Outback Steakhouse makes strides in turnaround effort

Outback Steakhouse is experiencing notable improvements in its turnaround strategy, leading to significant stock gains for its parent company, Bloomin’ Brands. As of midday Wednesday, Bloomin’ Brands' share price surged 35% to $12.04, marking an overall increase of more than 88% year-to-date. The 662-unit chain reported a 1.4% increase in same-store sales for the quarter ending June 28, its highest growth since early 2023, despite a 2.8% decline in overall traffic.

The decline in traffic was attributed to the decision not to engage in third-party delivery promotions that had previously boosted visitor numbers but reduced profitability. However, customer satisfaction metrics have improved, including service quality (up 7 points year-over-year), atmosphere (7 points), value (6 points), and customer intent to return (5 points). Executives emphasized the enhancements in steak quality and a new service model that limits server workloads to four tables for better customer engagement.

The popularity of the value-priced Aussie 3-Course meal has also contributed positively, with about 60% of customers opting for upgrades to more expensive meal tiers. While the overall menu mix was reported as negative, suggesting that consumers were still choosing less expensive items or fewer dishes, improvements have exceeded expectations; Bloomin’ Brands initially budgeted $18 million for menu enhancements but has revised that figure down to $4 million.

CEO Mike Spanos remarked, “We're seeing guests spending when they feel great in a restaurant,” indicating a link between enhanced customer experience and spending. Following these positive developments, Bloomin’ has adjusted its sales growth outlook for the year across its four brands from a previously estimated range of 0.5% to 2.5% to a new projection of 1% to 2%. For the upcoming quarter, the expectation for same-store sales growth across all brands is set similarly at 1% to 2%.

Despite these advances, Outback Steakhouse still lags behind the broader casual-dining sector, as reported by Black Box Intelligence. The gradual nature of the turnaround strategy suggests that while progress is tangible, operators and franchisees may need to remain patient as the chain continues to build momentum. The effectiveness of the turnaround plan will depend on maintaining customer loyalty and enhancing dining experiences moving forward.