Will Bloomin’ Brands ever find a way to regain the restaurant mojo of old when its core chains like Outback Steakhouse, Carrabba’s Italian Grill and Bonefish Grill were hot properties?
The Tampa company Friday morning reported a tepid, at best, third quarter earnings and issued a litany of reasons and excuses for a 5.6 percent decline in revenues, a startling 79 percent drop in net income and more per-store slippage in sales at three of its four major chains.
According to Bloomin’ Brands, the combined impact of lost operating days from Hurricane Harvey and Irma trimmed 1 percent off its comparable or per-store sales. Refranchising both internationally and domestically also hurt sales. Chains suffered from higher labor costs, "unfavorable" seafood and dairy costs, inflation, higher rent expense due to the sale and the leaseback of certain properties, as well as the costs of closing certain locations, the company said.
Bloomin’ said it fought back against these pressures with savings initiatives, spending less on advertising, higher average check prices and lower beef costs. The company said it would have broken even in comparable store sales without the drag from the two hurricanes.
"We were pleased with how we performed in a challenging third quarter," said Bloomin’ CEO Liz Smith.
Challenging indeed. Bloomin’s latest struggles were announced on the same day that the nation reported seemingly good economic news with U.S. unemployment rate falling to 4.1 percent — the lowest since December 2000.
Adding to Bloomin’s headache is a well established backlash by consumers to chain restaurants in favor of the rise of more independent, local eateries. That’s spreading consumer restaurant spending across more and more choices, reducing the frequency of visits even by diehard Outback or Carrabba’s customers.
There are now more than 620,000 eating and drinking places in the United States, according to the Bureau of Labor Statistics. The number of restaurants is growing at about twice the rate of the population.
Smith on Friday pointed to one bright spot — a small but positive bump in Outback sales and customer traffic, and some strong 4.6 percent sales gains from a modest number of Outback locations in Brazil.
She also cited two areas of opportunity. Bloomin’ operates 240 of its restaurants that currently offer home delivery of its menu items, Smith said, and that will likely expand once the company gets more experience under its belt. She predicted as much as 25 percent of future sales could stem from home delivery in the future.
To help drive that strategy, Bloomin’s has begun testing small locations that offer take-out or home delivery of both Outback Steakhouse and Carraba’s fare. It is adding a few locations now in both new and existing markets and will continue to do so into 2018.
All of these changes may prompt a re-think on staffing and hiring to reflect changing needs of the company, Smith said.
"We have seen further strengthening across the portfolio in October," she added. However, Bloomin’ Brands lowered its financial outlook for the remainder of this fiscal year.
Cautioned Bloomin’ in its earnings release: "We remain cautious on future industry sales trends given the severity of industry declines in the third quarter and uncertainty surrounding consumer behavior during the upcoming holiday season."
Contact Robert Trigaux at [email protected] Follow @venturetampabay.