Good day, everyone, and welcome to the BJ's Restaurants, Inc. First Quarter 2020 Earnings Release and Conference Call. Today's call is being recorded. And now at this time, I'd like to turn the call over to Greg Trojan, Chief Executive Officer. Please go ahead, sir.

Thank you, operator. Good afternoon, everyone, and welcome to our conference call and webcast. I'm Greg Trojan, BJ's Chief Executive Officer. Joining me on the call today is Greg Levin, our President and Chief Financial Officer; and we also have Kevin Mayer, our Chief Marketing Officer, on hand for Q&A. So after the market closed today, we released our financial results for the first quarter of 2020, which ended Tuesday, March 31, 2020. You can view the full text of our earnings release on our website at www.bjsrestaurants.com. Our agenda today will start with Rana Schirmer, our Director of SEC reporting, providing our standard cautionary disclosure with respect to forward-looking statements. I will provide an update on our business. And then Greg Levin will provide a more detailed commentary on the quarter and current environment. After that, we'll open it up to questions. We expect to finish the call in about an hour. So Rana, please go ahead.

Thanks, Greg. Our comments on the conference call today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Investors are cautioned that forward-looking statements are not guarantees of future performance and that undue reliance should not be placed on such statements. Our forward-looking statements speak only as of today's date, May 7, 2020. We undertake no obligation to publicly update or revise any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by the securities laws. Investors are referred to the full discussion of risks and uncertainties associated with forward-looking statements contained in the company's filings with the Securities and Exchange Commission.

