Same-store sales fell for all four Bloomin’ Brands Inc. concepts in the fourth quarter, the company said on Wednesday, when the company announced plans to close 14 Bonefish Grill locations.
Same-store sales fell 2.2 percent at Outback Steakhouse, 4 percent at Carrabba’s Italian Grill, 5.4 percent at Bonefish Grill and 0.3 percent at Fleming’s Prime Steakhouse & Wine Bar in the quarter ended Dec. 27. Combined, the Tampa-based company’s four brands saw same-store sales decline 2.8 percent in the period.
“We knew back-half trends would be challenged,” CEO Liz Smith said on the company’s earnings call Wednesday. She noted that the company reduced ad spending in the quarter to prepare for initiatives in 2016. “Our No. 1 priority in 2016 is to grow domestic sales.”
Bloomin’ Brands said it plans to close 14 Bonefish Grill locations as part of a restructuring of the struggling polished casual concept, which currently has 210 locations. Most of those locations will be closed this year, and the company recorded a $24.2 million asset impairment charge during the period.
Bloomin’ Brands said it plans to start a company-wide loyalty program, called Dine Rewards, that would give customers as much as 50 percent off their next order if after they make three visits to one of the company’s brands.
Company executives said they expect that program to have a sales lift of 1 to 2 percent, based on the performance of that loyalty program in three test markets.
In addition, Bloomin’ Brands plans to release an app for Outback Steakhouse at the end of the current quarter, which would enable customers to “control their experience” at one of the chain’s restaurants — including pay at the table.
The company also plans to sell most of its real estate this year and return cash from those deals to shareholders.
The company has 258 properties that, “We do not intend to own long term,” CFO Dave Deno said on the call.
The company plans to sell most of those properties, holding back as much as 15 percent for potential relocation opportunities, in a combination of individual transactions and larger deals.
Funds from the deals will be used to pay off a $300 million bridge loan. “The intent is to buy back shares with any excess proceeds,” Deno said.
Sales were strong in Brazil, where Outback Steakhouse recorded a 7.3-percent increase in same-store sales in the fourth quarter. Same-store sales were flat in the chain’s Korea market. Executives on the earnings call said they plan to continue adding locations in Latin America and Asia.
The system finished the year with 1,507 locations, including 755 domestic Outback Steakhouse locations, 247 Carrabba’s, 215 Bonefish Grill locations and 66 Fleming’s Prime Steakhouse.
Revenues in the quarter fell 5.3 percent to $1.05 billion, from $1.11 billion, in the same period a year ago. For the year, revenues fell 1.5 percent to $4.38 billion from $4.42 billion.
Net income in the quarter fell 20 percent to $19 million, or 15 cents per share from $24 million or 18 cents. For the year, however, net income increased 37 percent to $131.6 million, or $1.04 per share, from $95.9 million, or 73 cents.
For the year, Outback’s same-store sales rose 1.8 percent, the sixth straight year of increases. The company’s fourth quarter was the toughest comparison for the year, as the chain’s same-store sales in the fourth quarter of 2014 rose 6.4 percent in what at the time was the best, post-recessionary performance for the steak chain.
In 2016, the chain plans to make investments in the menu with new steak cuts, presentations and topping, such as a hand-carved roasted sirloin at $10.99.
“We’re investing significant dollars into existing products,” Smith said.
Outback is also running into intensifying competition from other casual-dining concepts, many of which have started advertising steak deals as beef costs decelerate. “The promotional market is and will continue to be challenging,” Smith said. “But that’s the nature of the casual dining industry.” She said the company is “completely confident” in the ability for Outback to continue to gain share in that industry.
The company will continue to remodel the exterior of the chain’s restaurants, with plans to remodel 160 locations this year. Remodels of 33 locations resulted in 5 percent sales growth at those units. And Outback is working to relocate locations.
At Carrabba’s, the chain recently introduced its new menu, a menu designed to generate traffic, even at the expense of average check. The same-store sales decline in the fourth quarter was expected, Smith said, given the chain’s reduced advertising as it geared up for that new menu.
Consumers’ response to the menu has been “positive,” Smith said. “Traffic will be the key measure of success,” she said.
As for Bonefish, the chain’s 5.4-percent same-store sales decline was also expected as the company is working to “return to its polished casual roots.” The chain removed 135 recipes from its system to simplify operations. So far, guest satisfaction is up “significantly,” Smith said.
Contact Jonathan Maze at [email protected].
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