Good day. Welcome to the BJ's Restaurants Incorporated First Quarter 2021 Earnings Release and Conference Call. Today's conference call is being recorded. At this time, I would like to turn the conference over to Greg Trojan, Chief Executive Officer. Please go ahead, sir.
Thank you very much, operator. Good afternoon, everyone, and welcome to BJ's Restaurants' fiscal 2021 first-quarter investor conference call and webcast. I'm Greg Trojan, BJ's Chief Executive Officer, and joining me on the call today is Greg Levin, our President and Chief Financial Officer. We also have Greg Lynds, our Chief Development Officer, and Kevin Mayer, our Chief Marketing Officer, on hand for Q&A. After the market closed today, we released our financial results for the first quarter of fiscal 2021, which ended Tuesday, March 30th. You can view the full text of our earnings release on our website at www.bjsrestaurants.com. Our agenda today will start with Rana Schirmer, our Director of SEC Reporting, providing our standard cautionary disclosure with respect to forward-looking statements.
I will then provide an update on our business and current initiatives, and then Greg Levin will provide some commentary on the quarter and the current environment. After that, we'll open it up to questions. Rana, go ahead, please.
Thanks, Greg. Our comments on the conference call today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that 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, April 22nd, 2021. We undertake no obligation to publicly update or revise any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events, or otherwise, unless required to do so by the securities laws.
Investors are referred to full discussion of risks and uncertainties associated with forward-looking statements contained in the company's filings with the Securities and Exchange Commission. Greg?
Thanks, Rana. I'm very pleased to report the positive momentum in our business continued and accelerated throughout the first quarter of 2021. Propelled by both improving dining room seating capacity in key markets and guests eager to return to our restaurants, our sales are continuing their steady recovery. The quarter began with weekly sales per restaurant averaging $66,000 in January, as strict indoor dining restrictions remained in place in a number of states, including California, where we operate 62 of our 209 restaurants, where all on-premise dining was banned, including outdoor patios. In February, our weekly sales average rose to $76,000 as certain states loosened restrictions and we had the benefit of sales from outdoor patios in California that were allowed to open in late January.
In March, the pace of our sales growth accelerated even further, with our weekly sales average increasing to $97,000, a 27% increase from February, as California began allowing guests to dine indoors, albeit with limited seating capacity. Our sales increased by 50% in the span of the quarter, highlighting guests' appreciation of the BJ's concept. I couldn't be prouder of our teams that continue to deliver our gold standard service in this rapidly evolving environment. We continue to see positive momentum in April, with our weekly sales per restaurant now averaging more than $100,000 a week. Additionally, on a comparable restaurant basis, our April sales are now within 7% of 2019 sales levels.
In fact, more than one-third of our restaurants now have higher sales than in the same weeks in 2019, which is quite encouraging when you take into account that we're operating with still only approximately 70% of our seating capacity given ongoing restrictions, and that our late-night business, while improving, still lags 2019 levels as bar-centric late-night traffic remains challenged. Offsetting these sales hurdles has been our team's ability to drive outdoor dining and off-premise sales. Regarding outdoor dining, we've installed temporary patio spaces in more than a third of our restaurants, which are currently adding approximately 10% to our effective seating capacity. Even as our dining rooms are allowed to open at higher seating capacity, some guests still prefer outdoor dining, especially as the weather continues to improve. We are even seeing guests book these outdoor spaces for special events such as birthday parties and other celebrations.
We're entering a busy time for our restaurants with Mother's Day, Father's Day, and graduation season in the coming months and anticipate these additional seats will continue to serve us well throughout the quarter. Next, our takeout and delivery sales have held up extremely well even as on-premise dining has begun to recover. Our off-premise weekly sales average per restaurant was more than $26,000 in the first quarter and has maintained at more than $25,000 to date in April. Our delivery and takeout sales remain more than double pre-COVID levels as our guests continue to take advantage of the convenience of enjoying BJ's in their homes while also returning to our dining rooms. We're encouraged that the off-premise innovation we introduced during the pandemic, including expanded family meals and our connected curbside service, remain very popular with our guests.
We continue to believe that the habits, such as these, formed during the pandemic, which increase consumer convenience will remain strong going forward. All told, we're very pleased to see both our in-restaurant sales and off-premise sales now higher than the levels in the fourth quarter of 2020, demonstrating strong momentum across all of our channels. As we welcome back more guests into our restaurants, nothing is more critical than delivering our gold standard level of service on each and every visit. Last year, we took a balanced approach to streamlining parts of our menu, which benefited our execution while maintaining BJ's tremendous variety, which is one of our key competitive advantages. We continue to see the results in our NPS net metrics. In fact, our dine-in NPS recommend score reached another all-time high in Q1, beating our previous mark set in Q4.
The key to continuing to deliver our gold standard service as our sales volumes recover, is hiring and retaining talented restaurant managers and hourly team members. We estimate that to return to pre-COVID sales levels on a sustainable basis, we need to recruit and train more than 5,000 additional kitchen and front of house team members and another 125+ restaurant managers. These restaurant leaders are critical to both strong execution today and to fuel our future growth as we ramp up our new restaurant openings. Much like our longstanding philosophy on opening new restaurants, where we always have prioritized the quality of openings over quantity, we will not compromise our hiring criteria as we seek only the best hospitality focused team members.
