Bloomin' Brands Q2 2025 Earnings Report

Bloomin' Brands EPS Results

• Actual EPS: $0.33
• Consensus EPS: $0.28
• Beat/Miss: Beat by +$0.05
• One Year Ago EPS: $0.51

Bloomin' Brands Revenue Results

• Actual Revenue: $1.00 billion
• Expected Revenue: $974.69 million
• Beat/Miss: Beat by +$27.67 million
• YoY Revenue Growth: +0.30%

Bloomin' Brands Announcement Details

• Quarter: Q2 2025
• Date: 8/6/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 6, 2025
• Conference Call Time: 8:00AM ET

Bloomin' Brands (NASDAQ:BLMN) engages in the acquisition, operation, design, and development of restaurant concepts. It operates through the U.S. and International geographical segments. The U.S. segment operates in the USA and Puerto Rico. The International segment operates in Brazil, South Korea, Hong Kong, and China. Its brands include Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, and Fleming's Prime Steakhouse and Wine Bar. The company was founded by Chris Thomas Sullivan, Robert Danker Basham and John Timothy Gannon in March 1988 and is headquartered in Tampa, FL.

Bloomin' Brands Q2 2025 Earnings Call Transcript

Key Takeaways

• Neutral Sentiment: Bloomin' Brands announced extensive leadership changes, including Michael Healy moving to EVP of Strategy & Transformation and Eric Christel as CFO-elect, aiming to bolster strategic and operational expertise.
• Positive Sentiment: The Outback turnaround has expanded to 42 test restaurants focusing on enhanced service model, steak quality, menu innovation and value offers, backed by a $3 million investment in 2025.
• Negative Sentiment: Second-quarter adjusted EPS of $0.32 fell short of last year’s $0.45 and full-year guidance was lowered to $1.00–$1.10, reflecting added costs from tariffs, insurance reserves and Outback testing.
• Neutral Sentiment: The company plans to repurpose capital from fewer new openings into roughly 10 Outback remodels this year, while targeting below 3.0× lease-adjusted net leverage and maintaining its $0.15 quarterly dividend.
• Positive Sentiment: Operational improvements like menu simplification across brands and full rollout of TableMates devices at Outback have increased service consistency and sped up table turns by five to seven minutes.

Presentation

[Operator]

Greetings, and welcome to the Bloomin' Brands Inc. Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow management's prepared remarks. Is now my pleasure to introduce your host, Tara Curian, Vice President, Corporate Finance and Investor Relations. Thank you, Ms. Curian. You may begin.

[Tara Kurian, SVP - IR, FP&A and International at Bloomin' Brands]

Thank you, and good morning, everyone. With me on today's call are Mike Spannas, our Chief Executive Officer and Michael Healy, Chief Financial Officer and Executive Vice President. By now, you should have access to our fiscal second quarter twenty twenty five earnings release and our investor presentation slides, both of which can be found on our website at www.bloomenbrands.com in the Investors section. Throughout this conference call, we will be presenting results on an adjusted basis. An explanation of our use of non GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our earnings release and investor presentation on our website as previously described.

[Tara Kurian, SVP - IR, FP&A and International at Bloomin' Brands]

Before we begin formal remarks, I'd like to remind everyone that part of our discussion today will include forward looking statements, including a discussion of recent trends. These statements are subject to numerous risks and uncertainties that could cause actual results to differ in material way from our forward looking statements. Some of these risks are mentioned in our earnings release, others are discussed in our SEC filings, which are available at www.sec.gov. During today's call, we'll provide a brief recap of our financial performance for the second quarter twenty twenty five, an overview of company highlights and current thoughts on fiscal twenty twenty five guidance. Once we've completed these remarks, we'll open the call up for questions.

[Tara Kurian, SVP - IR, FP&A and International at Bloomin' Brands]

With that, I would now like to turn the call over to Mike Spannis.

[Michael Spanos, CEO & Director at Bloomin' Brands]

Thanks, Tara, and good morning, everyone. Before I get into our business update, I would like to discuss the changes to our senior leadership team that were announced earlier this week. As I've previously stated, my initial focus has been on our operational priorities, listening and learning from our restaurant operators to best support them in simplifying the agenda and driving consistency of execution to deliver a great guest experience with a priority on Outback. This has been important to foster a culture that is grounded in our founders' principles and beliefs, executing with an operational mindset and a passion for guest hospitality. I've also discussed our urgent and deliberate work on the Bloomin' Brands strategy centered on turning around Outback.

[Michael Spanos, CEO & Director at Bloomin' Brands]

As we complete our enterprise wide strategy, we have implemented an organizational structure that builds capability, is effective and efficient, and consists of a set of leaders that are deep in restaurant and operational experience, enhancing our transformation and strategic muscles as we lead the future business. Turnaround Outback is our highest priority. As a result, Michael Healy will move into a newly created role, Executive Vice President, Strategy and Transformation. He will lead the strategic initiatives central to our turnaround efforts. His extensive experience with over sixteen years across the organization in supply chain, brand leadership, and both Outback's CFO as well as the company's CFO make him the ideal candidate for this role.

