BLMN Q3 Deep Dive: Turnaround Strategy, Menu Simplification, and Outback Brand Revamp

Restaurant company Bloomin’ Brands (NASDAQ:BLMN) beat Wall Street’s revenue expectations in Q3 CY2025, but sales fell by 10.6% year on year to $928.8 million. Its non-GAAP loss of $0.03 per share was 76% above analysts’ consensus estimates.

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StockStory’s Take

Bloomin’ Brands’ third quarter results were met with a significant negative market reaction, reflecting investor concerns despite revenue and non-GAAP EPS coming in ahead of Wall Street expectations. Management cited the effects of ongoing operational challenges, particularly at Outback Steakhouse, and highlighted steps taken to improve consistency and value perception. CEO Michael Spanos described the quarter as a period of foundational change, noting that “we faced several critical challenges, including overly complex menus, unclear brand positioning, inconsistent guest experiences, a gap in steak quality and diminishing value perception.” The company responded by simplifying menus, introducing new value offerings, and leveraging technology to enhance guest feedback and service consistency.

Looking ahead, Bloomin’ Brands is focused on executing a multi-year turnaround centered on Outback Steakhouse, with strategic investments in steak quality, service enhancements, and targeted marketing. Management believes that these investments, combined with operational simplification and digital engagement, will drive sustainable growth. CFO Eric Christel emphasized, “We have identified approximately $75 million of investments across 2026 through 2028... primarily in steak quality, service, our people, the guest experience and marketing.” The company expects these initiatives to be phased in thoughtfully to avoid overwhelming restaurant teams, with the majority of investments and marketing increases planned for 2026 and beyond.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to operational simplification, targeted value offers, and technology-enabled guest experience improvements, while also acknowledging the need for continued progress at Outback Steakhouse.

• Leadership team overhaul: Bloomin’ Brands appointed new brand presidents for all concepts, each with substantial operational experience. This leadership refresh is intended to strengthen execution, especially in core brands like Outback and Fleming’s.
• Menu and operational simplification: The company reduced menu items by 10-20% and cut back on limited-time offers, aiming to streamline kitchen operations and improve consistency. This simplification was a response to previously identified complexity hampering execution and guest satisfaction.
• Value-driven offers boost traffic: Everyday value promotions, such as the Aussie 3-Course at Outback and Dinner and Dolce at Carrabba’s, resonated with guests. These offerings were designed to address consumer price sensitivity and were cited as key drivers in stabilizing same-store sales trends.
• Technology integration with Ziosk: Over 85% of Outback guests used the Ziosk platform to pay, which improved table turns and enabled real-time feedback. Management uses this data to monitor guest satisfaction, intent to return, and to provide targeted coaching at the restaurant level.
• Brand trust and guest metrics improvement: Outback reported a six-point year-over-year increase in brand trust and enhanced guest scores for food, service, value, and atmosphere. Management credited these gains to focused operational changes and increased in-restaurant leadership presence.

Drivers of Future Performance

Bloomin' Brands’ outlook centers on Outback Steakhouse’s turnaround, driven by investments in product quality, guest experience, and marketing, while cost control and inflationary risks remain key watchpoints.

• Steak quality and service model: Management is rolling out a revamped steak lineup and reducing server table ratios at Outback to improve food quality and guest interaction. These changes are expected to enhance guest satisfaction and drive repeat visits, but will require disciplined execution and training.
• Marketing strategy shift: The company plans to shift its marketing mix from mostly traditional channels to a 60% digital focus, aiming to better target lapsed and younger guests. Increased marketing investment is timed to coincide with operational improvements to maximize impact.
• Cost and inflation management: Management highlighted ongoing food and labor inflation, particularly in beef and wages, as a risk to margins. Cost savings initiatives, including supplier negotiations and process optimization, are intended to partially offset these pressures, but the company will monitor inflation and tariffs closely before providing detailed 2026 guidance.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be watching (1) the impact of steak quality upgrades and the new service model on Outback’s guest metrics, (2) the effectiveness of increased digital marketing in attracting and retaining both lapsed and younger diners, and (3) whether ongoing cost savings and productivity initiatives can offset inflationary headwinds. Execution on restaurant remodels, as well as progress in menu optimization and operational simplification, will also serve as important markers of success.

Bloomin' Brands currently trades at $6.43, down from $7.25 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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