We've also made notable continued progress on several key initiatives that we believe will be key sales drivers in the coming quarters and years, including our Beer Club and our virtual brand called Slo Roast. In March, we launched our Beer Club to the majority of our California restaurants. As a reminder, our Beer Club is a subscription program where members pay $30 every two months for two unique and exclusive beers from our brewery team, as well as perks that include a free appetizer, a free Pizookie, large pizza, and $5 growler refills to go. While we're still in the early days of the broader California launch, we continue to be encouraged by the guest interest in and engagement with the program as it is driving both incremental visits and profits.
Looking beyond California, we are encouraged to see the progress of updates to liquor laws in certain states that could enable us to offer our beer club in other large markets, such as Texas and Florida. Earlier this month, we expanded the test of our virtual brand, Slo Roast, to approximately 30 restaurants in California and Texas. Our survey results show top tier satisfaction scores and a high level of guest incrementality, which supports our research and optimism that this brand can flourish alongside BJ's. We used learnings from our earlier testing to make adjustments to the menu, and we're now testing various price points to determine the best pricing structure to optimize sales and profits. We expect to be in a position to establish a broader rollout plan in the coming few months. No discussion of our growth prospects would be complete without mentioning our new restaurant openings.
We remain on track to open our two 2021 openings in the second quarter, located in Merrillville, Indiana and Lansing, Michigan, which were already under construction at the outset of the pandemic. Our Merrillville restaurant will open this Monday, April 26, and we also intend to reopen our Richmond, Virginia location in the third quarter. Our pipeline for 2022 and beyond continues to build, and we remain incredibly optimistic about the opportunity for many more new future locations as we continue on our path to at least 425 domestic restaurants. Reflecting on an unprecedented 12 months of operating during a pandemic, I remain amazed at the dexterity and ingenuity of our teams in our restaurants and at our restaurant support center. BJ's has a longstanding tradition of rigorous testing with an ability to move quickly to implement changes across our system.
These efforts were supercharged during the pandemic as we evaluated and executed on many opportunities to optimize our business in such a rapidly changing environment. We are using the learnings of our most recent innovative work to build an even stronger innovation capability with a cross-functional team from key areas in our restaurant support center and select test restaurants so we can learn even faster through testing and iterating on how to best approach our next opportunities. Also in the past year, we have expanded our guest research capabilities. We're still in the early innings, but I believe our enhanced ability to identify top priority consumer needs and quickly filter and refine solutions with our bolstered innovation process will be a powerful driver of outsized performance going forward.
Finally, I'd like to take a moment to share my immense gratitude to our restaurant team members. Our results wouldn't have been possible without the hard work and dedication of so many of our team members going above and beyond to welcome guests back to our restaurants with our world-class gold standard execution, which sets us apart. We can see through consumer surveys that guests are enjoying their dining experience at BJ's more than ever, which is only possible with the best teams in the business. Now let me turn it over to Greg to provide more detail update from the quarter and current trends. Greg?
Thanks, Greg. As Greg just outlined, our sales continue to be largely dictated by capacity restrictions. Therefore, my commentary on Q1 and Q2 to date reflects where we are with the ever-changing national, state, and local restrictions and regulations regarding dining room limitations. Please remember this commentary is subject to the risks and uncertainties associated with forward-looking statements as discussed in our filings with the Securities and Exchange Commission. As restrictions eased throughout the quarter, especially in California, where we started with off-premise only in January and then added outdoor patios in February, followed by indoor dining in March, BJ's weekly sales increased impressively as we finished the last two weeks of March with average weekly sales greater than $100,000 per restaurant.
Our comparable restaurant sales, compared to fiscal 2019, improved sequentially as well from negative 36% in January to negative 31% in February, and finally negative 17% this past March. Total revenues for Q1 were $223.3 million. We reported a net loss of $3.1 million and diluted net loss per share of $0.14 on a GAAP basis. The easing of dining room restrictions during the quarter allowed us to productively leverage certain variable and fixed costs in our business, resulting in restaurant level operating margin of 11.5% and positive adjusted EBITDA of $12.7 million for the quarter. Specifically, cost of sales came in at 25.1% for the quarter, which was in line with last year's first quarter. Sequentially, cost of sales came down 70 basis points from Q4. That was driven primarily by decreases in cheese costs and our overall sales mix in the quarter.
Labor came in at 36.6%, which was 420 basis points lower than the prior year. Adjustments we made at the beginning of COVID, including reducing our menu and continuing to drive off-premise sales, allowed us to leverage our kitchen and dining room labor compared to a year ago when COVID restrictions were just beginning. While it is difficult to compare 2021 labor to last year, our 36.6% labor is only 40 basis points higher than Q1 of 2019, when our weekly sales average was 26% higher at $111,000 compared to $81,000 this past quarter. Our labor productivity is really a result of the adjustments I just mentioned regarding a slightly smaller, yet still very broad menu, changes in management staffing levels based on weekly sales results, the continuing strength of our off-premise sales, and the leverage we are getting from the continued increase in weekly sales as capacity restrictions ease.
Right now, our sales are ahead of our ability to hire the talented people needed to operate our restaurants at the level expected. As Greg Trojan mentioned, the key to continuing to deliver our gold standard service as our sales volumes recover, is hiring and retaining talented restaurant managers and hourly team members. Great people delivering our gold standard food, service, and hospitality is how we grow our sales volume beyond our prior levels, which enables us to manage labor as a percentage of sales at levels that productively contribute to bottom-line growth. Operating occupancy costs were 26.8% for the quarter, inclusive of about 1% of sales for marketing. Operating and occupancy costs averaged about $22,000 per restaurant operating week for Q1, representing a decrease of 2.6% compared to last year.
