Marketing shifts bring gains for Outback Steakhouse and some sister brands

A more local approach to marketing is taking hold at Bloomin’ Brands, while discounting takes a back seat.

Fundamental shifts in marketing are paying off for Outback Steakhouse and the other casual-dining chains in Bloomin’ Brands’ extensive portfolio.

Part of the effort is lessening each holding’s reliance on discounting, with deal-making down 19% across the group, according to CEO Liz Smith.

Executives repeatedly cited those adjustments in trumpeting what they characterized as an exceptionally strong quarter for Bloomin’ Brands. Domestic same-store sales for the quarter ended July 1 rose for all brands except Carrabba’s Italian Grill, whose comps slipped 0.6%. Q2 gains ranged from 4% for Outback, the company’s largest business by far, to 0.3% for Fleming’s, the company’s highest-priced concept. Bonefish Grill, a concept in turnaround mode, generated a 1.3% gain.

The profit margin for the whole domestic portfolio hit 14.5%, compared with 13.8% for the year-ago quarter.

The sales increase at Outback was driven in part by a 0.6% improvement in traffic. That positive turn came despite a 14% reduction in overall marketing expenditures, an apparent effect of customizing the chain’s message to customers, or what’s known as one-to-one marketing.

The emphasis at the company’s three other major brands is on moving away from national marketing to more localized messaging. For instance, Bloomin’ is doubling the dollars available for Carrabba’s local marketing, with the money coming in part out of the national TV budget, according to Smith.

Marketing is similarly being localized at Bonefish Grill, where unit-level operators were recently given leeway to showcase local specials.

The strategic direction for Fleming’s is also market-focused. Smith said the chain will strive to change its image from a high-end steakhouse to more of a local upscale option, with a menu tailored to the location. She also noted that a new simpler menu was introduced chainwide during the second quarter.

All of the brands are shifting away from discounting, Smith stressed. For instance, she noticed that Carrabba’s discounting during Q2 was down 44% from the prior year’s level.

Bloomin’s top line will be helped going forward by a significant increase in delivery and takeout, with 200 of the company’s 1,239 domestic restaurants slated to add delivery, Smith said. (Two hundred forty already offer the service.) She noted that off-premise business currently accounts for about 12% or 13%.

The company’s restaurants that offer delivery use employees rather than third parties to transport the meals to consumers’ homes and offices. Smith mentioned that the company has developed metrics to gauge performance, including delivery times and deliveries made per location.

Bloomin’ Brands also operates five Outback and Carrabba’s Express restaurants, which offer takeout and delivery but no on-premise dining. One more unit is slated to open by the end of the year, according to Smith.

CFO Dave Deno described the no-seat stores as “idea labs,” and did not break out results specifically for those units.

“We have some that are working well, and we have some that need some work. But they’re labs,” he said.

Overall, Bloomin’s revenues slipped by 0.4%, to $1.03 billion, which the company attributed to a 6.1% same-store sales decline for units in Brazil, a refranchising of some U.S. stores and foreign currency exchange rates. Net income was $26 million, down 25%.

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