OSI Restaurant Partners LLC said it planned to remodel as many as 150 Outback Steakhouse units and focus new unit development on the Bonefish Grill brand.
The Tampa, Fla.-based company told securities analysts it would increase investments this year to between $125 million and $150 million to include restaurant development and improvements in corporate infrastructure and efficiency upgrades.
In addition to spending between $40 million and $50 million to renovate as many as 150 Outback Steakhouse locations, the company also will spend about $15 million to $25 million on expansion with an emphasis on Bonefish Grill, which OSI hopes to grow by six to 10 units in 2011.
Another $15 million to $20 million is earmarked for infrastructure upgrades, like a new point-of-sale system in OSI’s restaurants, officials said.
For the fourth quarter ended Dec. 31, 2010, OSI reported net income of $12.7 million, compared with a net loss of $29.9 million a year earlier.
Total revenue rose 2 percent to $911 million. Domestic same-store sales rose across its four large, core brands, including gains of 2.4 percent at Outback, 9.3 percent at Bonefish, 5.4 percent at Carrabba’s and 18.4 percent at Fleming’s.
For the full year, OSI reported net income of $21.6 million, compared with a $54 million loss in fiscal 2009. Revenues rose 0.7 percent to $3.63 billion. Same-store sales rose 1.5 percent at Outback, 6.5 percent at Bonefish, 2.9 percent at Carrabba’s and 10.4 percent at Fleming’s.
Chief financial officer Dirk Montgomery said renovation packages tested by the company in 2010 for Outback yielded a same-store sales lift that averaged from 3 percent to 5 percent and improved the locations’ customer survey scores for overall guest satisfaction and atmosphere.
“We feel like we’re getting a very solid return for these renovations,” Montgomery said. “As for the pace of remodeling, over the course of the year it will be stable quarter to quarter. But we try to do fewer renovations at the end of the year so as not to disturb holiday business.”
Chief executive Liz Smith said OSI is planning to renovate about 400 Outback units over the next several years and would explore similar remodeling strategies for its other brands.
OSI also operates or franchises Carrabba’s Italian Grill, Fleming’s Prime Steakhouse & Wine Bar, and Roy’s Hawaiian Fusion.
“We are doing the same due diligence across all our concepts; that work is ongoing at Carrabba’s and Fleming’s and is always being done on Bonefish,” Smith said. “Outback is our priority for 2011, but that work goes across the portfolio.”
Commodity cost inflation looms in OSI’s outlook for 2011. The company forecasts overall commodity prices to rise between 3 percent and 5 percent, Montgomery said, but OSI plans to mitigate those effects by taking some “moderate” price increases of 1 percent to 2 percent, contracting for about 70 percent of its basket of goods, and targeting about $50 million in productivity gains.
OSI operates or franchises 968 Outback Steakhouses, 152 Bonefish Grills, 233 Carrabba’s Italian Grills, 64 Fleming’s units and 22 Roy’s locations.
Contact Mark Brandau at [email protected].