Bloomin’ Brands is selling most of its operations in Brazil to a franchisee for $243 million.
Brazil-based investment management firm Vinci Partners will acquire 67% of the business, which consists of 176 Outback Steakhouses and 30 Abbraccio Cucina Italiana and Aussie Grill restaurants. (Abbraccio is the Brazilian version of Carrabba’s Italian Grill.)
Bloomin’ will hold on to the remaining 33% of the business and will receive ongoing royalties.
The sale price represents a 6.5x multiple of the business’ trailing 12-month earnings before interest, taxes, depreciation and amortization (EBITDA).
Bloomin’ will receive 52% of the proceeds at closing and 48% a year later. It has the option to sell the rest of its stake in 2028.
Bloomin’ said in May that it was considering selling or refranchising its operations in Brazil, where Outback Steakhouse is extremely popular. The business has been a consistent bright spot for Bloomin’ in recent years.
It has pursued a sale 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.
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. Last year, Bloomin’ opened 16 new Outbacks in Brazil, and same-store sales increased 5.5% year over year.
The sale should allow Tampa-based Bloomin’ to shift its focus to its domestic operations, which continued to struggle in the third quarter. Same-store sales declined 1.3% at Outback, 1.5% at Carrabba’s and 4.1% at Bonefish Grill, and rose 1.2% at Fleming’s Prime Steakhouse.
The company said the challenging market for casual dining as well as disruption from recent hurricanes continue to impact its business. Hurricanes Helene and Milton, which struck Bloomin’s home market of Florida within weeks this fall, are expected to have a 30 basis-point downward impact on same-store sales in the current quarter.
The company downgraded its outlook for full-year same-store sales as a result, and is now forecasting a decline of 1% to 0.5%, as opposed to the previous range of negative 1% to flat.
It was Bloomin’s first quarterly dispatch under new CEO Mike Spanos, who replaced longtime leader Dave Deno in September.
On an earnings call with analysts Friday, Spanos, who previously spent time at Delta Air Lines and PepsiCo, shared some thoughts about how he plans to improve Bloomin’s performance.
His focus, he said, will fall into three main buckets: operations, customer experience and growth through simplification.
Spanos offered few specifics about his agenda, saying he’d have more to share during the next earnings call in February. But he suggested that 674-unit Outback needs to simplify its menu and embrace its roots as a steakhouse rather than a bar and grill.
“I think it starts with simplification and getting back to the core of that Aussie spirit, that steak/seafood core, and being all things to some people on the menu and not necessarily being all things to all people on the menu,” he said, according to a transcript from financial services site AlphaSense.
Bloomin' has been under pressure from activist investor Starboard Value to make changes at Outback. Spanos said management has been collaborating with Starboard, particularly on ways to improve the customer experience. "They're incredibly insightful," he said.
Bloomin’s stock was down more than 10% early Friday afternoon.
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