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

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

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

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

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

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

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

As of ~~November 3, 2017,~~August 4, 2023, there were ~~20,633,394~~23,573,109 shares of Common Stock of the Registrant outstanding.

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the accounts of BJ’s Restaurants, Inc. (referred to herein as the “Company,” “we,” “us” and “our”) and our wholly owned subsidiaries. The consolidated financial statements presented herein include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of our financial condition, results of operations, shareholders’ equity and cash flows for the ~~period.~~periods presented. Our consolidated financial statements and accompanying notes have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and footnote disclosures normally included in consolidated financial statements in accordance with U.S. GAAP have been omitted pursuant to the U.S. Securities and Exchange Commission (“SEC”) rules.

The preparation of financial statements in ~~accordance~~conformity with U.S. GAAP requires us to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates. Our operating results for the twenty-six weeks ended July 4, 2023 may not be indicative of operating results for the entire year.

A description of our accounting policies and other financial information is included in our audited consolidated financial statements filed with the SEC on Form 10-K for the fiscal year ended January 3, ~~2017.~~2023. The disclosures included in our accompanying interim consolidated financial statements and footnotes should be read in conjunction with our consolidated financial statements and notes thereto included in the Annual Report on Form 10-K and our other reports filed from time to time with the Securities and Exchange Commission.

2. REVENUE RECOGNITION

~~Reclassifications~~

As a result of the adoption of the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-17, Balance Sheet Classification of Deferred Taxes (Topic 740), reclassifications of financial statement amounts have been made to the prior period to conform to the current period’s presentation. The adoption of this standard resulted in the reclassification of $18.4 million from current to long-term deferred taxes on January 3, 2017.

~~Recently Issued Accounting Standards~~

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

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

~~The majority of the Company’s~~Our revenues are ~~from~~comprised of food and beverage sales atfrom our restaurants. ~~ASU 2014-09 will~~Revenues from restaurant sales are recognized when payment is tendered. Amounts paid with a credit card are recorded in accounts and other receivables until payment is collected from the credit card processor. We sell gift cards which do not have an ~~impact~~expiration date, and we do not deduct non-usage fees from outstanding gift card balances. Gift card sales are recorded as a liability and recognized as revenues upon redemption in our restaurants. Based on historical redemption rates, a portion of our gift card sales are not expected to be redeemed and will be recognized as gift card “breakage.” Estimated gift card breakage is recorded as revenue ~~recognition related~~and recognized in proportion to our historical redemption pattern, unless there is a legal obligation to remit the unredeemed gift cards to government authorities.

Our “BJ’s Premier Rewards Plus” guest loyalty program enables participants to earn points for qualifying purchases that can be redeemed for food and ~~beverage sales unless~~beverages in the sales are to a customer participating in our loyalty program. Currently, we measure our total loyalty rewards obligation based on the estimated number of customers who will ultimately claim the rewards earned under the program using the estimated cost of the rewards. Under this approach, we estimate the cost of a loyalty point based on the equivalent cost of the food and beverage earned by our customers. These expenses are accrued for and recorded as marketing expenses and are included in “Occupancy and operating” expenses on our Consolidated Statements of Income. Under ASU 2016-10, we will be required tofuture. We allocate the transaction price between the goods delivered and the future goods that will be delivered ~~using the loyalty points earned,~~ on a relative standalone selling price ~~basis. The portion of~~basis, and defer the ~~transaction price~~revenues allocated to the ~~future~~points, less expected expirations, until such points are redeemed.

The liability related to our gift card and loyalty program, included in “Accrued expenses” on our Consolidated Balance Sheets is as follows (in thousands):


	July 4, 2023		January 3, 2023
Gift card liability	$	9,262	$	14,417
Deferred loyalty revenue	$	3,274	$	3,129

Revenue recognized for the redemption of gift cards and loyalty rewards ~~will~~deferred at the beginning of each respective fiscal year is as follows (in thousands):


	For the Thirteen Weeks Ended				For the Twenty-Six Weeks Ended
	July 4, 2023		June 28, 2022		July 4, 2023		June 28, 2022
Revenue recognized from gift card liability	$	2,186	$	1,887	$	8,430	$	8,568
Revenue recognized from guest loyalty program	$	1,227	$	1,209	$	5,309	$	5,314

3. LEASES

We determine if a contract contains a lease at inception. Our material operating leases consist of restaurant locations and office space. U.S. GAAP requires that our leases be ~~deferred until~~evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the ~~related loyalty rewards~~commencement date, and the lease term used in the evaluation includes the non-cancellable period for which we have the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option would result in an economic penalty. All of our restaurant and office

space leases are ~~redeemed.~~classified as operating leases. We ~~will no longer record a marketing expense related~~have elected to ~~loyalty points earned. These new standards will not impact the way we~~ account for ~~gift card breakage.~~lease and non-lease components as a single lease component for office and beverage gas equipment. We ~~are~~do not have any finance leases.

Lease costs included in “Occupancy and operating” on the ~~process~~Consolidated Statements of ~~quantifying~~Operations consisted of the ~~impact of adopting this new standard as well as determining the adoption method.~~following (in thousands):


	For the Thirteen Weeks Ended				For the Twenty-Six Weeks Ended
	July 4, 2023		June 28, 2022		July 4, 2023		June 28, 2022
Lease cost	$	14,788	$	14,827	$	29,684	$	29,662
Variable lease cost		1,417		1,037		2,407		1,745
Total lease costs	$	16,205	$	15,864	$	32,091	$	31,407

2.4. LONG-TERM DEBT

Line of Credit

On November 3, 2021, we entered into a Fourth Amended and Restated Credit Agreement (“Credit Facility”) with Bank of America, N.A. (“BofA”), JPMorgan Chase Bank, N.A., and certain other parties to amend and restate our revolving line of credit (the “Line of Credit”) to improve the pricing, extend the maturity date, change the interest reference rate, eliminate certain financial covenants and conditions, and reset other financial covenants starting with the fourth quarter of 2021.

Our Credit Facility ~~which~~ matures on November ~~18, 2021,~~3, 2026, and provides us with revolving loan commitments totaling ~~$250~~$215 million, which may be increased up to $315 million, of which ~~$50~~$50 million may be used for the issuance of letters of credit. Availability under the Credit Facility is reduced by outstanding letters of credit, which are used to support our self-insurance programs. ~~Our obligations under the Credit Facility are unsecured. As of October 3, 2017,~~On July 4, 2023, there were borrowings of ~~$194.0~~$53.0 million and letters of credit ~~totaling approximately $14.4~~of $16.2 million outstanding, leaving $145.8 million available to borrow.

Borrowings under the Line of Credit ~~Facility. Available borrowings under the Credit Facility were $41.6 million as of October 3, 2017. The Credit Facility bears~~bear interest at ~~our choice of LIBOR~~an annual rate equal to either (a) the Bloomberg Short-Term Bank Yield Index rate (“BSBY”) plus a percentage not to exceed ~~1.75%~~2.00% (with a floor on BSBY of 0.00%), or at(b) a percentage not to exceed 1.00% above a Base Rate equal to the highest of (i) the Federal Funds Rate plus 1/2 of 1.00%, (ii) BofA’s Prime Rate, (iii) the BSBY rate ~~ranging from Bank of America’s prime rate to 0.75% above Bank of America’s prime rate, based~~plus 1.00%, and (iv) 1.00%, in either case depending on ~~our~~the level of lease and debt obligations of the Company as compared to EBITDA plus lease expenses. The weighted average interest rate during the ~~thirty-nine~~twenty-six weeks ended ~~October 3, 2017~~July 4, 2023 and June 28, 2022 was approximately ~~2.2%.~~6.6% and 2.2%, respectively.

The Credit Facility is secured by the Company’s assets and contains provisions requiring us to maintain compliance with certain covenants, including a Fixed Charge Coverage Ratio and a Lease Adjusted Leverage Ratio. ~~At October 3, 2017,~~ On July 4, 2023, we were in compliance with these covenants.

Pursuant to the Line of Credit, we are required to pay certain customary fees and expenses associated with maintenance and use of the Line of Credit, including letter of credit issuance fees, unused commitment fees and interest, which are payable monthly. Interest expense and commitment fees under the Credit Facility were approximately $2.2 million and $1.1 million, for the ~~thirty-nine~~twenty-six weeks ended ~~October 3, 2017~~July 4, 2023 and ~~September 27, 2016 was~~June 28, 2022, respectively. We also capitalized approximately ~~$3.2~~$0.3 million and ~~$1.1 million, respectively. We capitalized approximately $0.1 million and $0.2~~$0.1 million of interest expense related to new restaurant construction during each of the ~~thirty-nine~~twenty-six weeks ended ~~October 3, 2017,~~July 4, 2023 and ~~September 27, 2016,~~June 28, 2022, respectively.

3.5. NET INCOME PER SHARE

Basic and diluted net income per share is ~~computed~~calculated by dividing net income by the weighted average number of common shares outstanding during the period. ~~Diluted net income per share~~The number of diluted shares reflects the potential dilution that could occur if holders of in-the-money ~~stock~~ options ~~issued by us~~and warrants were to ~~sell~~exercise their right to convert these instruments into common stock ~~at set prices were exercised~~ and ifthe restrictions on restricted stock units ~~issued by us~~(“RSUs”) were to ~~lapse (collectively, equity awards) using~~lapse. Additionally, performance-based RSUs are considered contingent shares; therefore, at each reporting date we determine the ~~treasury stock method. Performance-based restricted stock units have been excluded from the~~probable number of shares that will vest and include these contingently issuable shares in our diluted share calculation unless they are anti-dilutive. Once these performance-based RSUs vest, they are included in our basic net income per share ~~computation because the performance-based criteria have not yet been met.~~ calculation.

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

	For the Thirteen				For the Thirty-Nine
	Weeks Ended				Weeks Ended				For the Thirteen Weeks Ended				For the Twenty-Six Weeks Ended
	October 3, 2017		September 27, 2016		October 3, 2017		September 27, 2016		July 4, 2023		June 28, 2022		July 4, 2023		June 28, 2022
Numerator:
Net income	$	2,389	$	7,237	$	21,294	$	32,670	$	11,932	$	297	$	15,413	$	1,757
Denominator:
Weighted-average shares outstanding – basic		21,354		24,091		21,620		24,172		23,539		23,434		23,510		23,405
Dilutive effect of equity awards		316		395		412		417		432		142		451		253
Weighted-average shares outstanding – diluted		21,670		24,486		22,032		24,589		23,971		23,576		23,961		23,658

Net income per share:
Basic									$	0.51	$	0.01	$	0.66	$	0.08
Diluted									$	0.50	$	0.01	$	0.64	$	0.07

For the thirteen weeks ended ~~October 3, 2017~~July 4, 2023 and ~~September 27, 2016,~~June 28, 2022, there were approximately ~~1.1~~0.9 million and ~~0.4~~2.2 million ~~shares~~ of ~~common stock equivalents,~~equity awards, respectively, that were excluded from the calculation of diluted net income per share because they are anti-dilutive. For the ~~thirty-nine~~twenty-six weeks ended ~~October 3, 2017~~July 4, 2023 and ~~September 27, 2016,~~June 28, 2022, there were approximately ~~0.5~~0.9 million and ~~0.3~~2.0 million ~~shares~~ of ~~common stock equivalents,~~equity awards, respectively, that were excluded from the calculation of diluted net income per share because they are anti-dilutive.

~~4. RELATED PARTY~~

The Jacmar Companies and their affiliates (collectively referred to herein as “Jacmar”) is one of our shareholders and James Dal Pozzo, the Chief Executive Officer of Jacmar, is a member of our Board of Directors. Jacmar, through its affiliation with Distribution Market Advantage (“DMA”), a consortium of large, regional food distributors located throughout the United States, is currently our largest supplier of food, beverage, paper products and supplies. In 2006, we began using DMA to deliver the majority of our food products to our restaurants. In July 2017, after conducting a market evaluation, we entered into a new five-year agreement with DMA. The new agreement expires in June 2022.

