BLMN Q1 2025: Flat price mix; Q2 comps seen down 1–2% on promos
- Operational Simplification & Consistency: Executives noted that both guests and employees are demanding a simpler, less complex execution. This focus on streamlining menus and operations is expected to improve consistency and drive long‐term performance improvements.
- Catalyst Role of the Aussie 3 Course: The promotion, already showing evidence of encouraging guests to trade up into $17.99 and $20.99 tiers, is poised to gain momentum as it becomes a core menu item in June—suggesting potential boost in traffic and average check.
- Data-Driven Turnaround through Test Stores: Positive feedback from test stores on enhancements in food quality and value, enabled by instant guest feedback mechanisms, gives management confidence in the ongoing turnaround strategy and future comp sales growth.
- Worsening Same-Store Sales & Market Share Loss: Management acknowledged losing share against industry benchmarks (as defined by Black Box) and underperformance in comparable restaurant sales, suggesting persistent challenges in attracting customers.
- Choppy Macro Environment & Cautious Consumer Behavior: The company repeatedly noted a cautious consumer outlook and a choppy macro backdrop, which are likely to pressure traffic, impact holiday performance, and weigh on near-term margins.
- Execution Risks Amid Turnaround Initiatives: Ongoing efforts to simplify menus and adjust the value proposition, while necessary, bring operational risks and uncertainty in customer response, potentially compressing check averages and mix, which could further hurt profitability.
Metric | YoY Change | Reason |
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Total Revenue | –12% (from $1,195.3M in Q1 2024 to $1,049.6M in Q1 2025) | The decline in total revenue is primarily related to a drop in restaurant sales in Q1 2025, which affected overall sales, while U.S. revenue remained dominant and international revenue minimal. |
Restaurant Sales | –12–13% (from $1,179.5M in Q1 2024 to $1,029.5M in Q1 2025) | The decrease was driven by operational challenges including the impact of 58 restaurant closures that reduced sales by $27.5M and a decline in comparable restaurant sales by $6.1M, with the effect partially offset by $16.4M in sales from 25 new openings. |
Franchise and Other Revenues | +27% (from $15,840K in Q1 2024 to $20,077K in Q1 2025) | The marked increase in Franchise and Other Revenues suggests improved performance and possibly favorable adjustments in franchise agreements or royalty rates, shifting the revenue mix upward despite overall challenges in restaurant operations. |
Net Income | Turnaround from a loss of –$82,290K to a profit of $43,596K | Net income shifted from a significant loss in Q1 2024 to a positive figure in Q1 2025, indicating improved operational efficiency and cost management that reversed prior losses, contributing to the turnaround. |
Basic EPS | From –$0.96 to $0.50 | The improvement in Basic EPS reflects the recovery in net income, as earnings per share turned positive following the operational turnaround that saw net income rebound from losses. |
Operating Cash Flow | Virtually unchanged (~$73.5M vs. $73.8M) | Operating cash flow remained stable despite lower total revenue and restaurant sales, suggesting that the company maintained effective operational cash generation even as revenue and cost dynamics shifted. |
Total Assets | Approximately –2% decline | Total assets fell slightly to $3,305.4M in Q1 2025 due to adjustments such as the reduction of discontinued operations and declines in cash and inventories, partially offset by increases in other current assets and investments. |
Liabilities | Approximately –10% decline | Liabilities dropped to $2,920.5M, likely as a result of asset disposals and effective liability management, signaling strengthened balance sheet measures relative to the previous period. |
Total Stockholders’ Equity | Increased from $139.5M to $384.9M | A significant rebound in stockholders’ equity is driven by the turnaround in net income, a substantial positive shift in other comprehensive income, and adjustments from factors such as stock-based compensation and changes in noncontrolling interests, effectively reversing the prior period’s deficits. |
Metric | Period | Previous Guidance | Current Guidance | Change |
---|---|---|---|---|
