Bloomin’ Brands Earnings Call: Balancing Progress and Challenges

Bloomin’ Brands ((BLMN)) has held its Q2 earnings call. Read on for the main highlights of the call.

The recent earnings call for Bloomin’ Brands painted a picture of both progress and challenges. While there were notable advancements in certain operational areas, such as the success of the Aussie 3-course offering and Carrabba’s positive performance, the company is grappling with declining U.S. comparable restaurant sales, market share losses at Outback, and margin pressures due to inflation and labor costs. The sentiment expressed during the call was a mix of optimism about strategic initiatives and concern over ongoing operational hurdles.

Sequential Improvement in U.S. Traffic

The company reported a 190 basis point improvement in U.S. traffic from Q1 to Q2, highlighting progress in their operational priorities. This improvement is a positive indicator of the company’s efforts to enhance customer experience and drive traffic to their restaurants.

Positive Comp Sales Growth at Carrabba’s

Carrabba’s Italian Grill showed strong off-premises sales, including catering and experiential wine dinners, which contributed to positive comparable sales growth. This success underscores the effectiveness of Carrabba’s strategies in capturing customer interest and boosting sales.

Successful Aussie 3-Course Offering

The Aussie 3-course offering at Outback Steakhouse was a significant contributor to traffic improvement, with two-thirds of guests opting for higher price levels. This initiative has proven to be a successful strategy in attracting customers and enhancing their dining experience.

Executive Team Expansion

Bloomin’ Brands has expanded its executive team with new leadership additions and promotions across various departments. This move is aimed at driving strategic growth and improving operational efficiency, positioning the company for future success.

Decline in U.S. Comparable Restaurant Sales

Despite some positive developments, U.S. comparable restaurant sales were down by 10 basis points, with traffic declining by 200 basis points. This underperformance compared to the casual dining industry highlights the challenges Bloomin’ Brands faces in maintaining its market position.

Adjusted Operating Margins Decline

The company’s Q2 adjusted operating margins fell to 3.5%, down from 6.0% last year. This decline is attributed to higher costs of goods sold (COGS) inflation and increased labor costs, which have put pressure on the company’s profitability.

Outback Market Share Loss

Outback Steakhouse continues to lose market share as defined by Black Box, despite improvements. Execution challenges remain a significant hurdle for the brand, impacting its competitive position in the market.

Bonefish Grill Traffic Challenges

Traffic trends at Bonefish Grill remain challenging, posing risks to earnings forecasts. The company acknowledges these difficulties and is working on strategies to address them.

Forward-Looking Guidance

For fiscal year 2025, Bloomin’ Brands has adjusted its full-year adjusted diluted earnings per share guidance to a range of $1.00 to $1.10. This adjustment considers several factors, including a negative impact from tariffs, increased general liability insurance claim costs, and investments in Outback’s turnaround initiatives. The company is committed to reducing debt leverage and improving Outback’s service model, steak quality, and value perception to drive sustainable traffic growth.

In conclusion, Bloomin’ Brands’ earnings call reflects a balanced sentiment of optimism and caution. While there are promising developments in certain areas, the company faces significant challenges that require strategic focus and operational improvements. Investors and stakeholders will be keenly watching how these initiatives unfold in the coming quarters.