Good day, ladies and gentlemen, and thank you for standing by. Welcome to the BJ's Restaurants Incorporated First Quarter 2012 Results Conference Call. [Operator Instructions] I'd now like to turn the conference over to President and Chief Executive Officer, Mr. Jerry Deitchle. Please go ahead, sir.

Thanks, operator, and hello, everybody. I'm Jerry Deitchle with BJ's Restaurants, and welcome to our first quarter 2012 investor conference call, which we are also broadcasting live over the Internet. After the market closed today, we released our financial results for our first quarter of fiscal 2012 that ended on Tuesday, April 3, 2012. You can view the full text of our earnings release on our website at www.bjsrestaurants.com. Joining me on the call today, in the order of their prepared remarks, are Greg Lynds, our Executive VP and Chief Development Officer; Wayne Jones, our Executive VP and Chief Restaurant Operations Officer; and Greg Levin, our Executive VP and Chief Financial Officer. We're going to start with our prepared remarks after Dianne Scott, our Director of Corporate Relations, provides our standard cautionary disclosure with respect to forward-looking statement. Dianne, go ahead please.

Thanks, Jerry. Our comments on the conference call today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Investors are cautioned that forward-looking statements are not guarantees of future performance and that undue reliance should not be placed on such statements. Our forward-looking statements speak only as of today's date, April 26, 2012. We undertake no obligation to publicly update or revise any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by the Securities Laws. Investors are referred to the full discussion of risk and uncertainties associated with forward-looking statements contained in the company's filings with the Securities and Exchange Commission.

Thanks, Dianne. And as we noted in our press release today, our leadership team here at BJ's was very pleased to deliver yet another solid financial performance for the first quarter of 2012. And let me just take a minute and address some of the highlights for the quarter when compared to the same quarter last year. First, our total revenues were up 16% to $167.6 million, driven by incremental sales from our new restaurant openings and incremental sales from our established base of restaurants. Next, our comparable restaurant sales were up 3.3%, successfully hurdling our toughest quarterly comparison from last year of 7.8%. And we were able to surpass last year's increase in comparable restaurant sales without the help of the favorable winter weather comparison that benefited the sales comparisons of many of our national competitors during the quarter. We only have 99 restaurants in our comparable sales base, and 87 of them are located in the western and southern states of California, Nevada, Texas, Arizona and Florida, that didn't experience sustained severe winter weather conditions during the first quarter of last year. Once again, our quarterly comparable sales comparison outperformed the industry average for the quarter as reported by the Knapp-Track and the Black Box Intelligence surveys. It's important to note that the 13 weeks in our first quarter of this year do not include the week before Christmas -- I'm sorry, between Christmas and New Year's Day, which is a higher volume sales week for us. Now if you'll recall, that particular week was included in our 14-week fourth quarter last year. So when you line up the weeks in both first quarters on an apples-to-apples basis, our average sales per restaurant operating week also increased 3.3% and thereby reflects both our comparable sales increase and our…

Thank you, Jerry, and good afternoon, everybody. As we noted earlier in our call today, both our 2012 and 2013 new restaurant development pipelines are in excellent shape, and we continue to be very pleased with the overall quality and quantity of the new sites that we are seeing. Our new restaurant development strategy continues to focus on acquiring AAA locations in mature, densely populated trade areas, with premiere co-tenant, whose brands and operations are consistent with the BJ's brand and operation. We have worked hard to solidly position BJ's as a higher quality, more differentiated casual-plus-dining concept, and our new restaurant designs and site selection strategy continued to strengthen this positioning. Our development plan for this year calls for most of our new restaurants to be built within or contiguous to our current 13-state footprint, which will allow us to continue leveraging our brand position, consumer awareness, supply-chain infrastructure and field supervision resource. In the first quarter just ended, we opened 2 restaurants, one was in Clearwater, Florida, where we built a custom footprint restaurant as part of the newest addition to the 1.2 million square foot Westfield Countryside Mall. Our Clearwater restaurant represents our ninth restaurant in the state of Florida, where we have achieved some of our strongest comparable sales restaurant growth over the last couple of years. We plan to open 2 additional restaurants in the state of Florida during 2012, consistent with our plan to gain leverage and drive brand awareness as we grow. Our other new opening for the first quarter was in Salinas, California, which we were able to open earlier than originally planned. And this past Monday, we opened in Dublin, California, in the San Francisco Bay area, where we enjoy some for our highest sale-volume restaurant. All of our remaining 2012…