Included in operating occupancy costs was over $1.3 million of operating expenses for temporary patios, which generated over $16 million in revenue for the quarter. G&A for the quarter was $15.3 million. We are still targeting G&A of approximately $67 million for 2021, which includes more than $6 million for incentive compensation, compared to less than $500,000 booked in 2020 due to COVID and its impact on the business last year. Our G&A budget also includes $8 million related to equity compensation, compared to only $7 million in 2020. As always, depending on our results, the $6 million of incentive compensation may vary. Now, turning to the balance sheet.
As we previously reported, in January, we raised an additional $30 million of equity capital. That, combined with our improving sales and productivity, resulted in us finishing the quarter with approximately $90.7 million of cash on our balance sheet and funded debt of $116.8 million. At current sales levels, we are now generating more than $2 million of cash per week. With sales continuing to recover, subsequent to quarter end, we paid down an additional $15 million on our credit line. Plan to further reduce our debt balance in Q2 by another $10 million-$20 million, depending on the sales environment. The bottom line is we have a very strong balance sheet, cash flow, and the capital necessary to opportunistically and aggressively pursue new restaurant expansion while further investing in our sales-driving initiatives.
Shifting to today, as I said at the beginning of my prepared remarks, our sales continue to be governed by the varying capacity limitations imposed by local and state regulators. While many state and local jurisdictions continue to ease their capacity, we have seen some states roll back the easing of dining room restrictions. For example, certain counties in both Washington and Oregon have reduced allowed dine-in capacity from 50%-25% recently. Furthermore, despite some eliminating all restrictions, we continue to operate our restaurants with the safety of our team members and guests first, and therefore continue to follow CDC guidelines of maintaining 6 ft of social distancing in our restaurants. This safety-first practice will cap our total capacity to around 70%-75% in the near term.
However, with the strength of our off-premise sales and the continued use of temporary outdoor patios, we believe we have the opportunity to continue growing our sales sequentially each quarter until all restrictions are eliminated. As we noted in our press release today, on a comparable restaurant sales basis comparing current sales to 2019, we are down around 7% for the first three weeks of April. This equates to a weekly sales average of approximately $102,500 per restaurant so far in April. I am encouraged by both the recovery of our dining room sales, which was led by California in late March when dining room restrictions were eased, as well as our ability to maintain off-premise sales at more than double our pre-COVID levels.
Going forward, we expect some modest sales benefit in the coming months, which are seasonally stronger historically with guests celebrating Mother's Day, Father's Day, and graduations with us, but believe sales will be range bound until dining room capacities return to the 90 %+ level, which generally will not happen until we can safely eliminate the 6 ft of social distancing. We are all hopeful this will be sometime in the second half of the year as the growing number of vaccinated Americans will further reduce the spread of COVID. With regard to the middle of the P&L, right now we anticipate commodity inflation between 1.5% and 2% with cost of sales in the mid 25% range for the second quarter.
This is slightly up versus Q1, as we are seeing more freight cost increases and other supply chain challenges as manufacturers and distributors ramp back up for increased restaurant sales. At the current time, we have about 65% of our food commodities locked for the rest of this year. While labor as a percent of sales is trending back to more historical levels, as Greg Trojan noted, we estimate that in order to return to pre-COVID sales levels on a sustaining basis, we will need to recruit and train more than 5,000 kitchen and front of house team members and another 125+ restaurant managers. While this is an investment in our business for the long term, it will put some upward pressure on our labor as a percent of sales compared to Q1.
We are in the high touch business in which our precise execution of every aspect of our business, including food, service, and hospitality, drive long-term sales growth and therefore profitability. I am anticipating G&A to be in the range of about $17 million, which will include about $2.1 million in equity compensation compared to $1.6 million for Q1, an increased investment spend as we ramp up our hiring of new managers and people to continue driving sales. Additionally, I'm expecting our diluted shares outstanding to be in the 24.6 million range for the second quarter. Finally, the positive and growing sales trends discussed today clearly highlight the work of our exceptional team members, combined with the strength and attractiveness of the BJ's concept and the quality and level of hospitality our guests know and love.
BJ's is positioned to not only excel today, but also to emerge from the pandemic with strong opportunity to grow sales volumes and profitability exceeding pre-COVID levels. Our solid balance sheet enables us to opportunistically re-accelerate new restaurant growth beginning next year as we enter a new normal operating environment and to continue investing in additional sales driving initiatives like our Beer Club and guest research. We continue to believe that the BJ's concept can grow to at least 425 restaurants domestically, and that the combination of our sales momentum, higher cash flows, and strong balance sheet can readily support an acceleration in our restaurant expansion program. Thank you for your time today, and we'll now open up the call to your questions. Operator?
Thank you. If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're on speakerphone, make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one to ask a question. We will go to our first question from Brian Bittner of Oppenheimer.
Thank you. Good afternoon. Congratulations on the recovery you're seeing thus far in your business.