[Michael Spanos, CEO & Director at Bloomin' Brands]

He will also lead the revenue management work. I'm excited to see this transformation capability, which will allow us to in source external consulting support, driving cost efficiencies. I'd like to welcome Eric Christel, who has joined the company as Executive Vice President and Chief Financial Officer-elect. Eric is a seasoned finance leader with nearly two decades of experience in the food and beverage sector, including senior roles at Campbell's Snacks and PepsiCo. Most recently, he served as Senior Vice President and Chief Financial Officer of Campbell's Snack Division, where he led the finance teams through a period of growth, transformation, and operational efficiency.

[Michael Spanos, CEO & Director at Bloomin' Brands]

His leadership helped grow sales and profitability through strategic pricing, marketing investments and international expansion. Prior to Campbell's, Eric served as Senior Vice President of Chief Financial Officer of the Americas at Dentsu. He has deep experience across financial planning and analysis, operating finance, strategy and transformation, and franchise and company owned operations with large operating P and Ls. Eric will spend the next month getting hands on restaurant training, immersed in our restaurant and brand cultures. Michael will remain the company's Executive Vice President and Chief Financial Officer until September 8, and will collaborate closely with Eric to ensure a smooth and effective transitional responsibilities.

[Michael Spanos, CEO & Director at Bloomin' Brands]

They will work closely together on our go forward strategy and financial processes. Jessica Matorre will join our team officially next week as Senior Vice President and Chief Human Resources Officer. She will oversee human resources, compensation and benefits, recruiting, employee development and performance management. Jessica joins us from Advanced Auto Parts where she was Senior Vice President, Global Total Rewards and Employee Experience, and prior to that was at Pepsi Beverages North America. Jessica has worked in complex businesses in both company owned and franchised operations her entire career.

[Michael Spanos, CEO & Director at Bloomin' Brands]

She brings broad HR experience, a people first mentality and financial acumen to support the employee value proposition. Ali Chari will join our team as Senior Vice President, Guest Insights and Analytics. He will lead the company's strategic and marketing brand positioning, guest insights and analytics, and our digital capabilities. He brings over twenty years of experience in consumer insights, strategy and marketplace analytics across restaurants and consumer facing brands. He most recently served as Senior Vice President of Strategy and Insights at Darden Restaurants.

[Michael Spanos, CEO & Director at Bloomin' Brands]

He will lead the brand positioning of our four founder inspired brands and will work in partnership with each brand's marketing team. Rafael Sanchez, Senior Vice President and Chief Information Officer, joined our team at the June. Rafael has over twenty five years of IT leadership across the restaurant, retail, hospitality and entertainment industries. He recently served as Senior Vice President of Information Technology at Davidson Hospitality Group. Prior to Davidson Hospitality Group, he was a Chief Information Officer of Six Flags Entertainment and Feld Entertainment.

[Michael Spanos, CEO & Director at Bloomin' Brands]

His extensive background will be instrumental in integrating our technology to enhance the guest experience, while also helping our team members to work more effectively. Randy Scruggs has been promoted to Senior Vice President, Supply Chain. He has over twenty years of experience in the food industry, recently serving as our VP of Supply Chain. He and his team have collaboratively driven productivity with our partners while improving quality and specification standards. His expertise in sourcing and logistics and his passion for supporting our restaurant teams has been instrumental in the quality we provide our guests.

[Michael Spanos, CEO & Director at Bloomin' Brands]

Tara Curian has been promoted to Senior Vice President, IR, FP and A and International. Tara will take on expanded responsibilities within our International business. She will also partner with Michael on the Strategy and Transformation team as financial lead. She recently served as our VP of Corporate Finance and Investor Relations. Her deep financial expertise, banking and business acumen position her well to succeed in this role.

[Michael Spanos, CEO & Director at Bloomin' Brands]

Susan Klein has been promoted to Group Vice President, Strategy and Transformation, and will support Michael Healy in his new role. Susan's thirty years of operational experience, starting as a hostess and managing partner at Outback, will be critical in grounding our project management work from an outbacker perspective and guest lens. Turning to our brands, John Betten will join the company at the September as Senior Vice President, President of Bonefish Grill. John is a strategic and operational leader with over thirty years of experience within the restaurant industry, where he began his career as a sous chef. He most recently served as Chief Executive Officer of Miller's Ale House, and prior to that was CEO of the Palm Restaurant Group.

[Michael Spanos, CEO & Director at Bloomin' Brands]

His strategic leadership, operational experience, and guest centric approach are well suited as we develop our future strategic plans for Bonefish Grill. I want to thank Mark Rath for his years of dedicated service to our organization. His leadership helped shape our company's success and laid the foundation for the future of our brands. Mark will work with John to ensure a smooth transition over the next couple of months. The remainder of our executive and brand leadership teams remains the same.