Thanks, Greg. We continue to believe that BJ's four-wall economics are sound and they support a continued steady pace of new restaurant expansion. And as Greg mentioned, we're always going to pick quality over quantity when it comes to our new restaurant locations, and we're going to continue to carefully execute our expansion program at the right pace that facilitates the achievement of 3 outcomes: quality, predictability and leverage. And once again, we want to remind our investors that in contrast to many of our more mature, more fully penetrated casual dining competitors that rely more on top sales growth as the key driver of annual growth and total revenues, BJ's will continue to rely more on high quality, new restaurant expansion as the key driver of our total annual revenue growth for the next several years. And we continue to believe it makes sense to be very careful and measured as we steadily develop BJ's national geographical footprint in order to advance quality, predictability and leverageability in our business model. For us, expansion is not a strategy in and of itself, instead it's the outcome of our strategy to drive quality differentiation, predictability and leverage in our operations. And really, that's the difference between a good restaurant company that is growing and a restaurant-growth company. The restaurant-growth companies really focus on increasing differentiation, quality, predictability and leverage as they expand. The good companies that grow don't quite focus on that as intensely as we do. Before I turn the call over to Wayne Jones for his operational commentary on the quarter, here's a quick update on our research and development restaurant that we call BJ's Grill here in Anaheim Hills, California. This restaurant has been open about 6 months now. We continue to be very encouraged with its overall performance and more importantly, its overall acceptance by consumers. We continue to fine-tune the menu and the operating system in the restaurant. Additionally, due to much higher-than-expected consumer demand in this particular trade area, we're going to go ahead and expand the interior square footage of this restaurant from 4,600 square feet and 137 seats to about 5,800 square feet and 180 seats. By comparison, our larger-format Brewhouse restaurants contain about 8,500 interior square feet and 270 or so seats. We are also evaluating potential locations for another Grill restaurant as part of our 2013 new restaurant development plan. So we're excited about BJ's Grill, and we're eager to keep learning more about it during the next several months. Now Wayne, we're ready for your operational update.

Thanks Jerry, and good afternoon, everyone. We continue to be pleased with our execution of our sales-building initiatives by our restaurant operations team, in particular the execution of our menu-based initiatives, which have proven to be solid drivers in incremental sales. We also continue to see improved guest traffic and sales per guest as a result of the success of our CapEx-related initiatives, particularly our increased seating for parties for 2, what we internally call our 2-seat seating initiative and our expanded guest beer tap initiative. About 90% of our existing restaurants currently have both of these initiatives in place, and we have plans to complete the remaining 10% by the end of the current quarter. So there continues to be more upside yet to come with these 2 initiatives. All of our new restaurants open with these 2 programs in place. Additionally, we plan to increase capacity of several existing restaurants by upgrading their patio seating layouts, and we've also added 2 completely new patios in our Rancho Cucamonga and San Bruno, California restaurants, which are 2 of our better-performing restaurants. Moving to our menu initiatives, as Jerry mentioned, next week, we will be launching our spring new menu, which will continue to bolster our barbell approach to our menu positioning. We will also be adding our first steak option, a top sirloin at a very attractive price point, which will complement our current rib-eye and New York steak offerings. Additionally, we are also considering further addition to our steak line over time, and these offerings have been extremely well received by our guests, while providing a nice lift in our per-person average. On the other end of the barbell, we have added two new small bite offerings and lunch specials as we work to keep these offerings fresh…

Thanks, Wayne. Once again, our restaurant operations team certainly has a lot of sales building and productivity initiatives to digest this year. But we also know they're excited as we are to have the opportunity to keep driving the overall quality of our menu and our overall execution going forward. And now, I'm going to turn the call over to Greg Levin, our CFO, for his financial commentary on the first quarter.

