Thursday, November 15, 2018
Business

Bloomin' Brands delivers mixed quarterly performance as diners shy away from casual chains

TAMPA — The Tampa-based parent company of four major restaurant chains — Outback Steakhouse, Carrabba's, Bonefish Grill and Fleming's — reported a mixed performance in its first quarter on Wednesday morning, recording a profit of $43.9 million, up from $34.5 million a year earlier. But Bloomin' also saw quarterly revenues fall 1.7 percent to $1.14 billion, while dining traffic declined at all four chains.

For corporate parent Bloomin' Brands Inc., the bright spot may be the 1.4 percent uptick in U.S. restaurant sales by Outback, the company's flagship steakhouse chain. The other three chains saw drops in sales, especially at Carrabba's Italian Grill and the more upscale Fleming's Prime Steakhouse & Wine Bar.

Carrabba's sales slipped 3.8 percent while customer traffic fell a more serious 7.2 percent in the quarter — a result, in part, of a revised 2016 menu that did not sustain dining momentum. Fleming's, which has proved more resilient in the face of the backlash against chain dining, also suffered in the quarter with sales down 2.9 percent and traffic off 7.5 percent.

Still, Bloomin' noted there are signs of improvement in a casual dining sector buffeted by strong competition and customers often looking for non-chain dining experiences.

"The first quarter was a strong start to the year, and set us up well to achieve our 2017 goals," stated Liz Smith, Bloomin' Brands CEO. "We were pleased with our performance, particularly at Outback where our investments are gaining traction. We continue to make progress domestically, reallocating spending away from discounting toward investments that strengthen brand health. In addition, our international businesses are performing well and poised for growth."

Executives especially cited the opportunity to expand its Outback presence in China.

The company said it had profit of 41 cents per share. Earnings, adjusted for non-recurring costs, were 54 cents per share. The results topped Wall Street expectations. Bloomin' attributed the quarterly 1.7 percent revenue dip primarily to the sale of Outback Steakhouse South Korea restaurants in July 2016.

In addition, Bloomin' Brands shares have enjoyed the uptick in the overall stock market, increasing 10 percent since the beginning of the year. The stock has climbed 14 percent in the last 12 months.

Wall Street apparently liked the turnaround strategy outlined in a conference call with Bloomin' executives. Company shares closed at $21, up nearly 6 percent Wednesday, the stock's highest price since August of 2015.

Industry headwinds remain. "Factors like restaurant oversupply and additional competition for dining occasions continue to take their toll on chain traffic," warns Victor Fernandez of the restaurant market research firm TDn2K in his latest industry assessment.

This story has been updated to reflect corrected traffic and sales figures.

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