Bloomin’ Brands Struggles in Quarter, as Chain Restaurants Face New Chef-Inspired Concepts

Justine Griffin
© 2015 Tampa Bay Times
http://www.tampabay.com/news/business/retail/bloomin-brands-struggles-in-quarter-as-chain-restaurants-face-new/2252436

While the “anti-chain” movement across the U.S. isn’t new, it is slowing down sales at some of the best known restaurant brands, including Outback Steakhouse and Carrabba’s Italian Grill. Bloomin’ Brands, the Tampa parent of Outback and Carrabba’s, is the most muscular restaurant company in Tampa Bay with $4.4 billion in revenue last year and 1,500 restaurants worldwide. But it’s anything but local to consumers here.

The company on Tuesday reported disappointing sales for the third quarter for most of its brands. CEO Liz Smith said casual dining as a segment in the hospitality industry was down from July to September, not just at their in-house brands.
“We knew the trends would be challenged,” Smith said. “And our marketing didn’t break through as expected.”

Bonefish Grill, which was intended to be the engine powering new growth for Bloomin’ Brands’ restaurant portfolio this year, saw the steepest declines, with sales down 6.1 percent for the quarter and traffic down 8.5 percent. It’s the second quarter of decline for Bonefish, which is in a competitive class of “polished casual” chain restaurants, and tends to be more pricey than dining experiences like a TGI Fridays or Olive Garden. The menu quality is more on par with restaurants like Seasons 52 or Carmel Cafe.

Carrabba’s Italian Grill reported a decline in the quarter of 2 percent sales and Fleming’s Prime Steakhouse & Wine Bar saw a 0.6 percent drop.

Outback Steakhouse, which performed well in new international markets like Brazil, was the only brand to report modest growth, at 0.1 percent, this quarter.

Chain restaurants are struggling to meet the changing trends fueled by younger demographics in the U.S., said Darren Tristano, executive vice president with Technomic, a restaurant research firm in Chicago.

“These are the same issues that most casual dining restaurants face today,” Tristano said. “Bloomin’ is no different than Darden” — the Orlando parent of Olive Garden and several other chains — “and most others in this regard.”

Another blow landed this summer when Bloomin’ Brands lost a bid to open an Outback Steakhouse and a Bonefish Grill in Tampa International Airport after $953 million in terminal renovations. The aviation authority board sought to make the airport’s restaurants feel more local, and one board member noted the company’s widely located chains made it feel less so. The Carrabba’s in the main terminal, which opened in 2008, is slated to close next spring.

Millennials and generation X-ers look for value but tend to try locally owned or chef-inspired restaurants rather than a chain, so it’s difficult for the casual dining chain restaurant to stand out in what’s become a very competitive market, Tristano said.

“It’s hard for chains to add more regional flavors to a menu, like local craft beer or local food options that the independent restaurants can do so easily,” he said. “They need to be more innovative and focus on the strengths that they do have, which usually is price, to get the attention of this next generation customer.”

Outback Steakhouse will roll out a new mobile phone app next year, which the restaurant chain has been testing in Tampa Bay. Through the app, customers can add their names to the wait list before they arrive at a restaurant, place take out orders and use to pay at the table.

“We will continue to invest in this kind of innovative tech platforms,” Smith said during Tuesday’s earnings call.

Carrabba’s Italian Grill will debut a simpler menu next year. Fewer items will be available, but the chain will add a new small plates category for tapas-style sharing at the table. Bloomin’ also changed the menu at Bonefish Grill earlier this year, with the same “less is more” theme.

“Too much on the menu overwhelms the customer,” Tristano said.

It also keeps food costs down, said Brian Connors, with Connors Davis Hospitality, a restaurant consulting firm in South Florida.

“Chains are the safe choice. Customers know what they’re going to get there and the restaurants know what they’re good at,” Connors said.

Bloomin’ Brands plans to continue to expand aggressively in new international markets like Korea and China. Much of the company’s growth has come from international openings this year.

“They don’t have to reinvent the wheel this way,” Connors said. But in this country, he suggested, they’ll need to come up with something new to keep attracting diners.

“We’ve entered this new age of adventure eating. Food recipes is one of the highest pinned categories on Pinterest,” Connors said. “People are willing and wanting to try something new.”

Bloomin’s brands: Tough quarter for sales
U.S. sales in the last four quarters
BrandQ3Q2Q1Q4 (2014)
Outback Steakhouse0.1 %4%5%6.4%
Carrabba’s Italian Grill- 2%2%1.9%0.3%
Bonefish Grill- 6.1%-4.6%0.9%0.7%
Fleming’s Prime Steakhouse & Wine Bar- 0.6%3.2%3.0%3.4%
Source: Bloomin’ Brands

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