Bloomin’ Brands(BLMN) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues in Q1 2025 were $1,050 million, down 1.8% from 2024, primarily due to restaurant closures and a decrease in comparable restaurant sales [22][24] - U.S. comparable restaurant sales were negative 50 basis points, with traffic down 390 basis points, which was below the casual dining industry [22][23] - Q1 GAAP diluted earnings per share were $0.50 compared to negative $1 in 2024, while adjusted diluted earnings per share were $0.59 versus $0.64 in 2024 [24][25] - Adjusted operating margins were 6.1%, down from 7.8% last year, driven by a decline in restaurant level margin and inflationary pressures [25][26] Business Line Data and Key Metrics Changes - Positive comparable sales were noted at Carrabba's and Fleming's, but overall performance was below industry standards [8][10] - Off-premises sales accounted for 23% of total U.S. sales, with third-party delivery making up 11% [23] - Menu simplification efforts included reducing menu items by approximately 10% at Outback and 20% at Bonefish, aimed at improving execution and guest satisfaction [12][13][66] Market Data and Key Metrics Changes - The company experienced a disappointing February, including a weaker Valentine's Day week, and noted a consumer pullback during the Easter holiday [9][10] - Households earning under $100,000 were identified as the most pressured demographic, impacting overall sales [44][78] Company Strategy and Development Direction - The company is focused on three operating priorities: simplifying the agenda, delivering a great guest experience, and turning around Outback Steakhouse [10][17] - A third-party consulting firm has been hired to assist with strategy and cost-saving initiatives, with a commitment to reducing debt leverage post-Brazil transaction [20][27] - The company aims to reinvest in restaurants, reduce debt leverage to below 3.0 times, and return capital to shareholders [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed dissatisfaction with financial and market share results, acknowledging the need for improvement in the current choppy macro environment [9][10] - The outlook for the remainder of the year assumes continued challenges, particularly in consumer spending and holiday performance [38][39] - Management is committed to transparency regarding results and business progress throughout the year [10][19] Other Important Information - The Board declared a quarterly dividend of $0.15 per share, payable on June 4, 2025, with $97 million remaining under the share authorization program [28] - The company expects to be at the low end of its full-year adjusted diluted earnings per share range of $1.20 to $1.40, influenced by the extinguished Brazil tax benefit and cautious consumer behavior [29][30] Q&A Session Summary Question: Outlook for the remainder of the year - Management acknowledged underperformance compared to industry benchmarks and emphasized the need for improvement in value perception and operational execution [36][37] Question: Softer holiday trends - Management noted that while some brands performed well, overall results were below expectations, particularly among households earning under $100,000 [43][44] Question: Same store sales and traffic performance - Management indicated that the entire value proposition needs to be addressed, focusing on food quality, value, and consistency of execution [46][47] Question: Price and mix component of same store sales - Mix was relatively flat in Q1, with expectations for a slight decline in Q2 due to the impact of value offers [50][51] Question: Employee feedback on execution - Employees expressed a desire for simpler execution processes and less complexity in operations [60][61] Question: Test stores performance - Management reported positive feedback from test stores regarding food quality and guest experience, with plans for a deliberate rollout based on learnings [87][88] Question: Current value construct effectiveness - Management acknowledged the need to improve the value proposition, particularly at Outback, and emphasized the iterative nature of their approach [92][93]