All right, thank you, Jerry. I'm going to go ahead and take a couple of minutes, I'll go through some of the highlights for the first quarter and provide some forward-looking commentary for the remainder of 2012. All such commentary is subject to the risks and uncertainties regarding forward-looking statements that are included in our SEC filings. Additionally, my commentary may also refer to certain non-GAAP financial measures that we use in our internal review of the business and that we believe will help provide insight into our ongoing operations. As Jerry previously noted, our total revenues for BJ's first quarter of 2012 increased approximately 16% or approximately $167.6 million from $144.9 million in the prior year's comparable quarter. This 16% increase was comprised of an approximate 13% increase in operating week and an increase in our average weekly sales of approximately 2.7%. However, as Jerry mentioned, the 13 weeks in our first quarter this year do not include the week between Christmas and New Year's Day, which is a higher volume week for us. In fact, our weekly sales average for this holiday week was approximately $121,000, compared to our reported weekly sales average for the first quarter of 2012 of approximately $112,000. So in lining up the weeks in both the first quarters on an apples-to-apples basis, our average weekly sales per restaurant operating week also increased approximately 3.3%, which was equal to our increase in comparable restaurant sales for the quarter. While we do not report monthly comparable restaurant sales, each period was solidly positive. Our comparable restaurant sales trends during the quarter follow the industry trends, with January and February higher than the March period. However, when we look at our trend, our lower March comparable restaurant sales appears more to be more due to comparisons…

Thanks, Greg. As usual, very thorough review. So to summarize our prepared comments today, we were very pleased with our solid results for the first quarter of 2012. We're continuing our forward momentum so far in the second quarter and despite the pressures of the operating environment. Most importantly, we're well underway with the successful execution of yet another year of profitable new restaurant expansion for BJ's. We're going to keep doing our best to navigate through the current tough operating environment for both consumer discretionary spending for casual dining occasions and the higher commodity cost environment. And we're going to use a combination of menu-related and merchandising actions, achievable and selective menu price increases and the deployment of certain productivity, efficiency and cost-savings initiatives. And at the same time, we intend to continue to make the right investments for BJ's long-term success: investments in our team members, investments in our guests, investments in our operating and support infrastructure and investments in the quality and differentiation of the BJ's brand. Compared to our larger, more mature casual dining competitors, BJ's is still a youngster in many respects, and we still have our fair share of the typical growing pains to overcome. But we're in this for the long haul, and we're going to continue to build a solid foundation to support the continued growth of our concept and our company in a productive, leverageable manner. The best years are yet to come at BJ's. And we're now going to open up the call for your questions. Operator, it's all yours.

[Operator Instructions] Our first question comes from the line of Jonathan Komp with Robert W. Baird & Co.

Jerry, just wanted to start off, hoping you can maybe provide a little bit more color on the recent sales trends. I know you mentioned, maybe not taking quite as much pricing as you'd maybe like to with the upcoming menu change. I just wanted to ask you, is there anything specific in the customer patterns that you're seeing that's making you a little bit more hesitant? Or is it really just taking a cautious approach amid a tough environment?

Well, let me answer that I think we just want to be very cautious in this operating environment. We haven't seen any material shifts, and yes, management of their checks with us. But again, with this very tough environment on the consumer in general, for discretionary spending, with higher food and gasoline costs, and frankly, with the vast majority of our larger, more mature casual dining competitors really driving value promotions on television, not only during the dinner day part, but we've also seen a significant increase of lunch promotions. I think we have to be very, very careful with our overall menu pricing. And I think we also have to competitively respond to that particular pressure in the operating environment. Greg will comment more on his assessments of sales trends today for the second quarter. I will say, however, that the incremental marketing spend that we talked about deploying for this quarter has not yet started. It will start in the second week of May and will benefit the last 8 weeks or so of the quarter. So again, I think we still got a better opportunity to drive sales as the quarter progresses and as some of this increased marketing spend begins to hit the marketplace. Greg, you want to add anything to that?