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

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

For the Thirteen

For the Thirty-Nine

Weeks Ended

Weeks Ended

October 3, 2017

September 27, 2016

October 3, 2017

September 27, 2016

Cost of sales:

Third party suppliers

$
45,066

68.7
%

$
40,642

67.9
%

$
138,089

68.9
%

$
122,681

67.0
%
Jacmar

20,487

31.3

19,240

32.1

62,376

31.1

60,410

33.0

Total cost of sales

$
65,553

100.0
%

$
59,882

100.0
%

$
200,465

100.0
%

$
183,091

100.0
%

Occupancy and operating:

Third party suppliers

$
52,913

95.8
%

$
48,305

95.7
%

$
157,186

95.8
%

$
143,148

95.6
%
Jacmar

2,325

4.2

2,169

4.3

6,868

4.2

6,543

4.4

Total occupancy and operating

$
55,238

100.0
%

$
50,474

100.0
%

$
164,054

100.0
%

$
149,691

100.0
%

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

October 3, 2017

January 3, 2017

Third party suppliers

$
20,168

$
25,363

Jacmar

3,816

5,782

Total accounts payable

$
23,984

$
31,145

5.6. STOCK-BASED COMPENSATION

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

Under the Plan, we issue ~~non-qualified stock options as well as~~ time-based and performance-based ~~RSUs to vice presidents and above. We issue time-based RSUs, and/or non-qualified stock options to other support employees. We also issue~~ RSUs and non-qualified stock options to senior vice presidents and above on an annual basis. We issue time-based RSUs and non-qualified stock options to vice presidents on an annual basis. New hires are given the option between receiving their full grant as a time-based RSU or split evenly between non-qualified stock options and time-based RSUs. We issue time-based RSUs to other select support team members, and we issue time-based RSUs to non-employee members of our Board of Directors. We also issue time-based RSUs in connection with the BJ’s Gold Standard Stock Ownership Program (the “GSSOP”). The GSSOP is a long-term equity incentive program for our restaurant general managers, executive kitchen ~~mangers,~~managers, directors of operations and directors of kitchen operations. ~~GSSOP grants are dependent on the length of each participant’s service with us and position.~~ All GSSOP participants are required to remain in good standing during their ~~service~~vesting period.

The Plan permits usour Board of Directors to set the vesting terms and exercise period for awards at ~~our discretion.~~their discretion; however, the grant of awards with no minimum vesting period or a vesting period less than one year may not exceed 5% of the total number of shares authorized under the Plan. Stock options and time-based RSUs vest ratably over one, three or five years for non-GSSOP participants and either cliff vest at five years or cliff vest at ~~33%~~33% on the third anniversary and ~~67%~~67% on the fifth anniversary for GSSOP participants. Performance-based RSUs ~~generally~~ cliff vest on the third anniversary of the grant date in an amount from 0%0% to ~~150%~~225% of the grant quantity, dependent on the level of performance target achievement.

The following table presents the stock-based compensation recognized within our consolidated financial statements (in thousands):


	For the Thirteen Weeks Ended				For the Twenty-Six Weeks Ended
	July 4, 2023		June 28, 2022		July 4, 2023		June 28, 2022
Labor and benefits	$	410	$	640	$	1,276	$	1,390
General and administrative	$	2,368	$	1,648	$	4,144	$	3,609
Capitalized (1)	$	95	$	93	$	189	$	169
Total stock-based compensation	$	2,873	$	2,381	$	5,609	$	5,168

For the Thirteen

For the Thirty-Nine

Weeks Ended

Weeks Ended

October 3, 2017

September 27, 2016

October 3, 2017

September 27, 2016

Labor and benefits

$
406

$
413

$
1,404

$
1,321

General and administrative

$
1,335

$
1,061

$
3,867

$
3,259

Capitalized (1)

$
75

$
64

$
218

$
226

(1)

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

~~(1)~~

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

Stock Options

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


	For the Thirty-Nine Weeks Ended						For the Twenty-Six Weeks Ended
	October 3, 2017			September 27, 2016			July 4, 2023			June 28, 2022
Expected volatility		34.7	%		35.9	%		66.9	%		63.2	%
Risk free interest rate		1.9	%		1.5	%
Risk-free interest rate								3.5	%		1.6	%
Expected option life	5 years			5 years			5 years			5 years
Dividend yield		0	%		0	%		0.0	%		0.0	%
Fair value of options granted	$	12.12		$	14.30		$	18.29		$	17.35

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

~~The~~Under our stock-based compensation plan, the exercise price of ~~our~~a stock ~~options under our stock-based compensation plan~~option is required to equal or exceed the ~~market close~~ fair value of our ~~shares~~common stock at market close on the option grant date or the ~~most recent~~last trading day prior to the date of grant when grants take place on a day when the market ~~holidays.~~is closed. The following table presents stock option activity:

	Options Outstanding					Options Exercisable
	Shares (in thousands)			Weighted Average Exercise Price		Shares (in thousands)		Weighted Average Exercise Price		Options Outstanding					Options Exercisable
Outstanding at January 3, 2017		1,227		$	31.95		802	$	27.73
										Shares (in thousands)			Weighted Average Exercise Price		Shares (in thousands)		Weighted Average Exercise Price
Outstanding at January 3, 2023											824		$	40.48		601	$	41.57
Granted		168			36.25						121			31.29
Exercised		(38	)		27.08						—			29.88
Forfeited		(23	)		39.67						(36	)		36.73
Outstanding at October 3, 2017		1,334		$	32.50		880	$	29.42
Outstanding at July 4, 2023											909		$	39.41		686	$	41.19

As of ~~October 3, 2017,~~ July 4, 2023, total unrecognized stock-based compensation expense related to non-vested stock options was approximately ~~$3.6~~$2.9 million, which is ~~generally~~ expected to be recognized over the next ~~five years.~~three years.

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

Shares
(in thousands)

Weighted
Average
Fair Value

Outstanding at January 3, 2017

460

$
39.75

Granted

157

37.26

Vested or released

(76
)

43.70

Forfeited

(50
)

39.82

Outstanding at October 3, 2017

491

$
38.34


	Shares (in thousands)			Weighted Average Fair Value
Outstanding at January 3, 2023		729		$	34.10
Granted		215			30.54
Released		(127	)		36.12
Forfeited		(44	)		33.67
Outstanding at July 4, 2023		773		$	32.83

The fair value of ~~our~~ time-based RSUs is equal to the fair value of our common stock at market close on the date of grant or the ~~most recent~~last trading day prior to the date of grant when grants take place on a day when the market ~~holidays.~~is closed. The fair value of each time-based RSU is expensed over the vesting period (e.g., one, three or five years). As of ~~October 3, 2017,~~July 4, 2023, total unrecognized stock-based compensation expense related to non-vested RSUs was approximately ~~$9.4~~$12.7 million, which is ~~generally~~ expected to be recognized over the next five ~~years.~~ years.

Performance-Based Restricted Stock Units

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

Shares
(in thousands)

Weighted
Average
Fair Value

Outstanding at January 3, 2017

54

$
37.87

Granted

40

35.95

Vested or released

—

—

Forfeited

(24
)

32.49

Outstanding at October 3, 2017

70

$
38.68


	Shares (in thousands)			Weighted Average Fair Value
Outstanding at January 3, 2023		123		$	38.89
Granted		52			31.87
Released		(40	)		38.90
Forfeited		(7	)		35.01
Outstanding at July 4, 2023		128		$	36.24

The fair value of ~~our~~ performance-based RSUs is equal to the fair value of our common stock at market close on the date of grant or the ~~most recent~~last trading day prior to the date of grant when grants take place on a day when the market ~~holidays.~~is closed. The fair value of each performance-based RSU is expensed, based on management’s current estimate of the level that the performance goal will be achieved. As of ~~October 3, 2017,~~July 4, 2023, based on the target level of performance, the total unrecognized stock-based compensation expense related to non-vested

performance-based RSUs was approximately ~~$1.2~~$2.5 million, which is ~~generally~~ expected to be recognized over the next three ~~years.~~ years.

6.7. INCOME TAXES

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

Our effective income tax benefit rate for the twenty-six weeks ended July 4, 2023 was a benefit of 35.0% compared to a benefit rate of 128.4% for the comparable twenty-six week period of 2022. The effective tax rate benefit for the twenty-six weeks ended July 4, 2023 and June 28, 2022, was different from the statutory tax rate primarily as a result of significant Federal Insurance Contributions Act (“FICA”) tax tip credits.

As of ~~October 3, 2017,~~July 4, 2023, we had unrecognized tax benefits of approximately ~~$1.3~~$1.0 million, of which approximately ~~$0.9~~$0.9 million, if reversed, would impact our effective tax rate.

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

Balance at January 3, 2017

$
1,245

Decrease for tax positions taken in prior years

(3
)
Increase for tax positions taken in current year

96

Decrease for statute expiration

(64
)
Balance at October 3, 2017

$
1,274


	For the Twenty-Six Weeks Ended
	July 4, 2023			June 28, 2022
Beginning gross unrecognized tax benefits	$	1,249		$	1,198
Increases for tax positions taken in prior years		—			3
Decreases for tax positions taken in prior years		—			(1	)
Increases for tax positions taken in the current year		22			22
Decreases due to lapse of statute of limitations		(236	)		—
Ending gross unrecognized tax benefits	$	1,035		$	1,222

Our uncertain tax positions are related to tax years that remain subject to examination by tax agencies. As of ~~October 3, 2017,~~July 4, 2023, the earliest tax year still subject to examination by the Internal Revenue Service is ~~2014.~~2015. The earliest year still subject to examination by a significant state or local taxing ~~jurisdiction~~authority is ~~2012.~~2018.

7.8. LEGAL PROCEEDINGS

We are subject to lawsuits, administrative proceedings and demands that arise in the ordinary course of our business and which typically involve claims from ~~customers, employees~~guests, team members and others related to operational, employment, real estate and intellectual property issues common to the foodservice industry. A number of these claims may exist at any given time. We are self-insured for a portion of our general liability, ~~our employee~~team member workers’ compensation and ~~our~~ employment practice liability insurance requirements. We maintain coverage with a ~~third party~~third-party insurer to limit our total exposure. We believe that most of our ~~customer~~ claims will be covered by our ~~general liability~~

insurance, subject to coverage limits and the portion of such claims that are ~~self-insured. Punitive~~self-insured; however, punitive damages awards ~~and employee unfair practice claims, however,~~ are not covered by our ~~general liability~~ insurance. To date, we have not been ordered to pay punitive damages with respect to any claims, but there can be no assurance that punitive damages will not be awarded with respect to any future claims. We could be affected by adverse publicity resulting from allegations in lawsuits, claims and proceedings, regardless of whether these allegations are valid or whether we are ultimately determined to be liable. We currently believe that the final disposition of these types of lawsuits, proceedings and claims will not have a material adverse effect on our financial position, results of operations or liquidity. It is possible, however, that our future results of operations for a particular quarter or fiscal year could be impacted by changes in circumstances relating to lawsuits, proceedings or claims.

9. SHAREHOLDERS’ EQUITY

Stock Repurchases

~~8. STOCK REPURCHASES~~

During the ~~thirty-nine~~twenty-six weeks ended ~~October 3, 2017,~~July 4, 2023, we ~~repurchased and retired approximately 1.7 million~~did not repurchase shares of our common ~~stock~~stock. As of July 4, 2023, we have approximately $22.1 million remaining under the current $500 million share repurchase plan approved by our Board of Directors. Repurchases may be made at ~~an average price of $34.02 per share for a total of $57.3 million, which is recorded~~any time.

Cash Dividends

Due to the COVID-19 pandemic, we suspended quarterly cash dividends until such time as ~~a reduction in common stock, with any excess charged to retained earnings. In March 2017,~~ the ~~Company’s~~ Board of Directors ~~approved an expansion~~determines that resumption of dividend payments is in the best interest of the ~~authorized share repurchase program by $50~~Company and its shareholders. The only cash dividends paid during the twenty-six weeks ended July 4, 2023 were related to dividends (declared prior to fiscal 2020) on restricted stock grants, which vested under our stock compensation plans.