Thanks, Rana. As we all know, our business was turned upside down in a matter of weeks in March as the coronavirus pandemic took hold across the United States and throughout the globe. Given the business updates we've provided since the onset of the virus, I will summarize the steps we have taken and adjustments we've made in our business and how we are executing in the early days of the gradual reopening of dining rooms in our restaurants. We first started restricting dine-in capacities and enacting social distancing practices within our restaurants in the first two weeks of March. Government restrictions put in place over the following two weeks led to full closures of all of our dining rooms, leaving us with only delivery and takeout channels to drive sales. Pre-crisis, our off-premise represented about 10% of our revenue or roughly $11,000 per year. Our sales reached their lowest level in the fourth week of March, ending March 24, declining 82% year-over-year and reaching a weekly average of approximately $21,300 per restaurant. By mid-March, we were already implementing cost savings actions but knew we had to push further in order to conserve cash and reduce our burn rate. Early on, we quickly eliminated discretionary G&A spending, stopped all nonessential capital expenditures, including halting construction activity on three new restaurants, and temporarily delaying or canceling all other new restaurant openings for 2020. In total, we currently have only one incremental signed lease obligating us to open a new restaurant beyond the three we recently postponed. We also suspended our dividend slated to be paid March 24, and future quarterly dividends and share repurchases. We scaled back our marketing and media spend significantly. Unfortunately, the severity of the situation necessitated us temporarily laying off roughly 16,000 of our approximately 21,000 hourly team members and furloughing roughly 200 of our restaurant managers. At our restaurant support center in Huntington Beach, we furloughed approximately 20% of our staff and implemented salary reductions ranging from 10% for team members making more than $100,000 per year, up to 20% for our senior team and Board of Directors. These were difficult and painful choices for sure. But consistent with our strategy, throughout all of this, we did what it took to address the near-term challenges while positioning BJ's to emerge from the pandemic with strength. We then set out to work on our plan to keep as many of our restaurants open as possible, and in so doing keep as many of our team members working as possible. Our first decision in this regard was to reduce the number of menu items available from about 145 to roughly 85. This enables us to provide our guests with the quality they've come to expect, but at staffing levels well below our norm. Our operations team stepped up in amazing fashion, learning each day better ways to approach and execute in this new reality. Through our operations leadership and the hard work and problem-solving creativity of our restaurant teams, we have been able to keep all but 4 of our 209 restaurants operating to date. The sales volumes of our off-premise business have nearly tripled since the start of the crisis to approximately $31,800. Aside from strong execution at the restaurant level, our culinary and marketing teams quickly assembled new product offerings, bundles, and promotional price points that have clearly resonated with our guests. Our $6 chilled to-go entrees introduced late last fall, our half-off large pizzas all day, every day, and our Family Feast, which feeds four to six, have all been mainstays of our sales each day. We've also sold more of our award-winning beer-to-go than ever in six-pack cans, along with new disposable growlers priced attractively at $12 for 64 ounces. We've promoted our $10 bottles of wine to-go, along with higher-priced varietals, also available at prices competitive with what guests would pay at local retail. All of this speaks to the nimbleness of our team; despite more than doubling our revenues since 2010, we've worked hard to not lose the decision-making and speed-to-market advantages we've always used to our benefit. While our overall check is a bit lower year-over-year, our off-premise check is higher by approximately 15% from pre-COVID levels due to large part to these recently launched and expanded check-building add-ons. Our current level of promoted items has led to a higher promotional mix, about 28% versus 12% pre-COVID. However, the favorable food cost of selling a higher mix of pizza and pasta and fewer center-of-the-plate proteins has resulted in a cost of sales similar to our steady state. BJ's top-line growth combined with our limited menu and our operators' obsession with running our restaurants safely for our guests and team members resulted in a reduction of our burn rate by nearly half to a level of approximately $2.5 million per week. The next phase we've begun is the gradual reopening of our dining rooms across the country. Over the last week, we opened our Texas, Florida, Tennessee, Oklahoma, and Kansas restaurants to partial dining rooms. Our most substantial data set comes from Texas, which opened last Friday with dining area set at 25% of capacity. Our dining rooms are typically larger than our competitors, and we have less fixed booth seating than most as well. Both are nice advantages, enabling us to provide a safe environment for a large number of guests. The good news is, as we expected, guests are eager to get back out to a social dining experience, and they are doing so in a manner that respects the prudent safety protocols these times demand. Sales levels are encouraging even at these low levels of effective capacity. In early results, we've not seen a decline in off-premise sales after these dining rooms have reopened. In fact, off-premise sales are modestly higher when compared to the average sales from the same days in the three weeks prior to the dining rooms being reopened. And remember, these off-premise sales that we're maintaining or growing are roughly three times higher than our off-premise sales at the start of the year. So we believe the dine-in and off-premise sales are largely independent, at least in this current environment, with certain guests excited to return to the social experience of dining out, and others still using takeout and delivery orders to feed themselves and their families in the comfort of their own homes. Time will tell, but we're hopeful that guests that have now enjoyed the convenience of takeout and delivery from BJ's will continue to do so in addition to dining on-site well after this crisis has passed. We have a comprehensive plan in place to ensure the safety of our guests and team members, so our great food and service can be enjoyed with a high degree of comfort and security. Our recent technology and deep digital investments are serving us well in the current environment. We can provide our guests an experience that is as touchless as possible. We're taking reservations by phone and through our website and app. We have moved our hosts outside our entryways to meet our guests with mobile waitlist management devices and utilize text communication to let guests know when they can be seated. In addition, we're encouraging them to download our menus to their phones via text link, QR codes, and website landing pages, which eliminates the need for any physical touching of menus by our guests and also enables us to link their check processing and payment directly to their mobile devices. Guests are quickly adopting and using digital payment as a result, which adds convenience and improved speed at the end of the dining experience. Undoubtedly, there is opportunity for further innovation as our guest preferences and needs evolve beyond this crisis. We look forward to more partial dining room openings beyond these first states and are driving to the next milestone in all of this to achieve cash flow breakeven at the company level. At our current management staffing levels, which average a bit less than five managers per restaurant, we believe our average weekly sales levels needed to reach positive cash flow for the company, including corporate costs and current levels of CapEx spend, is about $65,000 per week. We were averaging about $30,000 per week before starting to reopen our dining rooms. While it's been less than a full week since Texas reopened its dining rooms at only 25% capacity, our dine-in sales in Texas are adding roughly $20,500 of additional weekly sales. As more dining rooms reopen, permitted capacities grow, and we expand our menu closer to our pre-COVID offerings, we can see a clear path to reaching this next milestone in the near term and continuing to grow well beyond it. In terms of liquidity, I previously mentioned that we're running about negative $2.5 million per week prior to dining room openings. Initially, we don't think dining rooms limited to 25% capacity will improve that run rate and, in fact, may put some near-term pressure on that level as the costs involved in safely opening are significant. However, we're confident we will see steady improvement as effective capacities grow to 50% and beyond. At the end of last week, we announced an equity raise of $70 million through the sale of common stock to Ron Shaich's Act III Holdings and funds and accounts advised by T. Rowe Price Associates. We are grateful for the confidence expressed by ACT III and T. Rowe Price in BJ's long-term outlook as we begin reopening our dining rooms and continue to deliver the delicious food, excellent dining experiences, and gold standard guest service and hospitality that guests have come to love and expect from BJ's. Before I turn the call over to Greg, on behalf of the executive leadership team, our Board, and all of our stakeholders, I want to again thank all of our restaurant and operating teams and everyone at the RSC for their unique ability to deliver BJ's gold standard level of guest service regardless of the circumstances. We stand by each one of our team members and loyal guests and look forward to resuming normal operations as conditions permit. And with that, I will turn the call over to Greg Levin.