Yes, the only thing I was going to mention, Jonathan, is when we look through our trends and if you look at the information, our incident rate per guest has not changed, still very strong, it's right around 2. If you remember us talking about our business, that's gone up from about 1.7 to 2 over the last 2 years, and we haven't seen any real change in that number. Additionally, as I mentioned, all of our day parts which, when we look at our day parts, is really 4 day parts, there's kind of lunch, mid afternoon, dinner and late night, all of them are solidly positive. As I mentioned, the weekdays are a little bit softer, I would say, than the weekend, and that seems to come a little bit at lunch time. But they're all generating nice, positive comp sales in that regard. So it's just generally a little bit, maybe softer than what we've seen last year in that regard, but there's really nothing, no significant patterns that we see in that regard.

Okay, that's very helpful, great color. And then, Greg, just one question on the outlook for the cost of sales line. You gave the specific inflation targets for the back 3 quarters. I just want to ask, does that include the incremental supply chain savings that you had mentioned? Is that being factored into the inflation you gave or is that incremental on top of that, I guess?

I think that could help maybe bring that number down a little bit. When we look at that number, around 3%, it doesn't include all those savings that could come through in the second half of the year that Wayne talked about. Most of those have been tested, and based on initial testing, we feel pretty comfortable on achieving the savings that Wayne mentioned. But I take a little bit more of a conservative approach and just kind of look at where we are on some of the commodity cost. And the big wildcard for us, frankly, is that Angus beef. While we've got the savings coming on board, our Angus beef partner right now, is some of it's quarterly and some of it's monthly, and we need to see where that's going to be locked down at.

And our next question comes from the line of Jeffrey Bernstein with Barclays Capital.

Couple of questions. Just first to follow up on kind of the industry volatility that seems like a lot of you and your peers are talking about. Just wondering how you kind of think about or how you measure the health of your consumer, whether there are specific macro indicators that would lead you to be more cautious or whether it's your own internal? Just trying to get a feel for the volatility we've seen lately, whether you think the next 6 months should be an improving trend or whether there's some signs, a little bit more -- a little bit more concerning for you from a macro perspective?

Well, again, from our perspective, it's a little tough to be 100% precise. The only measures that we have internally to judge would be the one measure that Greg referred to earlier, and that's the number of items purchased per guest. And that number has held steady even during the last 6 or 8 weeks where we've also read that the casual dining industry in general has slowed down with respect to its sales. So in terms of what consumers are interested in purchasing at our restaurants, we haven't really seen any material change. And in fact, our new menu development and beverage development programs are intended to further increase that statistic, offering more innovative and creative items for purchase at great values, not only at the small bite snacks, at $2.95 to $4.95 price point, but also at the other end of the barbell, with our center of the plate protein and seafood and other dishes. So we really haven't seen anything, nor can we discern, anything in particular in the macroeconomic environment that is impacting our sales trends. However, I do think, as we mentioned in our comments earlier, there is no question that the higher food and gasoline prices that are being felt by consumers across the board certainly does impact their decisions for dining occasions on the shoulders, if you will. As Greg mentioned, our sales during the weekend, they continue to be very positive. Where we've seen any slight weakness would be in the earlier weekdays and during the lunch period, where, like I mentioned in my comments earlier, if you're going to fill up your car and it costs $70 or $80 to fill it up, which it happens to do out here in California, even for someone like myself, it makes you take a second look at that gas pump and say, "Man, I just think I'm going to skip lunch today," or "I'm not going to go to happy hour today," or "I'm going to go to a quick-service restaurant and get the dollar menu for lunch today," or "I'm going to go to a sandwich shop and get a 2-for-1 for $5 today." So I do think that, that does impact consumer dining decisions, particularly during the workweek and particularly during the lunch period. Greg, you got anything to add to that, that you've seen?

