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OSI sees positive sales continue in 3Q

Company plans to ramp up renovations at Outback

OSI Restaurant Partners LLC said menu changes and promotions drove positive sales and traffic in the third quarter at all four of its major restaurant chains, including Outback Steakhouse.

Chief financial officer Dirk Montgomery told investors in a conference call Friday that OSI is ramping up renovations at its flagship brand, with plans to remodel 400 Outback locations in the next two to three years.

Increased restaurant sales and lower impairment charges helped the privately held OSI narrow its third-quarter net loss to $7.7 million from a year-ago loss of $20.2 million. The company, which also owns Carrabba's Italian Grill, Bonefish Grill and Fleming's Prime Steakhouse and Wine Bar, reported revenue of  $853 million for the Sept. 30-ended quarter, up 1.3 percent from $842 million a year ago.

Same-store sales for the quarter rose 3 percent at Outback, 4.9 percent at Carrabba's, 7.6 percent at Bonefish and 7.3 percent at Fleming's.

“Throughout the year we have invested in research and brand repositioning work and implemented a number of new menu and marketing strategies to drive sustainable traffic improvement,” Montgomery said. 
 
“Based on our strong comp sales and traffic results, which began in the second quarter and have continued unto the third quarter, those strategies are showing traction,” he said.

Among the promotions that helped bolster sales were $9.99 specials at Outback, $10 pasta meals at Carrabba's and a Sunday prime rib dinner special at Fleming's, Montgomery said.

OSI is aiming to deliver stable cash flow while investing in the business — one of four objectives for this year, Montgomery said. 
Part of the growth includes remodeling and upgrading stores, he said.

This year, 60 of Outback's stores were renovated, Montgomery said, noting that the investment per location ranges between $200,000 to $300,000.  He added that OSI is testing different décor options.

Montgomery acknowledged that 2011 will be challenging in light of consumer uncertainty and the unemployment rate.

“We believe that consumers will still look for value and quality and we plan to continue offering new menu items and promotional strategies that meet those needs in a brand appropriate manner as we have done this year,” Montgomery said. “In 2011, we will continue to take a balanced approach toward growing share over the near term and investing for long term growth.”

In response to one question during the conference call, Montgomery noted some labor costs went up in the third quarter, but that was in response to deploying staff to “improve the overall service on the wait” such as offering drinks or snacks.

Tampa, Fla.-based OSI ended the quarter with 1,435 restaurants, including 964 Outback Steakhouses, 233 Carrabba's units, 152 Bonefish Grills, 64 Fleming's locations and 22 Roy's restaurants.

Alan Snel is a contributor to Nation's Restaurant News. Contact editor Molly Gise at [email protected].

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