The parent of Outback Steakhouse and other casual brands is closing 41 underperforming restaurants but plans to offset those closures by opening as many as 45 more this year.
All but two of the closures will be in the U.S., and most of them will be Outback locations, Bloomin’ Brands executives said during a call with analysts Friday. The majority are older units, with leases dating back to the 1990s and early 2000s.
Besides Outback, Bloomin’ owns Carrabba’s Italian Grill, Bonefish Grill, Fleming’s Prime and the fast-casual Outback spinoff Aussie Grill. It has nearly 1,500 restaurants worldwide.
“This decision considered a variety of factors, including sales and traffic, trade areas and the investments that would have to be made to improve the restaurants,” said CEO Dave Deno. He added that many employees of the closed restaurants will be offered new jobs elsewhere.
The closures are expected to cost the company about $100 million in revenue this year, while adding about $4 million to its earnings before taxes, interest, depreciation and amortization (EBITDA).
The openings, meanwhile, will be across Bloomin’s portfolio, including 15 to 18 Outbacks. Bloomin’ also plans to continue remodeling restaurants after doing more than 100 of those last year. The company forecasted capital expenditures in the range of $270 million to $290 million for 2024.
In justifying the investment, Deno noted that new restaurants tend to generate good returns, especially in existing markets. “There's nothing like a new Outback or two in a city to attract people and say, ‘Wow, look at that,’” he said.
The announcement followed a difficult quarter for the 688-unit Australian-themed steak chain. Same-store sales fell 0.3% after demand slowed in October but picked up through the period. The current quarter also got off to a slow start thanks to bad weather in January, but momentum has bounced back since then.
“We’ve gone from a place, especially in the fall, when Outback was behind the industry in same-store sales growth, to a point in December and into Q1 where we’re consistently ahead, and we’re very pleased about that,” Deno said.
For the year, the company is expecting same-store sales growth to be between flat and 2%, and traffic to be flat to negative 2%. Menu prices will start out about 2% higher and increase slightly over the course of the year. Bloomin’s goal is to outperform the full-service category on traffic.
“If the category's down 2% to 3%, our traffic is going to be flat to down 2%, in that range,” CFO Christopher Meyer said.
Full-service restaurants have struggled to generate traffic growth following a surge in visits as the country emerged from the pandemic. Many brands have turned to value to appeal to price-sensitive customers.
To that end, Bloomin’ plans to spend an additional $20 million on marketing at Outback this year to raise its profile and get people to visit. Advertising will focus on new menu items and value, including LTOs like Outback’s three-course meals for $16.99.
As for Bloomin’s other brands, same-store sales rose 2.5% at Carrabba’s and fell 3% at Bonefish and 0.2% at Fleming’s. Comps at Outback’s Brazil business rose 0.6%.
The company also announced that Meyer plans to retire this year after 20 years with Bloomin', including the past five as CFO. He'll stay in his role until a replacement is named.
CORRECTION: A previous version of this story said Bloomin's leases on the closed stores dated back to as early as the 1980s. They began in the 1990s and early 2000s.
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