10. RELATED PARTY TRANSACTIONS

BJ's Act III, LLC

We entered into a consulting agreement for defined services with Act III Management, LLC, an affiliate of BJ’s Act III, LLC, one of our beneficial stockholders, and Act III Holdings, LLC, of which one current member and one former member of the Board of Directors are partners, for $145,000. The services were completed, and the agreement expired on December 31, 2022.

Equity Method Investment

During fiscal 2022, we contributed internally developed software valued at $5.0 million to ~~$400 million in the aggregate. As~~a company, of ~~October 3, 2017, approximately $52.2 million remains available for additional repurchases under~~which our ~~share repurchase program.~~

~~9. SUBSEQUENT EVENTS~~

~~On October 24, 2017,~~retired Chief Executive Officer and a member of our Board of Directors ~~authorized~~has a less than 1% interest. We recorded this non-cash contribution, in exchange for a 20% ownership of the company, as an investment within “Equity method investment” on our Consolidated Balance Sheets, and ~~declared~~the related gain within “Loss on disposal and impairment of assets, net” on our Consolidated Statements of Operations. For the twenty-six weeks ended July 4, 2023 and June 28, 2022, we recorded a ~~quarterly cash dividend~~net loss related to the investment of ~~$0.11 per share of common stock payable~~$100,000 and zero, respectively, within “Other income (expense), net,” and accordingly adjusted the investment carrying amount on December 4, 2017, to shareholders of record at the close of business on November 13, 2017. While the Company intends to pay regular quarterly cash dividends in future periods, any decisions to pay or to increase or decrease cash dividends will be reviewed quarterly and declared by the Board of Directors at its discretion.our Consolidated Balance Sheets.

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

STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE

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

~~The following discussion~~ These forward-looking statements are based on information available to us as of the date any such statements are made, and ~~analysis should be read in conjunction with our consolidated financial~~we assume no obligation to update these forward-looking statements. These statements ~~and notes thereto included elsewhere in this Form 10-Q, our Annual Report on Form 10-K for the fiscal year ended January 3, 2017, and our other reports filed from time~~are subject to time with the Securities and Exchange Commission. Except for the historical information contained herein, the discussion in this Form 10-Q contains certain “forward-looking” statements that involve known and unknown risks and uncertainties ~~such as statements of our plans, objectives, expectations and intentions. The risks~~that could cause actual results to differ materially from those described in ~~this Form 10-Q, as well as~~ the statements. These risks ~~identified~~and uncertainties include, but are not limited to, the risk factors described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 3, ~~2017, are not~~2023, as updated in our Form 10-Q for the ~~only risks we face. These statements reflect our current perspectives~~twenty-six weeks ended July 4, 2023 and ~~outlook~~in other reports filed subsequently with ~~respect to~~ the ~~Company’s future expansion plans, key business initiatives, expected operating conditions and other factors. We operate in~~SEC.

GENERAL

BJ’s Restaurants is a very competitive and rapidly changing environment, and new risks emerge from time to time. Additional risks and uncertainties that we are currently unaware of, or that we currently deem immaterial, also may become important factors that affect us. It is not possible for us to predict the impact of all of these factors on our business, financial condition or results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any “forward-looking” statements. Given the volatility of the operating environment and its associated risks and uncertainties, investors should not rely on “forward-looking” statements as any prediction or guarantee of actual results.

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

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

~~the rate and scope of our future restaurant development;~~

~~the total domestic capacity for our restaurants;~~

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

~~expectations for consumer spending on~~leading casual dining restaurant ~~occasions;~~

~~the availability~~brand differentiated by a high-quality, varied menu with compelling value, and ~~cost of key commodities used in our restaurants and brewing operations;~~

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

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

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

•

~~projected revenues, operating costs and expenses;~~

~~projected shareholder dividend frequency and amount; and~~

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

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

~~Failure to maintain~~ a ~~favorable image, credibility and the value of the BJ’s brand and our reputation for offering customers a higher quality more differentiated total~~ dining experience atthat offers our customers (referred to as “guests”) best-in-class service, hospitality and enjoyment, in a ~~good value.~~

~~Any inability or failure to recognize, respond to~~high-energy, welcoming and ~~effectively manage the accelerated impact~~approachable atmosphere. BJ’s is a national restaurant chain that, as of ~~social media.~~

~~Any deterioration in general economic conditions, which may affect consumer spending.~~

~~Any deterioration in general economic conditions, which may also have a material adverse impact on our landlords or on businesses neighboring our locations.~~

~~Any inability or failure to successfully expand our restaurant operations.~~

~~Any inability to open new restaurants on schedule in accordance with our targeted capacity growth or problems associated with securing suitable restaurant locations, leases~~August 7, 2023, owns and ~~licenses, recruiting and training qualified managers and hourly employees and other factors, some of which are beyond our control and difficult to forecast accurately.~~

~~Any inability to access sources of capital or to raise required capital in the future.~~

~~Any failure of our existing or new restaurants to achieve expected results.~~

~~Any strain on our infrastructure and resources due to growth, which may slow our development of new restaurants and adversely affect our ability to manage our existing restaurants.~~

~~Any decision to either reduce or accelerate the pace of openings.~~

~~Any fluctuation in our future operating results due to the expenditures required to open new restaurants.~~

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

~~Any negative publicity about us, our restaurants, other restaurants, or others across the food supply chain, due to food borne illness or other reasons, whether or not accurate.~~

~~Any adverse changes in the cost of food, labor and related employee benefits (including, but not limited to, group health insurance coverage for our employees), brewing and energy.~~

~~Any inability of our independent third party brewers and manufacturers to timely supply our beer.~~

Periodic reviews and audits of our internal brewing, independent third party brewing and beer distribution arrangements by various federal, state and local governmental and regulatory agencies, which may be adversely affected by different interpretations of the laws and regulations that govern such arrangements or by new laws and regulations.

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

Heavy dependence of our operations, including our loyalty and employee engagement programs on information technology, which may be adversely affected by any material failure of such technology, including but not limited to cyber-attacks.

•

Unsolicited takeover proposals, governance change proposals, proxy contests and certain proposals/actions by activist investors, which may create additional risks and uncertainties with respect to the Company’s financial position, operations, strategies and management.

Any suspension of, or failure to pay regular dividends or to repurchase the Company’s stock up to the maximum amounts permitted under, our previously announced repurchase program, either of which may negatively impact investor perceptions of us.

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

~~GENERAL~~

~~As of November 6, 2017, we owned and operated 195~~operates 215 restaurants located in the 25 states of Alabama, Arizona, Arkansas, California, Colorado, Florida, Indiana, Kansas, Kentucky, Louisiana, Maryland, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and Washington. Each of our restaurants is operated either as a BJ’s Restaurant & Brewhouse®, a BJ’s Restaurant & Brewery®, a BJ’s Pizza & Grill®, or a BJ’s Grill® restaurant. Currently, the BJ’s Restaurant & Brewhouse® format represents our primary future expansion vehicle. Our proprietary craft beer is produced at several of our BJ’s Restaurant & Brewery® locations, our Temple, Texas brewpub locations and by independent third party brewers using our proprietary recipes. Our BJ’s Pizza & Grill® restaurants are smaller format, full-service restaurants relative to our BJ’s Restaurant & Brewhouse® and BJ’s Restaurant & Brewery® locations and reflect the original format of the BJ’s restaurant concept that was first introduced in 1978. Our BJ’s Grill® restaurant is a slightly smaller footprint restaurant, compared to our BJ’s Restaurant & Brewhouse® format, featuring all the amenities of our Brewhouse locations.30 states.

The first BJ’s restaurant opened in 1978 in Orange County, California, ~~featuring~~and was a small sit-down pizzeria that featured Chicago style deep-dish pizza with a unique California twist. ~~Over the years~~In 1996, we introduced our proprietary craft beers and expanded the BJ’s concept ~~from its beginnings as a small pizzeria~~ to a full-service, ~~high energy~~high-energy casual dining restaurant when we opened our first large format restaurant with an on-site brewing operation in Brea, California. Today our restaurants feature a broad menu ~~including~~with over 100 menu items designed to offer something for everyone including: slow roasted entrees such as prime rib, EnLIGHTened Entrees® such as our ~~BJ’s award‑winning,~~Cherry Chipotle Glazed Salmon, our original signature deep-dish pizza, the world-famous Pizookie® dessert, and our award-winning BJ’s craft beers. Our craft beer is produced at four in-restaurant brewing facilities, our Texas brewpub locations and by independent third-party brewers using our proprietary craft and other beers, as well as a large selection of appetizers, entrées, pastas, burgers and sandwiches, specialty salads and desserts, including our made to order, warm pizza cookie dessert, the Pizookie®.recipes.

Our revenues are comprised of food and beverage sales atfrom our restaurants. Revenues from restaurant sales are recognized when payment is ~~tendered at the point of sale.~~tendered. Amounts paid with a credit card are recorded in accounts and other receivables until payment is ~~collected. Revenues~~collected from ~~our~~the credit card processor. We sell gift cards which do not have an expiration date, and we do not deduct non-usage fees from outstanding gift card balances. Gift card sales are recorded as a liability and recognized as revenues upon redemption in our restaurants. ~~Gift~~Based on historical redemption rates, a portion of our gift card ~~breakage is~~sales are not expected to be redeemed and will be recognized as ~~a component of “Other income, net” on our Consolidated Statements of Income. Gift~~gift card “breakage.” Estimated gift card breakage is recorded ~~when~~as revenue and recognized in proportion to our historical redemption pattern, unless there is a legal obligation to remit the ~~likelihood of redemption becomes remote, which is typically after 24 months from~~unredeemed gift cards to government authorities.

Our guest loyalty program enables participants to earn points for qualifying purchases that can be redeemed for food and beverages in the ~~original gift card issuance date.~~future. We allocate the transaction price between the goods delivered and the future goods that will be delivered, on a relative standalone selling price basis, and defer the revenues allocated to the points until such points are redeemed.

All of our restaurants are Company-owned. In calculating comparable restaurant sales, we include a restaurant in the comparable base once it has been open for 18 months. ~~Customer~~Guest traffic for our restaurants is estimated based on ~~individual customer~~the number of guest checks.

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

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

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

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

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

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

While we currently expect to pursue the renewal of substantially all of our expiring restaurant leases, there is no guarantee that we can mutually agree to a new lease that is satisfactory to our landlord and us or that, if renewed, rents will not increase substantially.12

RESULTS OF OPERATIONS

The following table provides, for the periods indicated, our unaudited Consolidated Statements of ~~Income~~Operations expressed as percentages of total revenues. The results of operations for the thirteen and ~~thirty-nine~~twenty-six weeks ended ~~October 3, 2017 September 27, 2016,~~July 4, 2023 and June 28, 2022, are not necessarily indicative of the results to be expected for the full fiscal year. Percentages below may not reconcile due to rounding.

