It was a little over a year ago when Bloomin’ Brands publicly made the call, from the doldrums COVID-19, to not furlough any staff. CEO David Deno gave up his base salary to aid front-line workers. The company’s board of directors suspended cash retainers.
On Thursday, Deno said the decision, which bucked industry trends at the time, has led to low turnover and a higher staffing pool, even amid one of the most convoluted labor arenas of the past three decades. “Maintaining a motivated and well-trained and engaged employee base is critical to our long-term success,” Deno said during a conference call. “As sales volumes are now exceeding pre-pandemic levels, these actions provide a competitive advantage to retaining talent as the industry faces some staffing challenges.”
“We are staffing where we need to be,” he added. We don’t have any significant problems. “
Bloomin’ hoped the move would hasten recovery when the landscape allowed for it. And that time appears to have arrived.
The combination of improving in-restaurant capacity, pent-up consumer demand, and additional stimulus jolted Bloomin’s performance of late.
In the four weeks ended April 25, Outback Steakhouse ran same-store sales 13.3 percent above 2019 levels. Versus 2020—when lockdowns were in full effect—Outback was 120.4 percent better, year-over-year.
Four weeks ended April 25
The other brands:
Carrabba’s
- Comparable to 2019: 18.6 percent
- Comparable to 2020: 166.4 percent
Bonefish Grill
- Comparable to 2019: 2.4 percent
- Comparable to 2020: 289.3 percent
Fleming’s Prime Steakhouse & Wine Bar
- Comparable to 2019: 16.5 percent
- Comparable to 2020: 360.5 percent
Combined U.S.
- Comparable to 2019: 12.6 percent
- Comparable to 2020: 155.8 percent
Weekly sales (four-week period March 29 through April 25)
- Outback: $79,150
- Carrabba’s: $66,498
- Bonefish: $62,688
- Fleming’s: $98,465
- Combined U.S: $74,903
As will be the case for full-service restaurants throughout the rest of 2021, basically until the summer months, the two-year view is the more telling one. April results are like comparing to the aftermath of a natural disaster.
In Q1, the 13-week period that ended March 28, Outback’s same-store sales climbed 4.1 percent, year-over-year, but down 5.8 percent versus 2019.
Similar trends were seen throughout:
All of Q1
Carrabba’s
- Comparable to 2019: –0.6 percent
- Comparable to 2020: 8.9 percent
Bonefish Grill
- Comparable to 2019: –16.3 percent
- Comparable to 2020: –2.9 percent
Fleming’s Prime Steakhouse & Wine Bar
- Comparable to 2019: –15 percent
- Comparable to 2020: –2.3 percent
Combined U.S.
- Comparable to 2019: –7.3 percent
- Comparable to 2020: 3.3 percent
Upward mobility has been significant. Average weekly sales at restaurants increased from about $62,000 in January to $75,000 in March.
Beyond external realities—such as improving consumer sentiment and more openings—CFO Chris Meyer said Bloomin’ rode several sales levers, such as a new menu at Outback and the introduction of virtual brand Tender Shack. Additionally, overall investments and expansion of the company’s off-premises business.
Over the course of Q1, Bloomin’ reported relatively consistently weekly off-premises sales volumes, even as in-restaurant sales returned. The company started and ended the period averaging roughly $23,000 per restaurant, per week, in off-premises take. The category presented 35 percent of Bloomin’s U.S. sales in Q1, down just 2 percent from Q4.
What that amounts to, from an incremental angle, is about $10,000 per store, per week at Outback and Carrabba’s compared to pre-pandemic. Before COVID, off-premises weekly sales volume hovered around $13,000 per unit. Outback mixed 15 percent of sales outside its four walls in those days (it was 38 percent in Q1). Carrabba’s was a touch north of 20 percent (and 42 percent this past period). The category was essentially nonexistent at Bonefish (it’s now 25 percent) and Fleming’s. One side note about Fleming’s is that, given its large California footprint, 17 percent of locations were closed for in-restaurant dining until mid-March.
