OSI Restaurant Partners LLC, parent to Outback Steakhouse and Carrabba’s Italian Grill, swung to second-quarter profit, crediting its value-positioning programs with improving same-store sales at its four major restaurant chains.
OSI reported Friday a profit of $19.2 million for the quarter ended June 30, compared with a net loss of $88.1 in the same quarter a year ago. Latest-quarter revenue rose 1.2 percent to $917 million. Restaurant sales were up 1.1 percent, to $908.9 million, the company said.
“The increase in revenue was driven by positive same-store sales in all brands, and store openings,” said Dirk Montgomery, chief financial officer for Tampa, Fla.-based OSI. Increases in same-store sales were offset by the loss of revenue from the sale of the 34-unit Cheeseburger in Paradise chain in September 2009, he said.
OSI’s four concepts each showed positive same-store sales and traffic in the quarter: At the 966-unit Outback, same-store sales rose 3.6 percent; at the 233-unit Carrabba’s, same-store sales increased 0.6 percent; at the 152-unit Bonefish Grill, results rose 5.6 percent; and at the 64-unit Fleming’s Prime Steakhouse and Wine Bar, results increased 9 percent. OSI maintains a minority joint-venture interest in Roy’s, but it does not report sales for that concept.
“Outback sales comps had the largest improvement relative to Q1, jumping 6 points from the first to the second quarter in the absolute,” Montgomery said in a Friday conference call with investors. He credited menu and marketing efforts with increasing both frequency and penetration for Outback.
Montgomery said holiday promotions for Mother’s Day and Father’s Day and improved limited-time offers, which include a sirloin-lobster meal and a $13.95 steak-and-crab special. These were accompanied by advertising expenditures, which were up from the same quarter of last year.
“In the first half of the year, we invested in research and brand-repositioning-strategy work,” he said. The results of which included smaller dishes at Carrabba’s and value-positioning at Outback, he noted.
“Consumer value perceptions are as much determined by benefits and the experience received vs. simply a low overall price,” Montgomery said. “We believe there is not one set price associated with value, and we are committed to providing our consumers with a superior experience and an appealing price.”
Montgomery said OSI expects to have 80 Outback Steakhouse renovations completed by the end of the year. About 50 of those remodels are in this fiscal year, he said. Each of those range in cost from $150,000 to $300,000, he said, and the company is still testing which components are most effective.
OSI was acquired in June 2007 by an investor group comprised of Bain Capital Partners LLC, Catterton Partners and company founders Chris T. Sullivan, Robert D. Basham and J. Timothy Gannon.
Contact Ron Ruggless at [email protected].