Q4 2024 Earnings Summary
- The company's shift towards abundant everyday value offerings, like the successful Aussie 3-Course at Outback, is expected to drive more momentum in the second half of 2025.
- Management is focusing on simplifying operations by reducing menu items by 10% to 20%, and improving guest experience to increase customer satisfaction and intent to return, which could lead to traffic growth and higher profitability. ,
- Strategic investments in remodels with lower spend, higher touch scopes are expected to yield better returns through improved traffic and guest satisfaction, enhancing the company's asset base and long-term growth prospects. ,
- Declining traffic trends: Bloomin' Brands expects first quarter traffic to decline by 4% to 5%, contributing to comparable sales being down 1.5% to 0.5%. This indicates challenges in attracting customers and could impact revenue growth.
- Pressure on restaurant-level margins due to labor and operating costs: The company anticipates that its restaurant-level margins will face pressure from labor inflation (forecasted at 4% to 5%) and other operating costs, affecting profitability.
- Underperforming assets and potential store closures: Bloomin' Brands acknowledges having some underperforming assets and may consider not renewing leases if performance does not improve, which could lead to store closures and reduced revenue.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | Down ~50% (from $1,194.20M in Q4 2023 to $597.54M in Q4 2024) | The 50% drop in revenue is largely due to a significant decline in both domestic and international performance, reversing the prior period’s strong revenue base, which included benefits like Brazil tax exemptions and net gains from new restaurant openings. |
Operating Income (EBIT) | Reversal from a $56.85M profit to a loss of $626K | Operating margins collapsed due to increased operating costs and loss of previous gains such as lease termination benefits and cost efficiencies; the current period’s losses reflect a combination of weaker sales and elevated expenses, contrasting sharply with the improvements seen in Q4 2023. |
Net Income | Shift from $43.27M profit to a loss of $77.54M | Net Income reversed dramatically as lower revenues and deteriorating operating margins overwhelmed earlier period benefits; the loss in Q4 2024 indicates that previously enjoyed profitability from strong domestic operations has been offset by heavy costs and underperformance in international segments. |
EPS | Declined from $0.48 to -$0.93 | EPS suffered a severe reversal in line with the operating and net income declines, reflecting the compounded impact of reduced revenue, higher costs, and margin erosion compared to the previous period’s positive earnings figures. |
International Performance | Went from positive figures to negative revenues of -$408.85M to -$355M | The international segment experienced a stark turnaround, moving from a period of incremental revenue growth (supported by factors like Brazil’s tax exemptions and new restaurants) to significant underperformance, likely due to closures, structural challenges, and adverse market conditions. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Adjusted Diluted EPS | Q1 2025 | no prior guidance | $0.55 to $0.60 | no prior guidance |
U.S. Comparable Restaurant Sales | Q1 2025 | no prior guidance | between -50 and -150 bps | no prior guidance |
U.S. Comparable Restaurant Sales | FY 2025 | no prior guidance | down 2% to flat | no prior guidance |
Adjusted Diluted EPS | FY 2025 | no prior guidance | $1.20 to $1.40 | no prior guidance |
Commodity Inflation | FY 2025 | no prior guidance | 2.5% to 3.5% | no prior guidance |
Labor Inflation | FY 2025 | no prior guidance | 4% to 5% | no prior guidance |
Full Year Tax Rate | FY 2025 | no prior guidance | close to 0% | no prior guidance |
Brazil Royalty Revenue | FY 2025 | no prior guidance | lower end of 2.75% to 5% with an approximate $10 million headwind | no prior guidance |
Investment in Ziosk, Product Enhancements, and IT Infrastructure | FY 2025 | no prior guidance | Approximately $10 million | no prior guidance |
G&A Savings | FY 2025 | no prior guidance | Approximately $22 million in annualized savings ($17 million realized) | no prior guidance |
Total G&A | FY 2025 | no prior guidance | Approximately $225 million (including $12 million from reloading compensation and $10 million of IT/infrastructure investments) | no prior guidance |
Interest Income | FY 2025 | no prior guidance | Expected from the second payment of the Brazil transaction, lowering net interest expense | no prior guidance |
