Outback Steakhouse's Traffic is on the Rise
Investments made by Bloomin’ Brands to improve the customer experience at Outback Steakhouse has resulted in the first quarter of improved traffic since 2016.
Same-store sales were up 0.6 percent at the steakhouse chain, while traffic increased 0.1 percent, but Bloomin’ credits hurricanes Harvey and Irma with affecting comparable sales by about 1 percent.
The company’s other restaurant brands posted negative same-store sales for the third quarter; Carraba’s dropped by 2.8 percent; Bonefish Grill dropped by 4.3 percent and Fleming’s Prime Steakhouse and Wine Bar dropped by 1 percent.
While Bloomin’ is optimistic about sales and traffic results it has seen in October, the company remains uncertain about the impact the holiday season will have on sales and traffic and has cut full-year guidance.
Facing competition from casual dining brands discounting and an increase in consumer preferences to dine at home, the company is pivoting away from value pricing on its menus and instead turning toward delivery and takeout.
During the quarter, the company opened its first Carrabba’s and Outback express unit, which does not allow for dine in and only serves delivery and take out orders. Bloomin’ plans to open several more this year and into 2018, and will use the new format’s performance to guide a delivery strategy.
In a conference call, Bloomin’ CEO Liz Smith said the company believes off-premise dining has the potential to reach 25 percent of total sales, and that 240 restaurants offer delivery. Smith said that Bloomin’ had a 42 percent lower marketing spend during the quarter as it continues to invest in customer experience rather than mass marketing campaigns on discounting, but that the company will retain dishes that range in price.
“We will always provide opportunities across the price point to surprise and delight,” she said.
The company has also been aggressively completing its multi-year rollout of redesigned locations and completed 150 in 2017. Smith says that in 2018 the program will shift to focus on interiors of locations that haven’t been updated since 2010.
Bloomin’ shares have risen by about 2 percent since the market closed yesterday.
"We were pleased with how we performed in a challenging third quarter," Smith said in a statement. "In particular, Outback's positive response to investments in the customer experience returned us to traffic growth in Q3. We have seen further strengthening across the portfolio in October; however, we maintain a cautious outlook on the industry as we enter the holiday season, and this is reflected in our updated guidance."