CEO David Deno has given up his salary to help workers.
So far, Bloomin’ Brands has achieved something few restaurant chains can claim during the COVID-19 pandemic: The company hasn’t laid off or furloughed any employees as a result of the crisis.
The casual-dining parent of Outback, Bonefish Grill, Carrabba’s, and Fleming’s employs more than 90,000 people. It provided a business update Thursday that revealed, like many others, a steep mid-March decline coupled with a boom in off-premises business.
Yet it’s the employee note that differs from the pack.
CEO David Deno announced earlier in the month he would forgo his base salary “in excess of the amount necessary to cover his required contributions to his employee benefits and related payroll taxes.” Essentially, he was giving up his paycheck from the period beginning April 6 to aid front-line employees. Bloomin’s board of directors suspended cash retainers as well.
Deno, the company’s former EVP and chief financial and administrative officer, took over the CEO position in March 2019, succeeding Liz Smith.
He said Thursday Bloomin, to date, has provided four weeks of relief pay, as well as free meals for pick-up, for any hourly employee impacted by dining room closures. “We hope to be able to continue providing these benefits and will reassess our ability to do so every two weeks,” he said.
Since COVID-19 landed in early March, any Bloomin’ worker quarantined or suffering from a personal illness related to coronavirus has received pay. Additionally, every employee has had free access to the company’s employee assistance program for additional support, and Bloomin’ funded 100 percent of benefit premiums for people not working and receiving relief pay.
The group stepped up best practices, too. “While our restaurant operators are accustomed to safe food handling and hygiene practices, which includes only allowing healthy employees to work, we have heightened those existing strict standards,” Deno said. “We have made changes to offer further protection for customers and employees, including additional sanitation and disinfecting practices, enhanced hand-washing protocols and increased use of gloves and facial protection.”
In terms of sales in the trenches, Bloomin’s off-premises business has ticked upward each week since switching to a takeout and delivery-only model March 20. The company has nearly tripled its total take since the beginning of March—something Deno credited to Bloomin’ investing “significantly into building a robust delivery network to complement our takeout business.”
This allowed the company to keep “substantially” all of its locations open, he said.
In short, the company spent $50 million in a three-year span on customer-facing improvements, like food quality, portion enhancements, service and labor investments ($20 million alone), and efforts to remove complexity. From 2016 to 2018, Outback took a 70 percent reduction in historical menu items, recipe, and SKU changes, from 475 to 140. The number was 682 in 2015.
But related to this particular conversation, Outback also dropped north of $400 million on remodels to contemporize restaurants and improve curb appeal. And part of that investment involved testing multiple design prototypes that could meet a changing customer preference for convenience. Notably, an expanded off-premises room for added order volumes.
So while Bloomin’ entered 2020 with 88 percent of its business coming within the four walls, it was methodically updating assets to serve more takeout and delivery orders.
It’s a move that’s paid off in recent weeks as it’s helped make an unprecedented pivot a little less painful for operators on the ground level. The company previously noted it planned to remodel 300 additional locations in the next three years to support takeout and that 74 percent of its customers prefer direct delivery, which is something, as noted, Outback built out to join its third-party business.
Bloomin’ is even getting ready to open its first stand-alone Aussie Grill in Lutz, Florida, in the first half of 2020, according to the Laker/Lutz News. The fast casual Outback spinoff will include a drive thru and dining room and be 2,925 square feet with a 305-square-foot patio.
Outback struck a major delivery deal with DoorDash in September 2019, becoming the largest steakhouse on its platform. After launch, off-premises hiked 20 percent year-over-year in Q4, the company said, jumping to 15 percent of sales. Carrabba’s saw 32 percent growth in the channel to reach 21 percent of mix.
Deno said then off-premises business was proving to be incremental and management reported little cannibalization to its own delivery network. In-house research showed the DoorDash customer was a different type of delivery guest, with distinct purchasing patterns. They came later in the day. Generated a smaller check.
“This future validates our omni-channel approach,” he said.
A major key as it pertains to COVID-19: This same in-house program embedded off-premises business into Outback’s culture before it launched with DoorDash. “We weren’t starting from ground zero,” Deno said earlier in the year.