Greg, you said in your prepared remarks that 1/3 of your stores are currently trending at higher sales volumes than experienced in April of 2019. Can you just maybe break out the commonalities in this cohort of stores? I'm sure they have higher seating capacity than the other stores, and still have very high off-prem, but any more specific color you can give related to this group that's now outperforming the 2019 levels would be helpful. Is there a late-night business coming back more quickly? Is the check averages a lot higher? Anything else you can give would be helpful on that.
Yeah. Brian, that's a great question, and, obviously, yes, it's nice to have 1/3 of our restaurants comping positive three weeks into April. Generally, I think what we see is those are in areas that have either pretty loose restrictions, so that's given us, obviously, the ability to have greater capacity than other areas. In some of those locations, like we have a few here in California that are comping on the positive side as well, and those generally have pretty large exterior or external patios right now that are temporary patios. There's been a little bit, to your point, of some late night that's come back in there. These are restaurants that have really done some nice job on the off-premise. They're holding onto that off-premise sales. They've got the patio and the late night. It's a combination of that.
Honestly, it's very mixed as well. Like I said, there's some California in there's Texas in there's Arizona. It's very broad geographic.
Yeah, Brian, the other thing I'd add is even though there are some states that have virtually eliminated all restrictions, we're still operating, Greg mentioned this, we're still operating with 6 ft of social distancing because we think, frankly, it's just the right thing to do. Even where you might be envisioning restaurants with very loose capacity restrictions, we're adhering to social distancing, which in general, it varies by restaurant layout, still caps our capacity at about 75%. Just give you that information as background in context to those positive comps.
No, thank you for that. Just as my follow-up, Greg, you have given some color in past earnings calls about where margins could go as your sales restore. You've talked about a path to getting back to 2018 levels or even better. That you're sitting here operating against these volumes that are clearly improving closer to 2019 levels, can you update us on how you're thinking about margins in 100% sales recapture scenario? It's clearly looking like that scenario is now imminent, you did also talk a lot about the need to hire and train all these employees. Any update on where you think margins go in 100% recapture scenario?
Yeah. I think it's a little bit of a two-part question here, Brian. I think in the first part, as sales start to recover, we're going to need to bring those team members in and get the training, and there's going to be that investment cost in our business. I think in the shorter term, that makes it a little bit more challenging per se, if you're at that 100% level. I actually look at it secondly, and I think more importantly, and that is, I think the real opportunity for us, and we've talked about this a lot internally as we look at our business, and that is, it's not so much 100% sales volume. We want to be 105%, 110% sales volume of where we were before.
Ultimately, by holding onto the off-premise, the initiatives that Greg Trojan touched on Beer Club, I think Kevin and his team are leading up some of the things around our most valuable guests. I think that gives us really this opportunity to take sales above the 110,000 weekly sales average that was our historic trend line. When we start to bring that above there, we're ultimately going to bring down more dollars down to the bottom line, and dollars is what we take to the bank. I think there's that opportunity for more dollars per restaurant week coming to us as we grow our sales volumes. We do need to get through some of the, I think, short-term challenges here around hiring. I'm hearing that across the industry from that perspective. I like the road we have in front of us.
Thank you. Thanks for the update.
Thank you.
We'll go next to Jeffrey Bernstein of Barclays.
Great. Thank you very much. Two questions as well. First, just on the, as you're reopening the dining rooms, it seems like you're encouraged by the off-premise. I think you mentioned in April, 125,000 or maybe it was $100,000 in average weekly sales just looking to clarify, I think you had said it was 25% of the $100,000 in average weekly sales was still in off-premise. If that was true, I'm just trying to figure out how you measure the incrementality once the restaurants reopen their dining rooms, whether you have some examples of markets that are back to 100% in restaurant dining and how incremental those to-go sales have been. That would be helpful. One follow-up.
We don't know from a micro basis, Jeffrey. What we know is, you're correct, first of all, in that we're holding on to that level of about $25,000 a week, and that is occurring in the face of very significant ramp-up in dine-in sales. I've maintained for quite some time that delivery and takeout are separate occasions. There's going to be some pressure on them as dining rooms come back when there's no alternative. They are filling a different need, right? That's what we're seeing. It's not like we're seeing a disproportionate differential in restaurants that have opened dining rooms more than less. It's been very consistent that we're holding on to the sales volumes when dining rooms were constrained more generally geographically. If that makes any sense.
Again, we're encouraged that we're holding on to these sales and it's our intention, going forward, is to grow our off-premise business. We think guests are certainly reacting to the product changes that we've made. We think we have a lot of advantages with the variety of our menu. We've done a lot of product development at what we think are screaming values out there. We think there's room to grow off of that $25,000 a week.
Got you. Right. It's 25% of your sales are currently to go, and those are really holding up even in markets where total sales are reverting back to historical levels.
Correct.
Got you. Okay, just my follow-up in terms of labor, because I know you guys emphasized it in your prepared remarks. First of all, the fact that it was down 400 and some odd basis points for the quarter, very impressive and I think you said it's actually quite close to the labor you sourced a percentage of sales two years ago, yet the average weekly sales are significantly lower. I'm just wondering, how much do you think is permanent or sustainable savings versus what's coming back? I don't know whether you can share a forecast for labor in 2Q or for 2021 with all that rehiring and training, but just trying to separate out what has to come back and maybe what is permanent savings or what you're expecting labor to be in the near term. Thank you.
