Bloomin’ Brands Inc. reported Tuesday a 12.7-percent increase in net income during the first quarter ended March 30, as productivity initiatives and strong sales, particularly at Outback Steakhouse, offset rising food costs.
Net income for the quarter was $62.1 million, or 48 cents per share, rising from $55.1 million, or from 43 cents per share, in the same period a year ago.
“The first quarter was a strong start to the year,” Bloomin’ Brands CEO Liz Smith said in a statement. “We’re pleased with our sales performance and delivery. These results set us up to deliver our 2015 goals.”
Same-store sales at all five of the company’s casual-dining brands increased in the quarter, including 5-percent growth at Outback Steakhouse, as consumers ordered more steak. Same-store sales increased 1.9-percent at Carrabba’s Italian Grill, the company said, which had been struggling with sales for more than a year.
In addition, same-store sales at Fleming’s Prime Steakhouse rose 3 percent, while Bonefish Grill’s same-store sales increased 0.9 percent. Overall, the company’s five brands reported 3.6-percent same-store sales growth in the U.S. for the quarter, along with 0.7-percent traffic growth.
Revenue rose 3.8 percent during the quarter, to $1.2 billion, from $1.16 billion, as new restaurant openings and the sales performance offset restaurant closures and the sale of Roy’s restaurants, as well as the impact of currency translation.
But the Tampa, Fla.-based company lowered expectations for full-year revenue to $4.43 billion, from $4.49 billion, due to currency translation.
Operating income margin increased to 18.3 percent of revenue in the period, rising from 18 percent the previous year.
Bloomin’ Brands has been working to improve productivity, particularly through the use of labor scheduling tools, CFO Dave Deno said during a call Monday discussing earnings. The company’s goal is to save $50 million through productivity as it works to match the margin performance of other casual-dining restaurants.
“Margins improved thanks to productivity initiatives, despite significant headwinds in the form of commodity and wage inflation,” Deno said.
He noted that Bloomin’ Brands experienced “higher-than-expected wage inflation” during the year.
At Outback, which has 649 locations in the U.S. and 206 in international markets, the company’s traffic rose 0.5 percent. Smith said the brand’s sales have improved as the company pushed its “steak authority” more often. That has led to a higher average check at the chain.
Outback has “many levers in front of it,” which should enable the chain to maintain its sales growth, she said, particularly the national launch of lunch.
“We like what we’re going to see on that,” Smith said. “There’s a lot of focus on lunch and on growing share in that $25 billion segment. So far it hasn’t had national ad awareness.”
Seventy-one percent of the chain’s restaurants currently offer lunch, she said, an increase from about 40 percent a year ago. Outback only started advertising lunch more than a week ago.
Smith added that the company is testing exterior remodels and the potential for 50 new restaurants.
“We just have riches of levers,” she said. “But one thing we can never do is walk away from reminding and asserting our steak authority. Remember, we’re No. 1 at steak.”
Carrabba’s same-store sales rose for the second consecutive quarter, following more than a year of declines. The improvement came despite the 246-unit chain’s delay in rolling out a second iteration of a new menu that is expected to include more variety, lighter items and more affordability.
“The whole Italian category needs to reinvent itself to have more craveability, lighter items, more approachable items,” Smith said.
She said the company has focused on value, variety and affordability, but also used promotions during the week to improve sales.
“We’re not going to wait to implement our playbook,” she said, adding that the company expects to roll out its new core menu late this year or early next year after completing testing.
Contact Jonathan Maze at [email protected].
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