Bloomin' Brands, Inc. Third Quarter 2026 Earnings Conference Call - BLOOMIN' BRANDS INC

Explicit Guidance:

• FY2026 U.S. Comparable Restaurant Sales: Revised guidance tightened to a range of 1.0% – 1.5% (previously broader; Q3 actual was +1.9%).
• FY2026 Average Check: Expected to increase approximately 3.5% for the full year, driven by pricing partially offset by mix.
• FY2026 Adjusted Diluted EPS: Raised and tightened to a range of $0.97 – $1.02 (previously $0.90 – $1.01).
• FY2026 Tax Benefit: Expected adjusted tax benefit range of $14 million – $16 million, driven by FICA tip credits relative to earnings.
• Q4 FY2026 U.S. Comparable Restaurant Sales: Guidance of 0% – 1.0%, impacted by holiday calendar shifts (Christmas on Friday) and delayed pricing actions.
• Q4 FY2026 Adjusted Diluted EPS: Expected range of $0.07 – $0.12, including an estimated $2 million – $3 million tax benefit for the quarter (compared to $5 million expense in Q3).
• FY2026 Capital Expenditures: Full-year capex expected to be approximately $185 million (YTD was $115 million).
• FY2028 Balance Sheet Target: Lease-adjusted net leverage ratio target of 3.0 by end of 2028, which management does not expect the OutWest acquisition to impact measurably.

Business-Segment Outlook:

• Outback:
  • Traffic & Sales: Anticipates sustainable, profitable traffic growth over the long term; Q3 traffic declined 150 bps, but comp sales rose 1.9%.
  • Guest Metrics: On track to maintain year-over-year improvements in Technomic guest scores (service, atmosphere, intent to return, value) and Ziosk scores.
  • Service Model: New service model (4 tables per server at peak) fully rolled out; management expects continued positive impact on service scores and server earnings.
  • Campaigns: "Best Stakes Ever" campaign launched in October; initial consumer engagement and traffic reaction described as "very encouraging."
  • Value Strategy: "Aussie 3 Course" platform evolving; pricing tiers and price points currently under active testing and evaluation for potential 2027 adjustments.
  • Renovations: On track to complete ~85 restaurant refreshes in FY2026; targets 100% refresh (approx. 100 locations) by end of 2028 with spend of $350k – $400k per location.
• Carrabba's:
  • Performance: Q3 comps up 0.6%; 34% of business is off-premise.
  • Strategy: Focus on in-restaurant execution and leveraging off-premise for convenience and recruiting younger cohorts to drive dine-in traffic.
• Bonefish:
  • Performance: Q3 comps up 5.3%; Q4 traffic expected to face "more difficult" laps.
  • Pricing: Pricing actions planned for Q4 have been delayed to Q1 2027; focus remains on average check trends.
• Fleming's:
  • Performance: Q3 comps flat; traffic down 1.9%.
  • Expansion: New Atlanta Midtown location opened; Riverside, CA location opening next week.
• Franchise (OutWest):
  • Transaction: Bloomin' Brands is the "stalking horse" for the bankruptcy sale of 61 OutWest restaurants; acquisition anticipated to close within a couple of months with no immediate impact on operations or lease leverage targets.

Market and Competitive Outlook:

• Demand Trends: Consumer sentiment described as "cautiously optimistic"; casual dining viewed as an "affordable luxury."
• Consumer Sensitivity: Management notes sensitivity on average check for households under $75k and among older guests practicing "check management."
• Competitive Position: Outback guest scores are at parity or higher than key competitors across service, atmosphere, and food quality metrics.
• Category Dynamics: Steak "away from home" category described as resilient and growing; relative value of restaurant dining vs. home cooking continues to drive traffic.
• Off-Premise: Viewed strategically as a "convenience and recruitment channel" rather than a primary revenue driver; maintaining disciplined pricing vs. dine-in.

Macro / Industry Outlook:

• Inflation: Beef inflation remains in the high single digits; other input costs (labor at 3.5%, general inflation) remain elevated.
• Labor Market: GDP and labor market remain strong, supporting the "affordable luxury" thesis.
• Economic Conditions: Management acknowledges "macro choppiness" but expects consumer resilience in the casual dining sector.
• Negotiations: Beef contract negotiations for 2027 expected in February 2027.

Strategic Initiatives:

• Turnaround Pillars: Execution remains anchored on four platforms: 1) Remarkable dine-in experience (steak quality, service), 2) Brand relevancy (marketing spend shift), 3) Culture of ownership (MP compensation), and 4) Restaurant investment (refreshes).
• Marketing Spend: Increased marketing spend by $10 million in FY2026, heavily back-loaded in the second half.
• Media Mix: By end of 2026, marketing mix expected to be ~60% digital and 40% linear TV (vs. historical 30/70); focus on auction-based digital CPMs and streaming sports/TV.
• Productivity: Non-guest-facing productivity savings currently self-funding turnaround investments; targeting ~$30 million in additional productivity savings for FY2027.
• Debt Management: Successfully refinanced $1.2 billion revolving credit facility in Q3 to reduce refinancing risk and stagger maturities.
• Capital Allocation: Priorities are 1) Invest in base business, 2) Pay down debt.

Risks and Headwinds to Outlook:

• Pricing Strategy: Delayed pricing actions in Q4 2026 (and Q1 2027) are intentional to avoid dilutive traffic; this creates a temporary sales gap but aligns with value strategy.
• Calendar Effects: Q4 comps impacted by specific holiday shifts (Christmas on Friday) and loss of an operating day.
• Inflation: High single-digit beef inflation remains a headwind for margins.
• Execution Risk: Success relies on consistent execution of service models and guest experience; any deviation could impact the "flywheel" of improvement.
• Acquisition Uncertainty: Finalization of OutWest acquisition and potential integration costs.

Management Tone on the Future:

• Confidence: Tone is "cautiously optimistic" regarding Q4 and long-term execution.
• Validation: Management emphasizes "proof points" via guest scores (5th consecutive quarter of improvement) and competitive parity.
• Commitment: Reaffirmed commitment to the strategy despite short-term sales headwinds, citing a "test and learn" culture and disciplined capital allocation.
• Correction vs. Prior: Raised EPS guidance significantly despite tight sales guidance, signaling confidence in margin improvement and cost controls.

Miscellaneous:

• OutWest Status: Management confirmed OutWest's bankruptcy is specific to that franchisee, with no impact on other franchisees or company-owned operations.
• Brazil Investment: Full-year loss on retained 33% equity interest in Brazil expected to be $3 million – $4 million (Q3 loss was $2 million).
• Gift Card Accounting: Q3 revenue included ~$13 million gift card breakage adjustment; excluding this, revenue was flat.