[Michael Spanos, CEO & Director at Bloomin' Brands]

Our brand leaders have spent their careers as operators, growing sales and profits, serving guests with a passion and making an impact on people. I am excited that we have the right team in place to foster a culture grounded in accountability, hospitality, inclusion and fun. We are in the early stages of turning around Outback. This team believes in our potential and is committed to the hard work to grow sales and profits in each restaurant. Before I move on to the business update, I wanted to thank our people.

[Michael Spanos, CEO & Director at Bloomin' Brands]

The more time I spend with our people and our guests in the restaurants, as well as with our restaurant support center team members, I increasingly see the passion our people have about serving our guests, taking care of each other, and making it happen every day. I'm proud to have the privilege of leading this organization. I will now discuss our second quarter results and progress on our operational priorities. Our second quarter results highlight the progress we are making on our operating priorities. We saw sequential improvements in U.

[Michael Spanos, CEO & Director at Bloomin' Brands]

S. Traffic, which was down 2% in Q2, 190 basis points better than Q1. Our Q2 sales comp of negative 10 basis points reflected an improvement from Q1 of negative 50 basis points. We had solid Mother's Day and Father's Day holidays across our brands. Traffic performance at Outback strengthened throughout the quarter, driven by the Aussie three course offering.

[Michael Spanos, CEO & Director at Bloomin' Brands]

We also saw continued positive comp sales growth at Carrabba's driven by strong off premises, including catering and experiential wine dinners. Fleming's maintained sales momentum with strong holiday and in restaurant traffic, driven by events and catering platforms. While we are making progress, we're still losing share in the industry as defined by Black Box. We know our in restaurant dining is our biggest opportunity. We know that it will take time to reverse our market share trends given the state of our business, and we remain focused on improving our execution every day.

[Michael Spanos, CEO & Director at Bloomin' Brands]

We've made progress on our operational priorities. I'll first discuss simplify the agenda and driving consistency of execution before we discuss the Outback turnaround. Menu reductions across brands are now fully implemented. We expect further reductions to the Outback menu to be implemented as we learn more in tests. We streamlined menus both on and off premise, removed items with low sales mix, low satisfaction scores, or items that did not travel well.

[Michael Spanos, CEO & Director at Bloomin' Brands]

We removed seasonal LTOs from Outback, which has allowed the team to focus on everyday execution. We introduced Aussie three course as the everyday value offer, which is easy for the restaurants to execute and is a great value for the guests. Aussie three course was a large contributor to the traffic improvement we sought out back in Q2. The mix continues to be in line with our expectations and the value within the offer creates a mix headwind for us. In the first half of Q3, we are lapping all C3 Course from last year, and then we expect a favorable lap for the second half of the quarter.

[Michael Spanos, CEO & Director at Bloomin' Brands]

We have favorable laps for the entire fourth quarter to finish the year strong. As I mentioned on the last call, we are continuing to monitor the effectiveness of all value programs and will iterate as needed. Our leadership teams, including Brand Presidents, JVPs and MVPs are spending more time in restaurants during peak hours and conducting multi day visits to gather feedback from employees and guests. The goal is to identify and remove obstacles to deliver more consistent execution. We are leading with an operational mindset.

[Michael Spanos, CEO & Director at Bloomin' Brands]

Ziosk, or as our Outbackers call the device TableMates, have been completely rolled out at Outback for a little over three months now. Over 85% of guests are electing to use TableMates to complete payments in the restaurants, improving table turns by about five to seven minutes. Additionally, we continue to gather real time feedback through surveys and leverage AI tools to help managing partners efficiently address any service gaps. The good news is we are seeing traction in our simplification and consistent execution at Outback. We are seeing improvements in customer metrics in key areas like food and intent to return.

[Michael Spanos, CEO & Director at Bloomin' Brands]

While we are encouraged by the improvements, we know we need to do more in our everyday operations to deliver a consistent experience. Beyond the everyday execution, we are focused on the Outback turnaround. We know we have three key areas to address in the what you get for what you pay for equation, and that is state quality, service and value. Addressing these three areas we believe will drive sustainable traffic growth at Outback. We have 14 restaurants in test earlier this year, which was largely focused on menu simplification, innovation and guest experience.

[Michael Spanos, CEO & Director at Bloomin' Brands]

We are encouraged by what we have seen in the tests, which provided guest learnings and outbacker feedback that has allowed us to expand testing to a total of 42 restaurants by the September. These restaurants will have integrated test cells with enhanced service models, steak quality, menu innovation and value components. We believe the expansion test will create a meaningfully improved guest experience and will be the foundation for the Outback turnaround. Starting with the service model, we know we need to improve our service model to deliver a consistent guest experience. Two years ago, we implemented handheld technology for our servers to aid in pace accuracy, increasing the server to table station ratios above industry standards.

[Michael Spanos, CEO & Director at Bloomin' Brands]

We transitioned to a one:six ratio with servers supported by server assistance. The increased table ratio has not delivered a consistent guest experience. I have seen this challenge for our teams and guests, especially during peak hours. We believe a lower server to table station ratio of one to four, offset by a reduction in server assistant support, will lead to a more consistent execution and speed of service. We are currently testing this revised service approach in select markets and are encouraged by what we are seeing.

