If there’s one thing Bloomin’ Brands is going to file away from its COVID-19 journey, it’s simplification. Everything from optimizing menus to enhancing labor models to marketing and restaurant support.
While on the mind of the Outback, Carrabba’s, Fleming’s, and Bonefish Grill parent before the crisis, execution was packed into a five-month window. And it’s exposed efficiencies the company won’t abandon.
CFO Chris Meyers on Friday said Bloomin’s P&L saw positive movement in several areas from recent changes, which helped it generate positive cash flow last month. For instance, despite lower overall check averages, cost of goods sold tracked only 10 basis points higher than 2019. Streamlined menus—in place from the onset of coronavirus—reduced food waste to record low levels.
Hourly labor as a percentage of sales also declined 190 basis points in June from pre-COVID-19 (excluding relief pay paid to hourly employees). The culprit: A significant reduction in food prep hours.
“That’s absolutely something we want to preserve moving forward,” Meyer said during the company’s Q2 review. “That’s going to help in cost of goods sold in terms of waste reduction. And it’s going to help in labor in terms of fewer prep hours. So those areas are absolutely key focuses for us.”
Bloomin’ CEO David Deno didn’t divulge exact details on menu cutbacks, only to say the company was moving forward aggressively. He noted “lower mixing appetizers, lower mixing entrees, and lower mixing sides” fell off of late. Meanwhile, Bloomin’ was “really plussing up the stuff that we do so well” on.
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Taking hours out the back has been a key COVID-19 focus for ops teams, Meyers added. And it’s going to influence which items return when Bloomin’ exits the pandemic.
Outback has sliced offerings by about a third during COVID-19. But Deno said he expects some to flow back. So the end-game simplification won’t be that severe.
Regardless, crisis-time learnings will define Bloomin’ on the other side of COVID-19, he said. “We are leveraging these learnings to drive more operating efficiency in the restaurant in the current environment and as we emerge in a post COVID world,” Deno said.
And there’s reason to be optimistic about the potential.
COVID-19 spikes in states like Texas and Florida haven’t slowed Bloomin’, Deno said. In fact, 129 restaurants across its portfolio (105 of which were Outbacks) posted positive same-store sales this past week. Half of those were in the South.
Roughly 21 percent of Bloomin’s corporate stores reside in its home base of Florida. Yet there’s been essentially no material impact to date, Meyer said.
Overall, in the week ending July 19, Outback’s same-store sales declined just 10.7 percent versus the prior year at 527 restaurants open with partial dine-in service. Only 36 remained restricted to off-premises only, and they fell 38.6 percent.
Outback’s same-store sales (at reopened units) have stayed under negative 13.6 percent every week since the end of May.
JPMorgan Monday lifted Bloomin’ to an “Overweight” rating after it was set at “Neutral.” The upgrade based on its view that the resumption of on-premise activity was going smoother than most industry peers.
Bloomin’ did trim its domestic footprint in Q2, however. In the period, which ended June 28, Outback permanently shuttered 13 restaurants (nine corporate and four franchises). Bloomin’ also closed five company-run Carrabba’s, eight Bonefish Grills, and two Fleming’s. Combined, it permanently closed 28 locations stateside and opened two (two closed internationally along with 16 openings).
In all of 2019, Bloomin’ closed 20 locations across its portfolio (12 Outbacks) and opened six units. The prior year, 14 shut down (nine Outbacks) and six opened as well.
The company closed Q2 with 1,187 total restaurants in the U.S. There were 1,460 total including international. Bloomin’ had 1,232 domestic restaurants as of December 30, 2018 and 1,218 a year later.
As of June 28, there were 708 Outbacks (567 company run), 220 Carrabba’s (199 corporate), 189 Bonefish Grills (182 company), and 65 Fleming’s (no franchises).
