Outback Steakhouse parent Bloomin’ Brands is meeting with parties interested in buying the chain’s Brazilian operations, but “compelling” bids for the whole company or its other businesses have not materialized since management announced in November that it would entertain a sale, CEO Dave Deno told investors this morning.
Although the board of directors will continue to explore strategic alternatives, Deno explained, the company is pursuing an adjusted strategy as a result of realigning management, bolstering off-premise business and identifying efficiencies at the corporate and restaurant levels. He also cited the company’s intention to pay down debt ahead of its repayment schedules. All told, Bloomin’ expects the savings to total $40 million across 2020 and ’21.
“Regardless of the strategic review, Bloomin’ Brands will be a transformed company,” Deno said.
A key step in that direction, he and other officials said, was the company’s management reorganization last week. Gregg Scarlett, formerly president of Outback, was named COO of the whole company, with oversight of the domestic operations of Outback and its two biggest sisters, Carrabba’s Italian Grill and Bonefish Grill. The former presidents of the Italian and seafood chains, Michael Kappitt and Jeff Carcara, respectively, have left the company.
The reorganization essentially restructures Bloomin’ into three operations: domestic casual dining, led by Scarlett; fine dining, consisting of Fleming’s Prime Steakhouse & Wine Bar, headed by Beth Scott; a fast-casual startup, Aussie Grille from Outback Steakhouse, overseen by Suk Singh; and international operations, consisting largely of Outback’s Brazilian operation, which accounts for 99 of Bloomin’s 127 restaurants outside of the U.S.
The new structure will facilitate cuts in general and administrative costs while providing Scarlett and his brand-specific teams a chance to improve restaurant margins through menu simplification, reductions in food waste, and technology, Deno said.
“The runway for cost reduction is there,” he told financial analysts.
The streamlining and strategic tweaks will result in a more agile Bloomin’ with “a sustainable level of performance that will allow us to succeed over the long haul,” said CFO Chris Meyer. Bloomin’ expects comps across all of its U.S. restaurants to rise between 1% and 1.5% for fiscal 2020.
Officials did not reveal what parties are interested in acquiring Bloomin’s Brazilian business. The operation has been rumored for weeks to be in play.
Deno repeatedly characterized the Brazilian business as a strong business with a standout management team led by Pierre Berenstein. The Brazilian Outbacks posted a same-store sales rise of 4.9% for the fourth quarter ended Dec. 29.
“We’ve had very strong sales growth, both in PPA (per person average, or the typical check) and traffic,” Deno said. “It’s a free-cash-flow positive business. We intend to be very thoughtful as to how we go forward with that business.”
All of Bloomin’s major domestic operations posted positive comps for the quarter, led by Outback, with a rise of 2.7%. Carrabba’s, Bloomin’s second-largest business, posted a 1.4% increase, while Bonefish and Fleming’s notched gains of 0.05% and 0.09%, respectively.
Net income for the quarter totaled $29.3 million, a leap of 135.7%, on revenues of $1.02 billion, an increase of just under 1%.
Bloomin’ opened seven restaurants during the quarter, five of them outside of the U.S.