Thanks, Greg. As Greg mentioned, these are very different and unprecedented times. I will keep my commentary on quarter one brief to provide some top-level highlights before we transition into some additional thoughts for the second quarter based on what we've seen to date on recent state reopenings, including capacity restrictions and social distancing measures, as well as an update on our liquidity position. In this situation, the different timing of state reopenings, coupled with national state and local restrictions, makes it challenging to provide any real visibility on the second quarter earnings at this current time. Please remember that all this commentary today is subject to the risks and uncertainties associated with forward-looking statements as discussed in our filings with the SEC. From a Q1 perspective, as we noted in today's press release, our comparable restaurant sales through February were positive 1.5%. However, as Greg Trojan noted, we began to see a reduction in our comp sales in the first weeks of March, as consumer worries around the virus started to impact traffic. The state of Washington began some of the earliest stay-at-home orders, followed quickly by Northern California and then subsequently, the rest of California and then the entire country. Our last positive day of comp sales was March 1, as COVID then started to dominate the airwaves, which ultimately forced all of our restaurants to only sell food and beverages through takeout and delivery channels. As a result, we finished March down approximately 40%, leading to a comp sales decline of more than 15% for the quarter. Prior to us switching to an off-premise only business, our margins were fairly consistent with the prior year. Cost of sales was in the mid-24% range through February, and this was offset by rate pressures with our other operating occupancy costs pretty much in line with the prior year. As we pivoted to an off-premise only business, our weekly sales average for all of March declined to $70,000 per week, compared to more than $115,000 per week in March of last year. As our business deleveraged against our fixed and semi-variable cost base, we adjusted our operations to better align with the sales levels, including a limited menu, new scheduling requirements, and eliminating all nonessential spending in our restaurants. We acted quickly to manage restaurant-level costs, resulting in an improved weekly cash burn rate of $2.5 million levels that Greg previously outlined. Additionally, as part of the temporary layoffs and furloughs, we implemented an emergency paid time-off program for team members who are not eligible for certain benefits. As a result, in March, we incurred almost $5 million in additional labor expense as we paid out approximately $6.7 million to our key members, which includes the new emergency paid time-off program as well as accrued vacation time. We have also continued to fund our portion of health insurance and offer restaurant free benefits to furloughed team members. Shifting forward to today, we have 65 restaurants, or 27% of our 205 operating restaurants, with dining rooms reopened and operating under capacity restrictions. Included in this first wave of reopening were Texas and Vista, Florida, our two largest states behind California. Both Texas and the areas where we are open for dining room service in Florida are allowed to operate at 25% total capacity. Using this most current week as a small sample, we are very encouraged by the additional sales increase we are seeing. Also impressive is that our off-premise sales volume for these restaurants have remained pretty consistent and even increased slightly week-over-week as we begin reopening our dining rooms. As Greg commented earlier, we believe that we need our sales to reach about $65,000 a week to achieve cash flow breakeven once dining rooms reopen, and that is inclusive of rent and corporate costs. It also contemplates today's manager cards and the limited menu we have in place with some menu additions, and the additional costs for personal protective equipment for our team members and the safety of our guests, including masks, gloves, throwaway menus, sanitizers, and other items. While these are only estimates, if we continue to maintain a large percentage of our off-premise sales even as our dining rooms reopen, the incremental sales we need in our business is very attainable and could allow us to return to generating positive cash flow. In regards to liquidity, we currently have $134 million on our balance sheet, including the net proceeds from the equity offering and the full drawdown on our $250 million line of credit. We also amended our current line of credit to provide additional flexibility during this time. As part of this amendment, our leverage and fixed ratio covenants have been raised for the second and third quarters and reset starting in the fourth quarter on an amended basis with beginning in November's results. For more details on our amended credit agreement, please see our filings with the SEC, which we filed on Monday, May 4. Regarding capital expenditures, we have stopped our initiative CapEx for the time being. We do have one restaurant under construction, which is close to 80% complete and currently anticipate opening this restaurant sometime later this year. This restaurant is in the Cleveland market, and we own the underlying land. So we have total flexibility as to when we will open this location as well as the opportunity to monetize the underlying real estate if we choose. Let me wrap up with a couple of thoughts before we turn it over to questions. As Greg Trojan mentioned, the passion and commitment of our team members is unparalleled in casual dining. We are able to pivot our operating models to accommodate the safety of our guests and our team members, while simultaneously growing our off-premise sales by nearly 200%. We are now beginning to slowly reopen our restaurants based on the local regulations in the communities in which we operate. Our leading-edge investments in technology allow us to provide our guests with digital check-ins, digital menus, and digital payment options directly from their phones, but do not take away from the personal service level our guests expect from BJ's. Additionally, our large restaurants with flexible seating give us a competitive advantage to welcome more guests back into our restaurants to enjoy the great BJ's experience, beer, and service in a dine-in setting. Combine these attributes with our strengthened balance sheet and BJ's ability to take advantage of opportunities to continue gaining market share in the casual dining industry for years to come. With that, I would like to open it up for questions.

