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Outback tests new off-premise-friendly designs

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Coming off Outback Steakhouse’s strongest 12-month same-store sales gain in six years, parent Bloomin’ Brands intends to maintain the momentum in part by redesigning stores to better accommodate delivery and takeout sales.

The casual chain is testing a number of interior designs “to modernize our look,” Bloomin’ CEO Liz Smith told financial analysts yesterday. The potential prototypes also devote more room to handling off-premise business, she added. Smith did not say if that additional space was being allocated in the front of the house, the back of the house, or both. 

She projected that off-premise sales could grow to 25% of sales across Bloomin’s brands, which also include Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. “Given this potential, we have built the infrastructure, technology and capabilities to support these elevated sales volumes,” Smith said. She suggested that store design is the next step toward achieving those volumes.

An increase in off-premise business was a key factor in the success of Outback and its sisters during the fourth quarter of 2018, according to Smith.  

Delivery, takeout and catering sales rose across the portfolio during Q4 by 18% year over year, raising the overall contribution to 14% of sales, said Dave Deno, Bloomin’s CFO. Some 80% to 85% of that intake is incremental, he added.

Deno noted that 488 Outback and Carrabba’s restaurants now offer delivery. Unlike most of the other full-service concepts offering the service, the Bloomin’ chains opted to deliver meals themselves rather than partner with third parties such as Grubhub or DoorDash. The company expects to expand delivery to 600 stores.

The executives also attributed their charges’ success during Q4 to a 2.5-year campaign to reduce discounting, a $50 million outlay to improve food and service, and a shift away from mass advertising to targeted digital marketing.  

Smith noted that the company’s Dine Awards frequent-guest program, which extends across all of Bloomin’s brands, has grown to 8 million members. That provides the company a trove of information for targeting its marketing. The accompanying decrease in TV and other mass-market advertising has saved the company $25 million over two years, Smith said.

The Q4 results also reflect an upturn in the business of Bloomin’s Brazilian restaurants, which had been sapping overall performance because of the political turmoil there. Same-store sales for the units there rose 2.4% for the quarter, compared with a 3.3% decline for Q3.

For Q4, Outback’s comps rose by 2.9%, elevating the same-store gain for the fiscal year to 4%, or the highest increase in six years, according to the company. Outback’s traffic for the year rose 0.9%, the company said.

Carrabba’s posted a 0.8% rise in comps for Q4. 

Bonefish and Fleming’s saw same-store sales decline, by 1.1% and 0.4%, respectively. 

Smith noted that all of the brands saw a year-over-year increase in traffic for the quarter.

Overall, Bloomin’s revenues for 2018 slipped 2.3% to $4.13 billion, while profit rose 5.7% to $107.1 million.

The company operates or franchises 1,490 restaurants across its various brands.

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