Food delivery has its fair share of skeptics, especially within casual dining. Bloomin’ Brands isn’t one of them.
The service has become an important channel for the owner of Outback Steakhouse and three other brands, and one that it intends to keep growing. In the third quarter ended Sept. 25, delivery made up 12.4% of Bloomin’s sales, up slightly from 12% the quarter before.
Some restaurant chains, notably Chipotle, have reported lower delivery sales recently. Delivery is expensive, and the fact that some consumers are pulling back isn’t surprising given inflation. But not at Bloomin’, which believes the service is too convenient for customers to give up.
“The delivery business is really strong and the customer has a habit,” Bloomin’ CEO Dave Deno said during an earnings call Friday. “Our third-party delivery sales continue to be really great. And I think people get in the habit of ordering.”
Delivery has been especially big for Bloomin’s Carrabba’s Italian Grill brand, where 33% of sales in the third quarter came from off-premise. Carrabba’s has been aggressive on catering in particular and has helped blaze the trail for Bloomin’s other concepts on that front.
“With Carrabba's example, we think that certainly Bonefish and Outback especially can come along and do a great job in catering,” Deno said.
All those delivery sales haven’t hurt Bloomin’s margins, either. They’re comparable to in-restaurant margins, Deno said, noting that the company has a great relationship with its third-party delivery partners.
That said, Bloomin’ is prepared to act if a recession hits and delivery does slow down. Deno highlighted family bundles from Bonefish Grill, Carrabba’s and Outback that offer good value. “That we will play up in a big way,” he said. “We can't rest on our laurels.”
The off-premise success contributed to a better-than-expected revenue quarter for the Tampa-based company. It increased its annual revenue outlook as a result.
Same-store sales across its brands rose 1.4%, including 2.3% at Outback and 0.7% at Carrabba’s. Sales and traffic increased in each month of the quarter and sales continued to grow in October, hovering in the 3% to 6% range, Deno said.
Customers didn’t flinch even as menu prices clocked in at 7.3% higher than a year ago, executives said. In fact, average check was up 8.6% year over year.
That was still not enough to offset costs in what ended up being one of the company’s highest inflationary quarters. Commodity inflation was 13% and wage inflation was 9%. Utilities inflation of 13% also ate into the bottom line. Restaurant-level operating margins for the quarter were 13.1%.
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