Thank you. [Operator Instructions] And we will first hear from Jeffrey Bernstein of Barclays.

Great. Thank you very much. I had a couple of questions. One, obviously, in terms of the most recent investment you took in, clearly Ron Shaich as a pioneer, and we hold him in high regard, so congratulations on that. With that said, I'm just wondering how you evaluate the different funding options you had in front of you before ultimately deciding on that particular investment?

Yes. Hey, Jeff. It's Greg Levin here. Great question. I think like we’ve seen across the industry, from Garden to Shake Shack, The Cheesecake Factory, just recently with Brinker, we evaluated a combination of different opportunities out there. I think we felt that it was important to really have a clean balance sheet. I think as a continuing growth company, with a lot of opportunity out there, we felt that straight equity was a better way to go for us. It allows us to really maintain, as I said, a simple capital structure without additional costs. Therefore, as we move through this current pandemic and get to the other side of it, it allows us, I believe, more flexibility to continue executing our longer-term growth plans.

And look, Jeff, you said it; the other element of this is being able to attract Ron and his team and the experience they have. Think about the path of growing off-premise that drove so much growth at Panera's that overlaps a great opportunity for our concept as well, and we look forward to tapping into that knowledge and experience in other elements as well. You guys are well aware of T. Rowe's track record and depth of experience in the retail restaurant space. So we are really happy to have two investors of the caliber of both ACT III and T. Rowe joining our team.

Understood. And then I'm just curious about your thoughts in terms of your ability to retain the current 30-some-odd percent of your former AUVs that you're now generating with to-go, while at the same time, reopening your restaurants. I'm just wondering, obviously, the early states and maybe you're only opening up 25%, so maybe that helps. But in terms of your confidence level in being able to sustain the to-go component of your business, while at the same time, growing the dine-in. Any thoughts there in terms of your ability to do that as more and more states open up and maybe you can open up closer to 50% capacity?

Yes. That’s a really good question. Look, we're only a few days into this experience. My perspective has always been, as we've talked about off-premise and delivery in the past, these are different occasions and are driven by different guest needs, and as such are a lot more incremental and differentiated than they overlap. And we've shown that as we've grown takeout up to this point. As you remember, we started this journey with only about 5% of sales in off-premise, and we had doubled that before pre-COVID. So based on every piece of evidence and data we've looked at, we did not cannibalize in restaurant dining while we did that. So I don't expect we will hold on to all of the dollars we've grown to here, but I do think we're going to hold on to a whole lot of it. The trial we've generated and some of the innovations we've made around product and pricing are going to serve us well. I would also say alcohol delivery, the latitude from a legal perspective of most states and municipalities loosening liquor delivery laws and takeout laws has really opened up an opportunity for us to, particularly on the beer side, deliver six packs and also impressive growler sales. So I'm very optimistic about continuing to grow and just accelerating the growth of off-premise in this journey.

Got it. And just my last question. I'm just curious about the pace of the recovery. I think you said you bottomed out down 82% in late March. And now you're in the down 68% range, I guess, in early May. So it seems like maybe a 15 percentage point improvement. I know some of your peers have gotten comps into the down only 40% range. I'm just wondering what you think differentiates or leads to the differential in your pace of recovery thus far only with to-go versus some of your other casual dining peers? Thank you.