No. The only thing that would be, maybe I could comment from a BJ's perspective, Jeff, might be the fact that because we didn't have restaurants in the Northeast or kind of in that Midwest, that got some of the better weather, our patterns through the first 3 months here and going in April have been somewhat consistent. I mean, they're not like -- obviously, we're not putting up the comp sales that we did last year in that regard. But when I look at January, February, March, now going into April, the numbers are consistent, kind of period to period. Could they be up 1% from a comp standpoint versus one month versus the other? They can, but I don't think that's, really that significant, and you've got [indiscernible] holiday shifts, et cetera. Where some of the other concepts earlier this quarter really got that benefit, at least in that first kind of month of January and then it's come down. So maybe theirs is really coming down to their more normalized trends. And because we didn't see that benefit of weather, we're just seeing more of a longer, normalized trend versus them.

Got it, and to that point, from the operating cost side of things, you gave a lot of color on the individual line items. When it comes down to kind of the restaurant margin, I'm just wondering how you think about the comp and/or the pricing to kind of sustain. I know you mentioned the longer-term goal is to preserve kind of that level of restaurant margin, which is already kind of industry leading. But specific to 2012 and with the pressures we're seeing, but yet the 3 percent-plus pricing, like what do you think you need from that pricing or comp perspective to preserve that margin?

Well, our plan for this year calls for something between 3% and 3.5%. I think Greg mentioned in his comments right now that we're kind of looking at about a 3%. Although we haven't made our final menu pricing decisions for the year, we want to be very, very cautious in this operating environment. We're going to take 1% here in May. I think we would have preferred to take another 1% in May, but given the volatility of the operating environment, we thought it was prudent to hold off on that and let's take a look at some of the input cost and some consumer-discretionary behavior patterns over the next 90 days. If we need to go out and reprint our menu, we can certainly do that at any time. But I do think we have to be very, very careful not to get ahead of ourselves in terms of pricing in this environment. It is our long-term goal to preserve the current four-wall unit economics that we currently have, which in the casual dining space are among the best in class. But at any point in time in the operating cycle, we may be a little bit ahead of the game in terms of pricing, we may be a little bit behind the game in terms of pricing, depending on conditions in the operating environment. Right now, as I mentioned, we'd like to have another percent of price in there, but we don't feel comfortable enough in taking it right now. There will be a time later in this operating cycle where we'll get the opportunity to move ahead in terms of our pricing and catch up a little bit. But over the long run, it's not all science. There's a heart to it, and there's some intuition to it. But at the end of the day, we're trying to preserve the value of the business as it relates to the operating environment.

And Jeff, separate of that, we talked about this on prior calls. We still have too many restaurants that aren't running the optimal margins that they should be running. So forget menu pricing, forget food inflationary, forget anything in that regards. We've just got restaurants that aren't as productive as they should be. I can tell you right now as I look at it at the end of each period and during the middle of the week, our class of 2011 restaurants, last year's restaurants, they're doing 6 million AUVs. Those are tremendous AUVs. We're very happy with that. But their operating margins, they're kind of stuck at the 20-yard line, using the football adage. And they're not at the company margin that we show from the consolidated basis. But there's 13 restaurants that we opened up last year. 6 million AUVs, maybe even better that frankly, have a little bit of ways to go, forgetting the menu pricing, et cetera. And believe me, by moving those restaurants up, you're moving the entire company up significantly, and that's where we need to focus on. And we'll always look at the menu pricing, as Jerry mentioned, but there's a lot of work to be done within the 4 walls of our restaurants, could be better, and that's where we want to spend a lot of our time, driving productivity, efficiencies, giving that better dining experience, et cetera, to drive the margins.

