Outback Steakhouse parent Bloomin’ Brands is again exploring strategic alternatives for its business in Brazil, including selling or refranchising its operations in the country.
Tampa-based Bloomin’ has 159 company-owned Outbacks in Brazil, where the Australian-themed casual-dining concept is extremely popular. Those restaurants have been a consistent bright spot for Bloomin’ in recent years.
The company also has about three dozen Carrabba’s Italian Grill (known in Brazil as Abbraccio Cucina Italiana) and Aussie Grill restaurants in the country.
Bloomin’ has pursued a sale of its Brazil division before and had reportedly narrowed the field to three bidders as of February 2020. At the time, the business was valued at about $472 million, according to a Reuters report.
But it put those efforts on hold after COVID-19 hit. Now the pandemic has waned, the Brazil business is growing and the company is again weighing its options.
“It’s time to take a look to see if this is the right time to refranchise the business,” Bloomin’ CEO Dave Deno told analysts Tuesday. “It's a great business, and we don't have to sell it, but we expect the proper valuation for it.”
He said it was too early to say what Bloomin’ might do with the proceeds from a deal, but that it would provide significant cash to pay down debt, buy back shares or invest in the U.S. business.
Outback opened its first restaurant in Brazil in Rio de Janeiro in 1997, and the brand has found a receptive audience in the beef-loving country. In 2023, Bloomin’ opened 16 new Outbacks in Brazil, and same-store sales increased 5.5% year over year.
The potential spinoff comes as Bloomin’s U.S. business continues to face headwinds. In the first quarter ended March 31, Outback’s U.S. same-store sales declined 1.2% year over year; Carrabba’s rose 0.4%; Bonefish Grill’s fell 4.9%; and Fleming’s were down 2%. Same-store sales in Brazil were down 0.7%.
Executives blamed poor weather in January and slowing demand from low-income consumers for the weak domestic sales. But they noted that results improved each month of the quarter, and they expect Outback comps to turn positive for the current period.
The full-service sector has been plagued by traffic declines as price-conscious consumers shift to more affordable options. In an effort to drive traffic, Outback is investing in marketing and value, restaurant remodels and off-premise and catering.
The Orlando-based company is under pressure from activist investor Starboard Value to make changes at Outback and improve returns for shareholders. Starboard believes the company, one of the largest casual-dining operators in the world, is undervalued relative to its peers.
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