Jeff, I don't know if we have the answer to that, just because the amount of training that we're expecting to come back in is going to be much more substantial than what we've seen over the last year in that regards. The other side of it is you think about the dining rooms open, you're attaching a server to that additional sale versus the leverage that comes from off-premise. I think those two things generally will move our labor percentage up maybe a little bit versus what we saw in the Q1 timeframe. In my prepared remarks, I try to basically say, frankly, sales right now are running ahead of labor. They're not where we'd like them to be in regards to our traditional staffing models.
As much as our NPS scores are up and everything seems to be going in the right direction, the ability to hold on to those from a long-term perspective or sustainability, as we said, really comes down to making sure we've got the right team members on there that are working the correct amount of hours and the right shifts so that they like and love working at BJ's from that standpoint. I think that the labor number gets a little bit up and down from that standpoint over this year. We have said in the past, and I forget the exact number here, but with the change in the menu and the things that we've addressed this year, we've pulled out labor hours in both the kitchen and the prep in the morning and the kitchen hours and other things from that standpoint. That'll definitely stay out.
The hard part about your question, Jeff, is really where inflation kind of moves into some of those positions within really the back of house or in what we call the kitchen area of our restaurants. We know us as well as the rest of the industry are all fighting to get good people back into the restaurants, and that will put some inflationary pressure on there. It's hard to kind of quantify labor hour savings versus what the dollar rates may be.
Ultimately, just to add there, I would just say, as Greg was saying earlier, overall sales volumes will leverage our fixed labor and off-premise, we think is going to settle in at a much higher level than it was pre-COVID. Given the lower labor content up there, those are the offsets against what we are continuing to see is wage pressure and inflation.
It's fair to say, I think you've mentioned that you think labor as a percentage of sales would be higher than the 36.6% in the first quarter in the near term as you invest so heavily.
That's correct.
Yeah, exactly.
When I think about it. I do think, just going on what Greg said because he does break, I think he breaks it down in a really effective way, and that is, we talked about this before, our hourly labor is down significantly year-over-year because of the changes we've made, the ability to get off-premise, and that number's going to go there. When we look at labor versus two years ago, it's really because that management labor is de-leveraging off on the lower weekly sales average. As that weekly sales average can get back to more normal levels, that management labor should come down a little bit and while the hourly labor goes up. If those two can offset, I think the ability to run more historical labor is out there from that perspective.
I just think in the short term, as we work through the pushes and pulls, it's going to be a little bit more difficult.
Understood. Thank you.
We'll go to our next question from Alex Slagle of Jefferies.
Hey, thanks. Just wanted to follow up on that conversation and just kind of what else you think you need to do to get the best people and retain them. Do you think you need to raise wages more broadly or what else you might need to do to make sure you're able to execute like you want to consider capping capacity at certain locations or something like that maybe we hadn't thought of?
You know what, Alex? It's a good question. You know what? We have always had some advantages as a concept, particularly with our high volumes of being an attractive place to work financially, particularly front of house. Also, we've worked hard on our culture as a good place to be, et cetera. Even though there's a lot of pressure out there, I think we've hired about 750 people in the last three weeks, right? We have not had to curtail hours of operation or take out seats in dining rooms to this point. Our team is handling the pressure well and we are seeing success in hiring people. The core of operations is creating the right place to work and the right conditions, if you will. So far, we're still optimistic. We remain optimistic we'll be able to negotiate through it all. It's tougher right now.
Okay. A question on the bar room activity, and just if you have a sense for what traffic looks like more recently in the later hours and the shoulder periods, and how you expect the bar room activity to pick up as the restrictions loosen a little bit more and people get more comfortable. If you have any, just remind us what the historical mix or sales volume of that hard-hit period is.
Yeah. Alex, generally that late night business is somewhere in the $12,000- $13,000 range. If you start thinking about $100,000 or $110,000 a week of sales, you're getting 10%, 12% coming from that later night period. We have seen it slowly improve. I think as stimulus checks came through in March, you had the NCAA tournament, gave a reason for people to start venturing out a little bit more. I think, again, vaccinations are playing into that, where people are feeling more comfortable. It's still down. When I look at that business compared to the other times of the day, it's got our largest decrease on a percentage basis year-over-year. When I have to think about it's going to play out based on how people think about the pandemic itself and how different areas start to continue to ease restrictions.
Our view, at least probably through Q2, is it's still going to be on the softer side there. Hopefully as we get to the second half, we'll start to see not only our capacity increase within the rest of the restaurant, but the ability to get a little bit more on that late night. That's why I think Q2, our weekly sales average, as much as we like where they are right now, I think they're a little bit range bound until this next level of improvement. An improvement meaning more vaccines and the COVID cases come down.
Just as a reminder, we have curtailed operating hours and are closing our restaurants earlier than normal in most markets. We've started to see enough volume in some markets where we're not going all the way to usual hours, but we are extending our closing hours by a bit, and it's usually about an hour or so. We're seeing some of that business come back, but that's a big part of it, obviously, is we have to be open to drive the sales, but we want to make sure the demand is there.
All right. Okay. Thank you.
You're welcome.
We'll go to our next question from David Tarantino of Baird.
Hi, good afternoon. I was wondering if you could comment on your views on how much the stimulus checks might be impacting the sales trends in the late March and April to date period. I know that's a tricky thing to isolate, but perhaps you can talk about what's happening in the restaurants that aren't seeing capacity changes during that period, as an illustration.