I would agree with what Greg said. We are our own toughest critics here at BJ's. We have opportunities to take those bottom-quartile performers that have the sales volumes, that can currently deserve to operate at a four-wall margin, 100 or 200 basis points higher than where they are. And that's what Wayne and his team are diligently working on. That's why we make all of the technological investments in our operating systems to surface those opportunities and to identify the specific areas, whether it's in the cook times or the run times or the seating times or the kitchen times or the speed of the restaurant, the table turns. This is why we made those investments.

And our next question comes from the line of Nick Setyan with Wedbush Securities.

You guys talked about how well the hand-tossed pizza is testing in your Anaheim Hills location. Do you plan to roll it out system-wide in your July pizza refresh or will that refresh apply only to your current deep-dish pizzas? And then also with the uptick in marketing and the menu rollout, is there an opportunity to strengthen the weekday versus the weekend a little bit more?

Well, with respect to pizza, we are very, very proud of our casual dining, industry-leading positioning with respect to pizza as far as all of the consumer surveys that we've ever seen. Hand-tossed pizza is something that we continue to evaluate, but we haven't made a final decision as to when it might appear in our Brewhouse restaurants side-by-side with our deep-dish pizza. We are very, very encouraged with the results we see with the hand-tossed pizza alongside our deep-dish pizza in our Grill concept. We do have some operational and supply-chain considerations that we continue to work on. And then, as far as the additional marketing investment, I think where you're going to see it hit beginning the week of May 6 will be primarily in advertising our new products. We have our new menu rollout that's effective here next week, so we're going to give that some advertising. We're going to be doing some additional advertising for Mother's Day week and for Father's Day week, which are big weeks for us at BJ's. We're going to have some other print executions with respect to some new menu items that we've been working on and that we really haven't talked too much about. And like I said, we'll wait to comment on those when the advertising hits the marketplace. And then, we also have some other social media executions that we're working on. We're in the process of developing a couple of very strategic partnerships with a couple of the most large, well-known, social media networks, which will remain unnamed, but you can probably figure out who they are. And I think over time, those are going to be very, very powerful for us because both of those social media networks see BJ's as an innovative player in the space, and that's where they want to be. So I think that's where you're going to see the majority of our incremental spend, really driving new and existing products. And we will probably have an underlying small current promotional activities. But for us, it's driving overall awareness of our new products and our quality and differentiation. That is most important to us.

And our next question comes from the line of Matthew DiFrisco with Lazard Capital Markets.

This is Phan Le in for Matt DiFrisco. Early in the call, Greg had mentioned that your real estate team was taking advantage of some vacancies in order to build new sites, and I was wondering, as you shift away from your traditional model of building a new site, does that alter your expectations for new unit volumes or opening volumes? And looking ahead, since its development, what percentage would you say is going to be new sites versus say taking over vacancies? And then second question is, if I may squeeze it in, I was wondering if you could provide an update on the succession planning committee that was established last year for Jerry's potential departure. I was wondering if there's any updates there in terms of have you been able to fill [ph] candidates yet or how far along you are in the interview process?

Yes, this is Jerry. You were breaking up so it was very hard to discern your question, at least your first question. But I did here your second question, and let me comment on that. Again, as mentioned in our proxy statement, both last year and this year, the Board of Directors has formed a special committee consisting of myself, our lead independent director and another director to plan a CEO succession for the company. We've been working on it for a while. We've engaged the services of a nationally-respected executive search firm to help us in that planning. And I think we continue to make good progress in that respect. And as soon as we make additional progress and have something really to talk about, we're just going to continue to keep working on it. And then, I think your other question was related to development. And you broke up and would you mind repeating it, because we couldn't clearly hear it.

Not at all. So Greg had mentioned earlier in the call that some of the real estate team was able to take advantages of some vacancies at existing sites, and I was wondering as you sort of chipped away from your traditional model of building in new sites, does that alter your expectations for opening volume at these existing vacancies?