	For the Thirteen						For the Thirty-Nine
	Weeks Ended						Weeks Ended						For the Thirteen Weeks Ended						For the Twenty-Six Weeks Ended
	October 3, 2017			September 27, 2016			October 3, 2017			September 27, 2016			July 4, 2023			June 28, 2022			July 4, 2023			June 28, 2022
Revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Restaurant operating costs (excluding depreciation and amortization):
Cost of sales		26.5			25.6			26.0			25.2			25.9			27.6			26.3			27.4
Labor and benefits		36.9			35.1			36.0			34.8			36.2			37.3			36.9			38.1
Occupancy and operating		22.4			21.6			21.3			20.6			23.4			23.2			23.3			23.6
General and administrative		5.3			5.5			5.4			5.6			6.1			5.1			5.9			5.6
Depreciation and amortization		7.1			7.0			6.6			6.6			5.1			5.3			5.1			5.7
Restaurant opening		0.2			0.9			0.4			0.7			0.1			0.3			0.2			0.3
Loss on disposal of assets and impairments		0.4			0.3			0.5			0.3
Natural disaster and related		0.4			—			0.1			—
Severance and legal settlements		0.2			—			0.1			0.1
Loss on disposal and impairment of assets, net														0.3			0.1			0.5			0.1
Total costs and expenses		99.4			96.1			96.5			93.8			97.1			99.0			98.1			100.7
Income from operations		0.6			3.9			3.5			6.2
Income (loss) from operations														2.9			1.0			1.9			(0.7	)

Other (expense) income:
Other income (expense):
Interest expense, net		(0.5	)		(0.1	)		(0.4	)		(0.2	)		(0.3	)		(0.1	)		(0.3	)		(0.2	)
Other income, net		0.2			0.2			0.2			0.1
Total other (expense) income		(0.3	)		—			(0.2	)		—
Income before income taxes		0.3			3.9			3.3			6.2
Other income (expense)														0.2			(0.1	)		0.1			(0.1	)
Total other expense														(0.1	)		(0.2	)		(0.2	)		(0.3	)
Income (loss) before income taxes														2.8			0.8			1.7			(1.0	)

Income tax (benefit) expense		(0.6	)		0.8			0.5			1.7			(0.6	)		0.7			(0.6	)		(1.3	)
Net income		1.0	%		3.1	%		2.8	%		4.5	%		3.4	%		0.1	%		2.2	%		0.3	%

Thirteen Weeks Ended ~~October 3, 2017~~July 4, 2023 Compared to Thirteen Weeks Ended ~~September 27, 2016.~~June 28, 2022

Revenues. Total revenues increased by ~~$13.3~~$20.0 million, or ~~5.7%~~6.1%, to ~~$247.0~~$349.7 million during the thirteen weeks ended ~~October 3, 2017,~~July 4, 2023, from ~~$233.7~~$329.7 million during the comparable ~~thirteen week~~thirteen-week period of ~~2016.~~2022. The increase in revenues primarily consisted of a 4.7%, or $14.9 million, increase in comparable restaurant sales and a $10.5 million increase in sales from new restaurants not yet in our comparable restaurant sales base. Revenue increases were offset primarily by a $2.4 million decrease related to closed restaurants and a $2.8 million decrease related to the shift in weeks as a result of our 53rd week in fiscal 2022. The increase in comparable restaurant sales was the result of an ~~approximate $17.2~~increase in average check of approximately 7.6%, due to menu price increases, offset by a decrease in guest traffic of approximately 2.9% coupled with changes in mix.

Cost of Sales. Cost of sales decreased by $0.3 million, or 0.3%, to $90.6 million during the thirteen weeks ended July 4, 2023, from $90.9 million during the comparable thirteen-week period of 2022. This was primarily due to lower commodity costs and savings from our cost savings initiatives, offset by the increase in revenue and associated costs related to new restaurants opened since the thirteen weeks ended June 28, 2022. As a percentage of revenues, cost of sales decreased to 25.9% for the current thirteen-week period from 27.6% for the prior year comparable period. This decrease was primarily due to easing of inflationary pressure on food costs, coupled with increased revenues from menu price increases and the effectiveness of our cost savings initiatives.

Labor and Benefits. Labor and benefit costs for our restaurants increased by $3.4 million, or 2.8%, to $126.5 million during the thirteen weeks ended July 4, 2023, from $123.1 million during the comparable thirteen-week period of 2022. This was primarily due to $2.4 million related to higher management labor, and $0.9 million related to taxes and benefits. As a percentage of revenues, labor and benefit costs decreased to 36.2% for the current thirteen-week period from 37.3% for the prior year comparable period. This decrease was primarily due to our ability to leverage certain fixed costs over a higher revenue base and improved labor efficiency, coupled with the effectiveness of our cost savings initiatives. Included in labor and benefits for the thirteen weeks ended July 4, 2023 and June 28, 2022, was approximately $0.4 million and $0.6 million, respectively, or 0.1% and 0.2% of revenues, respectively, of stock-based compensation expense related to equity awards granted in accordance with our Gold Standard Stock Ownership Program for certain restaurant management team members.

Occupancy and Operating. Occupancy and operating expenses increased by $5.4 million, or 7.0%, to $81.9 million during the thirteen weeks ended July 4, 2023, from $76.6 million during the comparable thirteen-week period of 2022. This was primarily due to increases of $1.5 million in rent related expenses, $1.4 million in marketing expenditures, $1.3 million related to restaurant facilities expenses, and $0.8 million in third-party delivery company fees.As a percentage of revenues, occupancy and operating expenses

increased to 23.4% for the current thirteen-week period from 23.2% for the prior year comparable period. This increase was primarily related to increased marketing expenditures.

General and Administrative. General and administrative expenses increased by $4.3 million, or 25.4%, to $21.2 million during the thirteen weeks ended July 4, 2023, from $16.9 million during the comparable thirteen-week period of 2022. This was primarily due to increases of $3.6 million in personnel costs, including a $2.3 million increase related to our deferred compensation liability and $0.5 million in corporate expenses. Included in general and administrative costs for the thirteen weeks ended July 4, 2023 and June 28, 2022, was approximately $2.4 million and $1.6 million,or 0.7% and 0.5% of revenues, respectively, of stock-based compensation expense. As a percentage of revenues, general and administrative expenses increased to 6.1% for the current thirteen-week period from 5.1% for the prior year comparable period. This increase was primarily related to our increased deferred compensation liability coupled with higher incentive compensation expense.

Depreciation and Amortization. Depreciation and amortization increased by $0.1 million, or 0.8%, to $17.7 million during the thirteen weeks ended July 4, 2023, compared to $17.6 million during the comparable thirteen-week period of 2022. This increase was primarily related to depreciation expense related to our restaurants opened since the thirteen weeks ended June 28, 2022, partially offset by impairment and disposal charges taken in the prior year, and the closure of three restaurants since the thirteen weeks ended June 28, 2022. As a percentage of revenues, depreciation and amortization decreased to 5.1% for the current thirteen-week period from 5.3% for the prior year comparable period. This decrease was primarily due to a higher revenue base.

Restaurant Opening. Restaurant opening expense decreased by $0.7 million, or 63.8%, to $0.4 million during the thirteen weeks ended July 4, 2023, compared to $1.0 million during the comparable thirteen-week period of 2022. This decrease was primarily due to the timing of openings.

Loss on Disposal and Impairment of Assets, Net. Loss on disposal and impairment of assets, net, was $1.1 million during the thirteen weeks ended July 4, 2023, and $0.4 million during the comparable thirteen-week period of 2022. For the thirteen weeks ended July 4, 2023, these costs primarily relate to disposals of assets in conjunction with initiatives to keep our restaurants up to date.

Interest Expense, Net. Interest expense, net, increased by $0.7 million to $1.1 million during the thirteen weeks ended July 4, 2023, compared to $0.4 million during the comparable thirteen-week period of 2022. This increase was primarily due to the increase in weighted average interest rate year over year, coupled with a slightly higher average outstanding debt balance.

Other Income (Expense), Net. Other income (expense), net, increased by $0.8 million to $0.6 million of income during the thirteen weeks ended July 4, 2023, compared to $0.2 million of expense during the comparable thirteen-week period of 2022. This increase was primarily related to gains associated with the cash surrender value of certain life insurance policies under our deferred compensation plan.

Income Tax (Benefit) Expense. Our effective income tax rate for the thirteen weeks ended July 4, 2023, reflected a 22.7% tax benefit compared to a 88.2% tax expense for the comparable thirteen-week period of 2022. The effective tax rate for the thirteen weeks ended July 4, 2023 and June 28, 2022 was different than the statutory rate primarily due to FICA tax tip credits. Additionally, the thirteen weeks ended June 28, 2022, include a $2.2 million income tax expense, which reflects our estimated annual effective tax rate and offsets a portion of the $10.2 million income tax benefit recorded in the first quarter of fiscal 2022.

Twenty-Six Weeks Ended July 4, 2023 Compared to Twenty-Six-Weeks Ended June 28, 2022

Revenues. Total revenues increased by $62.5 million, or 9.9%, to $691.0 million during the twenty-six weeks ended July 4, 2023, from $628.4 million during the comparable twenty-six week period of 2022. The increase in revenues primarily consisted of a 6.8%, or $42.0 million, increase in comparable restaurant sales, a $22.5 million increase in sales from new restaurants not yet in our comparable restaurant sales base, ~~partially offset by an approximate 1.7%, or $3.8 million, decrease in comparable restaurant sales~~ and a ~~$0.1~~$1.6 million ~~decrease~~increase related to the shift in weeks as a result of our 53rd week in fiscal ~~2016.~~2022. Revenue increases were offset primarily by a $3.1 million decrease related to closed restaurants. The ~~decrease~~increase in comparable restaurant sales ~~resulted from~~was the result of an increase in average check of approximately 7.2%, due to menu price increases, offset by a ~~reduction~~decrease in ~~customer~~guest traffic of approximately ~~3.0%, partially offset by an increase~~0.4% coupled with changes in ~~the average check of 1.3%.~~mix.

Cost of Sales. Cost of sales increased by ~~$5.7~~$9.1 million, or ~~9.5%~~5.3%, to ~~$65.6~~$181.5 million during the ~~thirteen~~twenty-six weeks ended ~~October 3, 2017,~~July 4, 2023, from ~~$59.9~~$172.4 million during the comparable ~~thirteen~~twenty-six week period of ~~2016.~~2022. This ~~increase~~ was primarily due to the ~~opening~~increase in revenue and costs related to our five new restaurants opened since the twenty-six weeks ended June 28, 2022, partially offset by the closure of ~~13 new~~three restaurants since the ~~thirteen~~twenty-six weeks ended ~~September 27, 2016.~~June 28, 2022. As a percentage of revenues, cost of sales ~~increased~~decreased to ~~26.5%~~26.3% for the current ~~thirteen~~twenty-six week period from ~~25.6%~~27.4% for the prior year comparable period. ~~The increase in cost of sales, as a percentage of revenues,~~This decrease was primarily due to ~~an increase in commodity~~easing of inflationary pressure on food costs, coupled with increased revenues from menu ~~mix shifts related to~~price increases and cost savings benefits resulting from our ~~new slow roasted items and Daily Brewhouse Specials, as well as increased promotional activities.~~cost savings initiatives.

Labor and Benefits. Labor and benefit costs for our restaurants increased by ~~$9.2~~$15.5 million, or ~~11.2%~~6.5%, to ~~$91.2~~$254.9 million during the ~~thirteen~~twenty-six weeks ended ~~October 3, 2017,~~July 4, 2023, from ~~$82.0~~$239.4 million during the comparable ~~thirteen~~twenty-six week period of ~~2016.~~2022. This ~~increase~~ was primarily due to $8.1 million related to higher hourly labor, $4.1 million related to higher management labor and incentive compensation, and

$2.7 million related to taxes and benefits as a result of increases in hourly wage rates and the ~~opening of 13~~additional labor related to our five new restaurants opened since the ~~thirteen~~twenty-six weeks ended ~~September 27, 2016.~~June 28, 2022. As a percentage of revenues, labor and benefit costs ~~increased~~decreased to 36.9% for the current ~~thirteen~~twenty-six week period from ~~35.1%~~38.1% for the prior year comparable period. ~~The percentage increase~~This decrease was ~~driven by higher hourly labor rates, increased training labor hours related~~primarily due to our ~~major sales building initiatives,~~ability to leverage certain fixed costs over a higher revenue base, improved labor efficiency, and ~~negative comparable restaurant sales.~~team member retention, coupled with the effectiveness of our cost savings initiatives. Included in labor and benefits for the ~~thirteen~~twenty-six weeks ended ~~October 3, 2017~~July 4, 2023 and ~~September 27, 2016,~~June 28, 2022, was approximately ~~$0.4~~$1.3 million and $1.4 million, respectively, or 0.2% of revenues, of stock-based compensation expense related to equity awards granted in accordance with our Gold Standard Stock Ownership Program for certain restaurant management team members.