[Michael Spanos, CEO & Director at Bloomin' Brands]

On steak quality, we completed a thorough menu satisfaction survey earlier this year. With the survey results combined with Ziox TableMates item level data, we are working with our strategic partners to improve our center of the plate proteins, primarily our steak lineup and spec tolerances to enhance quality and craveability. We have tests in selected markets that include enhanced product specs and updated execution processes. As a steakhouse, we have to lead with great steak quality. On menu innovation and value, we are testing opening price points across categories, as well as different offerings, leveraging work we are doing on revenue growth management.

[Michael Spanos, CEO & Director at Bloomin' Brands]

Through testing that has enhanced service models, steak quality, menu innovation and value components, we believe we will drive greater frequency from our loyal guests, as well as visits from lapsed and new guests. Given our average guest frequency of two times per year, it will take some time to see the traffic benefits and we will provide updates as we learn more. We also started our brand positioning work, which complements changes in quality, service and value. Outback is a casual and craveable steakhouse at its core with great equities, and we need to be sharper in our positioning and consumer communication to differentiate ourselves within casual dining. This will enhance the effectiveness of our marketing.

[Michael Spanos, CEO & Director at Bloomin' Brands]

It is exciting work and the results will amplify the efforts we are doing to improve the guest experience. As I've said in our prior calls, we are focused on getting to the best outcome for the brand, for our outbackers and for our guests, and we will continue to test until we have the right approach. Michael will speak in more detail, but expanding the test to more restaurants requires approximately $3,000,000 of investments in 2025, which was not included in our prior guidance. As it relates to our assets, we have a thorough assessment underway that is looking at our network of restaurants, analyzing repair and maintenance costs, developing a refresh and remodel approach and completing a restaurant level analysis based on profitability, site quality and trade area demand. We completed the repair and maintenance survey at the end of the second quarter and we'll use the findings to help prioritize the remodel scopes.

[Michael Spanos, CEO & Director at Bloomin' Brands]

We will do approximately 10 Outback remodels this year that have three different levels of spending scopes. These remodels will inform our approach for the next few years as we work through the balance of the system. As we have pulled back on new restaurant openings, we intend to repurpose those capital dollars towards remodels over the next few years. We are working diligently and urgently on our strategic plan. We know we need to make changes for the long term health of the business.

[Michael Spanos, CEO & Director at Bloomin' Brands]

We are encouraged by the expansion of the test cells to 42 restaurants, and we believe the test expansion will be the foundation for the Outback turnaround. Our intention is to be transparent as we work through our plan and provide elements of our strategy by the end of this year. Before I turn it over to Michael, I want to reiterate that our priorities remain reinvesting back into our restaurants, reducing our debt leverage post the Brazil transaction and returning capital to our shareholders. Our liquidity is ample and our cash flow is healthy. We're committed to getting our leverage back to below a three times lease adjusted net leverage ratio, but we know the solution will require a focus on debt pay down as well as completing the Outback turnaround.

[Michael Spanos, CEO & Director at Bloomin' Brands]

With that, I would now like to turn the call over to Michael to review our financial performance.

[Michael Healy, CFO & EVP - Global Business Development at Bloomin' Brands]

Thank you, Mike, and good morning, everyone. I would like to start by providing a recap of our continuing operations financial performance for the 2025. Total revenues were $1,000,000,000 compared to $999,000,000 last year. Restaurant sales were up driven by net impact of restaurant openings and closures. This was offset by a decline in franchise and other revenue as the royalty rate on Brazil this year is less than the intercompany royalty received last year.

[Michael Healy, CFO & EVP - Global Business Development at Bloomin' Brands]

U. S. Comparable restaurant sales were down 10 basis points and traffic was down 200 basis points. These results were above our expectations, however, they were below the casual dining industry. Average check increased 1.9% compared to 2024 as we invested in value offers for our guests.

[Michael Healy, CFO & EVP - Global Business Development at Bloomin' Brands]

Our off premises sales was 24% of total U. S. Sales in the quarter consistent with Q2 last year. Outback's off premise sales was 26% in the quarter and Carrabba's was 35%. Our GAAP diluted earnings per share was $0.29 compared to $0.28 last year.

[Michael Healy, CFO & EVP - Global Business Development at Bloomin' Brands]

Our Q2 adjusted diluted earnings per share was $0.32 versus $0.45 last year. $0.03 2 was above our guidance of range of $0.22 to $0.27 The primary difference between GAAP and adjusted diluted earnings per share is due to approximately $3,500,000 of adjustments incurred in Q2 twenty twenty five as a result of the transformational and restructuring activities and approximately $2,000,000 in connection with the foreign currency forward contracts that we entered into to partially offset the risk associated with the purchase price installment payments on the Brazil transaction. Q2 adjusted operating margins were 3.5% versus 6% last year. The two fifty basis point difference between this year and last year was driven by a decline in overall adjusted restaurant level margin by 200 basis points, COGS inflation of 3.3%, similar to the first quarter we used higher priced inventory and had another quarter of negative product cost mix. We expect it to normalize in the back half of 2025.