No, thank you for asking that question. Structurally, you have to remember a couple of different things about BJ's. One is the amount of consistent business we do throughout the day and shoulder periods. Especially late night, the amount of food and beverage we sell late night is highly experiential. Those can't be replicated in a takeout or a delivery kind of order. So that's the biggest reason you see us from a comp perspective look lower. Our rate of growth in off-premise has actually been higher than the industry. But the sales fall because of the dynamic I mentioned, and also the fact that we, as you've known us a long time, we have a high alcohol and beverage mix much higher than other concepts as well, which is never going to be able to replicate that kind of beverage consumption off-premise. So, all of that plays into why our comp perspective numbers will look different than others.

Yes. Hey, Jeff, it's Greg. Just to add specifically back to the estimates, if I take up our late-night business, which virtually does not exist today, and looked at comps for the last week, we've actually been down in the negative 43%, 45% range. So probably a little bit more in line with our peers, but we just have a segment of our business today that, frankly, is zero.

Sharon Zackfia, William Blair.

Hi. Good afternoon. Can you ... obviously, you did a good job being nimble in this environment. But trying to get a handle on where your G&A run rate is at this point. It was really low in the first quarter relative to what we've been expecting. So if you could kind of help us understand what the right current G&A run rate is, that would be helpful. And then just wanted to understand when you're reopening in Texas, are you reopening with the full menu? Are you still using that curtailed menu that you've had for off-premises?

We are opening with the same limited menu. It's another great question, Sharon. That, as I alluded to in my remarks, is some upside for us because a lot of our favorable center-of-the-plate protein items that we worked so hard at growing over the last few years, particularly our slow-roast items, our prime rib and tri-tip that have been so successful, are not on our menu right now. We look forward to when we see a line of sight around how dine-ins will settle in from a traffic perspective, and then also supply chain, restart-up, and all that stuff. But that's obviously significant upside for us.

Yes. Sharon, it's Greg, or the other Greg here. I would probably say that the first quarter, because of the way this market came down, we've had a deferred comp plan. As a result, when the market comes down, we get excited in G&A. At the same time, we have to take in expense and other income, and you can kind of see that on our P&L year-over-year. That was to the tune of about $2.5 million. That's why G&A looked so low or one of the reasons G&A looked so low in the first quarter. If you get into the second quarter and forward, we're probably closer to about a $13 million a quarter run rate.

Great. Thank you. And then did you ... I didn't hear this, but maybe you did mention that out of the off-premises customers you're getting, do you have any intel on kind of what percent of those might be new to BJ's?

I don't know the answer to that. I would tell you our loyalty is up from a frequency standpoint. We're seeing a nice increase in loyalty guests. We can reach out to them very effectively through our loyalty program. So we're starting to see nice increases there. Other than that, I don't know. I couldn't speculate what's a new guest.

Thanks. Good afternoon. Hope you are all well. Greg, you talked about some potential start-up or restart costs as you open dining rooms. Do you have a sense of what those are and maybe thinking about labor dollars per week or something? And are there any issues of getting employees to come back inside and work dine-in once you've heard anecdotally that there is some concern for obvious reasons that working inside may increase risk? Any issues with attracting and re-attracting those employees?

I will answer the last one first, John. We really haven't experienced that yet. Generally, I think, it's an industry concern, particularly given the unemployment subsidies that are in place. You could argue there is an economic disincentive to go back to work for a while. But we haven’t experienced that as we brought some people back as we have opened dining rooms. People looking in the medium to longer-term are like, listen, this is a place I like to work, and I want a job. So that’s been good so far.

As far as the first part of your question, John, because it appears that we're going to be opening restaurants in a social distancing way, it doesn't look like there will be much training costs as you're bringing people back. Ultimately, we are bringing individuals that have worked with BJ's. The training on that from an hourly standpoint is pretty minimal. We haven't really seen it in our Texas or Florida restaurants as of yet, and I think that's going to be the case again because the restaurants are going to be opened up in a social distancing type.

Thank you. And just one last question. I understand job one is to get the restaurants back up and running, and real estate and community development has been pushed too far. As you think about how these may look different, either real estate site selection or format of the store, do you anticipate changes to how the furloughs work or the sites you select just based on this experience and maybe potentially permanent changes in consumer behavior?