Occupancy and Operating. Occupancy and operating expenses increased by ~~$4.8~~$12.8 million, or ~~9.4%~~8.6%, to ~~$55.2~~$161.1 million during the ~~thirteen~~twenty-six weeks ended ~~October 3, 2017,~~July 4, 2023, from ~~$50.5~~$148.3 million during the comparable ~~thirteen~~twenty-six week period of ~~2016.~~2022. This ~~increase~~ was primarily due to ~~the opening~~increases of ~~13 new restaurants since the thirteen weeks ended September 27, 2016.~~ $3.0 million related to restaurant facilities expenses, $2.8 million in rent related expenses, $1.8 million in marketing expenditures, $1.7 million in utilities, $1.5 million in third-party delivery company fees, and $1.4 million in merchant credit card fees.As a percentage of revenues, occupancy and operating expenses ~~increased~~decreased to ~~22.4%~~23.3% for the current ~~thirteen~~twenty-six week period from ~~21.6%~~23.6% for the prior year comparable period. This ~~percentage increase~~decrease was ~~due~~primarily related to ~~the deleveraging of the~~our ability to leverage certain fixed ~~component of these expenses as~~operating and occupancy costs over a ~~result of negative comparable restaurant sales.~~higher revenue base.

General and Administrative. General and administrative expenses increased by ~~$0.1~~$5.7 million, or ~~0.9%~~16.3%, to ~~$13.0~~$40.9 million during the ~~thirteen~~twenty-six weeks ended ~~October 3, 2017,~~July 4, 2023, from ~~$12.9~~$35.2 million during the comparable ~~thirteen~~twenty-six week period of ~~2016. Also included~~2022. This was primarily due to increases of $4.9 million in personnel costs, including a $2.9 million increase related to our deferred compensation liability, and $0.9 million in corporate expenses, offset by decreases of $0.2 million in rent related expenses, and $0.3 million in recruiting related expenses. Included in general and administrative costs for the ~~thirteen~~twenty-six weeks ended ~~October 3, 2017~~July 4, 2023 and ~~September 27, 2016,~~June 28, 2022, was approximately ~~$1.3~~$4.1 million and ~~$1.1~~$3.6 million,or ~~0.5%~~0.6% of revenues, of stock-based compensation expense. As a percentage of revenues, general and administrative expenses ~~decreased~~increased to ~~5.3%~~5.9% for the current thirteen week period from 5.5% for the prior year comparable period. This percentage decrease was primarily due to lower incentive compensation and the leveraging of our costs over a higher revenue base.

~~Depreciation and Amortization.~~ Depreciation and amortization increased by $1.1 million, or 7.0%, to $17.4 million during the thirteen weeks ended October 3, 2017, compared to $16.3 million during the comparable thirteen week period of 2016. This increase was primarily due to depreciation expense related to the 13 new restaurants opened since the thirteen weeks ended September 27, 2016. As a percentage of revenues, depreciation and amortization increased slightly to 7.1% for the current thirteen week period from 7.0% for the prior year comparable period.

~~Restaurant Opening~~. Restaurant opening expense decreased by $1.7 million, or 75.9%, to $0.5 million during the thirteen weeks ended October 3, 2017, compared to $2.2 million during the comparable thirteen week period of 2016. This decrease was due to the opening of one new restaurant during the thirteen weeks ended October 3, 2017, compared to five new restaurants during the comparable thirteen week period of 2016.

~~Loss on Disposal and Impairment of Assets.~~ Loss on disposal and impairment of assets increased by $0.3 million, or 32.1%, to $1.1 million during the thirteen weeks ended October 3, 2017, compared to $0.8 million during the comparable thirteen week period of 2016.~~These costs primarily related to t~~he ~~disposal of certain unproductive restaurant assets.~~

~~Natural Disaster and Related.~~ Natural disaster and related expense of $0.9 million during the thirteen weeks ended October 3, 2017, related to property damages, food spoilage, labor and other expenses from Hurricanes Harvey and Irma, in excess of our related insurance coverage.

~~Severance and Legal Settlements.~~ Severance and legal settlements of $0.4 million during the thirteen weeks ended October 3, 2017, related to the reduction of certain corporate overhead positions primarily related to supporting new restaurant openings.

~~Interest Expense, Net~~. Interest expense, net increased by $0.8 million to $1.2 million during the thirteen weeks ended October 3, 2017, compared to $0.3 million during the comparable thirteen week period of 2016. This increase was due to increased borrowings under our Credit Facility.

~~Income Tax (Benefit) Expense~~. Our effective income tax rate for the thirteen weeks ended October 3, 2017, was a net benefit of $1.6 million compared to an income tax expense of $1.9 million for the comparable thirteen week period of ~~2016. The income tax benefit for the thirteen weeks ended October 3, 2017,~~ was a result of a change to our estimated annual effective tax rate principally attributable to a decrease in forecasted income for fiscal 2017. The effective income tax rate for the thirteen weeks ended October 3, 2017, differed from the statutory income tax rate primarily due to tax credits.

~~Thirty-Nine Weeks Ended October 3, 2017 Compared to Thirty-Nine Weeks Ended September 27, 2016.~~

~~Revenues~~. Total revenues increased by $43.2 million, or 5.9%, to $770.6 million during the thirty-nine weeks ended October 3, 2017, from $727.4 million during the comparable thirty-nine week period of 2016. The increase in revenues primarily consisted of an approximate $56.3 million increase in sales from new restaurants not yet in our comparable restaurant sales base, partially offset by an approximate 1.5%, or $10.2 million, decrease in comparable restaurant sales, a $2.5 million decrease related to the shift in weeks as a result of our 53^rd week in fiscal 2016 and a $0.4 million decrease in restaurant sales due to the closure of our Century City, California restaurant in January 2016. The decrease in comparable restaurant sales resulted from a reduction in customer traffic of approximately 3.9%, partially offset by an increase in the average check of 2.4%.

~~Cost of Sales.~~ Cost of sales increased by $17.4 million, or 9.5%, to $200.5 million during the thirty-nine weeks ended October 3, 2017, from $183.1 million during the comparable thirty-nine week period of 2016. This increase was primarily due to the opening of 13 new restaurants since the thirty-nine weeks ended September 27, 2016. As a percentage of revenues, cost of sales increased to 26.0 % for the current thirty-nine week period from 25.2 % for the prior year comparable period. The increase in cost of sales, as a percentage of revenues, was primarily due to an increase in commodity costs, menu mix shifts related to our new slow roasted items and Daily Brewhouse Specials, as well as increased promotional activities.

~~Labor and Benefits.~~ Labor and benefit costs for our restaurants increased by $24.9 million, or 9.9%, to $277.7 million during the thirty-nine weeks ended October 3, 2017, from $252.8 million during the comparable thirty-nine week period of 2016. This increase was primarily due to the opening of 13 new restaurants since the thirty-nine weeks ended September 27, 2016. As a percentage of revenues, labor and benefit costs increased to 36.0% for the current thirty-nine week period from 34.8% for the prior year comparable period. The percentage increase was driven by higher hourly labor rates, increased training labor hours related to our major sales building initiatives, and negative comparable restaurant sales. Included in labor and benefits for the thirty-nine weeks ended October 3, 2017 and September 27, 2016, was approximately $1.4 million and $1.3 million, respectively, or 0.2% of revenues, of stock-based compensation expense related to equity awards granted in accordance with our Gold Standard Stock Ownership Program for certain restaurant management team members.

~~Occupancy and Operating.~~ Occupancy and operating expenses increased by $14.4 million, or 9.6%, to $164.1 million during the thirty-nine weeks ended October 3, 2017, from $149.7 million during the comparable thirty-nine week period of 2016. This increase was primarily due to the opening of 13 new restaurants since the thirty-nine weeks ended September 27, 2016. As a percentage of revenues, occupancy and operating expenses increased to 21.3% for the current thirty-nine week period from 20.6% for the prior year comparable period. This percentage increase was due to the deleveraging of the fixed component of these expenses as a result of negative comparable restaurant sales.

~~General and Administrative.~~ General and administrative expenses increased by $0.5 million, or 1.2%, to $41.5 million during the thirty-nine weeks ended October 3, 2017, from $41.1 million during the comparable thirty-nine week period of 2016. The slight increase in general and administrative costs was primarily due to higher field supervision and support costs to manage our increasing number of restaurants offset by lower corporate incentive compensation. Also included in general and administrative costs for the thirty-nine weeks ended October 3, 2017 and September 27, 2016, was approximately $3.9 million and $3.3 million,~~or 0.5% and 0.4% of revenues, respectively, of stock-based compensation expense. As a percentage of revenues, general and administrative expenses decreased to 5.4% for the current thirty-nine~~twenty-six week period from 5.6% for the prior year comparable period. This ~~percentage decrease~~increase was primarily ~~due~~related to ~~the leveraging of~~ our ~~costs over a higher revenue base.~~increased deferred compensation liability.

Depreciation and Amortization. Depreciation and amortization ~~increased~~decreased by ~~$3.3~~$0.2 million, or ~~6.9%~~0.6%, to ~~$51.2~~$35.3 million during the ~~thirty-nine~~twenty-six weeks ended ~~October 3, 2017,~~July 4, 2023, compared to ~~$47.9~~$35.5 million during the comparable ~~thirty-nine~~twenty-six week period of ~~2016.~~2022. This ~~increase~~decrease was primarily ~~due~~related to impairment and disposal charges taken in the prior year, including the impairment and reduction of carrying value for the closure of three restaurants since thetwenty-six weeks ended June 28, 2022. The decrease in depreciation and amortization was partially offset by depreciation expense related to ~~the 13 new~~our restaurants opened since the ~~thirty-nine~~twenty-six weeks ended ~~September 27, 2016.~~June 28, 2022. As a percentage of revenues, depreciation and amortization ~~remained consistent at 6.6%~~decreased to 5.1% for the current ~~thirty-nine~~twenty-six week period ~~and~~from 5.7% for the prior year comparable period. This decrease was primarily due to a higher revenue base.

Restaurant Opening. Restaurant opening expense decreased by ~~$2.0~~$0.4 million, or ~~38.6%~~24.9%, to ~~$3.2~~$1.2 million during the ~~thirty-nine~~twenty-six weeks ended ~~October 3, 2017,~~July 4, 2023, compared to ~~$5.2~~$1.6 million during the comparable ~~thirty-nine~~twenty-six week period of ~~2016. This decrease~~

~~was due to the opening of eight new restaurants during thirty-nine weeks ended October 3, 2017, compared to 12 new restaurants during the comparable thirty-nine week period of 2016.~~

~~Loss on Disposal and Impairment of Assets.~~ The loss on disposal and impairment of assets increased by $1.9 million, or 83.9%, to $4.2 million during the thirty-nine weeks ended October 3, 2017, compared to $2.3 million during the comparable thirty-nine week period of 2016.2022. This increase was primarily due to the ~~write-off~~timing of ~~the remaining~~openings.

Loss on Disposal and Impairment of Assets, Net. Loss on disposal and impairment of assets, net, ~~book value of certain convection ovens and point of sale terminals following the recent rollout of our new slow roasting ovens and server handheld point of sale tablets.~~

~~Natural Disaster and Related.~~ ~~Natural disaster and related expense of $0.9~~was $3.3 million during the ~~thirty-nine~~twenty-six weeks ended ~~October 3, 2017, related to property damages, food spoilage, labor~~July 4, 2023, and ~~other expenses from Hurricanes Harvey and Irma, in excess of our related insurance coverage.~~

~~Severance and Legal Settlements.~~ ~~Severance and legal settlements was $0.4~~$0.6 million during the ~~thirty-nine weeks ended October 3, 2017, and for the~~ comparable ~~thirty-nine~~twenty-six week period of ~~2016.~~2022. For the ~~current thirty-nine week period, this related~~twenty-six weeks ended July 4, 2023, these costs primarily relate to disposals of assets in conjunction with initiatives to keep our restaurants up to date, including the ~~reduction~~removal of ~~certain corporate overhead positions primarily related to supporting new restaurant openings, and for~~glass partitions in our dining rooms that were installed early in the ~~comparable prior year period, it related to the settlement of a wage and hour claim.~~pandemic.

