Sales were up at all four of Bloomin’ Brands restaurant concepts in the first quarter of 2023.
But it was because of higher prices, not more customers.
Bloomin’s same-store sales rose a combined 5.1% year over year, including 5% at Outback Steakhouse and nearly 7% at Carrabba’s Italian Grill.
But menu prices were 7.6% higher in the quarter than last year, and traffic was down 0.7%. That was actually an improvement from the prior quarter, when traffic was negative 9%.
And it came as other chains reported particularly strong traffic to start the year. Outback competitor Texas Roadhouse, for instance, set a traffic record through the first seven weeks of 2023.
Bloomin’ executives did not seem to think higher prices are the culprit for slowing traffic. Customers are “hanging tight,” especially higher-income guests, CEO Dave Deno told analysts Friday. On the lower end, “We are seeing continued frequency, but maybe a little bit of management on the guest check side.”
Things will not get easier for Bloomin’ in the second quarter, when it expects comps to increase by just 0.5% to 1.5%. Executives blamed the deceleration on tough comparisons to last year, although same-store sales were negative 0.4% then.
Boosting traffic, especially at Outback, is Bloomin’s top priority, said Deno, who outlined several ways the company plans to do that.
It has been investing in technology, and recently finished the rollout of handheld server tablets at Outback that allow staff to cover more tables and deliver better service.
It has also been doing less discounting and more digital marketing, which allows it to target specific customers with tailored messaging.
And it has added new daypart “layers,” like Social Hour at Fleming’s, wine dinners at Carrabba’s and brunch at Bonefish Grill. Catering has also been an area of growth.
Yet the company’s outlook for the year implies negative traffic, and it reiterated that outlook Friday. It led some analysts to wonder when the company will start to reap the benefits of the traffic-building efforts. Executives said it will take time.
“They will come together and build and you'll see as a result, if you look at our full year guide, improvement in traffic trends as the year goes along,” Deno said.
“Some of these are going to have a little bit longer tail as well,” CFO Chris Meyer added. The impacts of the new technology, for instance, are difficult to measure in the short term, he said. “They're all going to play a different role in terms of how it feeds in through the year in this environment.”
One thing Bloomin’ doesn’t plan to do is offer discounts to juice transactions.
“We want to build healthy traffic through sales layers,” Deno said. “We don't want to participate in any big-time discounting or promotions even though we've seen an uptick in parts of the industry.”
The move away from discounts could explain some of Bloomin’s traffic problems, but it has also helped its bottom line. Restaurant-level operating margins increased by nearly 1 point, to 17.9%, in the first quarter. And the company delivered diluted earnings per share of 93 cents in the period, its best mark ever. Its stock price was up more than 5% Friday afternoon.
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