Yeah.
There really aren't any of those, so that's tough.
Yeah. What I would tend to say is the sales volumes that we're seeing right now, just taking out the capacity changes, so we're looking at more of maybe like a Texas and Florida that have had looser restrictions versus California to see the business, is the sales trends are very similar to sales trends in 2019. That is, you come into the March timeframe, and that's spring break. In spring break, it's a little bit higher of a seasonality standpoint. We see sales increase from that standpoint in a lot of those existing markets. I think you put that with the vaccinations and you put that with the stimulus check, and I do think there was kind of a couple of weeks there, more in the late March, where the numbers bumped up.
They probably come down a little bit, which tends to look at, frankly, how our sales trends were in prior years, taking obviously 2020 out of it. I definitely think that there was some benefit to it, but it doesn't feel like two weeks later or three weeks later, the stimulus is gone and sales have declined some significant amount from that standpoint. In fact, I'd probably say they've generally stayed up in regards to their sales levels.
Just, Greg, so I have the context. It sounds like a lot of those markets are close to being even to 2019. When did you start to see that happen? Was that, I guess, pre-stimulus checks in early March? Were they also approaching 2019 levels, or did you see that step up late March and into April?
I think we saw more of a step up into late March on those markets. I would tend to tell you that the sales trends were similar to prior year sales trends, meaning March generally is a higher weekly sales average trend for our weekly sales average for us than February and January is, because of spring break, because of how Easter might be, and then we saw those same type of patterns from that standpoint. I do think that as the stimulus checks came in that mid to late March, that's when we saw that step up, and I think consumers after that felt good about going out, and they've held on to that kind of dining trend that we've seen.
David, another thing that might help answer your question, again, indirectly, we have seen some really solid check growth in our business, and the biggest driver of that check growth is party size. People are going out and they're calling friends and family and driving the average, like I said, number of people in making up a check or a party, a big growth factor. They're also ordering more per capita, even in alcohol. People are just so glad to be out, and they're spending more when they are out. We haven't seen that. That wasn't like, "I've got a stimulus check, let's go out and have a party." That has been very consistent. I find that pretty interesting as it relates to the stimulus.
There's no question that it helped, but we're seeing, I think it's more fundamental human behavior of glad to be out and be with friends and family that's going to be with us for some time.
Very helpful. Thank you.
You're welcome.
We'll go to our next question from Nicole Miller of Piper Sandler.
Thank you. Good afternoon. I wanted to ask first about labor and the hiring, and it sounds a little overwhelming as you can imagine. Is there some perspective or context to how many BJ's employees you have in the field today to right size that? Then I know this is a super challenging question, but how many of the hires are familiar or worked with you in the past? How many are well-versed in the restaurant industry space, and how many do you have to really teach to do these jobs?
Nicole, I'm trying to think through all the different questions that were in that one question, so to speak. Pre-pandemic, we had about 23,000 kind of hourly team members. We're somewhere in the neighborhood of 17,000-18,000 today. It's across the board from that standpoint. We obviously want people that have high integrity, have high hospitality, can handle the high volumes of BJ's from that perspective, and generally, we tend to look for people that have restaurant experience when they want to join us. The thing that we've got to see here is, I believe it's in early September when the federal unemployment starts to run out or does run out. There might be a little bit more of an influx of people that come at that timeframe.
This set of unemployment insurance that's been given through the pandemic, and frankly, I'm not going to debate whether right, wrong or indifferent from that standpoint, but it was given at a rate to really supplement or bring people in lower paid jobs or in service type jobs to make them whole. There's less of an incentive sometimes for people to get back into some of these positions that are in the $15- $20 hourly wage rate right now, and I think that might change in the September timeframe as the unemployment insurance expires from the federal level. I don't know if that answers your entire question. It's hard to tell exactly how many have been in the restaurant space before versus haven't from that standpoint. We've got a good reputation, as Greg Trojan was saying out there.
We've been actually hiring a decent amount of people over the last couple of weeks. Our retention levels right now are lower than they were, I believe, in 2019. People enjoy working for us from that perspective. It's just we're not only competing with our peer companies out there, and I know everybody's challenged with that. We're also right now kind of competing with the federal government and somewhat of the unemployment subsidies.
That really does help and makes sense. I know it's a really dynamic situation. The last question for me, you've always helped us think about leading indicators of same-store sales, and I would typically think value for the industry and for yourselves. Maybe it was the idea or notion of safety, and I'm just wondering now if it isn't like fun and entertainment. Does your guest study lead you in any direction of what the leading indicator of sales might be?
I'll let them answer this. Thankfully, everything you just mentioned is BJ's. Value, fun, and entertainment, and safety. Those are all three things that we do very well.
You must have been in some of our focus groups, Nicole. Very much so. We know that BJ's as a social gathering place, and for all those reasons. Really is at the core of the dining experience of our brand, and that is going to serve us and has served us well, particularly given the dynamic of coming out of the pandemic, I think is a really great strength to have, for sure. Sort of that high energy, comfortable gathering place. We structurally have the ability to serve large parties better than most concepts out there. We're set up to accommodate large parties without a reservation, et cetera, and we've been doing that well for a long period of time.
Thanks for the update tonight. Appreciate it.
You're welcome.
We'll move next to a question from John Glass of Morgan Stanley.
