The second phase of the plan includes a reduction of infrastructure costs thanks in large part to investments in digitization and automation. The third is a rebalanced approach to allocation of free cash flow, including doubling the dividend while having flexibility to pay debt, repurchase shares, and reinvest in the brand.
“Regardless of the outcome of the strategic review, one thing is clear: Bloomin’ Brands will be a transformed company,” Deno said.
The search for alternatives rages on with a backdrop of consistent figures for Bloomin’s flagship brand, Outback. In Q4, same-store sales at company-owned domestic units grew 2.7 percent (579 locations), the 12th straight quarter of positive comps. In 2019, domestic comp sales at corporate stores increased by 2 percent. U.S. traffic dipped 0.7 percent in 2019 and rose by 0.6 percent in the fourth quarter. Average check grew by 2.1 and 2.7 percent in Q4 and the full year, respectively. Bloomin’ oversees 724 domestic Outback restaurants, 145 of them franchised.
Bloomin’ Brazil is attracting interest for a reason, according to Deno. Outback (99 units) saw a 4.9 uptick in comp sales in Q4 and a 5.8 percent jump in 2019. Traffic leaped 8.2 percent in Q4, compared to a 2.5 percent drop in 2018. That was driven by a promotion called “All-Stars,” featuring menu favorites at reduced prices. In 2019 overall, traffic increased 3.9 percent compared to a 4.4 percent dip in 2018.
“The market remains underpenetrated and the future growth potential of this business is tremendous,” Deno said.
Carrabba’s Italian Grill (204 U.S. company locations), Bonefish Grill (190 U.S. company locations), and Fleming’s Prime Steakhouse & Wine Bar (68 U.S. company locations) each saw slight increases in domestic company-owned same-store sales in the full year and fourth quarter. Carrabba’s and Fleming’s witnessed positive traffic numbers in 2019 (0.2 percent, 0.1 percent) after dipping 4.1 percent and 4.3 percent, respectively, in 2018. Although Bonefish’s traffic stood at negative 1.7 percent in 2019, it’s an improvement from the 2.6 percent decline in 2018. Bonefish and Fleming’s experienced a small lift in average check in 2019, but Carrabba’s slid by 0.1 percent.
Bloomin’ ended 2019 with $4.1 billion in revenue and $1.02 billion in Q4, both slight year-over-year increases. Seven restaurants opened in Q4, five of them internationally.
“Overall, this was a very good year for our company,” Deno said. “We built on the platform and investments that were implemented over the last several years to improve execution in our restaurants and allow new growth opportunities across the portfolio. None of this would be possible without the dedication and commitment of our over 90,000 team members.”
The top objective going forward, Deno said, is to maintain sales across the company, particularly at Outback. In the past three years, Bloomin’ has invested more than $50 million in food quality and portion enhancements, service and labor investments, and efforts to reduce complexity in the restaurants.
Another priority is taking advantage of the growth in off-premises sales. After the launch of DoorDash in the fall, off-premises hiked 20 percent year-over-year at Outback in Q4 and now accounts for 15 percent of sales. Carrabba’s saw 32-percent growth in Q4; off-premises is 21 percent of sales at the concept. Deno said the off-premises business is proving to be incremental and management has seen little cannibalization to its own delivery network.
Bloomin’ plans to open 25 new locations (mostly in Brazil), accelerate the growth of new Outback restaurants, relocate nine units, and start a new round of interior remodels at Outback stores.
U.S. comp sales are expected to grow between 1 percent and 1.5 percent in 2020, driven by a 1 percent increase in average check, investments in the customer experience, and growth in off-premises sales.
“We feel good about both the fourth quarter results and where we finished 2019,” Meyer said. “The domestic business is on strong footing and our Brazilian business is performing at an extremely high level.”