[Michael Healy, CFO & EVP - Global Business Development at Bloomin' Brands]

Labor inflation of 3.4% as we continue to experience inflationary pressure on wages. Additionally, we had approximately 50 basis points from an increase in our health insurance costs. And higher restaurant operating expense year over year driven by higher operating and supply expenses, mostly driven by inflation, as well as 50 basis points from higher insurance expense. Depreciation was slightly higher from last year driven by new unit development. We had approximately $6,000,000 of tax benefit in Q2 driven largely by the reduction in our full year expectations and FICA tip credits, which I will explain more shortly.

[Michael Healy, CFO & EVP - Global Business Development at Bloomin' Brands]

As it relates to our 33% retained ownership in Brazil, which is classified using equity method investment accounting, we recognized an impact of negative 1,800,000 in Q2. This was driven by the depreciation and amortization on the stepped up fair value basis of accounting for the assets as well as interest expense from the acquisition debt on the company. Turning to our capital structure. Total debt net of cash was $867,000,000 at the end of Q2. As a reminder, we received $104,000,000 from the first installment of the Brazil refranchising transaction and applied those proceeds to our revolver balance in the first quarter.

[Michael Healy, CFO & EVP - Global Business Development at Bloomin' Brands]

Our leverage metrics are 2.7 times on a net debt to adjusted EBITDA basis and 4.1 times on a lease adjusted net leverage basis. Reducing our debt leverage remains a primary component of our capital allocation and we are committed to a lease adjusted leverage of less than three point zero times. We anticipate the next installment of Brazil proceeds to be received at the December this year to be approximately $96,000,000 and intend to apply it to our revolver balance. The Board declared a quarterly dividend of $0.15 a share that is payable on 09/03/2025. We have $97,000,000 remaining under our share authorization program, which expires on 08/13/2025.

[Michael Healy, CFO & EVP - Global Business Development at Bloomin' Brands]

We do not plan to execute share repurchases at this time. Turning to our guidance. We are adjusting our adjusted diluted earnings per share range to be between $1 and $1.1 driven primarily by four items. We shared last quarter that the tariff impact was estimated to be a negative 20 to 40 basis points of impact to restaurant level margins in 2025. Due to the fluid nature last quarter, we did not include the estimated impact in our guidance.

[Michael Healy, CFO & EVP - Global Business Development at Bloomin' Brands]

As the environment has somewhat settled, we now expect to be on the lower end of that range or approximately $6,000,000 spread across Q3 and Q4, and we have included it in our updated full year guidance. Importantly, at this time, we are not contemplating additional pricing actions this year to offset these costs. As a result of higher general liability insurance claim costs, driven primarily by the pace and cost of older cases that are now working through the court system, we anticipate increasing our balance sheet reserves to account for these trends, which will result in approximately 6,000,000 to $8,000,000 expense in our forecast spread across Q3 and Q4. The volume of claims has remained consistent year to year, but we are seeing an increase in average cost per case, which impacts how we reserve for open cases. This expense is included in our full year guidance.

[Michael Healy, CFO & EVP - Global Business Development at Bloomin' Brands]

We have a significant number of restaurants and tests, including the 42 restaurant expansion as well as isolated tests for state quality and service. We expect to incur approximately $3,000,000 in investments in quality, service and value and that is now included in our full year guidance. The majority of this expense will impact Q4. We will scrutinize these investments to make sure we invest in areas where we expect a meaningful return. To be clear, this is not indicative of a full system launch.

[Michael Healy, CFO & EVP - Global Business Development at Bloomin' Brands]

We would seek to refine the analysis and returns, identify cost offsets and design a staged rollout with pace sequencing and results paying for future investments. We are excited by these 42 restaurants as we believe they represent the holistic solution to our value, service and quality opportunities. For the Bonefish Grill brand, traffic trends have been challenging. While the team remains very focused on improving the trend, we still see risk in this brand and have incorporated this in our guide. With this reduction in earnings per share, we will be in a higher tax benefit situation, which is driven by the tax benefit of FICA tip credits relative to lower earnings.

[Michael Healy, CFO & EVP - Global Business Development at Bloomin' Brands]

We would expect a tax benefit in the range of approximately 11,000,000 to $14,000,000 on the year, which is included in our updated guidance. We will be on the low end of our capital guidance range or approximately $190,000,000 for the full year. As Mike mentioned, we are doing a thorough assessment of our network of restaurants. Based on the outcome of this assessment, there may be operating or financial implications that are not included in our guidance. We will be transparent as we conclude this work later this year.

