Bloomin’ Brands: Balancing Closures with Expansion Plans

Bloomin’ Brands , the parent company of popular restaurant chains like Outback Steakhouse, Carrabba’s Italian Grill, and Bonefish Grill, is making strategic decisions to optimize its portfolio. The company recently announced the closure of 41 underperforming restaurants, primarily older Outback locations in the U.S. These closures are part of Bloomin’s efforts to streamline operations and focus on more profitable ventures.

Factors Driving Closures

CEO Dave Deno emphasized that the decision to close these restaurants was based on various factors, including sales performance, location viability, and the investments required for improvements. The closures are expected to result in a loss of approximately $100 million in revenue but will contribute around $4 million to earnings before taxes, interest, depreciation, and amortization (EBITDA) by reducing operating costs.

Offsetting Closures with Openings and Remodels

Despite the closures, Bloomin’ Brands remains optimistic about its growth prospects. The company plans to offset the impact of closures by opening as many as 45 new restaurants this year across its portfolio, with a focus on Outback Steakhouse. Additionally, Bloomin’ intends to continue remodeling existing restaurants to enhance the customer experience and drive sales. The company has allocated a significant budget of $270 million to $290 million for capital expenditures in 2024.

Investment in New Restaurants

Deno highlighted the potential returns of investing in new restaurants, especially in established markets. He emphasized the positive impact of new restaurant openings on attracting customers and driving excitement within communities.

Performance and Outlook

Despite facing challenges, including unfavorable weather conditions and sluggish demand, Bloomin’ Brands is confident in its ability to rebound. The company reported mixed same-store sales performance across its brands, with Outback experiencing a slight decline before recovering momentum. Looking ahead, Bloomin’ Brands expects modest same-store sales growth and remains committed to outperforming the full-service restaurant category on traffic.

Marketing Strategy

To drive traffic and enhance brand visibility, Bloomin’ Brands plans to increase its marketing investment, particularly for Outback Steakhouse. The company aims to attract customers with promotional offers and new menu items, emphasizing value and affordability to appeal to price-sensitive consumers.

Leadership Transition

In addition to operational adjustments, Bloomin’ Brands announced the retirement of CFO Christopher Meyer, who has served the company for 20 years. Meyer’s retirement marks the end of an era, and the company is currently searching for a suitable replacement to ensure a smooth transition in financial leadership.

Bloomin’ Brands’ strategic decisions reflect its commitment to optimizing its restaurant portfolio and driving sustainable growth. By balancing closures with new openings, investing in marketing initiatives, and maintaining a focus on customer experience, the company aims to navigate challenges and capitalize on opportunities in the competitive restaurant industry.