I think the point I was making is that there's very little new construction today. So the fact that we're seeing, not seeing a lot of new projects out there, you don't have a lot of developers building new shopping centers, that we're taking advantage of tearing down older restaurants or developers are taking advantage of redeveloping centers. And we are very well positioned to take advantage of that. We've been developing in that environment for the last 2 to 3 years. And we don't see a lot of change compared to what we've seen over the last couple of years.

Yes, and in fact when you -- and I think your question was related to the expected average volumes coming out of those particular locations compared to others. And the fact of the matter is, whenever you can get into a well-established, densely-populated, mature trade area with known levels of retail sales, you get into projects with higher-than-average sales per square foot, when you're able to know the sales volume of a lot of the restaurant competitors in the trade area, then your chances of actually hitting a higher average unit volume, on a risk-adjusted basis, I think, are much, much higher. And that's really been our experience as we continue to execute this development plan going forward.

And we have a question from the line of Conrad Lyon with B. Riley & Co.

Question, I'm not sure who's the best to answer this, but you talked earlier about the fact that you have some stores that could have some improvement. This might help some insight and just where you might go with that. I'd be curious to know what the manager tenure is at some of those stores, if you think it's -- I know you talked about technology, but I'd be curious to see what kind of the personnel side of the equation is, if you think there needs to be more tenure or if it's just simply that technology that will help out eventually?

Conrad, it's Wayne Jones. We're very keen on the teams that we open restaurants with and the subsequent management teams that are left behind for the existing restaurant. So we're very conscientious. We never open a new restaurant without a seasoned management team. There might be a few new folks on there, but absolutely goes into our calculus because it makes it far more difficult, obviously, to ramp up with a brand-new team. It's unfair to them. It's unfair to the guests. So we do have internal metrics that we look at. We are steadily improving, actually, in terms of our average tenure for our general managers and executive kitchen managers in each of our restaurants, and we have actually been very pleased with our progress on that front. As part of our pipeline in terms of our development, we're pretty forward looking when it comes to the individuals that we look for, specifically to staff new openings and to backfill existing restaurants as those restaurants come online. So it's a metric we definitely look at. We clearly pay attention to it. It's moving in the right direction. And I have to say that it is, notwithstanding some of the comments Greg made earlier, it has been instrumental in sustaining solid operations, especially in our new restaurants as we get them open.

The second question is kind of following on an earlier question about development. Is there any trade areas that have developed into, say, better demographics than you might have seen a couple of years ago that might be opportunistic? Specific reasons that you might be able to identify, not sure if you want to for competitive reasons to those listening, but I'd be curious to see if that dynamic is occurring at all?

Well, let me take a crack at that. First of all, our development plan remains largely filling in our existing 13-state footprint. We have found that as we fill in trade areas, the restaurants nearby generally benefit from the new restaurant entering the market. For example, in Austin, Texas, we had our first restaurant down in Sunset Valley on the southwest side of Austin that had been opened, I guess, 3 or 4 years ago. And then when we opened our second restaurant at MoPac and Braker there on kind of the north-central part of Austin about a year or so ago, the Sunset Valley restaurant had a nice pickup of double-digit sales. And it's still doing very nicely because we were able to increase the overall awareness of the BJ's brand in the trade area. So that's an important strategy from a development perspective going forward, filling in, driving awareness, driving leverage. And most of the trade areas that Greg has selected, and I'm speaking for him, and I'm sure he has something to add to this. But when we map out a market, for example, DFW market, we draw our 5-mile radiuses and we look at all of the demographics and population densities within each radius, and we try to carefully space our restaurants so that we get complete coverage of the market without incurring any cannibalization to the maximum extent possible. And again, that's something that most restaurant companies do. I think we've been extraordinarily good at it here to this point at BJ's. And Greg, you want to add anything?