[Michael Healy, CFO & EVP - Global Business Development at Bloomin' Brands]

As we focus on the turnaround at Outback, we are also aggressively looking for cost saving opportunities and have engaged an external partner to work with us. Importantly, these opportunities will not be guest facing or negatively impact operations. They will focus on other areas including indirect expenses, contract negotiations and supplies among others. We will share more as we identify opportunities to fund the Outback turnaround. As it relates to the third quarter twenty twenty five, we expect U.

[Michael Healy, CFO & EVP - Global Business Development at Bloomin' Brands]

S. Comparable restaurant sales to be between flat and negative 100 basis points. We expect Aussie three course to be a bigger impact on our sales in the back half of Q3 as we are lapping underperforming promotions from 2024. We expect Q3 adjusted diluted earnings per share to be between negative zero one five dollars and negative $0.10 This earnings per share range includes an estimated negative impact from our 33% Brazil ownership to be approximately 1,000,000 to $2,000,000 And with that, we will open up the call for questions.

[Operator]

We will now begin the question and answer session. The first question comes from John Ivankoe with JPMorgan. Please go ahead.

[John Ivankoe, MD & Equity Research Analyst at JP Morgan Chase & Co]

Hi, thank you. Good morning. The question is on Outback general managers. Obviously, your average unit volumes are not as high as some peers, which might limit you in certain styles of compensation. So I'm curious if you are considering other methods of change, at the GM level to perhaps create desired financial or other operational outcomes for this important position? Thank you.

[Michael Spanos, CEO & Director at Bloomin' Brands]

John, good morning, how are doing? John, our goal is to pay at the market average in terms of comp, and our current structure is good. And we're assessing the structure as part of the strategic plan, and we want a variable component just like the model was set up to drive growth in sales and profits, and that's the success of the restaurant, we remain committed to that model.

[John Ivankoe, MD & Equity Research Analyst at JP Morgan Chase & Co]

Okay, thank you.

[Operator]

The next question comes from Jeff Bernstein with Barclays. Please go ahead.

[Analyst]

Hi, good morning. This is Pradek on for Jeff. Mike, just a big picture question on the Outback turnaround. Clearly, you're doing a lot of work in improving the service, the quality, the value. You're doing remodels.

[Analyst]

So obviously, there's a lot of initiatives currently going on. Can you just help us prioritize where you see the biggest opportunity in the near term? And if we were to kind of gauge this, what inning do you think you are in this process? Thanks.

[Michael Spanos, CEO & Director at Bloomin' Brands]

Well, I've said, we're in the early innings and turnaround takes time. And I think we'll continue to learn as we go forward. And I think the fundamental of this is it's all about we want to have a really good equation in terms of what you pay for what you get for. And what that means is, we're going to be very focused on service model. We're going to be very focused on state quality.

[Michael Spanos, CEO & Director at Bloomin' Brands]

We're going be very focused on our value components. And we're going to continue to test and learn.

[Analyst]

Appreciate that.

[Operator]

The next question comes from Alex Lagel with Jefferies. Please go ahead.

[Alex Slagle, Equity Research Analyst at Jefferies]

Thanks. Good morning. Wanted to ask a little bit more on the OSFI three course and if you can dial in a little bit more on what you learned about these transactions and customers that ordered the deal, just if there's any info on sort of check size or add ons or frequency And just maybe some more thoughts on how you wanna keep this offer fresh and evolve it going forward.

[Michael Spanos, CEO & Director at Bloomin' Brands]

Yeah, good morning, Alex. First, we said we're always gonna iterate our everyday menu offerings, and feel I feel really good about it. We've seen an increase in traffic, we've seen an increase in value satisfaction, and we've seen improved frequency out of our loyals. And I feel really good about it, and I think that's been the primary reason we've seen a nice traffic uptick, as I said, in Outback. Specific to your question, as I've said before, we've seen that about two thirds of the guests are trading up to the higher levels at the $17.99 and $20.99, which has been good.

[Michael Spanos, CEO & Director at Bloomin' Brands]

There's a bit of a mixed headwind out of it, which we know it's necessary and it's included in our guide. I also like when you look at it, we've got about 20% of the guests are trading up on desserts as well. So I like the behavior. The guests like the value, know the incentive curve and a big bunch of them are paying more for more.

[Alex Slagle, Equity Research Analyst at Jefferies]

Thanks.

[Operator]

The next question, Jeff Farmer with Gordon Haskett. Please go ahead.

[Jeff farmer, Managing Director at Gordon Haskett Research Advisors]

Thanks and good morning. You did touch on it a bit, but just drilling down on the initial 14 Outback test restaurants, can you just share some of the more impactful or I would say surprising early findings from this test group? What's really got your attention and your focus as you've looked at these 14 restaurants even though it's been just a short period of time?

[Michael Spanos, CEO & Director at Bloomin' Brands]

Yeah, good morning. Well the first thing we learned and I learned is that the potential of a brand is tremendous. And the second is that guests love our craveable food in a fun casual environment where there's a no rules just right approach, a reverent attitude. What we've also learned is there's a cumulative impact, which is part of getting the service model right, getting the steak quality right, getting the value right, and the ambiance right. And the last is like anything, there's change management.