Interest Expense, Net. Interest expense, net, increased by ~~$2.1~~$1.2 million to ~~$3.2~~$2.2 million during the ~~thirty-nine~~twenty-six weeks ended ~~October 3, 2017,~~July 4, 2023, compared to $1.1 million during the comparable ~~thirty-nine~~twenty-six week period of ~~2016. This increase was due to increased borrowings under our Credit Facility.~~

~~Other Income, Net. Other income, net increased by $0.7 million to $1.5 million during the thirty-nine weeks ended October 3, 2017, compared to $0.8 million during the comparable thirty-nine week period of 2016.~~2022. This increase was primarily due to ~~greater gift card breakage income~~the increase in our weighted average interest rate year over year, coupled with ana slightly higher average outstanding debt balance.

Other Income (Expense), Net. Other income (expense), net, increased by $1.4 million to $0.8 million of income during the twenty-six weeks ended July 4, 2023, compared to $0.6 million of expense during the comparable twenty-six week period of 2022. This increase inwas primarily related to gains associated with the cash surrender value of certain life insurance ~~programs~~policies under our deferred compensation plan.

Income Tax ~~Expense~~. (Benefit) Expense.Our effective income tax rate for the ~~thirty-nine~~twenty-six weeks ended ~~October 3, 2017, was 15.6%~~July 4, 2023, reflected a 35.0% tax benefit compared to ~~27.0%~~a 128.4% tax benefit for the comparable ~~thirty-nine~~twenty-six week period of ~~2016.~~2022. The effective ~~income~~ tax rate benefit for the ~~thirty-nine~~twenty-six weeks ended ~~October 3, 2017, differed from~~July 4, 2023 and June 28, 2022 was different than the statutory ~~income tax~~ rate primarily due to significant FICA tax tip credits.~~The decrease in our effective tax rate for fiscal 2017 compared to fiscal 2016 is a result of lower forecasted income for fiscal 2017.~~

LIQUIDITY AND ~~CAPITAL RESOURCES~~MATERIAL CASH REQUIREMENTS

The following ~~tables provide,~~table provides, for the periods indicated, a summary of our key liquidity measurements (dollars in thousands):


	October 3, 2017			January 3, 2017			July 4, 2023			January 3, 2023
Cash and cash equivalents	$	28,694		$	22,761		$	6,053		$	24,873
Net working capital	$	(47,793	)	$	(67,008	)	$	(118,107	)	$	(114,600	)
Current ratio	0.6:1.0			0.5:1.0			0.4:1.0			0.4:1.0

For the Thirty-Nine Weeks Ended

October 3, 2017

September 27, 2016

Cash provided by operating activities

$
69,054

$
108,631

Capital expenditures

$
57,358

$
80,682

Our ~~capital requirements are driven by~~second quarter ended on July 4, 2023, a national banking holiday. As a result and per our ~~fundamental~~accounting policy, $19.2 million of credit card revenues was recorded as accounts and other receivables on July 4, 2023. These in-transit funds were subsequently received. We focus on cash flow generation and maintaining a solid and flexible financial ~~objective~~position to improve total shareholder return through new restaurant expansion plans and restaurant enhancements and initiatives. In addition, we want to maintain a flexible and prudent balance sheet to provide the financial resources necessary to manage the risks and uncertaintiesexecute our long-term strategy of ~~conducting~~investing in our business ~~operations in a mature segment of~~and opening new restaurants. We continue to monitor the ~~restaurant industry. In order~~macro environment and will review and, when appropriate, adjust our overall approach to achieve these objectives, we use a combination of operating cash flows, funded debt and landlord allowances. Over the last several years we have been augmenting our cash flow from operations by increasing our funded debt and using these proceeds to return capital ~~to shareholders in the form of~~allocation, including share repurchases and ~~beginning in~~dividends, as the ~~fourth quarter of fiscal 2017, quarterly~~environment changes.

Based on current operations, we believe that our current cash ~~dividends.~~

~~We currently estimate the total domestic capacity~~and cash equivalents, coupled with cash generated from operations and availability under our credit agreement will be adequate to meet our capital expenditure and working capital needs for ~~BJ’s restaurants to be~~ at least ~~425, given~~ the size of our current restaurant prototype and the current structure of the BJ’s concept and menu. We expect to fund our growth plans from our ongoing operations, our cash balance on hand, proceeds from employee stock option exercises, tenant improvement allowances from

our landlords and our $250 million Credit Facility. However, depending on the expected level of new restaurant development, tenant improvement allowances that we receive from our landlords, other planned capital investments including ongoing maintenance capital expenditures, and results from our ongoing operations, we may not generate enough cash flow from operations to completely fund our plans. In addition, share repurchases and our quarterly cash dividend or any significant increases in such repurchases or dividends may impact our available capital resources. Accordingly, we continue to actively monitor overall conditions in the capital and credit markets with respect to the potential sources and the timing of additional financing in order to enhance total shareholder return. However, there can be no assurance that such financingnext twelve months. Our future operating performance will be ~~available when required or available on terms acceptable~~subject to ~~us. If we~~future economic conditions and to financial, business and other factors, many of which are ~~unable to secure additional capital resources, when needed, we may be required to reduce~~beyond our ~~planned rate of expansion, share repurchases, quarterly cash dividends or other shareholder return initiatives.~~control.

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

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

~~We also require capital resources to evolve, maintain and increase~~CASH FLOWS

The following tables set forth, for the ~~productive capacity of~~periods indicated, our existing base of restaurants and brewing operations and to further expand and strengthen the capabilities of our corporate and information technology infrastructures. Our requirement for working capital is not significant since our restaurant customers pay for their food and beverage purchases in cash or credit cards at the time of the sale. Thus, we are able to sell many of our inventory items before we are required to pay our suppliers for such items.

~~Our~~ cash flows from operating, investing, and financing activities ~~as detailed in the Consolidated Statements of~~(in thousands):


	For the Twenty-Six Weeks Ended
	July 4, 2023			June 28, 2022
Net cash provided by operating activities	$	41,600		$	30,212
Net cash used in investing activities		(52,908	)		(30,553	)
Net cash used in financing activities		(7,512	)		(425	)
Net decrease in cash and cash equivalents	$	(18,820	)	$	(766	)

Operating Cash Flows

Net cash provided ~~$69.1~~by operating activities was $41.6 million during the ~~thirty-nine~~twenty-six weeks ended ~~October 3, 2017,~~July 4, 2023, representing a ~~$39.6~~$11.4 million ~~decrease~~increase from the ~~$108.6~~$30.2 million provided by during the ~~thirty-nine~~twenty-six weeks ended ~~September 27, 2016.~~June 28, 2022. The ~~decrease in cash from operating activities for~~increase over the ~~thirty-nine weeks ended October 3, 2017, in comparison the thirty-nine weeks ended September 27, 2016,~~prior year is primarily due to the ~~collection~~timing of ~~our $6.0~~payments for accrued expenses, the change in deferred income taxes and improved net income. This increase was offset by the timing of accounts and other receivable receipts, including in transit credit card deposits due to the national banking holiday.

Investing Cash Flows

Net cash used in investing activities was $52.9 million ~~lease termination fee in~~during the twenty-six weeks ended July 4, 2023, representing a $22.4 million increase from the $30.6 million used during the twenty-six weeks ended June 28, 2022. The increase over prior year ~~coupled with a reduction~~is primarily due to new restaurants opened, restaurants under construction, and an increase in ~~payroll related accruals as a result~~restaurant remodel activity.

The following table provides, for the periods indicated, the components of ~~the impact of the 53~~^rd ~~week in fiscal 2016 and lower net income during the current thirty-nine week period.~~

~~For the thirty-nine weeks ended October 3, 2017, total~~ capital expenditures ~~were approximately $57.4 million. Expenditures for the purchase~~(in thousands):


	For the Twenty-Six Weeks Ended
	July 4, 2023		June 28, 2022
New restaurants	$	20,970	$	18,168
Restaurant maintenance and remodels, and key productivity initiatives		31,050		11,899
Restaurant and corporate systems		892		1,052
Total capital expenditures	$	52,912	$	31,119

Year to date as of the underlying land for new restaurants as well as the acquisition of restaurant and brewing equipment and leasehold improvements to construct new restaurants were $31.1 million. These expenditures were primarily related to the construction of our eight new restaurants that opened during the thirty-nine weeks ended October 3, 2017, as well as expenditures related to restaurants expected to open later in fiscal 2017. Total capital expenditures related to the maintenance and key productivity initiatives of existing restaurants and expenditures for restaurant and corporate systems were $25.7 million and $0.6 million, respectively.

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

~~As of November 6, 2017,~~August 7, 2023, we have opened ~~eight~~two new restaurants and ~~we have two additional restaurants, with signed leases, under construction that we expect~~closed three restaurants. We currently plan to open ~~before year end. We expect to open four to six new~~as many as five restaurants in fiscal ~~2018~~2023, and we have entered into signed leases, land purchase agreements or letters of intent for all of our ~~potential~~2023 new restaurant locations. While we expect our capital expenditures to remain significant, the reduction of restaurant openings in fiscal 2018 will reduce our capital expenditure spend as compared to fiscal 2017. The decision to continue to reduce our pace of expansion will generate increased free cash flow and provide added financial flexibility. It will also allow us to allocate greater resources to our core base of established restaurants to improve sales and profitability. While our new restaurant unit economics remain solid and warrant continued capital allocation, we will continue to balance this new restaurant growth with our commitment to drive shareholder returns through our share repurchases program and, beginning in the fourth quarter of fiscal 2017, quarterly cash dividends.

We currently anticipate our total capital expenditures for fiscal ~~2018, including all expenditure categories,~~2023 to be approximately ~~$50~~$90 million to ~~$60~~$95 million. This estimate includes costs to open five new restaurants and remodel 35 to 40 existing locations. Total capital expenditures exclude anticipated proceeds from tenant improvement allowances. We expect to fund our ~~anticipated~~net capital expenditures ~~for the remainder of fiscal 2017 and fiscal 2018~~ with our current cash balance on hand, ~~expected~~ cash flows from operations ~~proceeds from sale-leaseback transactions, expected tenant improvement allowances~~ and our line of credit. Our future cash requirements will depend on many factors, including the pace of our expansion, conditions in the retail property development market, construction costs, the nature of the specific sites selected for new restaurants, and the nature of the specific leases and associated tenant improvement allowances available, if any, as negotiated with landlords.

From time to time, we will evaluate opportunities to acquire and convert other restaurant locations or entire restaurant chains to the BJ’s restaurant concept. In the future we may consider joint venture arrangements to augment BJ’s expansion into new markets or we may evaluate non-controlling investments

Financing Cash Flows

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

Historically, we have not paid any dividends to our shareholders. However, on October 24, 2017, our Board of Directors authorized and declared a quarterly cash dividend of $0.11 per share of common stock payable on December 4, 2017, to shareholders of record at the close of business on November 13, 2017. While we intend to pay regular quarterly cash dividends in future periods, any future decisions to pay or to increase or decrease cash dividends will be reviewed quarterly and declared by the Board of Directors at its discretion. Our Credit Facility contains, and debt instruments that we enter into in the future may contain, covenants that place limitations on the amount of dividends we may pay.

