Bloomin’ Brands Inc. said Tuesday that it expects same-store sales to increase this year despite a 1.5-percent decline in the U.S. during the first quarter, as the company works on sales-building efforts at all four of its casual-dining brands.
“We’ve increased the level of investment in our concepts to grow sustainable [same-store] sales and improve shareholder returns,” Bloomin’ Brands CEO Liz Smith said during the company’s earnings call Tuesday. “The expected benefits from the investments we’re making in our concepts should build during the year.”
Bloomin’ Brands revenue declined 3.2 percent in the first quarter ended March 27, to $1.16 billion, from $1.2 billion the previous year. Net income plunged 42 percent, to $35.9 million, or 29 cents per share, from $62.1 million, or 48 cents per share the previous year. However, much of the decline was due to one-time, debt-related costs.
Same-store sales declined at three of the company’s four concepts, including a 1.3-percent drop at Outback Steakhouse. Carrabba’s Italian Grill, meanwhile, reported a 2-percent decline, and Bonefish Grill’s same-store sales fell 2.7 percent. Fleming’s Prime Steakhouse & Wine Bar’s same-store sales grew 1.3 percent.
Despite the performance, executives were confident that same-store sales would turn positive in the second half of the year, and that the company would finish the year in the black.
Part of the reason is that sales comparisons in the first half of the year are more difficult than in the second half because of performance at Outback a year ago, which was particularly strong from January through June.
Bloomin’ Brands executives noted that there was a five-percentage-point difference in same-store sales in the first half of 2015 than in the second half, which should make the latter part of the year easier.
The company is working to build sales at its brands. One of those efforts will be a loyalty program, Dine Rewards, which is expected to lift sales by 1 percent to 2 percent based on the performance of test markets, the company said.
Outback plans to more aggressively remodel restaurant exteriors, which has on average lifted sales 5 percent. The company plans to remodel 150 locations this year.
Outback recently released a new app that has been downloaded 200,000 times and lets customers get on a waiting list or pay at the table.
“It’s solving both consumer pain points,” Smith said.
The chain plans to upgrade its food by increasing portions and improving items. So far, the efforts have boosted customer satisfaction, and Smith expects it to be “key to our plan to drive future sales growth.”
Bloomin’ Brands is also investing in labor. The company has a new labor-scheduling tool to improve efficiency, but is also identifying areas where it could increase labor to improve service.
“We’re ensuring our productivity efforts are not affecting the food quality or service,” Smith said. “We’re making additional investments to enhance the customer experience.”
Carrabba’s introduced a new menu in the first quarter, but same-store sales fell 2 percent, despite higher traffic of 1.5 percent in what Smith called an “extremely competitive Italian market.”
The chain is making “minor menu adjustments” to address a higher-than-anticipated decline in average check. But the company expects the new menu to drive sustainable traffic.
“Carrabba’s is in a really competitive category called Italian that’s been declining for five years,” Smith said. “Our menu needed to change.”
Executives said that the decline at Bonefish Grill was “consistent with expectations,” as the company “returns Bonefish to its polished-casual roots.”
Bonefish Grill has started promoting its fresh fish, and it has shifted away from discount messaging used over the past two years.
Meanwhile, the Tampa, Fla.-based company said Tuesday that it has completed a sale-leaseback of 41 properties for $141 million, and plans to sell another 215 properties.
Bloomin’ Brands expects to sell the locations through a combination of large deals and small, one-off deals. The company expects to complete the sale-leaseback program early next year.
“It will unlock significant value for shareholders when completed,” Bloomin’ Brands CFO Dave Deno said during the earnings call. “We’re very pleased with the deal.”
Contact Jonathan Maze at [email protected]
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