Bloomin’ Brands, Inc. (NASDAQ:BLMN) Q3 2023 Earnings Call Transcript

So as such, I do think we expect mix to moderate some in Q4. It will still be down, but probably down closer to the 1% to 1.5% range versus the 2% range that you’ve seen in the last couple of quarters. Now as it relates to traffic and the traffic assumptions and what would be embedded in the guide, I think, look, so the way to think about it is, first, we’ve seen the improved trends in October from where we were in September. That’s built in. Second, we’re lapping a fairly soft November from last year, which we did call out on our Q4 call. We do get the benefit of lapping that. So that’s built into the guidance as well. Third, there is an increased marketing presence that Dave talked about. We’re not going to give the exact dollar amount for competitive reasons, but that is also built into the guide.

And there is a favorable holiday shift, right, from the timing of Christmas holiday. It works in our favor. And why that’s a little more impactful for us than maybe some others are that our brands do tend to skew a little more special occasion. So that is going to have a little more of a positive impact in Q4 than maybe it might for some others. In terms of the Winter Storm Elliott, I think our approach is we can’t really predict weather. So we know we’re going to be lapping Winter Storm Elliott in Q4, but that’s really not contemplated extensively in the guide because it’s just as likely that you’re going to have some things go the other way as well.

Operator: The next question comes from John Ivankoe with JPMorgan. Please go ahead.

John Ivankoe: Hi, thank you. There’s, I guess, a lot of discussion about kind of taking Outback as a brand back to its maybe it’s peak, which we could argue maybe was in the early to mid-90s, I mean, where it really was a very different brand, very high average unit volumes dinner-only, in some cases, three hours kind of lines. I mean it was a concept that really had a lot of excitement in just like the American populace including your own staff. And obviously, “No Rules, Just Right” is kind of part of that. And I understand that you kind of want to bring Outback back to some of that energy and even bring the Outback U.S. business maybe back to what Brazil is today and presumably will continue to be. So, long set up to the question.

Now maybe I’m embarrassed to say, but I do remember that in the mid-90s starting as an associate. And Outback was always a transaction-driven model at that point. In other words, the money was not really made on margin. It was just made on pure customer counts as the exceptional value that was given to customers and being dinner only, of course, the PPA was higher and higher alcohol mix and some other things, and it was a higher-margin business than being for lunch. So the question that I’m asking is, do we have an opportunity to kind of get back to that transaction-driven model? And if so, might major price investments kind of be made at the Outback business as you basically sacrifice gross margin and you sacrifice kind of your prime costs in order to just bring more customers to get back into the store over time?

In other words, do we have an opportunity for maybe doing kind of a major brand and price reset of just kind of reestablishing Outback more from a perception of value for the customer that arguably it was 25 years ago? And hopefully, it’s an okay question, Dave. Thank you.

David Deno: I think clearly, John, we agree with you on getting the reference fund service into the business, and we’re working very hard to do just that. And we talked on prior calls that one of our leading executive in Brazil is here and to help with our marketing efforts, and he’s doing a fabulous job here. So that’s part one. Part two is it’s the service and food elements that are going to win the day for us. And so making sure our service metrics, you’ve seen the investment in our food, John. We’re investing in remodels. We’re going to be very, very, very conscious of price changes at Outback, which we talked about earlier in the call today. So getting that price value back. And price value is not just price, it’s the value you provide to customers in service and food while being very thoughtful about the type of price increases you take.

Now if you look at within the menu itself, there are some really attractive price points like combo meals and like the offer we’re doing right now, our Steak ‘N Mate Combo. So I think if we bring back the fun in their reference as we continue to do that, continue to improve our service levels, we’ve invested in the food. We’ve invested in technology. We’re investing in our assets. We can move forward and push forward with transactions. Now as far as launch goes, that’s a very important part of our business, and I think we’ll continue to offer that. But on the dinner occasion, that’s exactly where we’re going.

John Ivankoe: Thanks for that, Dave.

David Deno: Yeah, thank you, John.

Operator: The next question comes from Jeff Farmer with Gordon Haskett. Please go ahead.

Jeff Farmer: [Technical Difficulty].

Operator: We’ll go to Sara Senatore from Bank of America. Please go ahead. Sorry about that.