Monday, October 15, 2018
Business

Tampa-based Bloomin' Brands, parent of Outback and Carrabba's, continues to struggle

After posting another rough financial quarter as a major casual dining company, Tampa's Bloomin' Brands is beginning to look more like Bleedin' Brands.

Economic headwinds are making it tougher for Bloomin' and its peers to make a buck. Those winds range from the negative rhetoric of the presidential election, slipping Baby Boomer confidence and the intense competition of greater numbers of restaurants, said Bloomin' CEO Liz Smith. Another issue: A growing consumer awareness that it's costing more and more to eat out than to cook at home.

The parent of Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill and Fleming's on Friday morning again reported hefty declines in U.S. customer traffic at most of its chains. Bloomin's flagship chain, Outback, fell a startling 6.5 percent for the quarter but is also down 0.9 percent since the start of the year. Carrabba's fell 4.5 percent in the quarter, while it has dropped 3.7 percent since Jan. 1. The more upscale Fleming's steakhouse and wine chain, dipped 2.9 percent in the quarter while slipping 2.3 percent for the year so far.

Even Bonefish Grill traffic was down in the quarter by 2 percent, despite recent efforts to refresh the chain. Since the start of 2016, Bonefish traffic remains down by a troubling 8.5 percent, though that dip also reflects some closings earlier this year.

Related: How did Bonefish Grill go from Tampa Bay's exciting new restaurant to an afterthought?

Combined, Bloomin's U.S. restaurant traffic fell 5.4 percent in the quarter, and remains down 2.6 percent so far this year.

That's not what Bloomin's executives predicted in earlier quarters would be the case in the latter half of 2016. Smith had assured analysts a rebound was forthcoming thanks to menu overhauls at Carrabba's, fresh Aussie-styled advertising themes for Outback, and a "return to polished casual dining roots" at Bonefish.

To be fair, Bloomin' countered the declines in customers by convincing those diners who did stop by their chains to spend more. The average check per person in the quarter rose at all of Bloomin's chains, led by a 5.8 percent increase in spending by Outback customers.

The bottom line? Bloomin's revenues fell 2 percent for the quarter to just under $999 million compared to the same period last year. Net income this quarter rose to $20.7 million from $16.8 million in the third quarter of 2015. Bloomin' Brands shares, which have remained largely flat over the past year, closed Friday at $17.29, up about 2 percent.

In remarks Friday to analysts, Bloomin's Smith again counseled patience while outlining a company strategy to rebound. She emphasized that consumers have more and more choices when eating, so making the experience worthwhile at Outback, Carrabba's, Bonefish and Flemings is paramount.

At Outback, the focus is on convincing more customers to try the center cut sirloin, a price upgrade Smith suggested would be more tempting with the new "Walkabout Wednesday" 6-ounce steak promotion for $9.99. Outback is also cutting 19 less relevant items (think tacos) from its menu to refocus on beef, Smith said. And Outback exteriors are getting a fresh look to improve their curb appeal.

"We need to deliver that energy in the box" – meaning an Outback location – "that makes it a go-to place," Smith said.

Bigger portions are also back in what Bloomin' hopes will signal more value. That includes a 25 percent bump in the size of pasta dishes at Carrabba's. And Bloomin's "Dine Rewards" loyalty program introduced this summer, which offers a half-off deal every fourth visit across all four of the company's chains, now has 1.6 million members, according to Smith.

Analysts on the Bloomin' Brands teleconference asked repeatedly about the challenge of restoring customer traffic. It's going to get harder to grow and remain profitable when fewer folks are choosing to dine at any of Bloomin's brands.

Contact Robert Trigaux at [email protected] Follow @venturetampabay.

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