Here is a look at recent sales trends across Bloomin’s portfolio, which illustrates one of the broader recoveries across the casual-dining sector:
Outback
Restaurants with open in-restaurant dining
Week ended June 21 (includes Father’s Day)
- Average sales volume: $70,007
- Comparable restaurant sales: 6.8 percent
- Number of restaurants: 464
Week June 28
- Average sales volume: $57,048
- Comparable restaurant sales: –11.6 percent
- Number of restaurants: 491
Week ended July 5
- Average sales volume: $54,741
- Comparable restaurant sales: –13.6 percent
- Number of restaurants: 530
Week ended July 12
- Average sales volume: $59,309
- Comparable restaurant sales: –9.7 percent
- Number of restaurants: 525
Week ended July 19
- Average sales volume: $60,095
- Comparable restaurant sales: –10.7 percent
- Number of restaurants: 527
Restaurants with off-premises-only dining
Week ended June 21
- Average sales volume: $42,140
- Comparable restaurant sales: –36.4 percent
- Number of restaurants: 99
Week ended June 28
- Average sales volume: $39,361
- Comparable restaurant sales: –41.9 percent
- Number of restaurants: 72
Week ended July 5
- Average sales volume: $33,604
- Comparable restaurant sales: –48.6 percent
- Number of restaurants: 33
Week ended July 12
- Average sales volume: $39,316
- Comparable restaurant sales: –42.2 percent
- Number of restaurants: 38
Week ended July 19
- Average sales volume: $43,462
- Comparable restaurant sales: –38.6 percent
- Number of restaurants: 36
Carrabba’s
Restaurants with open in-restaurant dining
Week ended June 21
- Average sales volume: $53,049
- Comparable restaurant sales: –0.7
- Number of restaurants: 180
Week ended June 28
- Average sales volume: $45,579
- Comparable restaurant sales: –16.5 percent
- Number of restaurants: 183
Week ended July 5
- Average sales volume: $39,975
- Comparable restaurant sales: –17.3 percent
- Number of restaurants: 193
Week ended July 12
- Average sales volume: $44,355
- Comparable restaurant sales: –15 percent
- Number of restaurants: 191
Week ended July 19
- Average sales volume: $44,704
- Comparable restaurant sales: –16.5 percent
- Number of restaurants: 191
Restaurants with off-premises-only dining
Week ended June 21
- Average sales volume: $37,431
- Comparable restaurant sales: –32.4 percent
- Number of restaurants: 19
Week ended June 28
- Average sales volume: $33,073
- Comparable restaurant sales: –38.5 percent
- Number of restaurants: 16
Week ended July 5
- Average sales volume: $25,759
- Comparable restaurant sales: –40.2 percent
- Number of restaurants: 6
Week ended July 12
- Average sales volume: $30,315
- Comparable restaurant sales: –33.5 percent
- Number of restaurants: 8
Week ended July 19
- Average sales volume: $31,347
- Comparable restaurant sales: –33 percent
- Number of restaurants: 8
Bonefish Grill
Restaurants with open in-restaurant dining
Week ended June 21
- Average sales volume: $48,132
- Comparable restaurant sales: –14.6 percent
- Number of restaurants: 155
Week ended June 28
- Average sales volume: $39,866
- Comparable restaurant sales: –31.8 percent
- Number of restaurants: 156
Week ended July 5
- Average sales volume: $35,442
- Comparable restaurant sales: –29.4 percent
- Number of restaurants: 167
Week ended July 12
- Average sales volume: $38,553
- Comparable restaurant sales: –28.9 percent
- Number of restaurants: 162
Week ended July 19
- Average sales volume: $39,553
- Comparable restaurant sales: –32.4 percent
- Number of restaurants: 162
Restaurants with off-premises-only dining
Week ended June 21
- Average sales volume: $32,106
- Comparable restaurant sales: –49.4 percent
- Number of restaurants: 26
Week ended June 28
- Average sales volume: $34,354
- Comparable restaurant sales: –47 percent
- Number of restaurants: 25
Week ended July 5
- Average sales volume: $29,823
- Comparable restaurant sales: –48 percent
- Number of restaurants: 14
Week ended July 12
- Average sales volume: $28,101
- Comparable restaurant sales: –51.2 percent
- Number of restaurants: 19
Week ended July 19
- Average sales volume: $30,346
- Comparable restaurant sales: –51.9 percent
- Number of restaurants: 19
Fleming’s
Restaurants with open in-restaurant dining
Week ended June 21
- Average sales volume: $80,957
- Comparable restaurant sales: 14.9 percent
- Number of restaurants: 56
Week ended June 28
- Average sales volume: $57,131
- Comparable restaurant sales: –26.3 percent
- Number of restaurants: 58
Week ended July 5
- Average sales volume: $42,193
- Comparable restaurant sales: –9.6 percent
- Number of restaurants: 52
Week ended July 12
- Average sales volume: $45,546
- Comparable restaurant sales: –24.2 percent
- Number of restaurants: 48
Week ended July 19
- Average sales volume: $46,944
- Comparable restaurant sales: –27.4 percent
- Number of restaurants: 48
Restaurants with off-premises-only dining
Week ended June 21
- Average sales volume: $44,888
- Comparable restaurant sales: –50 percent
- Number of restaurants: 9
Week ended June 28
- Average sales volume: $32,101
- Comparable restaurant sales: –68.3 percent
- Number of restaurants: 7
Week ended July 5
- Average sales volume: $43,838
- Comparable restaurant sales: –44.6 percent
- Number of restaurants: 13
Week ended July 12
- Average sales volume: $43,377
- Comparable restaurant sales: –55.3 percent
- Number of restaurants: 17
Week ended July 19
- Average sales volume: $49,769
- Comparable restaurant sales: –51 percent
- Number of restaurants: 17
Same-store sales
Week ended June 21
- Outback: –0.8 percent
- Carrabba’s: –3.9 percent
- Bonefish: –20.1 percent
- Fleming’s: 3.8 percent
Week ended June 28
- Outback: –15.7 percent
- Carrabba’s: –18.3 percent
- Bonefish: –34.1 percent
- Fleming’s: –32 percent
Week ended July 5
- Outback: –15.7 percent
- Carrabba’s: –17.9 percent
- Bonefish: –31 percent
- Fleming’s: –20 percent
Week ended July 12
- Outback: –12 percent
- Carrabba’s: –15.7 percent
- Bonefish: –31.4 percent
- Fleming’s: –35.5 percent
Week ended July 19
- Outback: –12.6 percent
- Carrabba’s: –17.1 percent
- Bonefish: –34.6 percent
- Fleming’s: –35.8 percent
Nearly all of Bloomin’s domestic restaurants (92 percent) were reopened with limited in-restaurant dining capacity as of July 19. It’s helped Bloomin’ flip around from blended negative comps of 50 percent in late April to negative 17–19 percent in recent weeks. Deno also noted “our decision to not furlough any employees during this pandemic has allowed us to quickly prepare our restaurants to re-open dining rooms in a safe and efficient manner.”
