Bloomin' Brands, Inc. Q3 FY2024 earnings call

Mike Spanos highlighted the company's iconic brands, resilient team, and culture. He shared personal connections to Bloomin' Brands' restaurants. Acknowledged team resilience post-hurricanes and donated $500k to Red Cross. Outlined guiding principles: focus on team member experience, guest experience, and growth mindset. Identified growth opportunities at Outback Steakhouse (focus on sustainable traffic growth) and Carrabba's (assessing white space opportunity). Announced strategic partnership with Vinci Partners for Brazil operations, retaining 33% ownership.

Total revenues in Q3 2024 were $1 billion, down 4% from 2023. U.S. comparable restaurant sales were negative 150 basis points with traffic negative 440 basis points. Outback introduced greater value in LTOs, average check up 2.9% in Q3. Off-premises was approximately 23% of total U.S. sales, with third-party delivery at 13% of total U.S. sales. Q3 GAAP diluted earnings per share was $0.08 vs $0.45 in 2023, and adjusted diluted earnings per share was $0.21 vs $0.41 in 2023. Adjusted operating margins were 3% vs 5.3% last year, with factors like labor inflation and higher operating expenses contributing to margin decline, offset by cost of goods benefits and better-than-expected commodities.

Updated full-year 2024 guidance: comp guidance range revised to down 100 basis points to down 50 basis points. Adjusted diluted earnings per share guidance between $1.72 and $1.82. Hurricane impact on Q4 U.S. domestic comparable sales ~30 basis points, $0.03 impact on EPS. Commodity inflation guidance ~1%, adjusted tax rate 6%-7%. Q4 U.S. comparable restaurant sales expected down 200 basis points to down 100 basis points. Q4 adjusted diluted earnings per share expected between $0.32 and $0.42.

Industry softness and traffic trends volatility. Hurricanes impacted business and team focus. Inflationary pressures, particularly in beef category. Uncertainty around execution of strategic initiatives to drive growth.

Q: Thoughts on Outback's operations and near-term priorities?

A: Focus on guest experience, simplification of menu and agenda, and accelerating strategic work to sustainably grow traffic, comparable sales, and profitability.

Q: Portfolio thoughts and relationship with activist investor?

A: Collaborative relationship with Starboard, committed to domestic portfolio. Outback is primary growth opportunity, Carrabba's has steady traffic and sales, Bonefish focused on fresh seafood and bar experience.

Q: Insights from operators on Outback?

A: Operators want simplification, focus on brand positioning, increase guest frequency from 2 to 3 visits annually, and recruit right guests for steak and seafood.

Q: 4Q outlook and hurricane impact?

A: Q4 forecast reflects year-to-date trends, hurricane was a distraction for the team, consuming capacity and bandwidth.

Q: Marketing and brand positioning?

A: Focus on retaining loyals, recruiting right guests, consistent guest experience across awareness, trial, repeat, and loyalty stages. Marketing spends flat year-over-year.

Q: Capital allocation and dividend?

A: Committed to dividend, will be clear on cash returns after completing strategic plan. Focus on disciplined capital allocation for base business, debt, and shareholder returns.

Q: Brazil transaction and CapEx?

A: Transaction with Vinci Partners, $40M CapEx in Brazil over past 12 months. Focus on returns from Brazil business while simplifying domestic operations.

Q: Pricing and off-premise?

A: Balanced approach on pricing across volume, price, and mix levers. Focus on guest experience in off-premise, ensuring menu items travel well and guest interaction is positive.