In the week that ended May 3, Bloomin’ Brands had 23 Outback restaurants open for limited dine-in service. And those locations reported same-store sales declines of 17 percent, year-over-year, with “with limited declines in off-premises business.” While a microscopic sample, it provided an optimistic view into what life might look like during a COVID-19 recovery period.
The casual-dining operator, which also directs Bonefish Grill, Carrabba’s, and Fleming’s, provided an update Tuesday ahead of its Q1 review, scheduled for Friday. The likely reason being that 23 restaurant figure is about to balloon.
CEO David Deno said Bloomin’ expected to close business Tuesday with 336 total restaurants running with limited seating across multiple states.
A big question hovering over restaurants during this reopening process is whether or not restricted dine-in business will prove incremental to off-premises gains nurtured during the pandemic, or if it will simply pull from the mix and essentially replace it.
The previous week’s Outback sales suggest the first result, which is positive news for Bloomin’ as it tries to turn back the COVID-19 tide.
Deno said Bloomin’ is opening with additional sanitation and disinfecting practices and enhanced hand-washing protocols. Employees are wearing gloves and facial protection. Additionally, it’s offering contactless payment options to guests.
Dining rooms are also being reconfigured to adhere to social distancing and reduced capacity standards, with Bloomin’ leveraging its table management notification system to allow guests to wait in their cars. No crowded lobbies.
The company stopped non-essential spending, reduced marketing expenses, and deferred nearly all of its capital expenditures. Deno added Bloomin’s decision to not terminate or furlough employees at the corporate level will allow it to reopen quickly with no re-hiring or training expenses.
Here’s a look at how same-store sales have progressed across Bloomin’s portfolio:
(To note: The week ending April 12 includes the benefit of Easter)
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
Week ending April 19
- Outback: –40.3 percent
- Carrabba’s: –54 percent
- Bonefish: –74.3 percent
- Fleming’s: –77.9 percent
Week ending April 26
- Outback: –41 percent
- Carrabba’s: –50.3 percent
- Bonefish: –72.6 percent
- Fleming’s: –73.7 percent
Week ending May 3
- Outback: –38.4 percent
- Carrabba’s: –47.2 percent
- Bonefish: –70.7 percent
- Fleming’s: –74.1 percent
And here are Bloomin’s average off-premises weekly sales per restaurants (units open 18 months or more):
Outback
- 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 April 19: $41,246
- Week ending April 26: $39,828
- Week ending May 3: $39,648
Carrabba’s:
- 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 April 19: $26,825
- Week ending April 26: $26,822
- Week ending May 3: $26,523
Bonefish
- 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 April 19: $16,442
- Week ending April 26: $15,483
- Week ending May 3: $15,643
Fleming’s
- 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
- Week ending April 19: $21,403
- Week ending April 26: $20,086
- Week ending May 3: $20,848
At current sales levels, Bloomin’ is burning through about $6 million to $8 million in cash each week. That’s down from the company’s previous burn rate of $8 million to $10 million, announced in mid-April.
“We have leveraged our strong off-premises business since the pandemic required the closure of our dining rooms,” Deno said in a statement. “As a result, we have tripled our average off-premises sales per restaurant since the beginning of March. This is a testament to the strong affinity for our brands, and our decision to invest significantly over a number of years into building a robust delivery network to complement our take-out business.” More on those in-house efforts here.
Bloomin’ also provided some Q1 sales cadence to illustrate how things have progressed. The company was off to a solid start. For the period, it swung a loss of $41.6 million, or 44 cents per share, from a profit of $82.5 million (69 cents per share) in Q1 2019.
Same-store sales:
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
In November 2019, Bloomin’ announced it was exploring and evaluating strategic alternatives. This was a relatively complex matter but it boiled down to the company’s market price not reflecting its sales performance and intrinsic value, according to Deno.
In response, it retained BofA Securities as financial adviser and started looking at other ways to maximize shareholder value. It was a process that could include a sale, a strategic investment, something else, or nothing at all.
Bloomin’ then outlined a plan in February to save $40 million in 2020 and 2021 ($20 million each year), by restructuring leadership and reducing infrastructure costs thanks in large part to investments in digital and automation. A third phase promised a rebalanced approach to allocation of free cash flow, including doubling dividends while having flexibility to pay debt, repurchase shares, and reinvest in the brand.
This new look Bloomin’ saw Jeff Carcara and Michael Kappitt, EVPs of Bonefish Grill and Carrabba’s Italian Grill, respectively, depart the company. Gregg Scarlett, president of Outback since July 2016, was then promoted to chief operating officer of “casual dining restaurants” to oversee all three chains. Brett Patterson, Outback’s group vice president of operations, replaced Scarlett as Outback’s president.
Deno said this restructuring under a “casual dining portfolio” would allow it to improve operations and leverage expertise between the chains.
Bloomin’ also revealed at the time it was engaged in discussions about the possible sale of its business in Brazil, which includes Outback Steakhouse and Abbraccio Cucina Italiana restaurants.
On Monday, the company said that while it implemented the 2020 cost savings measures and remains committed to the plan, it suspended further activity in respect to the strategic review process as “we prioritize our response to the COVID-19 pandemic.” This includes a suspension of discussions with interested parties concerning the Brazil sale.
“Through February all of our concepts were positive in sales and traffic. We achieved meaningful expansion of our adjusted operating margins during those eight weeks, and we had begun to see the benefits of our expected $40 million of cost savings that we outlined in February,” Deno said. “Once we have successfully navigated the ongoing crisis, we believe that we will be well positioned to build on our early 2020 success and emerge a stronger company.”