~~As of October 3, 2017, we have cumulatively repurchased approximately $347.8~~financing activities was $7.5 million ~~shares in accordance with our approved share repurchase plan. We repurchased approximately $57.3 million of these shares~~ during the ~~thirty-nine~~twenty-six weeks ended ~~October 3, 2017. The share repurchases were executed through open market purchases, and future share repurchases may be completed through~~July 4, 2023, representing a $7.1 million increase from the ~~combination~~$0.4 million used during the twenty-six weeks ended June 28, 2022. This increase was primarily due to payments on our line of ~~individually negotiated transactions, accelerated share buyback, and/or open market purchases. In March 2017,~~credit during the Company’s Board of Directors approved an expansion of the share repurchase program by $50 million to $400 million. As of October 3, 2017, we have approximately $52.2 million available under our share repurchase plan. Our Credit Facility does not contain any restrictions on the amount of borrowings that can be used to make share repurchases as long as we are in compliance with our financial and non-financial covenants.twenty-six weeks ended June 28, 2022.

OFF-BALANCE SHEET ARRANGEMENTS

We do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or variable interest entities (“VIEs”), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow limited purposes. As of ~~October 3, 2017,~~July 4, 2023, we are not involved in any off-balance sheet arrangements.

IMPACT OF INFLATION

~~Inflation on food, labor, energy and occupancy costs can significantly affect the profitability of our restaurant operations. Our profitability is dependent, among other things,~~Heightened inflation has had a material impact on our ~~ability to anticipate~~operations, new restaurant construction and react to changes in the cost of key operating resources, including food and other raw materials, labor, energy and other supplies and services. Substantial increases in costs and expenses could impact our operating results to the extent that such increases cannot be passed along to our restaurant customers. While we have taken steps to enter into agreements for some of the commodities used in our restaurant operations, there can be no assurance that future supplies and costs for such commodities will not fluctuate due to weather or other market

conditions outside of our control. We are currently unable to contract for certain commodities, such as fluid dairy, fresh seafood and most fresh produce items for long periods of time. Consequently, such commodities can be subject to unforeseen supply and cost fluctuations.

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

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

SEASONALITY AND ADVERSE WEATHER

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

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions affecting the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenues and expenses in the reporting period. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. We continually review the estimates and underlying assumptions to ensure they are appropriate for the circumstances. Accounting assumptions and estimates are inherently uncertain and actual results may differ materially from our estimates.

A summary of our other critical accounting policies is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended January 3, 2023. During the twenty-six weeks ended July 4, 2023, there were no significant changes in our critical accounting policies.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Interest Rate Risk

We have a ~~$250~~$215 million ~~unsecured~~ Credit Facility, of which ~~$194.0~~$53.0 million is currently outstanding ~~that~~and carries interest at a floating rate. We utilize the Credit Facility principally for letters of credit that are required to support our self-insurance programs, to fund a portion of our announced ~~stock~~share repurchase program, and for working capital and construction requirements, as needed. We are exposed to interest rate risk through fluctuations in interest rates on our obligations under the Credit Facility. Based on our current outstanding balance, a hypothetical 1% change in the interest rates under our Credit Facility would have an approximate ~~$1.6~~$0.4 million annual impact on our net income.

Food, Supplies and Commodity Price Risks

We purchase food, supplies and other commodities for use in our operations based upon market prices established with our suppliers. ~~Many~~Our business is dependent on frequent and consistent deliveries of these items. We may experience shortages, delays or interruptions due to inclement weather, natural disasters, labor issues or other operational disruptions or other conditions beyond our control such as cyber breaches or ransomware attacks at our suppliers, distributors or transportation providers. Additionally, many of the commodities purchased by us can be subject to volatility due to market supply and demand factors outside of our control, whether contracted for or not. Costs can also fluctuate due to government regulation. As a result of the lingering effects of the COVID-19 pandemic, we continue to experience distribution disruptions, commodity cost inflation and certain food and supply shortages. To manage this risk in part, we attempt to enter into fixed-price purchase commitments, with terms typically up to one year, for some of our commodity requirements. However, it may not be possible for us to enter into fixed-price contracts for certain commodities or we may choose not to enter into fixed-price contracts for certain commodities. We believe that substantially all of our food and supplies are available from several sources, which helps to diversify our overall commodity cost risk. We also believe that we have some flexibility and ability to increase certain menu prices, or vary certain menu items offered or promoted, in response to food

commodity price increases. Some of our commodity purchase arrangements may contain contractual features that limit the price paid by establishing certain price floors or caps. We do not use financial instruments to hedge commodity prices, since our purchase arrangements with suppliers, to the extent that we can enter into such arrangements, help control the ultimate cost that we pay.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 promulgated under the Securities Exchange Act of 1934 as amended, as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~October 3, 2017,~~July 4, 2023, our disclosure controls and procedures are designed and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

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

Item 5. OTHER INFORMATION

None.

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

See Note 78 of Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this report for a summary of legal proceedings.

Item 1A. RISK FACTORS

~~A discussion of~~There have been no material changes from the ~~significant risks associated with investments~~risk factors previously disclosed in ~~our securities, as well as other matters, is set forth in Item 1A of~~ our Annual Report on Form 10-K for the ~~fiscal~~ year ended January 3, 2017. A summary of these risks and certain related information is included under “Statement Regarding Forward-Looking Disclosure” in Part I, Item 2 of this Form 10-Q and is incorporated herein by this reference. These cautionary statements are to be used as a reference in connection with any “forward-looking” statements. The factors, risks and uncertainties identified in these cautionary statements are in addition to those contained in any other cautionary statements, written or oral, which may be made or otherwise addressed in connection with a “forward-looking” statement or contained in any of our subsequent filings with the SEC. The risks described in this Form 10-Q and in our Annual Report on Form 10-K are not the only risks we face. New risks and uncertainties arise from time to time, and we cannot predict those events or how they may affect us. There may be other risks and uncertainties that are not currently known or that are currently deemed by us to be immaterial; however, they may ultimately adversely affect our business, financial condition and/or operating results.2023.

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

As of ~~October 3, 2017,~~July 4, 2023, we have cumulatively repurchased shares valued at approximately ~~$347.8~~$477.9 million in accordance with our approved share repurchase plan. Approximately $57.3 million of these shares were repurchased during the thirty-nine weeks ended October 3, 2017. The share repurchases were executed through open market purchases, and future share repurchases may be completed through the combination of individually-negotiated transactions, accelerated share buyback, and/or open market purchases. In March 2017, the Company’s Board of Directors approved an expansion of the share repurchase program by $50 million. As of ~~October 3, 2017,~~July 4, 2023, we have approximately ~~$52.2~~$22.1 million available under ~~the current $400 million~~our share repurchase plan approved by our Board of Directors. Our Credit Facility does not contain any restrictions on the amount of borrowings that can be used to make share repurchases as long as we are in compliance with our financial and non-financial covenants.

~~The following table sets forth information with respect to the repurchase of common shares during the thirty-nine weeks ended October 3, 2017:~~plan.

Period (1)

Total Number
of Shares Purchased

Average
Price
Paid Per
Share

Total Number of Shares Purchased as Part of the Publicly Announced Plans

Increase in
Dollars for
Share
Repurchase Authorization

Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs

01/04/17 – 01/31/17

309,677

$
36.12

309,677

$
—

$
48,279,389

02/01/17 – 02/28/17

316,423

$
35.72

316,423

$
—

$
36,977,187

03/01/17 – 04/04/17

170,689

$
38.12

170,689

$
50,000,000

$
80,469,746

04/05/17 – 05/02/17

33,916

$
40.34

33,916

$
—

$
79,101,642

05/03/17 – 05/30/17

3,143

$
43.98

3,143

$
—

$
78,963,417

05/31/17 – 07/04/17

36,348

$
37.42

36,348

$
—

$
77,603,349

07/05/17 – 08/01/17

200,019

$
35.26

200,019

$
—

$
70,550,137

08/02/17 – 08/29/17

57,968

$
32.96

57,968

$
—

$
68,639,351

08/30/17 – 10/03/17

555,673

$
29.62

555,673

$
—

$
52,181,393

Total

1,683,856

1,683,856

~~(1)~~

~~Period information is presented in accordance with our fiscal months during the thirty-nine weeks ended October 3, 2017.~~

Item 6. EXHIBITS


Exhibit Number		Description
3.1 ~~(P)~~		Amended and Restated Articles of Incorporation of the Company, ~~as amended,~~ incorporated by reference to Exhibit 3.1 toof the ~~Registration Statement~~Annual Report on Form SB-2 filed with the Securities and Exchange Commission on September 27, 1996, as amended by the Company’s Registration Statement on Form SB-2/A filed with the Commission on August 1, 1996, and the Company’s Registration Statement on Form SB-2A filed with the Commission on August 22, 1996, (File No. 3335182-LA) (as amended, the “Registration Statement”).10-K for fiscal 2017.

3.2		Amended and Restated Bylaws of the Company, incorporated by reference to ~~Exhibits~~Exhibit 3.1 of the Form 8-K filed on ~~June 4, 2007.~~August 14, 2020.

3.3		Certificate of Amendment of Articles of Incorporation, incorporated by reference to Exhibit 3.3 of the Annual Report on Form 10-K for fiscal 2004.

3.4		Certificate of Amendment of Articles of Incorporation, incorporated by reference to Exhibit 3.4 of the Annual Report on Form 10-K for fiscal 2010.

4.1		Specimen Common Stock Certificate of the Company, incorporated by reference to Exhibit 4.1 of the Company’s Registration ~~Statement.~~Statement on Form SB‑2A filed with the Securities and Exchange Commission on August 22, 1996 (File No. 3335182‑LA).

10.1		~~Amended and Restated Employment~~Investor Rights Termination Agreement, dated ~~August 8, 2017, between~~April 13, 2023, by and among the Company, SC 2018 Trust LLC and ~~Gregory A. Trojan, employed as President and Chief Executive Officer,~~BJ's Act III, LLC, incorporated by reference to Exhibit 10.1 toof the Form 8K8-K filed ~~on August 8, 2017.~~April 18, 2023.

31		Section 302 Certification of Chief Executive Officer and Chief Financial Officer.
32
32		Section 906 Certification of Chief Executive Officer and Chief Financial Officer.

~~101~~		The following materials from BJ’s Restaurants, Inc.’s Quarterly Report on Form 10-Q for the quarter ended October 3, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance ~~Sheets; (ii) Unaudited Consolidated Statements of Income; (iii) Unaudited Consolidated Statements of Cash Flows; and (iv) Notes to Unaudited Consolidated Financial Statements.~~
101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
~~(P)~~101.SCH		~~Paper exhibit~~Inline XBRL Taxonomy Extension Schema
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB		Inline XBRL Taxonomy Extension Labels Linkbase
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

~~SIGNATURES~~

SIGNATURES

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


		BJ’S RESTAURANTS, INC.
		(Registrant)

~~November 6, 2017~~	~~By:~~	~~/s/ GREGORY A. TROJAN~~
August 7, 2023	By:	~~Gregory A. Trojan~~
		~~President and Chief Executive Officer~~
		~~(Principal Executive Officer)~~

		~~By:~~	/s/ GREGORY S. LEVIN
			Gregory S. Levin
			Chief Executive ~~Vice~~Officer and President
			~~Chief Financial Officer and Secretary~~(Principal Executive Officer)


		By:	/s/ THOMAS A. HOUDEK
			Thomas A. Houdek
			Senior Vice President and Chief Financial Officer
			(Principal Financial Officer)


		By:	/s/ JACOB J. GUILD
			Jacob J. Guild
			Senior Vice President and Chief Accounting Officer
			(Principal Accounting Officer)


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


	October 3, 2017		January 3, 2017		July 4, 2023		January 3, 2023
	(unaudited)				(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	28,694	$	22,761	$	6,053	$	24,873
Accounts and other receivables, net		12,537		14,698		33,091		28,593
Inventories, net		10,226		9,907		11,994		11,887
Prepaid expenses and other current assets		8,368		11,324		14,636		16,905
Total current assets		59,825		58,690		65,774		82,258

