Bloomin’ Brands Inc. saw off-premise and delivery sales grow 18 percent in the fourth quarter ended Dec. 30, and the parent to Outback Steakhouse and Carrabba’s Italian Kitchen sees the category eventually reaching a quarter of its sales, executives said Thursday.
“We believe off-premise represents a structural tailwind for the category and has the potential to reach 25 percent of total sales in our restaurants over time,” said Elizabeth Smith, CEO and chair of the Tampa, Fla.-based casual-dining company, which also owns Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar.
“Given this potential, we have built the infrastructure, technology and capabilities to support these elevated sales volumes,” she said, adding that the company expects to complete its delivery rollout this year.
As the Outback brand embarks on interior remodels, after just completing renovation updates on its exteriors, it anticipates added areas for the off-premise business, she added.
Dave Deno, Bloomin’ Brands chief financial and administrative officer, said Bloomin’ had delivery in 488 units at the end of 2018 and expects the rollout to be completed with 600 units total by the end of this year.
Delivery currently makes up about 14 percent of the business, Deno said.
“We feel very good about the incrementality,” he said.
“And it's interesting, some of our highest-volume restaurants also have the
highest-volume delivery,” Deno said, which allayed concerns that the highest volume restaurants wouldn’t be able to accommodate the delivery volume as well.
Deno said the company is tracking track speed of service, customer satisfaction and other aspects of delivery and is making progress “every quarter on all those key measures.”
Delivery and off-premise sales do not have the same margin benefits as in-store sales, he noted.
“We won't have as high a margin because we're not delivering alcohol and beverage as in-restaurant experience, but, given the incrementality of the business, it helps us,” Deno said.
For the fourth quarter ended Dec. 30, Bloomin’ Brands net income was down 8.7 percent to $10.9 million, or 12 cents a share, from $12 million, or 13 cents a share, in the same period last year. Revenues were down 5.9 percent to $1 billion compared to $1.1 billion in the prior-year period.
Combined same-store sales for the Bloomin’ Brands domestic portfolio were up 1.6 percent in the quarter. Same-store sales were up 2.9 percent at Outback, up 0.8 percent at Carrabba’s, down 1.1 percent at Bonefish and down 0.4 percent at Fleming’s. Same-store sales were up 2.4 percent at the Brazil Outback division, the company reported.
Smith said Bloomin’s Dine Rewards loyalty program has reached 8 million members.
“We will evolve the program to further leverage the customer segmentation opportunities provided by the rich data we have collected over the years,” she said. Investments in the loyalty program and customer relationship management are yielding a better use of the company’s marketing spending, Smith added.
“For perspective, these investments have enabled us to reduce advertising spend by $25 million over the past few years while improving return on investment,” she said.
As of Dec. 30, Bloomin’ Brands owned and franchised 1,490 restaurants. It has 1,232 domestic restaurants, including 733 Outback Steakhouses, 227 Carrabba’s, 197 Bonefish Grills, 70 Fleming’s and five other units.
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