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Outback Steakhouse sees growth in U.S. and Brazil markets in second quarter

The Outback Steakhouse, on 4088 Park St. N, is showin on July 26, 2017. Restaurant sales were up at Outback Steakhouse  and Carrabba's Italian Grill during the second quarter of 2017, but Bonefish Grill continues to lag at Tampa-based Bloomin' Brands. [SCOTT KEELER | Times]
The Outback Steakhouse, on 4088 Park St. N, is showin on July 26, 2017. Restaurant sales were up at Outback Steakhouse and Carrabba's Italian Grill during the second quarter of 2017, but Bonefish Grill continues to lag at Tampa-based Bloomin' Brands. [SCOTT KEELER | Times]
Published Jul. 27, 2017

TAMPA — The parent company of Outback Steakhouse and Carrabba's Italian Grill hopes investing in restaurant delivery and international expansion will stem sluggish sales and slumping traffic at its U.S. restaurants.

Casual dining chains, from Outback to the Olive Garden, have struggled to stand out amid a slew of new restaurants that have opened recently. Consumers preferences have changed too, as many are opting for local and independent eateries over chains. New trends, from restaurant delivery apps like Uber Eats to at-home meal programs like Blue Apron are forcing restaurant chains, like Tampa-based Bloomin' Brands, to rethink their strategy to draw more diners, as seen in Bloomin' Brands' most recent earnings report released Wednesday.

Restaurant sales were up at Outback Steakhouse and Carrabba's Italian Grill during the second quarter of 2017, but Bonefish Grill continues to lag at Tampa-based Bloomin' Brands. Bloomin' is the parent company of chain restaurants including Outback, Carrabba's, Bonefish and Fleming's Prime Steakhouse & Wine Bar. Overall restaurant sales slumped three tenths of a percent for the quarter, the company reported.

Bloomin' posted net income of net income of $35.6 million, or 35 cents a share, for the quarter ending June 30, rebounding from a year-ago loss of 8 cents a share. Still, investors were wary after the earnings' release, pushing down Bloomin's stock almost 11 percent to $18.53 a share.

Outback Steakhouse and Carraba's Italian Grill both increased sales by less than a percent in the quarter. But Bonefish Grill, which closed about a dozen restaurants last year and has reported struggling results quarter after quarter, saw the biggest decline of 2.6 percent. Fleming's, too, posted a 1.3 percent decline in U.S. store sales.

Outback Steakhouse was clearly the bright spot for Bloomin's second-quarter results driven by international growth. The steakhouse chain saw a 13 percent spike in sales in Brazil, a relatively new market for the company. Outback's growth internationally this quarter is the highest quarterly growth Bloomin' has seen since 2013, said Bloomin' Brands CEO, Liz Smith.

"Outback's business is performing extremely well in a challenged environment," she said.

Bloomin' opened five new restaurants this quarter, all of which were in international markets.

Last year, the company hired a global real estate firm to look for growth opportunities specifically in South America, like Chile and Argentina, while continuing to grow its presence in Brazil. There are no new locations to announce yet.

"When you think of markets like the Middle East, where they're building so many malls and hotels, it drives a tremendous amount of traffic to restaurants there," said Darren Tristano, a longtime restaurant consultant based in Chicago. "Outback has some good opportunities internationally. American brands, from a restaurant standpoint, are very trusted and well regarded in other countries. With low growth in the U.S., more revenues will be driven internationally for the chains that can expand."

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In addition to its international expansion, Smith chalks up Outback's success to new strategies to drive more traffic and loyalty to the longstanding steakhouse chain.

"We were pleased with our second quarter performance, and remain on track to achieve our sales and EPS goals for the year," Smith said during a call with investors Wednesday. "We maintained positive comp sales at Outback with strengthening traffic trends as our investments are gaining traction."

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Smith said she was pleased with the increase in traffic at Outback Steakhouse restaurants this quarter. She added that the casual dining sector strengthened as opposed to a "significant pull back" in the early part of 2017. Additionally, a boost in national employment levels, consumer confidence and wage growth provides a better outlook going forward, Smith said.

However "the continued increase of new restaurant openings pressures traffic at existing restaurants," Smith warned investors on an earnings conference call.

"The end of 2016 was tough on the restaurant industry as a whole. But what we're seeing now is restaurant chains cutting back and closing some units. That lifts sales all around but it's no indication that casual dining is bouncing back," Tristano said. "It's less about growth and more about stopping the bleeding."

Smith also warned investors that more consumers are dining in home, at peak levels that haven't been seen since 1992.

"This has put a pressure on restaurant chains," Smith said. But it presents an opportunity for Bloomin' to expand its curbside pick up and new delivery programs, she added. Delivery is available in 250 chain restaurants nationally, including several Outback and Carrabba's locations in Tampa Bay.

"The dining at home experience isn't limited to cooking at home," she said. "It's more important than ever that we elevate the 360-degree experience in our restaurants."

But where restaurant delivery fits in the long term is tricky, said Brian Connors, a consultant with Connors Davis Hospitality in South Florida.

"The delivery idea, and even Amazon acquiring Whole Foods and what that means for grocery delivery, has completely shifted how people approach meals, period," Connors said. "Now even the Outbacks of the world have to try to keep up with the Amazons of the world if they want to reach consumers."

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In addition to boosting its take out programs, Bloomin' is investing heavily in remodeling stores and relocating some to more prime real estate locations. This year, Bloomin' is opening 150 remodeled Outback Steakhouse locations and relocating 16 of them.

Correction: An earlier version of this story online misstated the number of remodeled Outback locations.

Contact Justine Griffin at or (727) 893-8467. Follow @SunBizGriffin.


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