Bloomin’ Brands CEO Mike Spanos, a former Delta, Six Flags, and PepsiCo executive, came into the role in September, as many would, with no shortage of personal experiences dining at the group’s casual brands. His late father would go to Outback on Friday nights to grab a steak and beer. Spanos now brings his wife and kids there. He meets his in-laws at Carrabba’s for Italian, celebrates birthdays at Bonefish, and tap Fleming’s for elevated meals. The point being, Spanos understands what it’s like to be a loyalist of Bloomin’s restaurants. Now, can he speak to that same customer as traffic and sales trends continue to soften?
Year-over-year Q3 same-store sales declined at every brand at Bloomin’ except Fleming’s (1.2 percent over a negative 4.1 percent decline in the year-ago period). Outback dropped 1.3 percent against a lap of negative 1.1 percent last year; Carrabba’s fell 1.5 percent versus a 3 percent gain in Q3 2023; Bonefish decreased 1.4 percent on top of negative 0.5 percent. Total revenues also slid 3.8 percent from $1.079.8 billion to $1.038.8 billion thanks to lower comps, closures (Outback shuttered three U.S. stores and opened two in the quarter, while international closed 10 against nine openings), and the currency of the Brazilian Real relative to the U.S. dollar.
MORE: Outback to Sell Majority Ownership of Brazilian Business for $243 Million
Bloomin’ also lowered its full-year same-store sales guidance from negative 1 percent to flat to negative 1 to negative 0.5 percent.
Mainly, the drag is coming from traffic:
U.S.
Traffic
Outback
- Q3 2024: –3.9 percent
- Q3 2023: –6.1 percent
Carrabba’s
- Q3 2024: –3.4 percent
- Q3 2023: –0.1 percent
Bonefish
- Q3 2024: –8.5 percent
- Q3 2023: –5.7 percent
Fleming’s
- Q3 2024: –7.3 percent
- Q3 2023: –4.4 percent
Average check per person
Outback
- Q3 2024: 2.6 percent
- Q3 2023: 5 percent
Carrabba’s
- Q3 2024: 1.9 percent
- Q3 2023: 3.1 percent
Bonefish
- Q3 2024: 4.4 percent
- Q3 2023: 5.2 percent
Fleming’s
- Q3 2024: 8.5 percent
- Q3 2023: 0.3 percent
Naturally, given Spanos is just 60 or so days into the position, much of what’s on deck will unravel in the months ahead. He mentioned on the call Bloomin’ planned to reveal the blueprint next period. But Spanos did share some early thoughts, also admitting the company was “not pleased with our performance and we know we could do better.”
Operators have given Spano clear feedback through those initial weeks. One, they want “simplification in the simplest terms,” he said. Secondly, they want to get back to guest experience.
“They’re giving me feedback around center-of-the-plate improvements. They’re giving me feedback around how we remove barriers by simplifying the guest experience—very consistent feedback there,” Spanos said.
The other element is brand positioning. One “Outbacker” told Spanos, “they want to be great at a few things and not average at a lot of things.”
“That’s very clear,” he added. “So they want to have a really strong value every day that the guest knows, from a brand they trust, that they can get out there in a big way.”
And going back to the notion of courting loyalists, the average Outback customer today shows up about twice a year. Operators asked Spanos how to get to visit No. 3. “What they’re also telling me,” he said, “is to recruit new guests, we should recruit the right new guests that want to lean into the steak category, steak and seafood.”
There’s a lot to unpack in that motion, yet the framework isn’t complex. In past stops, Spanos led operations, marketing, consumer insights, revenue management, and food service teams. His model was always to manage with an operational focus and a guest-centric lens, he said. Namely, via three guiding principles he’s brought to Bloomin.’
It starts with the notion “leadership is a privilege, focused on the team member experience,” Spanos said. Essentially, stay close to managing and joint venture partners, as well as franchisees, to take the pulse of what they need to improve guest experiences through employees. A better team member journey results in high-quality, welcoming, elevated, and caring experiences for customers, Spanos explained.
The next principle builds on those customer interactions. “Our ability to consistently execute a memorable experience for our guests with a high-quality meal at a great value and a relaxing environment is what drives repeat visits and loyalty to our iconic brands,” he said. “Consumers want memorable experiences in away-from-home occasions. Every moment matters when guests choose to spend their hard-earned money and their precious time with us.”
Thirdly, Spanos believes Bloomin’ can ignite growth by focusing on its core. His observations so far show traffic, revenue, and profitability whitespace in every market. Initially, the two primary scalable areas, however, will be Outback and Carrabba’s. The former, Spanos said, simply has not sustainably grown traffic despite its global recognition and standing in a category that’s witnessed success from other brands (Texas Roadhouse and LongHorn, for instance, are among the casual category’s highest performers). The runway lies in improving customer experience through team member development, Spanos said. For Carrabba’s, which closed Q3 with 210 stores (192 company owned), it’s more of a unit count ambition.