John, it's a great question. We do, and right now, probably in our spare time. I think there’s a lot more change that will happen. The primary reason I say that is the foundation of our dining room experience is highly social, and I don't think that's going to go away. I mean, there is the fundamental of going out with friends and family. In the near-term, you've got to make sure that it appears and actually is a super safe experience. But that’s what people are yearning to do. And for that reason, those elements of our business, fundamentally from how we build our restaurants and maybe where we're building, maybe not so much. But I do think, as you know, we've been on this road of how technology can make this experience a better one, not at the detriment of hospitality, but increasing the convenience and just mitigating some of the pain points of dining in a restaurant. Our hope is that this current experience will accelerate some of that from a technology perspective. I mentioned some of these things that we are doing around a downloadable menu that our guests, so far—again, very early on—really appreciate. They like not having to touch a menu, but also find the experience to be pretty convenient. When we tie that mobile device to a guest, that leads to payment and other elements that can drive more convenience, that's the kind of stuff that I think will change the experience for the better. The obvious one is continuing to... I think this will induce more physical changes as off-premise reaches these kinds of numbers. In fact, if we are able to hold onto the majority of these dollars, that will necessitate—we've started down that path and put some CapEx behind expanding our takeout areas and situating our kitchen lines to accommodate these kinds of volumes. This will require further changes on that side of the business.

Great. Thanks and glad to hear that everyone is well. Guys, so for those 55 restaurants that have reopened given the dining room constraints, was there an actual wait to get into those restaurants? Were there any common themes for those locations in terms of those that sold the strongest and weakest traffic levels?

Jeff, I would say, as is usual, we saw some level of waits. But it was pretty even flow over the weekend, which was really the test. We were running—keep in mind, this is not typical that we're taking in the level of reservations that we are taking now. In fact, we are encouraging guests to reserve online or just call the restaurant, so we can better manage that flow. Because honestly, one of the things we are worried about is going to be tougher to manage; we can't queue people in our waiting areas, right? So we are having our folks literally outside the restaurant, meeting folks as they come up and then using text to let them know when they can come back to the restaurant to be seated. So far, it's been encouraging that the sales volumes have been that way. It was pretty evenly paced. As for the second question, it's too early to tease out much of the if this is true of our business in general, we obviously have higher-volume restaurants and those that are lower around our averages. But our extremes are not that extreme. We didn't see something where initially, you're like, 'Wow, urban—you might think more dense urban areas—versus some of the counties in Texas where they've had a low level of infection rates or whatever.' Nothing that stands out in this early stage.

That’s helpful. And just one other follow-up. So you guys touched on this, but can you give any color on how much of that off-premise sales growth was driven by curbside versus delivery?

Yes. About 70% of our increase is coming from takeout, interestingly. Delivery is still up nicely, at about 90% of the pre-COVID rates, but is about 30% of the incrementality.

Hi. Good afternoon. Hope you both are doing well. My question, I have a couple of technical questions. So in Texas, I think you mentioned the $20,500 lift in average weekly sales. Could you maybe frame up what that means relative to what the prior dine-in business looked like a year ago?

I'm sorry. David, can you ask the question again?

Yes, I'm sorry. The $20,500 in average weekly sales you mentioned for the Texas dine-in business, could you clarify how that compares to what the dine-in business in Texas and those same restaurants looked like a year ago? So we can frame up what percentage of the volume you've recovered compared to the dine-in business a year ago?

Yes. I don't know if I have that. The better way I would say it is Texas has been down the last couple of days from a comp sales perspective—something in the negative 45% range. I would leave it there. I don’t have the exact difference between takeout or off-premise and dine-in from last year.

Got it. Okay. That’s helpful. And then I guess, are you getting guest feedback on the experience in these restaurants as you reopen them? I’m curious to know if ... what the reaction has been to all those social distancing efforts and what the experience is like, if you have it. And then, I guess, if there's anything you can share on how they are using the restaurant, either the same or differently than they did in the past, whether it's by day part or mix or anything like that.

That's a great—really great question. We can answer the first one better than the follow-on, David. Because look, people are wearing masks in our restaurants. They have gloves. We are asking them to download. There is a lot that's different than just weeks ago, right? It's kind of a—you have guests that are willing to be in the restaurants to begin with; not the general population. So you have folks that have an expectation of like, okay, I'm going out in the world here. So it’s not necessarily representative of all of our guests. But having said that, people were actually not just receptive, but glad we were doing what we were doing because it made them feel safe. The visual cues and the actual things that we are doing reassure people. So far, again, I think it's encouraging that the number of people that are going out are going out. I think the guest experience is one that people are going to come back for. It's not like, 'Wow, this is so compromised.' That’s just our anecdotal from our restaurants, from our teams.

Right. That's interesting. And then Greg Levin, do you have a rough ballpark for what the restaurant contribution margin looks like at the current sales volumes for the industry overall, not just Texas but mainly for your chain overall? And then what that would look like or what levels are needed to break even specifically at the restaurant level?