[Michael Spanos, CEO & Director at Bloomin' Brands]

You've got to train and drive execution, consistency of execution. And our outbackers are incredibly proud to serve what we're doing in these test restaurants. So I'm very excited and it takes time to build, you got to build momentum, but I'm really excited based on what we've seen and that's why we're moving to 42 to get a broader learning in terms of more geographies and see how we continue to build the brand and build the turnaround.

[Jeff farmer, Managing Director at Gordon Haskett Research Advisors]

Yeah, thank you for that. Just one more quick follow-up. You did note that the traffic performance at Outback strengthened throughout the quarter and it sounds like you're attributing the lion's share of that improved performance to the Aussie three course. But with the offering in place for the entire quarter, what drove that improved momentum? Again, that it's been in place the entire quarter, but you did get stronger as the quarter progressed.

[Jeff farmer, Managing Director at Gordon Haskett Research Advisors]

Help us understand how or what role the LSU-three course played in driving that improving momentum as you move through the quarter?

[Michael Spanos, CEO & Director at Bloomin' Brands]

Well, the labs helped us in terms of was just a better offer than what we had in terms of dine under previously. But I also want to give credit to Pat Hafner and the team. We're executing with more consistency. Our leaders are in the restaurants on the weekends. They're there during peak hours.

[Michael Spanos, CEO & Director at Bloomin' Brands]

We're driving consistency of execution, recipe adherence, and I think that's a big part of it. And then you've got is we're marketing getting folks in the restaurants with OSCE three course, but we're getting folks to come back as we're improving our service and our excellence. I think that's formula we've gotta drive moving forward.

[Jeff farmer, Managing Director at Gordon Haskett Research Advisors]

Thank you.

[Operator]

The next question comes from Brian Lennon with Piper Sandler. Please go ahead.

[Brian Mullan, Director & Senior Research Analyst - Restaurant & Food Distribution at Piper Sandler Companies]

Hey, thanks. I wanted to ask about the menu reduction actions at Outback. I think in April you reduced by 10%. I guess one, you can just talk about how that's going from a guest experience and an employee experience perspective. And then two, from the prepared remarks, sounds like you might see the opportunity to take off more even if you do need to test it.

[Brian Mullan, Director & Senior Research Analyst - Restaurant & Food Distribution at Piper Sandler Companies]

So just talk about what's making you think there's still more room to go.

[Michael Spanos, CEO & Director at Bloomin' Brands]

Well, our outbackers really like it because we've simplified the operation, and we're also seeing our guests give us a response that we're just creating and developing and executing better products and executing much better more consistently. In terms of the numbers, we're down about 15% on the menu. If you just go off the rough numbers, we were in the mid-80s, we got down to low-70s with the reduction in terms of menu items. And we'll continue to iterate and look to get into probably the mid-60s over time. That seems to be the right formula as we've been looking at the menu innovation. And we'll continue to do more.

[Brian Mullan, Director & Senior Research Analyst - Restaurant & Food Distribution at Piper Sandler Companies]

Okay. And then a question on Carrabba's, good same store sales result there, positive traffic. Maybe just talk to what was behind that strength. And I know the Outback turnaround is the number one priority, but I'm wondering if there are some strategic changes going on at Carrabba's underway as well.

[Michael Spanos, CEO & Director at Bloomin' Brands]

We did. Carrabba's team, I'm really impressed with how they're thinking about day part conversion, so I start there. That team has done a good job in terms of channels and converting guests across the day. And specifically strength, we saw good momentum on the experiential wine dinners, events that bring in guests both for lunch and dinner in restaurant. We've seen really nice momentum on catering.

[Michael Spanos, CEO & Director at Bloomin' Brands]

We've had good luck with our bistro sandwiches that have been driving the catering business as well as our OPD has continued to grow, so it's all of the above.

[Operator]

The next question comes from Sarah Senatore with Bank of America. Please go ahead.

[Analyst]

Hey, good morning. Thanks for the question. This is Isaiah on for Sarah. Just wanted to ask really quickly about the decision to pull back on advertising in the quarter. It seems to have helped out other OpEx. And then I have a follow-up after that.

[Michael Spanos, CEO & Director at Bloomin' Brands]

Yeah, so our advertising, we run about 2.5% of sales. And it wasn't I wouldn't call it a reduction. What we've reduced, we've just gotten more effective with our marketing spends. We've reduced our non working marketing, less creative, less content, more focus on our ROIs, which channels we're pushing. And that's allowed us to just be more efficient and effective with our marketing.

[Analyst]

Got it. Thank you. Very helpful. And then just a quick question on labor. It seems like it came in a little pressured this quarter and appreciating that you spoke earlier about just lowering the server to table station ratio.

[Analyst]

Just want to know where we are with labor investments, what more there is to come, kind of how much has already been invested into labor year to date, just especially with labor inflation being the primary driver of that higher labor cost this quarter? Thank you.

