Along with Tender Shack, Bloomin’ credited one other major initiative of 2020 for its current trajectory: A new Outback menu that launched in September 2020, which is outperforming test markets.
The tightened-up offering reinforces steak through more accessible, premium cuts and larger portions, while also lowering menu prices. For instance, there are now combos, like Center-cut Sirloin & Aussie Twisted Ribs. The menu separates steaks by cooking style—Season and Seared, Slow-Roasted, and Char-Grilled.
Thus far, Deno said Outback’s witnessed strong customer preference as guests trade up to larger cuts of steak, appreciate larger portions, and increase attachment rate on appetizers thanks to the lower prices. Additionally, Outback’s efficient menu design reduced complexity and improved consistency. It also led to “record low levels of waste” over the back half of the year.
In terms of Q4 adjusted performance by cost category, COGS was 60 basis points favorable, year-over-year, thanks to that cutback. The company is in the midst of a two-year plan to simplify overhead structure and save $40 million. About $25 million was realized in 2020, with most of the benefits impacting the G&A line, Meyer said. The cumulative total after 2021 will present 100 basis points of operating margin improvement from 2019, when adjusted operating margins were 4.8 percent on $4.1 billion of total revenues.
For more perspective on the menu initiative, before the switch, Outback had six menus present on the table for guests. Everything from drinks to LTOs to Happy Hour. “The amount of time that it took a server to articulate all these menus was inefficient. So simple things like that, honestly … they add up in a redefined service model that we think can be far more efficient moving forward than it was coming into this. And that's just the front of the house,” Meyer said.
In the back, Outback’s been able to significantly reduce prep hours.
The steakhouse chain’s third lever these days is off-premises volume, and maintaining elevated business as dine-in returns.
Bloomin’s blended same-store sales declined 17.7 percent in Q4 (13-week period that ended December 17). Comps fell 15.2 percent at Outback; 11.4 percent at Carrabba’s; 27.1 percent at bar-heavy Bonefish; and 29.7 percent at Fleming’s, which has a sizable California footprint.
Bloomin’s Q4 revenues came in at $812.5 million, down 20.5 percent from $1.022.2 billion in Q4 2019.
Added restrictions in late November, forced roughly 15 percent of Bloomin’s corporate portfolio to switch back to off-premises-only business.
So far in Q1, U.S. comps improved to negative 12.9 percent. Dining rooms reopened throughout January. And as of Thursday, 99 percent of Bloomin’s domestic stores were open for some level of in-restaurant dining.
For the seven-week period leading up to February 14:
- Outback: –10.8 percent
- Carrabba’s: –6.1 percent
- Bonefish: –21.3 percent
- Fleming’s: –26.1 percent
“There are several factors likely contributing to this momentum, including the reopening of dining rooms, the benefits from government stimulus and, most importantly, momentum behind our growth initiative,” Meyer said.
This past quarter, though, off-premises represented 37 percent of Bloomin’s domestic business. It mixed 40 and 46 percent at Outback and Carrabba’s, respectively.
Bloomin’ worked on expanding this corner of its business well before COVID, investing in white-label channels as well remodeled real estate. “Mix is important. But total revenue per channel is really important,” Deno said. “And our goal, which we are seeing in the first quarter, by the way, as restaurants reopen, our goal is to keep that revenue, profitable revenue and grow it from there.”
“We think about these channels entirely differently,” he added. “So you've got in-restaurant experience and you have a carryout experience and delivery experience. We talked today about Tender Shack. So, these all come together to provide the customer experience. And because it's a largely incremental business, it's a profitable business that flows through to us. And we are very, very, very mindful of the consumer measures that drive success, like delivery times, customer satisfaction, accuracy.”
Deno said Outback, in particular, has an opportunity to expand its footprint. Bloomin’ is testing a smaller building, which it’s done successfully in Brazil. He said a delivery-enabled, smaller unit “makes a lot of sense,” and could unlock expansion. The brand has already done 50 or so Outback relocations and those are generating north of $5 million in revenue with solid profitability and cash flow. “When you have restaurants doing well over $5 million, it's clear that the brand is very highly regarded. And we were just real estate disadvantaged in certain cases and we're trying to correct that,” Deno said.
While still early, he added they’ve see 5–10 percent closures across the restaurant landscape, with a lot of them being independents. He believes it could settle in the 5–15 percent range.
“And we're obviously monitoring that very carefully. We don't wish any ill will on any restaurant operator,” Deno said. “But I think you can imagine, this has enabled real estate opportunities for us for relocations at Outback, new restaurants, et cetera. And we are prepared to, and we have the muscle to go in and do that.”