In what was a tough quarter for the restaurant industry, Bloomin’ Brands reported on Wednesday an overall same-store sales increase of 1.6 percent and a traffic increase of 2.2 percent at domestic company-owned locations during the first quarter.
Chief executive Elizabeth Smith said the performance is attributable to strategic planning at the company’s brands: Outback Steakhouse, Bonefish Grill, Carrabba’s Italian Grill, Fleming’s Prime Steakhouse and Wine Bar, and Roy’s.
Initiatives include a slow rollout of lunch at Outback and Carrabba’s, as well as an ongoing restaurant relocation program, which has helped increase sales by as much as 40 percent at select Outback locations.
During a call three months ago to discuss the company’s results for the fourth quarter of 2012, Smith struck a cautious tone, saying 2013 would likely be off to a “choppy” start due to “some lingering political issues” that might be causing uncertainty among consumers. Indeed, many companies experienced declining same-store sales during the first quarter, citing the same macroeconomic factor: higher gas prices, bad weather and payroll tax increases.
Still, during the quarter, same-store sales increased 2.5 percent at Outback Steakhouse, 0.5 percent at Bonefish Grill and 5 percent at Fleming’s restaurants. Carrabba’s Italian Grill reported a same-store sales decrease of 1.7 percent.
“We were very pleased with how we finished the first quarter,” Smith said of Bloomin’ Brands. “We were able to once again outperform the segment.”
Net income for the quarter increased to $58.7 million, or 50 cents per share, from $53.1 million, or 47 cents per share, the year prior. Total revenue for the quarter rose 3.5 percent to $1.1 billion.
Banking on lunch
Lunch service will be a big part of future planning at Outback and Carrabba’s locations, according to Smith. “How we choose it and what markets have to do with demographics, a convergence of where we can build out and also get bang for our buck on a marketing communication front,” she said. “And so, there's a couple different factors that come in, and we have that all mapped out over the next 2 years. Obviously, for competitive purposes, I don't think we want to get into what store, what quarter.”
By the end of the year, the company plans to have weekday lunch available at 34 percent of Outback Steakhouses. About 50 percent of the Outback “fleet” will support a weekday lunch service in the long term, Smith said. At Carrabba’s, 26 percent of restaurants should offer weekday lunch by the end of 2013.
“This is going to be a very staged, very thoughtful rollout,” said Smith.
Referring to Outback’s store relocation program, Smith said as many as 100 restaurants will be potential candidates for the moves. The moves will likely occur during the rest of 2013 and some of 2014, she said.
The idea is to move underperforming stores into locations where they can be more successful, she said.
Andy Barish, an equity analyst with Jefferies, said Bloomin’ performed well during the quarter due to menu, design and service changes the company has made in the recent past. Although Carrabba’s is lagging behind its peers at the company, there’s no need to panic, he wrote in a report.
“Carrabba’s is still a few steps behind Outback in terms of executing on [Bloomin’s] growth strategy, but we think it is well-positioned in the fragmented [casual dining] Italian category to take share from older, less innovative concepts,” Barish wrote.
Overall, Bloomin’ Brands expects to have same-store sales growth of 2 percent with positive traffic for the full year 2013.
Tampa, Fla.-based Bloomin’ Brands has nearly 1,500 restaurants systemwide, 975 of which are Outback Steakhouses.
Contact Erin Dostal at [email protected].
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