Shrinking sales pushing Bonefish Grill chain to close 14 restaurants, restructure

February 22, 2016
Justine Griffin, Times Staff Writer
Tampa Bay Times
Wednesday, February 17, 2016 11:12am
http://www.tampabay.com/news/business/retail/bonefish-grill-to-close-14-restaurants-and-restructure/2265710

Times files
Bonefish Grille on North Dale Mabry Highway.Bonefish Grill will close 14 restaurants this year as the seafood chain restructures following several quarters of disappointing sales results.

Tampa-based Bloomin’ Brands, the parent company of Bonefish Grill, Outback Steakhouse, Carrabba’s Italian Grill and Fleming’s Prime Steakhouse & Wine Bar, announced Wednesday that it expects the 14 Bonefish Grill locations to close within the year. Bloomin’ took a pre-tax charge of $24.2 million during the fourth quarter of 2015 in connection with the closures. No specific stores were named.

“We needed to strip out the complexity that had impacted the core service at Bonefish and focus on what wasn’t broken,” said Bloomin’ Brands CEO, Liz Smith, during an earnings call Wednesday. “We’ve done that. It’s important to look beyond quarter to quarter. We expect 2016 to be a strengthening and momentum story for Bonefish Grill as we move through the year.”

Sales were down at Bonefish Grill by 5.4 percent for the months of October through December as compared to same period in 2014. Sales for the quarter were down a combined 2.8 percent at all Bloomin’ restaurant brands in the U.S.

Bonefish Grill, which was intended to be the leading brand for new growth in Bloomin’ Brands’ restaurant portfolio last year, saw the steepest declines. This is the third quarter of decline for the chain, 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 similar to restaurants like Seasons 52 or Carmel Cafe.

But Bonefish’s biggest competitors are independent restaurants, said Malcolm Knapp, a restaurant economist in New York City and the founder of Knapp-Track, an industry tool used to track restaurant sales.

“Bonefish is in a good spot where they can appeal to a higher demographic because the food quality is good,” Knapp said. “But independent restaurants are getting bigger and there are a lot of really great chef-driven places out there. With the shrinking size of the middle class, restaurants are seeing less frequency from consumers, who have a lot more choices.”

An “anti-chain” movement from a younger demographic has changed the way consumers are spending their money and hurt chain restaurants like Bonefish. Millennials and generation X-ers are looking for value but often opt to try a locally owned restaurant rather than a chain.

“This is a symptom of a bigger issue,” said Darren Tristano, president of Technomic, a Chicago-based food research firm. “Fast food and fast casual concepts continue to do well but casual dining is staying stagnant. It doesn’t help that Bonefish is a seafood restaurant, which has its ups and downs and isn’t as broadly appealing as steaks or Italian.”

Nevertheless, Knapp believes Bloomin’ is taking the right steps to get Bonefish Grill back on track this year. The company named Gregg Scarlett as Bonefish’s CEO in March 2015. Founding Seasons 52 chef, Clifford Pleau was hired away to Bonefish in Sept. 2014. Since then, the restaurant chain has simplified its menu and instituted an updated look inside newer restaurants.

“They are clearly in the middle of a turnaround,” Knapp said. “Bonefish is not young. The market has moved on from them. But it’s not unusual for large chains to do some pruning like this periodically.”

Bonefish Grill opened two new restaurants in the U.S. from September to December 2015, bringing the total count to 210. The company opened more than a dozen Bonefish locations from 2014 to 2015. However, Smith said in August that development for Bonefish would stall until sales improved.

Carrabba’s Italian Grill also had a shake up in leadership. Bloomin’ Brands announced that Mike Kappitt was named president the day before Bloomin’ released its fourth quarter results. Kappitt will be responsible for leading operations and development of the Carrabba’s brand in the U.S. He most recently served as the senior vice president and chief marketing officer of Bloomin’ Brands. The former president, David Pace, left the company to become CEO at Jamba Juice last month.

Bloomin’ Brands fourth-quarter revenue was $1.04 billion, down 5.3 percent from the fourth quarter of 2014. The company’s net income for the fourth quarter was $17.7 million, down from $22.4 million the year before. Earnings per share were 14 cents for the quarter, down from 17 cents in 2014. Sales were down for the quarter at brands across the U.S. Sales in international markets were up — Outback Steakhouse sales in Brazil saw a 7.3 percent increase. The company operates 75 Outback Steakhouse restaurants in Brazil and 75 in South Korea.