Well, I'd just say when you go into a market like a DFW, or a Houston or even at Tampa, I mean, you've got strong retail trade areas in all of those markets and they've been generally strong for a long time. And so, we're not releasing a big shift on that. The one thing we are seeing is we are seeing, if there isn't any development, we are seeing some new development in infill areas that you wouldn't maybe see in the past. There's less green pasture development areas. So if you get a Whole Foods coming in or a Trader Joe's in some of these infill areas, it does change the dynamics of that trade area a little bit and we are studying that quite a bit as we look into some of the newer trade areas.

And our next question comes from the line of Bart Glenn with D.A. Davidson & Co.

This is Adam on the line for Bart today. Can you repeat what the traffic and mix was in the quarter?

Yes, we had about 3% of pricing in the quarter, and the traffic and mix combined is about 0.3%.

And our last question comes from the line of David Dorfman with Morgan Stanley.

I just wanted to ask about for a little more detail on your expectations for rolling out the loyalty program. And maybe understand how you expect it to ramp with people signing up and getting used to using it and maybe how that creates a mismatch between some of the costs you're incurring now and when you actually do expect to see meaningful benefits? I guess related to that also, how that might affect the accounting, as we think about our models in terms of ramping up if you have to sort of expense things along the way or drop down revenue along the way for that? And I guess one last piece of that would also be, as you said it was a little bit early in the life cycle of BJ's for a program like this, just a little bit of the context about why you sort of maybe accelerated when you would launch a program like this?

Sure. Well, I'll take a crack at the business side of it, and then Greg will answer the financial accounting questions. With respect to the program itself, again, we don't want to get into too much granularity as to how the program works and what the cost and expected economic benefits are. We have a lot of competitors that would love to benefit from the learning that we've obtained over the last year in terms of that particular test. But as I mentioned in our prepared comments, in our test markets, the overall increase in the visit frequency by a guest in the loyalty program and the related increase in their spend per visit more than offset the incremental ongoing cost of executing the program. So that gave us additional comfort to move forward with the company-wide rollout. As with any program of this nature, you have initial start-up costs that you're going to have expense related to printing up all the materials, the promotional, introductory marketing, that you've got to put behind the program. Then obviously, like any ongoing program that needs technological care and feeding, we have an outside provider that does a great deal of that for us. There is an ongoing fee that we have to cover. So there will be an upfront cost that we're going to have to cover. But then, the ongoing fees should be able to be more than offset by the benefits of having the program. As far as making the decision to kind of get into it a little earlier, BJ's is a higher quality, more differentiated restaurant concept. And by definition, particularly in the space of casual dining that we compete in, the varied menu or the grill-and-bar space, that space is really dominated by the more commoditized mass-market…

Yes. A couple things here. I think, first of all, what that means is Jerry ends up getting a free cup of coffee every 3 or 4 days based on the amount of coffee he drinks. The other thing in regards to the financial accounting for it, David, there's a couple -- there's 2 different ways that are accepted under generally accepted accounting principles, and I don't want to get into all the specifics, that we are going to probably adopt what's called the cost method, where you're going to have to recognize a liability, and it'll be our marketing expense as everybody uses their loyalty cards and builds up their points, in that regard. We haven't necessarily nailed down all those costs yet. We're actually still kind of evaluating the different offerings under the program, which as a result, have a different value on those individual costs per point. I think as Jerry mentioned, there will be investment costs that will start to hit us in Q3 and Q4 as we build this up. Based on what we've seen over our learnings, it's about a 6-month buildup timeframe and then you kind of reach altitude and then it kind of pays for itself in that regard. And frankly, as we're rolling it out in July, and we'll be on our quarterly call in July, we'll give you some of the updates that are very specific to that part of the business, that are outside of really the ongoing operations on a day-to-day basis.

And again, just to conclude and to follow up here. The intention of the program is that it will more than pay for itself. Okay, do we have any other questions? Okay, well thank you, all, for being on the call today. We'll be at our California office this year for a while, and if there's anything we can do for you, give us a call. Thank you.

Ladies and gentlemen, that concludes our call for this afternoon. We thank you very much for your participation. You may now disconnect.