Thanks very much. I wanted to ask about the two new emerging sales layers you've talked about, the Slo Roast virtual brand and the Beer Club. Any early sense of how we should think about the size of that opportunity relative to whatever else you want to think about? Maybe it's the overall off-premise business. Specifically in the Beer Club, you mentioned there's obviously regulatory issues in certain states. How many of your restaurants could you actually put that into now, just given current regulations?
Yeah. On the Beer Club, I want to say it's somewhere in the neighborhood of 70% or so. Hopefully, as Greg Trojan said on the call, that number can expand into Texas and into Florida. In fact, I think Florida may have changed some of their laws just recently. Taking those two states out, I believe the majority of the other states we can get into, which gives us pretty close to 70%. You start thinking about that, it's in the 150 range or so on the 210 restaurants. Then John, real quick, we have not quantified where we think both of those can go for us.
One of the things we've talked about in the Beer Club is, Greg mentioned it with all the different perks, our idea in the Beer Club is to drive people into our restaurants to spend more in our restaurants. At least in the test of Sacramento and in all of California, we are seeing incremental visits from those guests. One of the things we'll have to see is as capacity opens in California, will that incrementality even increase even more in that regard? Right now, the Beer Club is showing incremental visits to us, and they tend to use the perks and spend up. It's, in that case, driving incremental revenue. Slo Roast is doing the same thing for us. It doesn't have as much, what's the word I'm looking for? Cannibalization against our own product in the analysis that we've done.
We've kind of held back on giving specifics as we want to see how these things continue to grow over time in the test period. I don't know.
I mean, John, part of the reason for that is, first of all, we haven't been at it that long. When you think about the timeframe, and when we consciously did this, we might've been a little crazy, but we rolled it out in Sacramento in the midst of the pandemic. It's operated under a few different conditions of dining room availability, right? It's been interesting to watch because throughout, even when our dining rooms were closed, folks were taking advantage of the off-premise offers and the growler refill, for example, is really popular. That's been gratifying to see. We really need a more extended period of time with some sustainable dining rooms open to understand where it's really going to settle out. We're obviously very encouraged because the metrics and the dynamics of the program look like guests are really responding well.
That's the most important thing. How big it can be and how this grows, we just need a little more time to see it mature a little bit before we have a better idea.
Thanks. Maybe just a more detailed question, just on the first quarter and store margins, what were the discrete COVID related costs? I know you talked about, maybe they go both ways. Maybe you had better insurance experience because in restaurant experience was less. You may have had more costs associated with pay related. What were those puts and takes on the COVID basis in the first quarter that may not persist in the future?
John, if I had to think about those costs, I think they're around the patio. I'm just trying to think of things that we've changed in our business. I kind of brought at least one of them up on the call was the $1.3 million that we spent on patios that we didn't have before. There's obviously some PPE and stuff like that's probably in the $200,000-$300,000 range in there. It's honestly, from a direct cost, probably in the neighborhood of $2 million or so that I just think off the top of my head. It's hard to discuss the insurance side of it because the insurance markets were just crazy last year, and they unfortunately have no relationship to the underlying business in regards to how you're managing claims and other things, the insurance markets just are really what I would call a very hard market.
That again, is something we haven't seen in 10+ years, which again, doesn't really reflect that having less people in the dining room, therefore your slip and falls might be down or general liability insurance should be down. The fact of the matter was the insurance market was higher and we self-insure on that. If I had to think pure direct costs, it's somewhere in the neighborhood about $2 million. The only other thing that I, and I don't have the number in front of me here, is the labor. We've spent a lot of money on overtime, and that's as Greg touched upon, it really comes down to hiring those other team members to bring them on board that can reduce overtime, which can help us manage the labor costs a little bit better, but also give a better quality of life for everybody in our restaurants.
That's great. Thank you.
We'll move to our next question from James Rutherford of Stephens Inc.
Yeah. Thanks for all the details so far. Most of mine have been asked. I'll just do a couple of bookkeeping things, if that's all right. First, within that $25,000 of off-premise weekly sales, could you share the split between curbside and delivery? Within that delivery bucket, what's the split of first party and third party, please?
I'm just kind of looking at how the sales kind of played out here. It's pretty close to 50/50 looking at the number. It might be 55 delivery, 45 takeout, but I would probably think, James, it's 50/50. On delivery, out of that, a good 85% of it is going to be actually probably closer to 90% of it is going to be third party delivery. Frankly, all of it's going to be third party delivery, except about 10% of it's what we call our white label, where they kind of go through our website versus going through a third party aggregator site.
Got it. Okay. Thank you for that. One more. Within your one year comp, what is price running today? Do you foresee pushing a little bit harder on price given demand seems to be outstripping supply and given the ongoing wage inflation picture?
Actually, thank you for asking that because I think it's an important element of where the business is right now. I mentioned earlier that we're really happy to see guest numbers and incidents driving some healthy check growth. We're taking that as an opportunity to price less, not more. I think as one of the things that drives BJ's volumes and traffic, is the fundamental value of our concept. We view this as an opportunity to invest in value while we have some of these other dynamics working in our favor. I would say, we've been pricing in the low to mid 2s in the last few years. We're a good 100 basis points or so below that.
Okay. Thanks very much, and congrats on the results here.
Thank you.
Thank you.
We'll go to our next question from Brian Mullan of Deutsche Bank.
