Bloomin' Brands Q2 Earnings Call Highlights

Key Points

• Q2 results improved: Revenue rose 1% to $1.02 billion, while adjusted EPS increased to $0.39 from $0.32. U.S. comparable sales grew 2.3%, although traffic fell 1.9% as higher pricing and mix offset weaker visits.
• Brand performance was mixed: Bonefish Grill led with 8.1% comparable-sales growth and 4.5% traffic growth, while Outback posted 1.4% growth despite a 2.8% traffic decline. Bloomin’ continued investing in Outback’s turnaround through service changes, restaurant refreshes and increased marketing.
• 2026 outlook raised: The company increased adjusted EPS guidance to $0.90–$1.00 from $0.75–$0.90, while maintaining its 1%–2% comparable-sales growth forecast. Full-year capital spending remains projected at $185 million–$195 million, with debt reduction still a key priority.

Bloomin' Brands NASDAQ: BLMN reported fiscal second-quarter 2026 revenue of $1.02 billion, up 1% from $1 billion a year earlier, as positive comparable restaurant sales helped offset continued traffic pressure at several of its brands.

The company said U.S. comparable restaurant sales increased 2.3% during the quarter, while traffic declined 1.9%. Average check rose 4.2% from the prior-year period, reflecting pricing that was partly offset by negative mix as the company continued to promote affordable offerings.

Adjusted diluted earnings per share rose to $0.39 from $0.32 a year earlier, while GAAP diluted earnings per share increased to $0.37 from $0.29. Adjusted operating margin improved to 4.0% from 3.5%, driven by stronger restaurant margins. Chief Financial Officer Eric Christel said commodity inflation was 5.7% in the quarter, while labor costs benefited from lapping higher health insurance costs in the prior year and other restaurant operating expenses benefited from productivity initiatives.

Brand Performance

Outback Steakhouse posted comparable sales growth of 1.4%, though traffic declined 2.8%. Chief Executive Officer Mike Spanos said the company chose not to repeat certain traffic-driving offers from the prior year, particularly in third-party delivery, because it viewed them as profit dilutive.

Spanos said the company’s Aussie three-course affordability offering continued to bring in guests, with roughly 60% consistently trading up from the entry price point to higher-priced tiers. About 20% of guests also traded up to the dessert option, he said.

• Carrabba’s Italian Grill: Comparable sales increased 1.7%, while traffic declined 2.5%. The brand recorded its sixth consecutive quarter of positive comparable sales growth.
• Bonefish Grill: Comparable sales rose 8.1% and traffic increased 4.5%, supported by day-of-week offers including Margarita and Martini Mondays and Bang Bang Shrimp Wednesdays.
• Fleming’s Prime Steakhouse & Wine Bar: Comparable sales grew 1.6%, with traffic down 2.8%. The brand delivered its eighth consecutive quarter of positive comparable sales growth.

Off-premises sales represented 24% of total U.S. sales, unchanged from the prior-year quarter. Outback’s off-premises mix was 26%, while Carrabba’s was 34%.

Outback Turnaround Efforts

Management continued to emphasize its turnaround strategy for Outback, which is centered on improving the dine-in experience, increasing brand relevancy, rebuilding a culture of ownership and fun, and investing in restaurant refreshes.

Spanos said Outback’s guest metrics improved year over year for a fourth consecutive quarter. In the second quarter, guest scores rose seven points for both service and atmosphere, six points for value, five points for intent to return, four points for food, and two points for brand trust.

The company completed the rollout of a revised service model across Outback locations during the quarter, reducing peak-hour server stations from six tables per server to four. Spanos said Outback’s absolute service scores exceeded 90% top-box ratings and increased by nearly three points year over year. He also said server pay was “almost exactly the same” following the change, with tips increasing as a percentage of sales and tip sharing declining.

Management cited stronger guest trade-up behavior in premium steak cuts, steak toppers, premium sides and desserts. Spanos said the company’s upgraded steak lineup has produced high guest scores, while an expanded char-grill platform has increased kitchen capacity for steak and non-steak proteins.

The company plans to increase marketing spending in the second half, with messaging centered on Outback’s Australian-themed identity, steak offerings, affordability and service. Christel said total marketing spending is expected to rise by about $15 million from the prior year for the full year, including approximately $10 million at Outback. Management expects to shift the media mix toward approximately 60% digital and 40% linear television.

Restaurant Investments and Capital Allocation

Bloomin’ Brands remains on track to refresh nearly all Outback restaurants by the end of 2028. The company had completed approximately 31 refreshes through the end of July and expects to complete about 85 during fiscal 2026. Each refresh is expected to cost an average of $350,000 to $400,000 and include targeted updates to interiors and exteriors.

Capital expenditures were $44 million in the second quarter, and the company maintained its full-year capital spending outlook of $185 million to $195 million. Christel said the company’s capital allocation priorities remain investing in the base business and reducing debt.

Total debt net of cash was $636 million at the end of the quarter. Lease-adjusted net leverage was 3.7 times, while net debt to adjusted EBITDA was 2.0 times. The company’s long-term lease-adjusted net leverage target remains 3.0 times.

Updated 2026 Outlook

The company raised its full-year adjusted diluted EPS guidance to $0.90 to $1.00, from prior guidance of $0.75 to $0.90. Christel attributed the increase to year-to-date performance, improved sales mix and better cost control in the middle of the profit-and-loss statement.

Bloomin’ Brands continues to expect U.S. comparable restaurant sales growth of 1% to 2% for fiscal 2026. Management expects mix to improve by approximately 100 basis points, offset by somewhat lower traffic due to its decision not to repeat prior-year promotional offers that reduced profitability.

For the third quarter, the company expects U.S. comparable sales growth of 1% to 2% and an adjusted diluted loss per share of $0.27 to $0.22. It expects approximately $5 million in tax expense during the quarter and a roughly $2 million loss from its 33% Brazil equity-method investment.

Turnaround investments for 2026 are now expected to total $36 million, down from $50 million, as the company reduced its anticipated mix-related food investment to $4 million from $18 million. Productivity savings are still expected to total $30 million, resulting in a projected net investment of $6 million for the year.

About Bloomin' Brands (NASDAQ:BLMN)

Bloomin' Brands, Inc engages in the ownership, operation and franchising of casual dining restaurants worldwide. The company's portfolio includes five full-service restaurant chains: Outback Steakhouse, known for its Australian-inspired steakhouse concept; Carrabba's Italian Grill, offering Italian-American cuisine; Bonefish Grill, specializing in handcrafted seafood dishes; Fleming's Prime Steakhouse & Wine Bar, focusing on premium steak and wine experiences; and Aussie Grill by Outback, featuring a streamlined menu of signature items.

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