• Total Revenue: $1 billion, down 4% from 2023.
• US Comparable Restaurant Sales: Negative 150 basis points.
• Traffic: Negative 440 basis points.
• Average Check Increase: 2.9% in Q3 versus 2023.
• Off-Premises Sales: 23% of total US sales.
• Third-Party Delivery Sales: 13% of total US sales, up from 12% in Q3 2023.
• GAAP Diluted EPS: $0.08 versus $0.45 in 2023.
• Adjusted Diluted EPS: $0.21 versus $0.41 in 2023.
• Adjusted Operating Margins: 3% versus 5.3% last year.
• Labor Wage Inflation: 3.8% for the quarter.
• Cost of Goods: 50 basis points favorable.
• Total Debt Net of Cash: $1 billion at the end of Q3.
• Share Repurchase: 10.1 million shares for approximately $266 million.
• Quarterly Dividend: $0.24 per share.
• Full Year 2024 Adjusted EPS Guidance: $1.72 to $1.82.
• Commodity Inflation Guidance: Approximately 1%.
• Adjusted Tax Rate Guidance: Between 6% and 7%.
• Brazil Operations Enterprise Value: BRL2.06 billion.

• Warning! GuruFocus has detected 2 Warning Sign with BLMN.

Release Date: November 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bloomin Brands Inc (NASDAQ:BLMN) has iconic brands with strong growth potential, particularly in the steak and Italian casual dining categories.
• The company has a strategic partnership with Vinci Partners for its Brazil operations, retaining a 33% ownership, which is expected to drive future growth.
• Despite challenges, the company has a good balance sheet with ample cash flows, providing financial stability.
• The company is focused on improving the guest experience and operational excellence, which is expected to drive traffic and profitability.
• Bloomin Brands Inc (NASDAQ:BLMN) has demonstrated resilience and community support, notably donating $500,000 to the American Red Cross for hurricane recovery efforts.

Negative Points

• Total revenues in Q3 2024 were down 4% from 2023, primarily due to a decline in comparable restaurant sales and FX translation impacts.
• US comparable restaurant sales were negative 150 basis points, with traffic down 440 basis points, reflecting broader industry challenges.
• Q3 adjusted diluted earnings per share decreased to $0.21 from $0.41 in 2023, impacted by asset impairment and closure-related charges.
• Restaurant-level margins declined by 150 basis points, driven by labor wage inflation and higher operating expenses.
• The company is not satisfied with its 2024 performance and acknowledges the need for improvement in execution and traffic growth.

Q & A Highlights

Q: In terms of operations and guest experience at Outback, where do you think improvements are needed to boost repeat traffic? Are there any immediate actions planned? A: Michael Spanos, CEO, noted that Outback has been experiencing declining same-store sales and traffic, losing share in the steak category. He emphasized the need to enhance the guest experience by offering a great meal and value in a fun environment. Spanos is personally involved in accelerating strategic work to improve Outback's performance, focusing on operational excellence and simplifying the menu.

Q: Could you discuss your thoughts on the broader portfolio, particularly regarding Carrabba's and Bonefish, and any insights on your relationship with activist investors? A: Spanos highlighted a collaborative relationship with Starboard, emphasizing their shared focus on guest experience and business sustainability. He sees growth opportunities in Outback and Carrabba's, with Carrabba's showing steady traffic and sales growth. For Bonefish, the focus is on simplifying the menu and enhancing the core brand experience centered around fresh seafood and an energetic bar.

Q: What feedback have you received from operators that differs from your initial expectations, particularly regarding the guest experience? A: Spanos mentioned that operators consistently seek simplification and a return to core brand values. They emphasize improving the guest experience, focusing on center-of-the-plate improvements, and increasing guest frequency. Operators believe in the brand's potential and are passionate about serving guests.

Q: Regarding the Q4 outlook, what factors contributed to the change in annual EPS guidance? A: CFO Michael Healy explained that the guidance adjustment reflects a more conservative view on traffic trends, aligning with year-to-date performance. The impact of hurricanes and Brazilian tax components were also considered. The company aims for transparency in forecasting and focuses on enhancing the guest experience.

Q: How do you view the current pricing strategy at Outback, and is there potential for adjustments to improve guest frequency? A: Spanos emphasized a balanced approach to pricing, considering volume, inflation, and mix. The focus is on providing value through a great guest experience. The company is evaluating entry price points and promotional strategies to attract sustainable traffic without over-relying on new menu items.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.