Much of this is related to reduced circulation of traditional marketing vehicles. And while there is a natural pickup in check average that accompanies a drop in discounting, CFO Chris Meyer said, the top-line boost doesn’t fully offset negative traffic.
“We are comfortable with this tradeoff,” Meyer said, “given the quality of traffic that is coming into our restaurants. This quality is enhanced by the improved ROIs on our marketing programs and the monetization of our investments in food and service.”
Deno said Bloomin’ would continue to evaluate its discounting PPA tradeoff throughout the year.
“We're growing this business for the long term,” Meyer added. “We're trying to seed this idea of building long-term, healthy, sustainable traffic growth that isn't reliant on discounting as a way to drive the comp sales results.”
But all of that noted, discounting isn’t dead at Bloomin’ Brands. It will always be a part of the company’s portfolio, Meyer said. The difference is, quarter to quarter, the company will evaluate whether or not it’s the right strategy relative to the LTOs running and so forth. It won’t be the safety valve it once was. “And our longer-term goal, of course, like we've always talked about, is to have our pricing be less than inflation to help with the value equation there,” Deno said.
The philosophical change has stirred for some time as Bloomin’ courts healthy, sustainable, ongoing, organic traffic, he added. “As we look at the cost opportunities in our business, the productivity opportunities in our business … we want to improve the long-term value equation for our customer, while investing behind key elements in our business in food and service, and we will continue with that strategy.”
Check average rose 2.9 percent at Outback in Q2 after hiking 3.4 percent to start the year. Bloomin’ expects its per person check averages to ratchet down as the year progresses. Absolute menu price increases were lower sequentially from Q1 to Q2, with menu mix representing a prominent component. And that’s driven more by value-oriented LTO price points, which ebb and flow by the period. Meyer said it’s a key point to mention since both of those items were partially offset by the increase in check average that comes with a reduction in discounting.
“The company's done a really good job having the discipline to walk away from unprofitable discounting and build healthy traffic. That's where we're going to be going,” Deno said.
The current sales levers at hand: Dine Rewards, capital investments in remodels, delivery, improving dine-in sales via food and service improvements.
But let’s highlight delivery, where Outback is ready to launch some significant news.