Off-premises was something Bloomin’ took plenty serious before COVID, especially in terms of investing in direct channels to balance third-party partnerships. Outback was testing multiple design prototypes, including a model with an expanded off-premises room for added order volumes. Two years prior to its 2019 agreement with DoorDash, Outback started work on an in-house platform to learn the frequency and behaviors of off-premises customers, Deno said at the time.
Today, about 65 percent of all off-premises sales in Q1 for Bloomin’ came through the company’s white-label digital channels, representing 147 percent growth versus last year. And Outback is in the process of updating its mobile app, Deno said, to improve execution for customers and operators, with an expected Q3 launch date.
“We believe that as we’ve made the investment in off-premises carryout and delivery in over the years that it’s an incremental occasion,” Deno said. “And our goal is to retain as much of that weekly volume as possible. And we’ve been very successful, as dining room reopen to retain much of that.”
More than half of the 35 percent off-premises mix for Bloomin’ in Q1 stemmed from to-go curbside. An important result, Meyer said, since the curbside margin is effectively as good as an in-restaurant experience.
But can Bloomin’ truly hold these figures? The company ended Q1 with 100 percent of its domestic corporate units open with restaurant dining—up from 85 percent at year’s end.
Deno addressed what he called the “skeptics out there” regarding off-premises gains.
“We have made significant investments in our digital efforts,” Deno said. “And we improved our online ordering system this quarter to make it easier to do a lot of different things we hadn’t done before. We’re also making other digital investments that will enable the off-premises business. So, this is not a static event. This is something we’re going to continue to build and grow.”
Bloomin’ witnessed other positive trends, too. The latest round of stimulus proved a catalyst, as noted earlier. The company saw a large increase, Deno said, in weekly sales volumes over the final two weeks of Q1—after checks started going out.
But momentum carried forward, as evidenced by the more recent 12.6 percent two-year basis result and restaurants continuing to average $75,000 per week in sales.
Outback’s new menu, for instance, isn’t a flash effort. Bloomin’ used the pandemic as an opportunity to hit the whiteboard. It was as preemptive as it was reactionary.
The goal being to lead with steak, or “reinforce our steak leadership,” as Deno put it, through more accessible premium cuts and larger portions, while also lowering menu prices. What this has done, he said, is please value seekers while also empowering customers to trade up to larger cuts. The attachment rate on appetizers and beverages has climbed as well.
On the back end, a more streamlined menu reduced complexity, improved consistency and execution, and cut down on waste and prep hours.
Deno added Bloomin’ would “be doing similar work” at its other brands.
The company also expects to spend anywhere from $20 million to $30 million on IT goals. Updates could include tablets for servers.
In other initiatives, Bloomin’ plans to build “a few” Aussie Grill test units—its counter-service model. Earlier in the year, Bloomin’ said four were on deck for the Tampa Bay, Florida, area. There are currently two domestic shopping mall units and a free-standing venue that came to market in May (also in Tampa Bay). The latest version includes a drive-thru attached to a 687-square-foot box.
Deno offered some color into Tender Shack’s progress. Bloomin’ announced in February it was bringing the virtual concept national, stretching to more than 700 kitchens.
When dine-in returned, Deno said Tender Shack’s performance “did soften a bit.” But the company still believes in its earlier target of $75 million annualized sales. “But we have some work to do on that,” he said.
“With the restaurants reopening, we’ve got to increase the brand awareness, we’ve got to add some potentially some additional products, we’ve got to look at pickup opportunity in our restaurants. And we’re looking at some partnerships,” he said.
The pickup outlet is something Chili’s recently explored with its virtual brand, It’s Just Wings.
“But most importantly, our sales volumes right now … they are profitable,” Deno said. They’re above the goals that we need to set. And we expect to see further improvement so far in the Tender Shack opportunity.”
With all of this in mind, however, pent-up demand for in-store dining remains target No. 1.
“As the country opens up, people want to come back into restaurant dining. We’re keeping our off-premises sale, which is so great. But we are seeing that throughout our system. We’re seeing it throughout our concepts,” Deno said.
Bloomin’ booked revenues of $987.47 million in Q compared to year-ago figures of $1.01 billion.