Yes. I don’t have the current level of 45 [technical difficulty] business. We think we need to be $55,000 to be cash flow neutral at the restaurant level. We need that additional $10,000 to move us up to $65,000 to cover our G&A and other costs around CapEx.

Thank you. Good afternoon.

Hi, Nicole.

Hi. Thanks for the time. I want to understand the limited menu. What are you learning, or what is that informing so far about margin, speed, and accuracy? Obviously, it's very early days, but how do you think about a staged reintroduction versus perhaps elimination of certain items or even platforms?

Yes, another really good question. Look, we're not going to rush to reinstate our full menu all at once. We will look at it in stages, for sure. As you know, we've been on this course of trying to reduce the number of items on our menu prudently; our level of about 145 compares to 180 or 190 previously. We're going to analyze everything from different dimensions, certainly not led by cost but by sales. I think it presents an opportunity to take another step forward on reducing complexity while making sure we don't compromise one of the best attributes of our concept, which is variety.

Great. Thanks for taking the questions. Just a few for me. First, curious, I think Greg Trojan, you mentioned earlier that at the 25% capacity levels in Texas, you're not making ... you're burning through quite a bit of money in that market. So I'm just curious to know why reopen full dining rooms if you're still burning significant levels of cash in that market versus just keeping the off-premise going? And I got a few more questions after that.

Just for clarity, I didn't say we were burning through a pile of money. I said it was going to not greatly influence our burn rate and may put pressure on it. We felt like the trade-off of learning—operationally, we think those capacities are going to grow sooner rather than later—we wanted to get team members back to work and continue the momentum. We don't think we're taking undue risk by doing that financially. The benefits of the learning experience with our guests has been exceeding our expectations.

Okay. Thank you. And then kind of following that similar thread. Thinking about your business longer-term and how it's going to change, I know it was already asked about how your stores might look. But I'm curious to think about the company as a brand in and of itself. You've got a strong beer business that's out there. Has this changed your thinking about extending the brand beyond the four walls and potentially going after new revenue streams, or is it sticking within the four walls and focusing purely on the restaurants?

Hey, because I think what others might be missing here, we are optimistic around people gathering, socializing, and enjoying food and drink. It’s one of the oldest, most important elements of being a human being, and it’s not going to go away. Are there going to be challenges and timing? Yes. Will some of this induce changes that may last a long period of time? Yes. But they’re not going to impede our fundamental business model of people wanting to be in a restaurant, having good food and award-winning beer. That said, we are looking at other revenue streams; they're not mutually exclusive. I think the popularity of our beer that we have started to sell in retail over the last couple of years, as an example, means there's probably other things we can be doing with our Pizookie franchise outside of our four walls. So yes, we think there are opportunities, but they are not driven so much because we think dining in is going away.

Understood. I appreciate that color. The last piece kind of carried on that same line of thinking. Curious to—you've mentioned earlier just the idea that it's going to take a while for things to return back to normal. A lot of commentary in the industry so far is perhaps that the independents, particularly in the full-service sector, might have a difficult time reopening and staying open for much longer. I'm just curious if you could perhaps put some numbers around in your—around your stores. Do you have a general idea of the competitive set from the independents within, say, a three to five-mile radius of your stores across your system?

No. We really don't, actually. It’s a valid question, but look, it varies by market where you see more chain representation in Texas as opposed to the Northeast, probably for obvious real estate development reasons. We don't look at it on a trade area or market-by-market basis in that way. It's an interesting question, but we don't have much to offer you there.

Thank you. My question is a couple of follow-up ones. I just want to be clear. With the $20,500 from the 25% capacity added in those Texas stores, did those stores see a greater cash burn after the dining room opened? Is that correct?

No, what we're saying is, don’t expect us to convert to a wildly different burn rate immediately based upon that sales increase because of the costs of the supplies, etc. It's still only $20,000 a week, right? The costs of the supplies, etc. are not going to wildly change the $2.5 million burn rate until that number grows. That’s really all we’re trying to say there. It's not based upon a few days of scientific analysis of our P&L. We know the business well enough to tell you it’s not going to be wildly incremental at those numbers. It may put a bit of short-term pressure, but we wouldn’t be doing this if we thought we would change our burn rate significantly.

And then I think I asked before a little about when you have the $20,500 from the dining-in business. But then I think, Greg Levin, you said those stores were doing down 45%. So are those stores seeing growth specifically in their delivery business, or are we just talking in aggregate for the brand itself? So I'm just trying to understand what the actual stores that have the dining room business are experiencing.