And now, it was able to hit the ground running when it had to and keep employees involved and restaurants open during unprecedented conditions.
“Consistent with our approach in other areas, we are prioritizing cash usage toward supporting our people and maximizing our off-premises business,” Deno said Thursday.
In recent weeks, Bloomin’ halted non-essential spending, reduced marketing expenses, and deferred nearly all of its capital expenditures. The company is also reviewing opportunities to increase its liquidity, Deno said.
“Although this situation is challenging, we are looking forward to emerging as a better, stronger, operations-focused company,” he said. “I am more convinced than ever of the important role that full-service restaurants will continue to play in the lives of our customers and our communities.
Here’s a look at how Bloomin’s sales have progressed:
Week ending March 1
- Outback: 0.4 percent
- Carrabba’s: 6.5 percent
- Bonefish: 5 percent
- Fleming’s: –1.9 percent
Week ending March 8:
- Outback: 0.5 percent
- Carrabba’s: 0.7 percent
- Bonefish: –4.5 percent
- Fleming’s: –7 percent
Week ending March 15
- Outback: –18 percent
- Carrabba’s: –16.2 percent
- Bonefish: –23.4 percent
- Fleming’s: –23.2 percent
Week ending March 22
- Outback: –63.7 percent
- Carrabba’s: –67.5 percent
- Bonefish: –83.4 percent
- Fleming’s: –82.3 percent
Week ending March 29
- Outback: –63.5 percent
- Carrabba’s: –68.7 percent
- Bonefish: –82.7 percent
- Fleming’s: –85.6 percent
Week ending April 5
- Outback: –60.6 percent
- Carrabba’s: –64.7 percent
- Bonefish: –79.2 percent
- Fleming’s: –82.7 percent
Week ending April 12
- Outback: –52.2 percent
- Carrabba’s: –53 percent
- Bonefish: –68.2 percent
- Fleming’s: –63.9 percent
Like its counterparts, Bloomin’s sales hit has been steeper in fine dining. Yet its ability to stay sub 70 percent for Outback and Carrabba’s actually differs from most.
How off-premises weekly sales per restaurant have grown:
- Week ending March 1: $12,674
- Week ending March 8: $12,628
- Week ending March 15: $12,983
- Week ending March 22: $21,781
- Week ending March 29: $27,013
- Week ending April 5: $28, 211
- Week ending April 12: $33,161
- Week ending March 1: $11,877
- Week ending March 8: $12,099
- Week ending March 15: $12,291
- Week ending March 22: $15,151
- Week ending March 29: $18,821
- Week ending April 5: $19,457
- Week ending April 12: $25,377
- Week ending March 1: $3,453
- Week ending March 8: $3,579
- Week ending March 15: $4,422
- Week ending March 22: $6,348
- Week ending March 29: $11,313
- Week ending April 5: $12,463
- Week ending April 12: $18,696
- Week ending March 1: NM (not meaningful)
- Week ending March 8: NM
- Week ending March 15: NM
- Week ending March 22: $9,261
- Week ending March 29: $12,664
- Week ending April 5: $13,781
- Week ending April 12: $28,077
Note: The week ending April 2020 includes the benefit of the Easter holiday. Still, the Fleming’s number jumps out given where it was earlier in the month.
Bloomin’ also provided first-quarter preliminary comparable year-over-year results.
Eight weeks ended February 23:
- Outback: 2.2 percent
- Carrabba’s: 4.5 percent
- Bonefish: 2 percent
- Fleming’s: 2.4 percent
Five weeks ended March 29:
- Outback: –28.1 percent
- Carrabba’s: –29.9 percent
- Bonefish: –38.6 percent
- Fleming’s: –40 percent
Thirteen weeks ended March 29
- Outback: –9.5 percent
- Carrabba’s: –8.7 percent
- Bonefish: –13.9 percent
- Fleming’s: –13.2 percent
As of April 15, Bloomin’s said it had about $304 million in cash on hand in its domestic bank accounts. At recent sales levels, it expects ongoing weekly cash burn rate to be about $8 million to $10 million, excluding any additional changes to net working capital.