“If I start with the problem, we are seeing declining same-store sales and we’re seeing declining traffic, and we have been losing share in the steak category,” Spanos said of Outback. “That is our reality right now.”
“If I look at what I think are the positives on the balance sheet, so to speak, we’ve got a great iconic brand. We’ve got a great team,” he continued. “The team is very passionate about the guest experience. And they’re very rooted in what I think is that Aussie spirit that a reverence that ‘No Rules, Just Right.’ The core ethos of the brand that’s out there. And we’re very much on trend in the steak category. So that I feel very good about.”
The gap exists within, again, the bucket of guest experience. Outback must create a great meal and value in a fun casual environment, Spanos said. That’s the kickoff point.
“I look at operational excellence as consistency, the team has told me that,” he said. “To me, that means we’ve got to be thoughtful about controlling what we can control, simplifying the agenda in the menu.”
Additionally, Spanos noted, Outback doesn’t want to be a bar and grill in terms of how it goes to market.
So the work turns to creating a differentiating experience rooted in Outback’s classic strengths. More is coming in February, Spanos said, in terms of what that looks like.
But regarding what’s been going on, Outback introduced greater value this past quarter in LTOs. The Aussie 3-Course meal, starting at $14.99 (the tier came down from $16.99), marked the lowest offering of the year for the chain. Only available for dine-in, it includes a soup or salad, entrée and side, and an individual slice of New York-style cheesecake.
CFO Michael Healy said Outback understands how critical value is to guests, which is why it’s working to take the least amount of pricing as possible while presenting compelling deals to compete with other chains (Chili’s and Applebee’s both promoted three-course architectures in recent months). The company was at about 4 percent pricing in Q3 and expects to be in that range in Q4.
Simplification, which starts in the back of the house, will aim at getting Outback “back to the core of that Aussie spirit,” Spanos said, “that steak, seafood core, and being all things to some people on the menu and not necessarily being all things to all people on the menu.”
He added “value” at a brand like Outback extends well beyond price. It’s a function of what something costs, what’s the benefit, and was it a great guest experience.
“And I start there,” Spanos said. “It’s that great meal, great value, great experience [in a] fun casual environment. That enhances that value because part of that value, that benefit, that feel, that memory you get when you walk out of an Outback.”
He’s drilling into what operators shared on how to execute LTOs relative to other innovation versus everyday value. Can Outback simplify the value of the promotional equation and also simplify the menu so it’s an easier-to-understand offering for customers and better-executed option for employees?
Outback wants to execute promotions that expand off its core, like the Aussie deal. What it doesn’t want to do, Spanos said, is bring in new items with value programs. These offers must generate transactions that retain loyal users or recruit the right kind of customers Outback wants long-term, versus inspiring a visit from a strictly-value driven diner who wouldn’t return without a deal.
“We know that we had to lower those opening price points,” Healey said. “We know that affordability matters. We know that how our prices compare to other steak competitors matters.”
Broadly, the blueprint for Bloomin’, which Spanos said will materialize next year, will be to emerge as a more focused and simpler company.
Q3 off-premises represented about 23 percent of total U.S. sales for the company. Third-party delivered represented 13 percent, which was an increase from 12 percent in Q3 2023, driven by catering growth.
Spanos said these trends and changes boil down to understanding the best results inside the four walls start with the leadership of its managing partners. “What I’ve seen is results that tell me when we get the right leadership, with the right accountability, and we simplify the agenda, we can unlock growth everywhere,” he said.
Spanos also intends to direct capital allocation efforts toward Bloomin’s base business, whether its repairs, remodels, relocations, etc. “I think to focus on better operations and better execution works when we reinvest in the restaurants as well,” Healy added. “And so, it has to be an and as we think about the investments or what we would need to do to support Outback.”
Getting the message out in the months to come, as the brand layers improvements in, is going to follow a curve of awareness to trial to repeat into loyalty, Spanos said. That’s the playbook. Start with the core users, retain them, and get loyal guest frequency up. If the average is two visits per year, lift them to three. That, he said, happens with great experiences. “That’s the foundation of brand trust and that’s the foundation of an intent to return,” Spanos said.
He then examines the same type of curve in recruiting. Bring in the type of customer who could become a loyalist—the diner who would be won over with experience, not price. “It’s going to be a focused steak and seafood experience with that Aussie spirit at a reverence where they get that great meal at that great value, that great experience,” Spanos said. “And then, we want to get them past the trial. We want to get them in to repeat. On both of those, regardless of what we’re saying, whether it’s social or traditional TV, we’ve got to be consistent in our operational excellence to deliver a great guest experience.”
“I think the foundation of any brand and any push or pull marketing starts with service,” he added. “And that’s guest experience. That to me is what we’ve got to focus on and first get right as we think about spends in terms of our voice to the customer base.”