Growth; actually. It’s $20,500; just to be clear, not $25,000. But we are saying those restaurants have seen continued growth. Again, we are only talking days here, but it’s encouraging that takeout and delivery have grown in those restaurants.

Yes. I think it’s important, Matt, when we think about that $20,500, Greg Trojan said again, we are just talking days. Texas opened up their dining room last Friday. So we’ve had Friday through today that we are giving you data for. This number could change widely next week, both positively and negatively. So I just want to make sure that we talk about that. We've added—when we look at Texas since last week, having the dining room opened, it added about $20,500 to their sales levels versus what they were doing before.

Hey. Good evening, everybody. Hope you’re well. Two questions on a different vein, but they're linked. One, if you could walk through just what the reality was of approaching your landlords and trying to renegotiate either abatements in rent or deferrals to maybe the end of the lease period, how collaborative that was? How you felt going to them, how successful you were? And then secondly, just in negotiating the amendment for the credit facility, same type of question. How is it working with your lender partners? What did it cost you to get the amendment? And I guess, how much recovery do we need to see to clear the Q4 covenants, which sound like they're set to a more flexible level? Thank you.

Just in terms of the landlords, those discussions are ongoing. A number of our restaurants have said, 'Look, we hear you. Let's let a little ...' I would say the majority of our restaurants or landlords reacted in that way to say, 'Okay, we hear you. We understand what you're going through. We are not going to make any broad commitments. Let's let a little time pass.' More substantive ongoing discussions about what the world might look like between us and landlords are ongoing, really starting to occur more now than it was four or five weeks ago. We have high-volume restaurants and have been great tenants for a long time; we have some great landlords on the other side. We have an asset in terms of those relationships, but it's not a happy time for either party on that side of the conversation.

Yes. And Todd, on the banks, look, I think the banks understand there are a lot of really good businesses out there; everybody is going through a period where the entire U.S. economy/world economy is shut down and not in any fault of the businesses. Our working with the banks has really been around that, and they've been very flexible. We try to reach agreements that make sense for both parties as they knew going or prior to COVID that BJ's maintained a very unlevered balance sheet for the most part and solid financial positioning. They took that approach as we worked through to come up with a covenant agreement that made sense for both parties. I don’t think it was crazy for either side. We’re trying to figure out how we can manage this through and make sure BJ's has the flexibility to continue to operate this business so that when it comes out of it on the other side, both parties are in good shape.

Okay, great. And just on the—when we get back to having a covenant in place in December, can you talk about where the weekly sales volumes need to get to keep clear that hurdle or any sort of color you can give us there?

I wouldn't go into that much specifics on it, but it really starts in November for us. As we start to look at it, we're taking the leverage ratios up. Probably you can see that all that information in our filing from that perspective. But based on all our analyses that we've done, we are not expecting us to be in a position of putting up positive comp sales in November and December of this year. 2020 is probably going to be a little bit tougher year from that standpoint. I would say I do expect all of our restaurants to be opened by November and December this year. But I’m not expecting it to be positive comp sales quite yet. Therefore, we’ll look through our covenant calculations based on a significant decline in comparable restaurant sales into the November and December timeframe.

Hi. Good afternoon, guys. Just had a question on the sales of beer outside the restaurants. Are there any restrictions on that? And how much is that contributing to your off-premise sales right now?

There—tight house laws vary by jurisdiction, states, counties, cities, etc. They’re all over the place. The most important thing to know is that many jurisdictions loosened the laws regarding delivery and takeout, which helps us grow that area of our business. It’s still down versus the dine-in incidence, which is always higher, so it’s hard to quantify it. The growth for off-premise has been significant, but I don't have that number at the top of my head. I would also add that I believe we are hopeful that the legislative bodies or powers that be will recognize that people obtaining beer through delivery and takeout is not a worse thing for the public. So I believe the public outcry would be substantial if they were to reverse this.

Okay. And just one more following up on that. It seems like, in the current environment, with gatherings limited and off-premise usage increasing, it would lend itself well to that beer club subscription you were planning on piloting later this quarter. Is there any update on that? Is that still planned? Any trial beyond California, or any update there?

No. It's a good observation, and we agree with you, but given the priorities of all that we’ve been grappling with here, we postponed that rollout and testing in California. But I would say it was in the eighth inning, or maybe in the top of the ninth ready to go. We’re as anxious as you to get that going, but we don't really have a timeframe yet.

And there are no further questions at this time. That does conclude today's conference. Thank you all for your participation. You may now disconnect.

Thank you, everybody.

Thank you.