Before COVID-19, Bloomin’ pushed about $10 million per week in total off-premises sales. It peaked around $32 million in April prior to reopenings. With most of the footprint back on line, Bloomin’ generated $23 million in off-premising dining this past week on $52 million of total sales. So the current dynamic is 55 percent in-restaurant, 45 percent off-premises.
Trends to follow
Over the last three weeks, Outback was able to retain more than 50 percent of its off-premises volumes built up during dining-room closures in April. Of that mix, to-go represents 55 percent, in-house delivery 13 percent, and the rest third-party. “Off-premises remains a large opportunity and a significant part of the go-forward strategy,” Deno said.
What Outback is finding, he added, is that third-party users return lower party sizes and tend to be new users. Guests who go direct are core customers.
In that off-premises movement, there is whitespace to capture. Deno said the changing landscape presents Bloomin’ a chance to reposition assets and relocate restaurants—an effort that was successful pre-pandemic. With real estate opening up from widespread industry closures, Outback will have a chance to move restaurants to more convenient trade areas, and build updated units designed to capture off-premises business. Things like to-go rooms and assets laid out to capitalize on delivery. The company noted previously it identified 100 Outbacks it could relocate for various reasons. “We’re going to pursue that … with a great deal of determination, Deno said.
He added, as of June, Bloomin’ was paying rents “with no issues,” but was taking the opportunity to restructure leases and reduce the company’s cost structure.
By Thursday, Bloomin’ total liquidity position was $502 million, which included about $138 million of domestic cash and $364 million of capacity on its revolving credit facility.
In Q2, the company posted total quarterly revenue of $578.5 million, a 43.4 percent year-over-year decrease from Q2 2019’s $1.02 billion. Combined comps declined 39.4 percent and Bloomin’ swung to a net loss of $92.4 million ($1.05 per share) from a profit of $29 million (32 cents per share) in the year-ago period.
The road forward
Deno laid out Bloomin’s six steps to “emerge as a stronger company and more formidable competitor on the other side of this crisis.”
Firstly, upgrade food, menu, and service systemwide. The company invested in this direction pre-virus. Notably, Outback spent upward of $400 million in remodels to contemporize the brand and improve curb appeal, and forked up $50 million on the customer experience over the past four or so years. Of that, $30 million was focused on food quality—portion enhancements and reducing complexity—and $20 million on service, training, and labor.
“This cycle of continuous improvement is aimed at enhancing our value proposition to consumers while taking minimal pricing,” Deno said.
Next, Bloomin’ wants to continue to push into delivery and carry-out.
“This pandemic has proven the importance of this channel and the role of convenience for our consumers,” he said.
The third element is marketing and digital technology. “For example, we are making changes to the online ordering platform to enhance stability and performance in this critical channel,” Deno said. “We’ve also implemented new tools that will enable us to pursue targeted digital marketing efforts that provide a high return on investment.” Bloomin’ said Friday there were 11 million members in its Dine Rewards loyalty platform.
Deno said Bloomin’ expected to “lead the way in taking care of our people and providing the benefits they need, attracting and keeping a talented and diverse workforce is the key to success in this business.”
Also, the company aims to enhance liquidity position and strengthen its balance sheet. “Our improved sales performance combined with the recent bond offering and steps taken to tightly manage cash has enhanced our liquidity position,” Deno said. “This also provides ample financial flexibility moving forward and enables us to capitalize on future opportunities.
“And finally,” he added, “we will accomplish all this while adhering to strict safety measures, protecting team members and customers remain the top priority. We want consumers to feel safe in any channel, whether that is in our restaurants or in the convenience of their own home.”