Property and equipment, net		599,450		601,324		522,610		507,116
Operating lease assets						361,494		368,784
Goodwill		4,673		4,673		4,673		4,673
Equity method investment						4,900		5,000
Deferred income taxes, net						41,969		38,312
Other assets, net		29,118		26,625		39,841		39,779
Total assets	$	693,066	$	691,312	$	1,041,261	$	1,045,922

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable (1)	$	23,984	$	31,145
Accounts payable					$	53,816	$	59,563
Accrued expenses		83,634		94,553		98,111		97,258
Current operating lease obligations						31,954		40,037
Total current liabilities		107,618		125,698		183,881		196,858

Deferred income taxes		37,073		37,587
Deferred rent		32,047		30,424
Deferred lease incentives		53,951		54,119
Long-term operating lease obligations						427,609		432,676
Long-term debt		194,000		148,000		53,000		60,000
Other liabilities		23,199		20,587		10,725		10,873
Total liabilities		447,888		416,415		675,215		700,407

Commitments and contingencies

Shareholders’ equity:
Preferred stock, 5,000 shares authorized, none issued or outstanding		—		—		—		—
Common stock, no par value, 125,000 shares authorized and 20,746 and 22,332 shares issued and outstanding as of October 3, 2017 and January 3, 2017, respectively		—		—
Common stock, no par value, 125,000 shares authorized and 23,544 and 23,392 shares issued and outstanding as of July 4, 2023 and January 3, 2023, respectively						—		—
Capital surplus		68,228		66,200		73,407		74,459
Retained earnings		176,950		208,697		292,639		271,056

Total shareholders’ equity		245,178		274,897		366,046		345,515
Total liabilities and shareholders’ equity	$	693,066	$	691,312	$	1,041,261	$	1,045,922


	For the Thirteen Weeks Ended						For the Twenty-Six Weeks Ended
	July 4, 2023			June 28, 2022			July 4, 2023			June 28, 2022
Revenues	$	349,670		$	329,697		$	690,950		$	628,426
Restaurant operating costs (excluding depreciation and amortization):
Cost of sales		90,614			90,928			181,491			172,394
Labor and benefits		126,522			123,111			254,855			239,397
Occupancy and operating		81,912			76,560			161,058			148,261
General and administrative		21,194			16,905			40,900			35,158
Depreciation and amortization		17,708			17,565			35,320			35,541
Restaurant opening		378			1,045			1,222			1,628
Loss on disposal and impairment of assets, net		1,130			438			3,276			595
Total costs and expenses		339,458			326,552			678,122			632,974
Income (loss) from operations		10,212			3,145			12,828			(4,548	)

Other income (expense):
Interest expense, net		(1,108	)		(436	)		(2,229	)		(1,070	)
Other income (expense), net (1)		622			(187	)		818			(575	)
Total other expense		(486	)		(623	)		(1,411	)		(1,645	)
Income (loss) before income taxes		9,726			2,522			11,417			(6,193	)

Income tax (benefit) expense		(2,206	)		2,225			(3,996	)		(7,950	)
Net income	$	11,932		$	297		$	15,413		$	1,757

Net income per share:
Basic	$	0.51		$	0.01		$	0.66		$	0.08
Diluted	$	0.50		$	0.01		$	0.64		$	0.07

Weighted average number of shares outstanding:
Basic		23,539			23,434			23,510			23,405
Diluted		23,971			23,576			23,961			23,658

	For the Thirteen						For the Thirty-Nine
	Weeks Ended						Weeks Ended
	October 3, 2017			September 27, 2016			October 3, 2017			September 27, 2016
Revenues	$	247,009		$	233,702		$	770,642		$	727,431
Restaurant operating costs (excluding depreciation and amortization):
Cost of sales (1)		65,553			59,882			200,465			183,091
Labor and benefits		91,228			82,034			277,724			252,793
Occupancy and operating (1)		55,238			50,474			164,054			149,691
General and administrative		13,035			12,921			41,536			41,050
Depreciation and amortization		17,430			16,292			51,231			47,930
Restaurant opening		534			2,218			3,205			5,216
Loss on disposal and impairment of assets		1,070			810			4,168			2,266
Natural disaster and related		905			—			905			—
Severance and legal settlements		423			—			423			369
Total costs and expenses		245,416			224,631			743,711			682,406
Income from operations		1,593			9,071			26,931			45,025

Other (expense) income:
Interest expense, net		(1,177	)		(344	)		(3,178	)		(1,100	)
Other income, net		423			378			1,474			813
Total other (expense) income		(754	)		34			(1,704	)		(287	)
Income before income taxes		839			9,105			25,227			44,738

Income tax (benefit) expense		(1,550	)		1,868			3,933			12,068

Net income	$	2,389		$	7,237		$	21,294		$	32,670

Net income per share:
Basic	$	0.11		$	0.30		$	0.98		$	1.35
Diluted	$	0.11		$	0.30		$	0.97		$	1.33

Weighted average number of shares outstanding:
Basic		21,354			24,091			21,620			24,172
Diluted		21,670			24,486			22,032			24,589

	For the Thirty-Nine Weeks Ended
	October 3, 2017			September 27, 2016
Cash flows from operating activities:
Net income	$	21,294		$	32,670
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		51,231			47,930
Deferred income taxes		(514	)		4,117
Stock-based compensation expense		5,271			4,580
Loss on disposal and impairment of assets		4,168			2,266
Natural disaster and related		194			—
Changes in assets and liabilities:
Accounts and other receivables		2,559			12,844
Landlord contribution for tenant improvements		124			559
Inventories, net		(319	)		(620	)
Prepaid expenses and other current assets		2,603			3,891
Other assets, net		(3,509	)		(3,729	)
Accounts payable		(4,788	)		(3,172	)
Accrued expenses		(10,919	)		4,895
Deferred rent		1,623			2,225
Deferred lease incentives		(168	)		660
Other liabilities		204			(485	)
Net cash provided by operating activities		69,054			108,631

Cash flows from investing activities:
Purchases of property and equipment		(57,358	)		(80,682	)
Proceeds from sale of assets		4,739			—
Net cash used in investing activities		(52,619	)		(80,682	)

Cash flows from financing activities:
Borrowings on line of credit		1,604,600			749,700
Payments on line of credit		(1,558,600	)		(740,900	)
Excess tax benefit from stock-based compensation		—			289
Taxes paid on vested stock units under employee plans		(248	)		(208	)
Proceeds from exercise of stock options		1,029			1,890
Repurchases of common stock		(57,283	)		(47,376	)
Net cash used in financing activities		(10,502	)		(36,605	)

Net increase (decrease) in cash and cash equivalents		5,933			(8,656	)
Cash and cash equivalents, beginning of period		22,761			34,604
Cash and cash equivalents, end of period	$	28,694		$	25,948

Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	4,909		$	6,786
Cash paid for interest, net of capitalized interest	$	2,968		$	904
Supplemental disclosure of non-cash investing and financing activities:
Property and equipment acquired and included in accounts payable	$	6,947		$	14,802
Stock-based compensation capitalized	$	218		$	226


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


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


		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements	1

	Consolidated Balance Sheets – ~~October 3, 2017~~July 4, 2023 (Unaudited) and January 3, ~~2017~~2023	1

	Unaudited Consolidated Statements of ~~Income~~Operations – Thirteen and ~~Thirty-Nine~~Twenty-Six Weeks Ended ~~October 3, 2017~~July 4, 2023 and ~~September 27, 2016~~June 28, 2022	2
	Unaudited Consolidated Statements of Shareholders’ Equity – Thirteen and Twenty-Six Weeks Ended July 4, 2023 and June 28, 2022	3
	Unaudited Consolidated Statements of Cash Flows – Thirteen and ~~Thirty-Nine~~Twenty-Six Weeks Ended ~~October 3, 2017~~July 4, 2023 and ~~September 27, 2016~~June 28, 2022	34

	Notes to Unaudited Consolidated Financial Statements	46

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1011

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	1918

Item 4.	Controls and Procedures	2018

Item 5.	Other Information	19
~~PART II.~~	~~OTHER INFORMATION~~
PART II.	OTHER INFORMATION
~~Item 1.~~	~~Legal Proceedings~~	20
Item 1.	Legal Proceedings	19
~~Item 1A.~~	~~Risk Factors~~	20
Item 1A.	Risk Factors	19
~~Item 2.~~
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2019

Item 6.	Exhibits	2120


	SIGNATURES	2321


	For the Thirteen Weeks Ended
	Common Stock					Capital			Retained
	Shares		Amount			Surplus			Earnings		Total
Balance, March 29, 2022		23,416	$	—		$	69,326		$	268,336	$	337,662
Issuance of restricted stock units		23		978			(978	)		—		—
Reclassification of common stock		—		(978	)		—			978		—
Stock-based compensation		—		—			2,380			—		2,380
Adjustment to dividends previously accrued		—		—			—			5		5
Net income		—		—			—			297		297
Balance, June 28, 2022		23,439	$	—		$	70,728		$	269,616	$	340,344

Balance, April 4, 2023		23,529	$	—		$	71,035		$	280,199	$	351,234
Exercise of stock options		—		8			(2	)		—		6
Issuance of restricted stock units		15		500			(500	)		—		—
Repurchase, retirement and reclassification of common stock		—		(508	)		—			508		—
Stock-based compensation		—		—			2,874			—		2,874
Net income		—		—			—			11,932		11,932
Balance, July 4, 2023		23,544	$	—		$	73,407		$	292,639	$	366,046

	For the Twenty-Six Weeks Ended
	Common Stock					Capital			Retained
	Shares		Amount			Surplus			Earnings		Total
Balance, December 28, 2021		23,304	$	—		$	72,513		$	261,258	$	333,771
Issuance of restricted stock units		135		6,593			(6,953	)		—		(360	)
Reclassification of common stock		—		(6,593	)		—			6,593		—
Stock-based compensation		—		—			5,168			—		5,168
Adjustment to dividends previously accrued		—		—			—			8		8
Net income		—		—			—			1,757		1,757
Balance, June 28, 2022		23,439	$	—		$	70,728		$	269,616	$	340,344

Balance, January 3, 2023		23,392	$	—		$	74,459		$	271,056	$	345,515
Exercise of stock options		—		8			(2	)		—		6
Issuance of restricted stock units		152		6,161			(6,659	)		—		(498	)
Repurchase, retirement and reclassification of common stock		—		(6,169	)		—			6,169		—
Stock-based compensation		—		—			5,609			—		5,609
Adjustment to dividends previously accrued		—		—			—			1		1
Net income		—		—			—			15,413		15,413
Balance, July 4, 2023		23,544	$	—		$	73,407		$	292,639	$	366,046

	October 3, 2017		January 3, 2017
Third party suppliers	$	20,168	$	25,363
Jacmar		3,816		5,782
Total accounts payable	$	23,984	$	31,145

Balance at January 3, 2017	$	1,245
Decrease for tax positions taken in prior years		(3	)
Increase for tax positions taken in current year		96
Decrease for statute expiration		(64	)
Balance at October 3, 2017	$	1,274

Period (1)	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of the Publicly Announced Plans		Increase in Dollars for Share Repurchase Authorization		Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
01/04/17 – 01/31/17		309,677	$	36.12		309,677	$	—	$	48,279,389
02/01/17 – 02/28/17		316,423	$	35.72		316,423	$	—	$	36,977,187
03/01/17 – 04/04/17		170,689	$	38.12		170,689	$	50,000,000	$	80,469,746
04/05/17 – 05/02/17		33,916	$	40.34		33,916	$	—	$	79,101,642
05/03/17 – 05/30/17		3,143	$	43.98		3,143	$	—	$	78,963,417
05/31/17 – 07/04/17		36,348	$	37.42		36,348	$	—	$	77,603,349
07/05/17 – 08/01/17		200,019	$	35.26		200,019	$	—	$	70,550,137
08/02/17 – 08/29/17		57,968	$	32.96		57,968	$	—	$	68,639,351
08/30/17 – 10/03/17		555,673	$	29.62		555,673	$	—	$	52,181,393
Total		1,683,856				1,683,856