Dive Brief:
- Bloomin’ Brands will close 41 stores over the next quarter. These units include 36 “predominantly older, underperforming restaurants” and five Aussie Grill locations, including three in the U.S. and two in international markets, according to the company’s latest earnings release.
- Bloomin’ decided to close the restaurants in question following a periodic review of assets that included consideration of trade area, historical performance and the investment required to renovate the units and strengthen their sales, CEO David Deno said on the company’s Q4 2023 earnings call.
- The company will see “asset impairments and net closure charges of $32.3 million during Q4 2023. We expect to complete these closures during Q1 2024 and incur charges of between $8 million and $11 million,” according Bloomin’s earnings release.
Dive Insight:
Deno said Bloomin’ would offer transfer opportunities to a large number of impacted employees and severance payments to those it cannot place. The closures were not a reflection of the performance of individual employees, Deno said.
“A majority of these restaurants were older assets with leases from the 90s and early 2000s,” Deno told analysts. Aussie Grill, the smallest of Bloomin’s brands, will be hardest hit by the closures. According to the chain’s Q3 earnings release, the fast casual brand had 14 units at the start of Q4, with seven in the U.S. and seven in international markets. The chain’s five closures represent a more than 35% drop in unit count for the brand.
Bloomin’ expects to open 40 to 45 new restaurants in 2024, in areas Deno described as “promising trade areas with great potential.”
Comparable sales performance was uneven across Bloomin’s restaurant brands in Q4, ranging from a 3% contraction for Bonefish Grill to 2.5% growth for Carrabba’s Italian Grill, with average comparable sales for the company’s U.S. operations at negative 0.2% year-over-year. The chain projected flat to 2% comps growth for 2024. Traffic, which was down 3.1% YOY, according to CFO Christopher Meyer, improved 1.6% from the quarter before, though Q4 included the holiday season and an extra week.
Meyer said the traffic situation left Bloomin’ “very cautious about taking additional menu pricing, particularly at Outback.”
Other sit-down restaurant brands are seeing similar trends in same-store sales and closures. Denny’s likewise announced a number of closures on its earnings call and also projected flat-to-low single-digit comps sales growth for 2024. But despite the coming closures, Bloomin’s store count actually grew in Q4 2023, from 1,187 to 1,189 company-owned units and from 290 to 291 franchised units between September and December, according to the earnings release.
The company announced that Meyer would retire once it has found a successor, per an 8-K form filed with the SEC Friday morning.