Shares in Bloomin’ Brands fell nearly 11 percent Wednesday to $15.10 despite strong daily gains by all the major U.S. stock markets. The company’s stock price has not been this low since 2012.


Growth Chains: Francesca Restaurant Group

May 1, 2012

Multiconcept operator aims to maintain independent feel in chain units

April 16, 2012 | By Mark Brandau

Since 1992, Chicago-based chef and restaurateur Scott Harris has blurred the line between chain and independent restaurants, opening 26 Italian eateries called Francesca’s, each distinguished by some variation on the name and a different decor. That strategy has fueled Francesca Restaurant Group’s growth around Chicago, which the newest member of Harris’ executive team would like to accelerate.


“Companies reach an inflection point where they have to decide whether [they’ll] be comfortable with the status quo,” said chief executive Trenton Brown, who joined Francesca Restaurant Group in January. “Or do you have something repeatable, where a wide audience could appreciate what you’re bringing to the table?”


Francesca’s recently expanded into four new states, also opening two outlets of its Davanti concept, which is slightly pricier and more wine-focused than the upscale-casual Francesca’s restaurants. The company is targeting six new restaurants and 30-percent revenue growth in 2012, building new markets out concentrically from footholds in Arizona, California, North Carolina and Wisconsin.


“We’re putting the focus on what we believe to be the most repeatable concepts in the marketplace and on creating high-quality food and experiences over and over again, without feeling like a chain,” Brown said. “We want to feel like a one-off every time.”


Over the company’s 20-year lifespan, each restaurant opened with a one-off name — Mia Francesca or Francesca’s Forno or Francesca’s on 95th — but that approach occasionally would backfire if operating partners deviated with different suppliers or training methods, complicating the quality control process, Brown said. He joined Francesca’s to standardize those things.


“We can maintain that feel of the local neighborhood restaurant, but behind the scenes we’re experimenting with … the central, corporate approach to training,” he said. The company recruits staffers from new units’ neighborhoods and coaches them at a training restaurant.


The training is key to succeeding against local independents, Brown said, which are bigger competition for Francesca’s than chains like Olive Garden.


HEADQUARTERS: Chicago
MARKET SEGMENT: upscale casual
NO. OF UNITS: 28
SYSTEMWIDE SALES: between $45 million and $50 million
LEADERSHIP: founder Scott Harris; president and chief executive Trenton Brown
YEAR FOUNDED: 1992
COMPETITION: independent Italian restaurants
TARGET MARKETS: Arizona, California, North Carolina, Wisconsin
WEBSITE: www.miafrancesca.com

People may love their local pasta places, he said, but more independents than chains have closed during the economic downturn, because mom-and-pop places lack many scale advantages and big advertising budgets.


Francesca’s will rely on execution and word-of-mouth rather than mass marketing, but its purchasing power and service and culinary standards should help it succeed where independents might falter, said Darren Tristano, executive vice president of Chicago-based consulting firm Technomic.


“The Francesca’s restaurants have a lot of strength even though they’re a group of independents and small chains,” Tristano said. “They can survive tough times and leverage economies of scale.”


He added that there continues to be a robust market for independent Italian restaurants — or an aligned group of restaurants meant to seem unique.


“There are a number of consumers who just prefer independents for the neighborhood feel,” Tristano said. “Francesca’s does a lot of that in what I would call a polished-casual experience, with a very casual-dining price point. That’s where their strength is.”

Brown said systemwide sales in 2011 “were closer to $50 million,” with unit volumes that vary from $2 million to $7 million depending on concept and market. As the company targets new markets, the family- and value-focused Francesca’s concepts could go in most cities with a population of at least 50,000 people, he said. He does not want to “overpopulate” Davanti, which likely would open in cities with populations of at least 100,000.


Francesca Restaurant Group also plans to open a few high-end doughnut shops in Chicago this year, called Glazed & Infused.


“There are big pluses to the approach we’ve taken,” Brown said. “We’ve been the tortoise, but we’ve seen a lot of hares die along the way in the race.” 


Contact Mark Brandau at mark.brandau@penton.com

Follow him on Twitter: @Mark_from_NRN