Bloomin’ Brands to expand deliveryBloomin’ Brands to expand delivery

Bloomin’ Brands Inc. is moving away from discounting and toward more delivery at its Outback Steakhouse and Carrabba’s Italian brands, executives said Monday.

“It is becoming increasingly evident that the potential for off-premise and delivery provides a large and incremental tailwind for casual dining,” said Elizabeth Smith, CEO and chairman of the Tampa, Fla.-based company, which also owns the Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar brands.

Bloomin’ currently has 240 delivery locations, she said, and the majority of those locations are hitting the company’s goals on such metrics as delivery time and deliveries per location.

“As a result, we are now resuming our rollout of delivery to another 200 locations,” Smith said on a second-quarter earnings call. “We anticipate having this next phase completed by the end of the year.”

Off-premise transactions currently make up 12 to 13 percent of the sales mix at the Outback and Carrabba’s brands, Smith said, and that has potential to grow to 20 or 30 percent.

The company also has combined the two brands in five delivery/takeout Express units, which it introduced last fall, and it plans one more Express unit by year’s end, Smith said.

“We continue to be patient and deliberate as we build our off-premise capability to meet expectations of customers,” she added.

To increase the bottom line, Bloomin’ Brands has moved away discounting across its brands, reducing reliance on limited-time officers and coupons, Smith said.

“In the second quarter,” she said, “discounting was down 19 percent collectively across the portfolio. This reduction did have an impact on traffic particularly at our smaller brands, but it has had a positive impact on profitability.”

Bloomin’ Brands has also shifted more of its marketing dollars to digital marketing and its Dine Rewards loyalty program, which crosses all four brands, and Smith said that has helped increase incremental visits along with off-premise orders.

“We have a lot of opportunity in front of us now since we've made the data investments: We've built the data cloud; we've built the integrated customer profiles,” she said. “We can use that database now and are using it to provide the relevant message at the right time regarding the right channel to our customers.”

The data has helped the brands target offers to guests, Smith added. “We know all about these customers, what they like and when they like it and when they want to be served it,” she said.

In the second quarter ended July 1, Bloomin’ Brands’ net income fell 26.7 percent to $26.7 million, or 28 cents a share, down from $35.1 million, or 34 cents a share in the same period last year. Revenues fell 0.4 percent to $1.03 billion from $1.04 billion in last year’s quarter.

Bloomin’ reported that systemwide same-store sales, including all four brands, was up 2.4 percent in the quarter. Same-store sales were up 4 percent at domestic Outback Steakhouses, with traffic up 0.6 percent.

However, same-store sales were down 6.1 percent for Outback Steakhouse in Brazil, which has been seeing political unrest in advance of the South American nation’s October presidential elections. Bloomin’ has 92 Outback Steakhouse units in Brazil.

“Our Brazil business has consistently stayed strong through some very difficult economic challenges over the past several years,” Smith said.

Recent protests and strikes, including a lengthy trucker’s work action, have shaken the Brazilian economy, she said, including some lost operating days because of supply shortages and transportation gridlock.

“These dynamics are more event-driven and are not a reflection of the underlying health indicators of the Brazilian economy,” Smith said, citing the country’s gross domestic product, which is forecast to increase 1.6 percent this year.

Smith said Brazil’s reduced inflation and interest rates are positively impacting consumer demand and disposable income.

“Therefore, we believe the current situation in Brazil is likely more temporary,” she said. “We are already seeing stronger trends and expect that to continue.”

As of July 1, the Bloomin’ Brands portfolio included about 1,500 restaurants. The domestic system had 737 Outback Steakhouses, 227 Carrabba’s, 199 Bonefish Grills, 70 Fleming’s Prime Steakhouse & Wine Bars and five combination Outback-Carrabba’s express units. Internationally, Bloomin’ had 252 Outback units.

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