Adjusted Diluted EPS | FY 2025 | $1.20 to $1.40 | $1.20 to $1.40 | no change |
Capital Expenditures | FY 2025 | $190 million to $210 million | $190 million to $210 million | no change |
Brazil Ownership Impact | FY 2025 | no prior guidance | -$5 million to -$7 million | no prior guidance |
U.S. Comparable Restaurant Sales | Q2 2025 | no prior guidance | -250 basis points to -150 basis points | no prior guidance |
Adjusted Diluted EPS | Q2 2025 | no prior guidance | $0.22 to $0.27 | no prior guidance |
Brazil Ownership Impact | Q2 2025 | no prior guidance | -$1.5 million to -$2 million | no prior guidance |
Mix Impact | Q2 2025 | no prior guidance | down 1% to 2% | no prior guidance |
Metric | Period | Guidance | Actual | Performance |
---|---|---|---|---|
Adjusted Diluted EPS | Q1 2025 | $0.55 to $0.60 | $0.50 | Missed |
U.S. Comparable Restaurant Sales | Q1 2025 | Negative 50 to negative 150 basis points | -1.17% YoY (1,043.1 in Q1 2024Vs. 1,030.9 in Q1 2025) | Met |
Topic | Previous Mentions | Current Period | Trend |
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Operational Simplification and Menu Streamlining | Q2, Q3, and Q4 2024 discussions consistently emphasized simplifying operations – reducing menu items, streamlining the organizational structure, and focusing on core initiatives to boost execution and cost efficiency. | Q1 2025 continues this focus by highlighting “fewer and bigger bets” and reporting that operational simplification is already generating additional savings, with further menu streamlining across brands. | Consistently emphasized, with a continued focus on execution efficiency and cost savings; sentiment remains positive as incremental improvements are reported. |
Promotional Pricing and Value Driven Offers | In Q2, Q3, and Q4 2024 the emphasis was on the Aussie 3-Course meal and $14.99 promos as effective tools for attracting traffic and inducing trade‐ups, with detailed tiered pricing and operational benefits discussed. | In Q1 2025, the company noted that while the Aussie 3-Course promotion lapped previous efforts and its mix impact led to a slight check down, the offer is expected to drive stronger traffic later, and guests are trading up when value is clear. | Steady focus with refined execution. The core value proposition remains, but there is an emerging fine-tuning—balancing affordability with realized mix impacts and observing guest trade-ups. |
Traffic and Same-Store Sales Challenges | Q2, Q3, and Q4 2024 repeatedly described declines in comparable sales and traffic, noting significant basis point drops, competitive challenges, and the impact of a choppy economic environment on guest behavior. | Q1 2025 continued to report similar challenges with U.S. comparable restaurant sales down (–0.5%) and traffic declining (–3.9%), along with acknowledgment of market share losses and a cautious outlook on near-term performance. | Persistent challenge. Traffic and comparable sales remain under pressure despite targeted value and menu adjustments; the company is taking incremental measures to address these issues, though sentiment remains cautious. |
Cost Pressures | Across Q2, Q3, and Q4 2024, there was detailed disclosure on rising labor costs (varying between 3.2%–4.4%), persistent beef inflation, and increasing operating expenses impacting margins. | In Q1 2025, cost pressures are still prominent with labor inflation at 3.7%, stubbornly high beef inflation, and rising operating costs; efforts to lock in beef prices and manage tariffs are noted. | Persistent headwinds. The company continues to navigate inflationary pressures across labor, beef, and operating costs, and while some cost management initiatives are being implemented, the overall sentiment remains challenging. |
Execution Risks Associated with Turnaround and Operational Adjustments | Q2, Q3, and Q4 2024 highlighted risks relating to executing a multi-year turnaround: from the need for consistent execution and cultural adjustments to challenges posed by hurricanes and strategic planning uncertainties. | Q1 2025 explicitly calls out that restoring financial and market share performance is a multi-year turnaround with recognized risks, including macro headwinds and the necessity for steady improvements via operational adjustments. | Continuously recognized. Execution risks have been a persistent theme; while strategic measures are underway, the risk of execution delays and operational missteps remains a significant concern. |
