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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Uncle Frank who wrote (51721)	6/20/2002 9:35:25 AM
From: Lhn5	Read Replies (2) \| Respond to of 54805

Interest seems to be mixed, so I'll be brief. Their website is www.bjsbrewhouse.com CHGO is known for its chain of BJs restaurants which specialize in hand-crafted beer and signature deep dish Chicago style pizza, but they have an extensive menu. It is diverse enough for the restaurants to be family oriented by day yet sports bar/dating scene by night. The margins on the beer and pizza are superb, allowing them to offer the rest of the menu at very attractive prices. The bulk of restaurants are in Southern California, but they are developing new geographic areas now. The company kind of puttered along since 1978, but was mainly just small beachfront sites until the current management experimented with much larger format stores which is the basis of the current strategy. They have 13 such larger format stores now, and plan 4-6 new ones this year, 8-10 next year, and 10-12 in 2004. They recently had 7.5 mil warrants exercised and have 41 mil in cash. The company also owns a few reataurants called Pietros in the northwest from a previous takeover. The best of those sites were converted to BJs. The few remaining are not part of ongoing strategy but are cash flow positive. Earnings estimates from the firm following them the longest, Roth Capital, is for .22, .35, .57 for 2002 thru 2004. Their largest shareholder are principals of a private company Jacmar which supplies restaurants including the Southern Cal BJs, and they also have real estate holdings as well as owning some much lower scale pizza reataurants themselves. One of the crucial aspects of success has been the care and standards of choosing new restaurant sites. New restaurants become profitable during the first month they are open. The yahoo message board is fairly sparse by yahoo standards, and the quality there has been excellent for the most part. As far as timing goes, CHGO is a candidate for the Russell 3000, and this may effect short term trading, but I am looking at 2004 when instead of 13 large format restaurants there could be as many as 41. And they have the cash to do all this and more.