Trade Payables Related to Jacmar (Detail) - USD ($) $ in Thousands		Apr. 04, 2017	Jan. 03, 2017
Related Party Transaction [Line Items]
Total Accounts Payable	[1]	$ 32,341	$ 31,145
Third Party Suppliers [Member]
Related Party Transaction [Line Items]
Total Accounts Payable		28,139	25,363
Jacmar
Related Party Transaction [Line Items]
Total Accounts Payable		$ 4,202	$ 5,782

[1] Included in accounts payable as of April 4, 2017 and January 3, 2017 is $4,202 and $5,782, respectively, of related party trade payables. See Note 4 for further information.

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Stock-Based Compensation - Additional Information (Detail) $ in Millions	3 Months Ended
	Apr. 04, 2017 USD ($) shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares charged to reserve per granted share | shares	1
Share basis for number shares charged to reserve | shares	1
Expiration term of stock options	10 years
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares charged to reserve per granted share | shares	1.5
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock-based compensation expense | $	$ 4.8
Unrecognized stock-based compensation expenses recognition period (in years)	5 years
Stock Options and Time-based RSUs [Member] | Cliff Vesting Third Anniversary
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	33.00%
Stock Options and Time-based RSUs [Member] | Cliff Vesting Fifth Anniversary
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	67.00%
Stock Options and Time-based RSUs [Member] | Cliff Vesting
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	5 years
Stock Options and Time-based RSUs [Member] | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	3 years
Stock Options and Time-based RSUs [Member] | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	5 years
Performance Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock-based compensation expense | $	$ 1.5
Unrecognized stock-based compensation expenses recognition period (in years)	3 years
Performance Based Restricted Stock Units | Minimum | Cliff Vesting Third Anniversary
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	0.00%
Performance Based Restricted Stock Units | Maximum | Cliff Vesting Third Anniversary
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	150.00%
Time-Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock-based compensation expense | $	$ 10.3
Unrecognized stock-based compensation expenses recognition period (in years)	5 years

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Information Related to Stock-Based compensation (Detail) - USD ($) $ in Thousands		3 Months Ended
		Apr. 04, 2017	Mar. 29, 2016
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Capitalized	[1]	$ 66	$ 78
Labor and benefits
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation		468	403
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation		$ 1,168	$ 1,147

[1] Capitalized stock-based compensation relates to our restaurant development personnel and is included in "Property and equipment, net" on the Consolidated Balance Sheets.

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Black-Scholes Option-Pricing Model, Weighted Average Assumptions and Fair Value of Options Grant Issued (Detail) - $ / shares	3 Months Ended
	Apr. 04, 2017	Mar. 29, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Expected volatility	34.70%	35.90%
Risk free interest rate	1.90%	1.50%
Expected option life	5 years	5 years
Dividend yield	0.00%	0.00%
Fair value of options granted	$ 12.03	$ 14.37

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Stock Option Activity (Detail) shares in Thousands	3 Months Ended
	Apr. 04, 2017 $ / shares shares
Options Outstanding, Shares
Outstanding, Beginning Balance | shares	1,227
Granted | shares	153
Exercised | shares	(7)
Forfeited | shares	(3)
Outstanding, Ending Balance | shares	1,370
Options outstanding, Weighted Average Exercise Price
Outstanding, Beginning Balance | $ / shares	$ 31.95
Granted | $ / shares	35.95
Exercised | $ / shares	24.20
Forfeited | $ / shares	45.90
Outstanding, Ending Balance | $ / shares	$ 32.40
Options Exercisable, Shares
Options Exercisable Outstanding, Beginning Balance | shares	802
Options Exercisable Outstanding, Ending Balance | shares	901
Options Exercisable, Weighted Average Exercise Price
Options Exercisable, Beginning Balance | $ / shares	$ 27.73
Options Exercisable, Ending Balance | $ / shares	$ 29.27

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Time-Based Restricted Stock Unit Activity (Detail) - Time-Based Restricted Stock Units shares in Thousands	3 Months Ended
	Apr. 04, 2017 $ / shares shares
Shares Outstanding
Outstanding Beginning Balance, Shares | shares	460
Granted, Shares | shares	90
Vested or released, Shares | shares	(50)
Forfeited, Shares | shares	(12)
Outstanding Ending Balance, Shares | shares	488
Weighted Average Fair Value
Outstanding Beginning Balance, Weighted Average Fair Value | $ / shares	$ 39.75
Granted, Weighted Average Fair Value | $ / shares	35.95
Vested or released, Weighted Average Fair Value | $ / shares	44.77
Forfeited, Weighted Average Fair Value | $ / shares	39.03
Outstanding Ending Balance, Weighted Average Fair Value | $ / shares	$ 38.56

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Performance-Based Restricted Stock Unit Activity (Detail) - Performance Based Restricted Stock Units shares in Thousands	3 Months Ended
	Apr. 04, 2017 $ / shares shares
Shares Outstanding
Outstanding Beginning Balance, Shares | shares	54
Granted, Shares | shares	40
Vested or released, Shares | shares	0
Forfeited, Shares | shares	(24)
Outstanding Ending Balance, Shares | shares	70
Weighted Average Fair Value
Outstanding Beginning Balance, Weighted Average Fair Value | $ / shares	$ 37.87
Granted, Weighted Average Fair Value | $ / shares	35.95
Vested or released, Weighted Average Fair Value | $ / shares	0
Forfeited, Weighted Average Fair Value | $ / shares	32.49
Outstanding Ending Balance, Weighted Average Fair Value | $ / shares	$ 38.68

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Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Apr. 04, 2017	Jan. 03, 2017
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Unrecognized tax benefits	$ 1,277	$ 1,245
Unrecognized tax benefits that would impact effective tax rate, if reversed	$ 1,000
Federal | Earliest Tax Year
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Income tax examination, years open	2013
State or Local Taxing Jurisdiction | Earliest Tax Year
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Income tax examination, years open	2012

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Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits (Detail) $ in Thousands	3 Months Ended
	Apr. 04, 2017 USD ($)
Income Tax Disclosure [Abstract]
Beginning Balance	$ 1,245
Decrease for tax positions taken in prior years	(1)
Increase for tax positions taken during the current year	33
Ending Balance	$ 1,277

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Stock Repurchases - Additional Information (Detail) - USD ($) $ / shares in Units, shares in Millions	1 Months Ended	3 Months Ended
	Mar. 31, 2017	Apr. 04, 2017
Equity [Abstract]
Number of shares repurchased during the period		0.8
Repurchased average price per share		$ 36.39
Shares repurchased, value		$ 29,000,000
Expansion of share repurchase program	$ 50,000,000
Total amount authorized under the share repurchase program		400,000,000
Common stock additional repurchases under authorized repurchase program		$ 80,500,000