[Michael Spanos, CEO & Director at Bloomin' Brands]

Well, I'll start with the service model in terms of the server to table station ratio as we're testing the one:six to one:four, there, just to be clear, we're reallocating costs. We don't see that as a major investment, just in terms of how your service assistant hours move off and then how you have your servers. I don't see that in any way as any type of major investment. We also have really started to improve and look at how we drive our hot schedule AI laboring tools. And the Outback team has gotten very behind that in terms of just flexing labor to flex labor up when we have more guests in the restaurants and flexing down when we have less demand restaurants.

[Michael Spanos, CEO & Director at Bloomin' Brands]

So it's really about just getting the right amount of people at the right time to take great care of our guests. That's what reflects more, and I think you'll see more of that use of tools to be more efficient in the labor spend. Yeah, just to share, as

[Michael Healy, CFO & EVP - Global Business Development at Bloomin' Brands]

far as overall labor inflation, we've been running around 4%, has been pretty consistent for actually almost a couple years now, and so we anticipate that to be our go forward inflation rate at least through the end of this year.

[Analyst]

Thank you.

[Operator]

The next question comes from Jared Letzinski with BMO Capital Markets. Please go ahead.

[Jared Hludzinski, Equity Research Senior Associate at BMO Capital Markets]

Good morning. Thanks for taking the question. So you mentioned that the repair and maintenance survey was complete and are planning for 10 remodels in 2025. Could you provide any additional details on the survey findings and scope of work needed to be done to bring some of the older assets up to standard? And then any initial thoughts for the level of remodels we could potentially see in 2026?

[Michael Spanos, CEO & Director at Bloomin' Brands]

I'd start with, we've done a lot of work on-site quality as well as asset conditions. And I would say broadly on-site quality, we're not seeing that as a primary issue for us in terms of the brand and how we think about the brand going forward. We have focused more on asset condition, which is why we decided to launch the repair and maintenance survey, because I wanted to make sure that we had an environment that was good for our guests, good for our outbackers and also creates a good safe environment out there. And that's helped us prioritize what we're going to do by restaurants. We don't see that as a major increase in spend.

[Michael Spanos, CEO & Director at Bloomin' Brands]

It's more about how we prioritize spend. In terms of remodels, we've looked at three different types of scopes, because as you as we take forward these surveys, we've done 10 different Outback remodels with three different scopes. It's helping us know from what is a light touch, what is a refresh, or we might spend a little bit more. But we're being very thoughtful in terms of one, addressing what we're finding in the R and M surveys as well as getting a good return on the money we put into the restaurants from a refresh, which is more of a lighter touch. And we think we can do those well.

[Michael Spanos, CEO & Director at Bloomin' Brands]

So you'll see us shifting, as I've said before, we're going to be shifting dollars from new restaurants into this remodel refresh scope moving forward.

[Jared Hludzinski, Equity Research Senior Associate at BMO Capital Markets]

Thank you. And then in the last call, you discussed scrutinizing all expenses with an expected G and A expense of $215,000,000 for the year. Has anything changed in that outlook? And how should we view these savings? And how much is expected to be structural as we head into 2026? Thank you.

[Michael Spanos, CEO & Director at Bloomin' Brands]

We don't anticipate any change to that two fifteen gs and A number.

[Jared Hludzinski, Equity Research Senior Associate at BMO Capital Markets]

Great. Thank you.

[Operator]

The next question comes from Teddy Farley with Goldman Sachs. Please go ahead.

[Teddy Farley, Equity Research Associate at Goldman Sachs]

Hi. Thanks for taking the question. I was curious if you could give some detail on how Outback is performing in various regions of the country. You previously mentioned some weakness across the South. Are you still seeing that?

[Teddy Farley, Equity Research Associate at Goldman Sachs]

And what, if anything, you're doing to position the brand better in those markets? Thanks.

[Michael Spanos, CEO & Director at Bloomin' Brands]

No, in Q2 we didn't see there's really no outliers. The performance was consistent across all geographies.

[Operator]

This concludes our question and answer session. I would like to turn the conference back over to Mike Spanos for any closing remarks.

[Michael Spanos, CEO & Director at Bloomin' Brands]

Thank you once again for your investment and support of Bloomin' Brands. I want to close by thanking our people for their passion, resilience and commitment to excellence. Thank you.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Tara Kurian, SVP - IR, FP&A and International
• Michael Spanos, CEO & Director
• Michael Healy, CFO & EVP - Global Business Development

Analysts

• John Ivankoe, MD & Equity Research Analyst at JP Morgan Chase & Co
• Analyst
• Alex Slagle, Equity Research Analyst at Jefferies
• Jeff farmer, Managing Director at Gordon Haskett Research Advisors
• Brian Mullan, Director & Senior Research Analyst - Restaurant & Food Distribution at Piper Sandler Companies
• Jared Hludzinski, Equity Research Senior Associate at BMO Capital Markets
• Teddy Farley, Equity Research Associate at Goldman Sachs