Bloomin’ Brands(BLMN) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues in Q3 2024 were $1 billion, down 4% from 2023, primarily due to a decline in comparable restaurant sales and FX translation impacts [25][32] - Q3 GAAP diluted earnings per share were$ 0.08 compared to $0.45 in 2023, while adjusted diluted earnings per share were$ 0.21 versus $0.41 in 2023 [27] - Adjusted operating margins were 3% in Q3 2024, down from 5.3% in the previous year, with restaurant-level margins declining by 150 basis points [28] Business Line Data and Key Metrics Changes - U.S. comparable restaurant sales were negative 150 basis points, with traffic down 440 basis points, consistent with casual dining industry trends [25] - At Outback, average check increased by 2.9% in Q3 2024, while off-premises sales accounted for approximately 23% of total U.S. sales [26] - The third-party delivery business grew to 13% of total U.S. sales, up from 12% in Q3 2023, driven by catering growth [26] Market Data and Key Metrics Changes - The company is experiencing a challenging market environment, with industry softness impacting performance and traffic trends [21][32] - The hurricanes negatively affected U.S. domestic comparable sales by approximately 30 basis points in Q4, impacting profitability by about$ 0.03 per share [33] Company Strategy and Development Direction - The company aims to focus on improving the guest experience and operational excellence, particularly at Outback Steakhouse and Carrabba's [19][20] - A strategic partnership with Vinci Partners for Brazil operations was announced, retaining 33% ownership to simplify and focus on domestic operations [22][23] - The company plans to share a meaningful update on the Outback and Bloomin' Brands strategy in the next earnings call [20] Management's Comments on Operating Environment and Future Outlook - Management expressed dissatisfaction with current performance and acknowledged the need for improvement, particularly in guest experience and traffic growth [21][39] - The updated full-year guidance reflects continued industry softness, with adjusted diluted earnings per share expected to be between $1.72 and$ 1.82 [32] - Management emphasized the importance of operational excellence and a strong team member experience to drive guest loyalty and repeat visits [41][85] Other Important Information - The company has repurchased 10.1 million shares for approximately $266 million year-to-date, with a remaining authorization of$ 97 million [31] - A quarterly dividend of $0.24 per share was declared, payable on December 11 [31] Q&A Session Summary Question: Concerns about Outback's guest experience and traffic - Management acknowledged declining same-store sales and traffic at Outback, emphasizing the need to enhance the guest experience and operational excellence [41][43] Question: Thoughts on the portfolio and activist investor relations - Management described a collaborative relationship with the activist investor Starboard, focusing on sustainability and guest experience [46] Question: Insights from operators on brand positioning - Operators expressed a desire for simplification and a focus on core offerings to enhance guest experience and frequency of visits [51][52] Question: Reinvestment in the brand and asset base - Management confirmed the importance of reinvesting in the base business for sustainable growth, including repairs and remodels [59][60] Question: Changes to the menu at Outback - Management indicated a focus on simplification and returning to core offerings to improve guest experience [68] Question: Current value positioning of Outback - Management highlighted the importance of balancing price and benefits to enhance perceived value, with a focus on affordability [70][72] Question: Marketing strategy and brand positioning - Management emphasized the need for a strong guest experience as the foundation for brand loyalty and trust, while maintaining flat marketing spends year-over-year [86]