Same-store sales fell 1.3 percent at Bloomin’ Brands Inc.’s four concepts in the U.S. amid a weak casual-dining environment, particularly on weekends, the company said Tuesday.
Same-store sales at all but one of the company’s concepts fell in the third quarter ended Sept. 27, including a 2-percent decline at Carrabba’s Italian Grill and a 6.1-percent decline at Bonefish Grill. The only increase came from Outback Steakhouse, where same-store sales rose a modest 0.1 percent.
Bloomin’ Brands CEO Liz Smith said that each concept had its own unique issues, but that weak casual-dining dinner traffic also contributed to the same-store sales decline.
Citing information from market research firm The NPD Group, Smith said that casual-dining dinner traffic declined 3 percent over the summer months, through August. The problem was most notable on the weekends, where traffic fell 6 percent.
“Our company remains primarily a dinner business that skews more toward the weekend,” Smith said. “Our dinner-weekend traffic declines have been noticeable and have had an impact on our [same-store] sales.”
Revenue at the company declined 3.6 percent, to $1.03 billion, from $1.07 billion, due largely to the impact of the strong dollar on sales in international markets. But revenue in the U.S. fell 1.4 percent, to $902.5 million, from $915.4 million.
Net income in the quarter was $17.4 million, or 14 cents per share, rising from a loss of $10.8 million, or 9 cents per share, a year ago. Profits largely met Wall Street expectations, and Bloomin’ Brands stock fell less than 1 percent Tuesday morning.
During the company’s earnings call, executives suggested that they have plans in place to improve sales at its four brands.
At Outback, Smith attributed the sales problems to the company’s decision to promote its steak and unlimited shrimp offer for a third straight quarter, instead of a new limited-time offer. This time, Smith said, the deal “did not drive the expected levels of incremental traffic” at a time when competitors were promoting their deals heavily.
Smith said she vowed that the chain would focus on innovation in the coming quarters. And she said the company would kick off an “aggressive, multi-year rollout of the new design” in 2016.
The company tested its new design in 33 locations. The design costs between $300,000 and $400,000, and in tests generated average sales growth of 5 percent, Smith said.
In addition, Bloomin’ Brands is working on technology enhancements. Smith said the company is finishing a test in Tampa, Fla., of its new Outback app, which, among other things, enables customers to pay at their table using the app at the end of their visit.
“Technology is an area where we will continue to invest ahead of growth,” Smith said.
At Carrabba’s, where same-store sales fell 2 percent in the quarter, Smith said the company deliberately reduced ad spending as it prepared to launch a new menu. Carrabba’s is planning a soft launch of a new menu in the fourth quarter, and will launch with media support in the first quarter of 2016. The menu reduces the number of items from 80 to 70, and is designed to increase everyday dining while simplifying overall offerings.
At 213-unit Bonefish, Smith said, the company expected poor sales performance as the chain works to return the concept to its “polished-casual roots.” She said the company has removed complexity from its menu and is working to reengage with “lapsed users.”
“But we are not going to accelerate this [re-engagement] process by using promotional tactics that are not consistent with the brand,” Smith said. She added that the company plans to launch a marketing effort once it restores the brand to growth.
“We’re confident in the future of Bonefish, as it remains a consumer favorite in the [casual-dining] segment across a variety of measures and surveys,” Smith said.
Fleming’s Prime Steakhouse, which has 66 units, saw same-store sales fall 0.6 percent, its first decline in 22 quarters. Smith said the company pulled back on promotional offers, which had “an impact on traffic in excess of expectations.” But she expressed confidence in that brand’s long-term health, too.
While investors tend to focus on domestic sales, Smith said international development remains the biggest potential for Bloomin’ Brands and for casual dining. The company and its franchisees have 217 international units, a decrease from 226 last year, but Smith expects the company will continue developing in growth markets, particularly in China.
“Our focus will be on Latin America and China, where a rising middle class is expected to lead to growth in the casual dining market,” Smith said, noting that the China business “is one of the largest market opportunities for casual-dining brands because of its highly fragmented markets and disposable income growth.”
“There is a great deal of demand for our restaurants outside of the U.S., and we plan to take advantage of this opportunity,” she said.
Correction Nov. 4, 2015: Due to an editing error, a previous version of this story had the incorrect same-store sales result in the headline. Same-store sales fell 1.3%.
Contact Jonathan Maze at [email protected]
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