OSI Restaurant Partners LLC, parent company to Outback Steakhouse, Carrabba’s and Bonefish Grill, among other chains, said it will accelerate its restaurant renovation program and capital spending for the rest of 2011, in an effort to drive sales.
Tampa, Fla.-based OSI plans to renovate as many as 175 Outback Steakhouse sites in 2011 after improving 84 in the first half of the year, Dirk Montgomery, OSI chief financial officer, told securities analysts during a second-quarter earnings call Friday morning.
In 2010, OSI conducted 60 Outback Steakhouse renovations, which usually take three to six months, and typically result in a traffic lift of five percent, Montgomery said. The company said the renovations include a more contemporary expression of the Australian theme, using updated colors, fabrics, textures, art, lighting, props and murals.
The OSI renovation program is one of several growth strategies the company is using to steal market share in casual dining, Montgomery said. The company plans to increase capital spending to between $150 million and $160 million, up from original expectations of between $125 million and $150 million, Montgomery said.
For the three-months ended June 30, OSI net income fell 68 percent to $5.7 million from $17.6 million in the same quarter a year ago. In the year-ago quarter, OSI booked an $11.3 million income taxes benefit.
Second-quarter revenue rose 4.2 percent to $955.5 million. Systemwide same-store sales rose 1.7 percent at Outback Steakhouse, 4.9 percent at Carrabba’s Italian Grill, 10.2 percent at Bonefish Grill and 9.9 percent Flemings Prime Steakhouse and Wine Bar.
To boost sales at the company’s flagship Outback Steakhouse, executives have added more seafood and salads and have beefed up menu offerings cooked on an oak wood fire grill, Montgomery said. Outback Steakhouse has added 14 new items to its menu while removing five offerings this year and is considering opening more restaurants for lunch, he added. About 50 Outback Steakhouses – less than 10 percent of the chain – are open for lunch.
“We’re encouraged by the test results,” he said, referring to the wood-fired grill menu items.
Sales drivers at Bonefish Grill included drink and appetizer specials during the weekdays, while drivers at Carrabba’s Italian Grill included $10 pasta meals and gift cards, Montgomery said.
OSI operates or franchises 968 Outback Steakhouses, 152 Bonefish Grills, 233 Carrabba’s Italian Grills, 64 Fleming’s units and 22 Roy’s Hawaiian Fusion locations in 49 states and 23 countries.
Contact Alan Snel at [email protected].
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