Hey, thank you. I was just hoping you could talk about current development expectations for 2022, maybe some color or context around current thinking on how many units might be realistic next year. What are some of the key factors that will determine where that winds up in the end? Then, is the intention right now to accelerate that number in 2023, just given the lead time that development pipelines tend to have?
Brian, when we think about the business, the question overall, ultimately, I think where we want to get to is getting ourselves back to a restaurant growth of minimum 5% a year from that standpoint. You start thinking about 200 restaurants, 5% puts you somewhere in the neighborhood of 10. I think going from two, let's call it three this year because we're going to reopen our Richmond, which is going to act like a new restaurant opening for us in regards to hiring, training, et cetera. Moving from that kind of three to next year is probably, and we've said this before, in the 8-10 range or so, going into 2022. I think going into 2023, we would get above that again and start to move that into the low teens.
We've done as many as, I'm looking over to Greg, what, 17 restaurants a year?
18 as of getting here. Yeah.
We've done 18 restaurants in a year. We know we can get ourselves back there. We're going to do it with quality. We're not going to race to quantity from that standpoint, but we want to make sure we always have great quality sites and are building that pipeline. Really, we've said this before, and I think there's a good opportunity for us to exceed this. That would be somewhere in that, 5%, 6%, 7% unit growth. Start thinking about 2%-3% comp sales, and you get yourself to around 10% revenue growth. Our ability to leverage in the middle of the P&L allows us to drive EBITDA or earnings growth into the low double digits.
Okay, thank you. That's great. Just to follow up, just a quick one on capital allocation. In the past, you've carried a bit of modest leverage and you've paid a dividend. I mean, do you view the dividend as necessary anymore coming out of this? What might you need to see to begin to feel comfortable doing share repurchase? I know we just went through development, which is a use of CapEx, but even with that, it seems like in a normalized year, the free cash flow is pretty attractive. Just wondering your latest thoughts, if anything's changed relative to how you used to do things.
Yeah. I think this is something that we would obviously get together with our board of directors as we go through and put together the details of our plans as we come out of COVID from that perspective. If we're in a position where we have significant amount of excess cash coming out of our business, we would look to determine what is the best use of that excess cash, which would mean to start thinking about a share repurchase or dividend program at that time. I think where we are right now, it's still a little bit early to start to put that on the table, from that perspective. I think we want to see the sustainability, really start to see ourselves moving back to capacity restrictions being eased so we can get to 100% capacity or 90%+ capacity.
When we start to see that, I think that's when we start to think about how we want to use our free cash flow in addition to, or what's extra after we continue to build new restaurants.
The only thing I'd add to that is, one thing I can say with a lot of confidence that we would not change is our conservative approach to the balance sheet. We don't need another year like we just had to remind us of the advantage of running our business that way. That's one thing that I don't think we have any intention on changing. The other is, the first priority is going to be the best use of capital is finding productive ways to grow our sales and grow our business, either through new restaurant openings or improving the restaurants that we have. Then we'd look to dividends and share repurchases from there in that order.
Thank you.
Our last question comes from Sharon Zackfia of William Blair.
Hi, good afternoon. Sorry if I missed this, in terms of the labor and kind of getting back to the staffing you'd like both hourly and managerial, how long do you think that would take? Is that something you expect to be made whole on here in 2021, and how do you kind of juxtapose that challenge with labor with the development accelerating into 2022?
That's a good question. Look, we don't have a crystal ball on this. It's our intention to certainly catch up to our sales volumes. Now, we're still not doing quite the sales levels yet and you do have capacity restrictions, so we don't have to get all these folks hired tomorrow, right? If, and as we would hope and expect, we continue to see progress on the sales front, and we'd like to see, I actually think Greg's point on unemployment pulling back, we've even seen some states that are going to be joining the federal unemployment programs as well. That's going to be a help. Our hope would be by the holiday season, we'd be in a much more normalized place in terms of staffing, where sales and our staffing have reached a more normal equilibrium.
Because we do need to hire managers, obviously, and establish that pipeline, but the numbers we're talking about are, Sharon, we have a high degree of confidence that we don't put new managers in new restaurants. Obviously, they all count as a manager, but we think that we can manage through and the kind of numbers we're talking about growing into are imminently manageable from a manager perspective. Because they're new trade areas, they aren't really impacted by the levels of where we are in hourly workers, right? I think you're asking a really good question on the balance of how those all work together, but that's how I'm thinking about it.
Can I just ask a follow-up? Is the labor dynamic more stressed on front of house? I ask that because I'm trying to figure out with Slo Roast, the virtual concept, how you're protecting the kitchens if there's some shortage impacting kitchen capacity.
Actually, that's a great question, too, because typically, in the last few years, kitchens been the most stressed. We haven't, by a fairly wide margin. It's like finding front of house folks, not that anything is easy in the labor markets for the last couple of years, but we've been much more stressed in terms of filling kitchen jobs. Interestingly, I'd say in part because we were still fairly staffed in our kitchens, there's a kind of a fixed amount of hours you need to run our kitchens that you're not going from the same low levels. When dining rooms aren't open, we don't have many front of house people. We're going from not zero, but close.
We had a good cadre of folks doing on the takeout and off-premise side of the business, but not nearly the number of front of house you need to run a dining room, right? There's more stress to the system on the front of house, which is different than it's been in recent history.
Okay, thank you.
You're welcome.