Dive Brief:
- Bloomin' Brands named Gregg Scarlett as EVP and chief operating officer of casual restaurants and placed him in charge of Outback, Carrabba's and Bonefish Grill's domestic operations, which were previously managed by three separate executives, according to an SEC filing. Jeff Carcara and Michael Kappitt, EVPs of Bonefish Grill and Carrabba's, respectively, left the company on Thursday.
- Bloomin' Brands also appointed Brett Patterson president of Outback Steakhouse, filling Scarlett's vacancy, according to Restaurant Business.
- Former CEO Elizabeth Smith will step down from her position as executive chairman, but will remain on the board as a director. The board's lead independent director, James Craigie, will assume her role.
Dive Insight:
Bloomin's recent executive shuffle could indicate that the brand is engaging in a new strategy from the top down. Consolidating leadership of three of its banners under one executive signals that it wants to create more consistency across its portfolio. The company has also been criticized for what some view as its bloated overhead, with Bloomin' having nearly twice as many corporate employees as comparable organizations like Brinker International, Texas Roadhouse and The Cheesecake Factory.
In November, Bloomin' indicated that it was considering strategic alternatives, which included a potential sale, merger, or other major step that could breathe new life into its operations. The executive shifts could also signal moves to make itself more appealing for a potential sale or to secure a specific type of deal.
It may soon have its wish. Activist investor Jana Partners stated in securities filings that it is nominating two to three people to Bloomin's board. The investor has pushed for Bloomin’ to break up into two individual holdings in the past. It would prefer to see Outback as a standalone company while the portfolio's less mature holdings would remain with a second company. Outback is reportedly closer to divesting its Outback Brazil holdings, recently selecting three potential bidders.
Bloomin's executive changes could be in response to activist investor pressure of this nature, but whether it is a defensive or welcoming move, remains to be seen. It does appear that Bloomin' is taking some feedback from activist investors to heart. Investor group Barington Capital Group commented last year that the chain's disappointing share performance was likely attributable to Smith's "poor operating execution and poor strategic and capital allocation decisions." Smith left her post as CEO March 2019, sparking several of the subsequent leadership and strategic changes.
Outback Steakhouse's performance remains strong despite the shifts over the last year while other banners like Bonefish Grill, Fleming's Prime Steakhouse & Wine Bar and Carrabba's Italian Grill saw sluggish improvements or downturns, which could make it more difficult to fight back against future activist investors.
