Bloomin' stock soars as Outback gains momentum

Bloomin’ Brands stock soared by nearly 45% on Wednesday after the company reported momentum at Outback Steakhouse, as well as impressive quarters for its smaller Bonefish Grill and Carrabba’s Italian Grill brands.

For the quarter ended March 29, combined same-store sales across Bloomin’s four brands rose 0.9%, surpassing analyst expectations. That included negative 0.3% for Outback, 1.3% at Carrabba’s, 6.1% at Bonefish and 0.8% at Fleming’s Prime Steakhouse.

Traffic overall was down 1.8%, which included a 240-basis-point wallop from weather.

Bloomin’ also delivered earnings per share of 67 cents, compared to 59 cents a year ago, beating Wall Street’s forecast.

Despite a choppy economic environment, Bloomin’ executives said they are “cautiously optimistic” about consumers’ willingness to dine out at its restaurants.

That includes at Outback, where customers seem to be noticing the food and service improvements the chain has made in an effort to revive its business over the past year.

One of Outback’s first areas of focus has been its steaks. It has invested in more training, with monthly reviews intended to boost accuracy and execution. And in November, it introduced a new steak lineup to reinforce its “steak excellence.”

It also launched a value meal, the Aussie 3-Course, with a starting price of $14.99 to appeal to price-conscious customers.

These efforts seem to be paying off, as customers are giving Outback higher marks across the board. Compared to last year, Outback’s brand trust is up by 4 points, service by 6, value by 5, atmosphere by 5, food by 4 and intent to return by 4, executives said Wednesday.

Same-store sales are still down, and traffic was down 2.4% in the quarter as well. But executives said the chain is closing its gap to the rest of casual dining, as measured by Black Box Intelligence data.

And in another encouraging sign, Outback’s performance improved in each month of the quarter and through April. These past two months have been closely watched by industry observers due to the spike in gas prices following the Iran war.

“I actually like where the guests and the consumer is right now. They're engaging our brands,” said Bloomin’ CEO Mike Spanos during the earnings call. “They're seeing casual dining and eating out as a very affordable luxury.”

In April, Outback began layering in another element of its turnaround plan, reducing its server-to-table ratio to 1:4, from 1:6. This is designed to allow waitstaff to provide better service during busy times. It will be fully rolled out by the end of the quarter, and early feedback has been positive so far, Spanos said.

“We really like what we're seeing in terms of intent to return, attentiveness to the server, likelihood to recommend the server,” he said, “and it's less stress.”

At 158-unit Bonefish, the 6% same-store sales growth was driven by 3% traffic growth. Executives credited new weekday offers such as Martini Mondays and Bang Wednesdays as well prix-fixe lunch specials for the lift.

Carrabba’s, meanwhile, has also benefited from day-of-week offers as well as experiential wine dinners and a revamped happy hour. It has now grown same-store sales in five straight quarters, though traffic was down 2.7% last quarter.

Bloomin’s total revenues in the quarter were $1.1 billion, a 1% increase year over year. Restaurant-level operating margin was 14%, a 0.1% improvement. Net income was $57.2 million, 31% higher than a year ago.

The company continues to expect combined same-store sales growth of 1% to 2% for the full year.