Data-Driven Turnaround Through Test Store Feedback | In Q4 2024 there was discussion of leveraging real-time guest feedback from test stores via Ziosk technology to guide strategy, although prior Q2 and Q3 earnings calls did not address this topic. | In Q1 2025, the company expanded its focus on data-driven turnaround, citing encouraging results from 14 test stores and emphasizing accelerated learning and adjustments based on immediate guest feedback. | Emerging theme. Absent in Q2 and Q3 but now gaining prominence in Q1 2025, indicating a new strategic emphasis on using real-time data to refine turnaround initiatives. |
Strategic Partnerships and Asset Management | All quarters from Q2 through Q4 2024 discussed restructuring asset management through initiatives such as Brazil refranchising, remodeling efforts, strategic partnerships (notably with Vinci), and evaluations of store closures to optimize performance. | Q1 2025 reiterates strategic partnerships, detailing refranchising in Brazil with defined cash proceeds, asset management via remodeling surveys, and potential store closures as part of a holistic turnaround plan. | Consistent and deepening. The focus on asset optimization and strategic partnerships remains steady with increasing detail and strategic clarity, suggesting this area could significantly influence future growth and operational performance. |
Macro Environment and Cautious Consumer Sentiment | Q2, Q3, and Q4 2024 discussions acknowledged a “choppy” macro environment with consumers being selective and cautious, impacted by factors like weather, geopolitical issues, and shifting calendars. | Q1 2025 continues to face a choppy macro environment, with particular emphasis on households under $100,000 experiencing financial pressure; the cautious consumer sentiment directly impedes traffic and same-store sales. | Steady challenge. The macro environment remains an external risk factor with little change in sentiment, but nuanced shifts—such as more pronounced consumer caution among lower-income households—are noted. |
Shift Away from Non-Core Brand Focus | Q2, Q3, and Q4 2024 did not feature prominent explicit discussion about de-emphasizing non-core brands like Fleming’s; instead, the focus was largely on operational improvements across the portfolio, leaving brands like Fleming’s with their established positioning. | Q1 2025 similarly does not highlight a strategic shift away from non-core brands; instead, the discussion centers on overall operational simplification and turnaround efforts rather than a deliberate de-prioritization of brands like Fleming’s. | Not a focal area. There is no clear trend toward diminishing focus on non-core brands; the emphasis remains on improving overall operational efficiency rather than reassigning strategic priority among brands. |
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Annual Guidance
Q: Does guidance include Brazil and tariff impact?
A: Management confirmed that Brazil’s impact is included while tariff effects are not factored, demonstrating a cautious approach amid uncertainties. -
Outlook
Q: What is the outlook for the rest of year?
A: Executives noted a choppy macro environment with ongoing turnaround efforts, emphasizing operational focus and value adjustments to regain market share. -
Margins
Q: How are restaurant margins evolving given investments?
A: Management indicated early margin pressure from quality and value investments, with expectations that increased traffic later will help restore profitability. -
Value Mix
Q: How is the value mix performing compared to past?
A: Leaders acknowledged that the brand is now priced higher than competitors, with a need for precise value adjustments to attract profitable traffic. -
Price Mix
Q: What were same-store sales price and mix contributions?
A: They reported flat mix in Q1 with an anticipated 1–2% decline in Q2 due to lower-check promotions affecting overall receipts. -
Customer Demographics
Q: Which customer group is most challenged recently?
A: The under $100k household segment has faced the most pressure, prompting a strategic focus to enhance appeal and improve comparables. -
Menu Strategy
Q: How is the menu reduction impacting operations and feedback?
A: Both guests and staff have responded positively to a simpler menu—initial 10% cuts have eased operational complexity and improved satisfaction.