David Deno was just in Dallas, where he got a chance to survey a lot of new commercial and residential growth north of the city. There was, he thought, a clear opportunity for Outback Steakhouse to get in on it.
“The team was just amazed at how much things have changed,” said Deno, the CEO of Outback’s Tampa-based parent company, Bloomin’ Brands. “You can begin to build prospective sites based on the development. So that is going to be important. The prime example’s Miami. Because you need a helicopter to get around Miami these days. We can drop in a bunch of restaurants.”
Dallas, Miami, Nashville, Austin and, yes, Tampa Bay — fast-developing markets are high on Bloomin Brands’ priority list these days. The company recently outlined plans to open a new generation of around 100 smaller Outbacks, mostly built into existing restaurant locations in those areas, with a renewed emphasis on takeout and catering.
Deno was named Bloomin’ CEO in 2019, meaning he’s spent more time in that role during the pandemic than not. The company has proudly touted that it didn’t lay off employees during that time, and recent quarters show the company’s strategy seems to have paid off. Thanks partly to increased menu prices, Bloomin’ last month reported sales of $1.1 billion during the first three months of 2022, up from $987.5 million the year before.
While the company has bullish expansion plans, it has decided to cut costs in other areas, most notably by ending a 36-year title sponsorship of Tampa’s Outback Bowl. In a recent call, Deno discussed that decision, the company’s growth strategy in southern states, and the potential for Bloomin’ Brands to get in on the digital non-fungible token craze. This interview has been edited for length and clarity.
More places opened up early in the pandemic in the South. Florida certainly did. Is that just good fortune that these are your core markets, and it happened to coincide with you guys moving along and having good quarters recently?
I think our geographies, for a host of reasons, are really strong economically. We started in the South, we developed in the South, because I think the people before me saw that opportunity coming. We’re just trying to capitalize on what’s out there. It is remarkable what’s going on in Dallas, Austin, Nashville, Atlanta, so many cities in Florida. It’s unbelievable.
What’s driving the desire to build and expand in those markets? Is it more people, or more development, or the type of people that are moving to those areas?
All of the above. Tremendous economic growth, tremendous population growth, economic opportunity, propensity to eat out. Traditionally, we’ve done very well there. So we’re basically building on strengths. We started here in Florida. We’ve always had a great business in Texas, Louisiana, Alabama, Georgia, Tennessee, North and South Carolina, Florida, Virginia, Maryland. Those states for us have always been strong, and that’s where we’re going. I’m not trying to be political here, but there’s such a difference in mindset and attitude toward growth in the South versus some of the other markets in the North. It’s obviously where you need to grow.
Follow trends affecting the local economy
Subscribe to our free Business by the Bay newsletter
You’re all signed up!
Want more of our free, weekly newsletters in your inbox? Let’s get started.Explore all your options
How do you view a new location, a smaller location, fitting into a downtown core versus a residential area?
You want what I call “the magic of the and.” The ideal site area for us, for instance, is this area where our office is (in Tampa), by the airport. You’ve got office locations, residential locations — that’s perfect. But you can’t always have perfection. So then where do you go next? Well, you could go downtown and have it be more of an off-premises, catering-type business; that’s one opportunity. Or you could go in a brand-new area in Riverview or the suburbs north of Tampa, and not have quite the same off-premises opportunity, because you don’t have that much office space, but you have tremendous residential opportunity. So, rank order No. 1 is where you have both residential and office parks. Rank order No. 2 would be residential. Rank order No. 3 would be the downtown one.
You’ve mentioned that from a supply standpoint on the new and updated restaurants, and the technology that’ll go in them, supply chain issues aren’t really a factor at this point. How is that possible right now?
All the handheld menus have been ordered and shipped, so that’s done. We’re a big company, and people want to make us happy. Our oven provider has build another line and has been very receptive and responsive to our needs, because they know what this could mean for them.
From a supply standpoint, what are the biggest headwinds facing Bloomin’ right now?
Timeliness of equipment. As we build new restaurants, are we getting new chairs and this and that on time? That’s No. 1. We really haven’t had any food supply issues. When you come to our restaurant, we don’t have signs hanging up saying you can’t get shrimp tonight, or we don’t have the ribeye. That has not been a problem. Cost has been. We’ve talked about commodity cost being a low double-digit (inflation) area. But we’ve built that into our calculations.
Bloomin’ just ended its title sponsorship of the Outback Bowl. Why did that happen? Why did you pull Outback out of the Outback Bowl?
It was time. There’s some discussions underway that I don’t want to go public. It was a great partnership. For a lot of different reasons, it was time.
Had you hit a ceiling with return on investment with those brand rights?
No, no. As we look at everything in that relationship, and all the things that are available to us, it was just time to move on. It was a great 25-year partnership. We think that the Tampa Bay Bowl now is a great asset to the community, and we wish them well.
I saw Outback might be exploring the NFT space. Would that be a move geared toward marketing, or brand engagement, or what?
We’re big in NIL (the NCAA’s Name, Image and Likeness program), and we can imagine an NFT space, right, with Bloomin’ Onions, another iconic brand? There’s an opportunity there.
What is that opportunity?
People will want the Bloomin’ Onion, right? The trademarked Bloomin’ Onion. What a great NFT opportunity.
So the Bloomin’ Onion could be the next Bored Ape?
There you go. Absolutely. All kinds of stuff like that.