Capital Expenditures | FY 2025 | no prior guidance | between $190 million and $210 million | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Guest Experience | Emphasized across Q1–Q3 for driving operational excellence, quality and improved satisfaction (e.g., Q1 improvements in steak accuracy , Q3 focus on creating a great meal and value ) | Reiterated as critical in Q4 to reverse traffic declines with renewed focus on consistent execution and guest satisfaction | Consistently prioritized; growing emphasis in Q4 to address traffic underperformance |
Menu Simplification | Discussed in Q1 with a 15% reduction post-COVID , in Q2 as work underway , and in Q3 as a key lever for operational efficiency | Detailed plans in Q4 for a 10–20% reduction across brands, linking it to everyday value and operational clarity | More detailed and strategic emphasis emerges in Q4 |
Cost Pressures | Noted in Q1 with wage inflation around 4.5% , in Q2 at 4.4% , and in Q3 with 3.8% wage inflation driving margin declines | Q4 highlights specific labor (3.2% current, with projections of 4–5%), commodity (2% rising to 2.5–3.5%) and operating expense pressures causing margin compression | Persistent concern with increasingly explicit details in Q4, reinforcing a bearish tone on margins |
Store Remodels | Mentioned in Q3 via focus on capital allocation for maintenance and remodels ; Q1/Q2 had less specific discussion | Q4 introduces a distinct “lower spend, higher touch” approach with plans to remodel 50% of stores and reallocate funds from new unit development | New strategic language in Q4 signals an evolved approach toward cost-effective remodels |
Brazil Market Strategy | Q1 discussed reviewing strategic alternatives and potential refranchising ; Q2 noted macro challenges and cautious pricing ; Q3 focused on a partnership with Vinci (33% retained, 67% sold) | Q4 emphasizes completion of refranchising with Vinci, recording immediate proceeds and setting clear debt-reduction targets | Evolving from exploratory alternatives to execution via a strong partnership model in Brazil |
Earnings Guidance Adjustments | Q1 maintained guidance with caution amid industry softness ; Q2 updated full‐year guidance to $2.10–$2.30 with softer comps ; Q3 guidance revised downward due to persistent softness and volatility | Q4 guidance now factors weather, commodity, and labor impacts with lower EPS expectations (e.g., Q1 2025 EPS of $0.55–$0.60) | Increasingly cautious outlook with progressive downward revisions reflecting sustained industry softness |
Shift to Everyday Value Offerings | Q1 highlighted value-driven LTOs that resonated with guests ; Q2 launched a $14.99 3-course meal emphasizing strong economics ; Q3 shifted focus to core menu and lower opening price points | Q4 underscores a strategic move away from aggressive LTOs toward everyday value (e.g., Aussie 3-Course promotion) to drive simplicity, guest trust and cost efficiencies | Consistent refinement toward everyday value with heightened emphasis in Q4 and a move away from complex promotions |
Segment Performance Divergence | Q1 noted divergence with casual dining resilient and fine dining weak ; Q2 described fine dining as more challenged ; Q3 highlighted Fleming’s strong performance in fine dining | Q4 does not mention segment divergence, suggesting a deprioritization of this discussion point | Topic no longer emphasized in Q4, indicating a strategic shift away from segment-based performance narratives |
Legacy Brand Challenges | Q1 referenced challenges at Bonefish Grill and adjustments at Carrabba’s ; Q3 mentioned legacy brands in a more optimistic tone with less focus on issues | Q4 earnings call does not emphasize underperformance of legacy brands, instead focusing on broader operational initiatives across brands | Legacy brand challenges have faded from the narrative, suggesting a potential strategic refocusing |
Growth Projections, Productivity, and Margin Outlook | Q1 highlighted improvements in productivity and strong performance (e.g., pricing, new openings) despite margin pressures ; Q2 and Q3 further discussed revised guidance, technology investments and evolving margins | Q4 emphasizes self-funding investments through productivity while outlining significant margin pressure from inflation, with Q4 margins down from previous periods | A more cautious sentiment in Q4 with a dual focus on productivity gains amid persistent and explicitly detailed margin pressures |
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Same-Store Sales Guidance
Q: What is the outlook for same-store sales in 2025?
A: The company expects same-store sales to be down 1.5% to 0.5% in the first quarter, with traffic running between negative 4% to 5% and pricing around 4%, leading to an average check increase of 3% to 4%. For the full year, they are assuming similar trends, accounting for a choosy consumer and a choppy environment. -
Margin Expectations
Q: How are margins affected by commodity and labor costs?
A: Margins will face pressure from labor and other restaurant operating inflation. Commodities are expected to increase 2.5% to 3.5% for the full year, with beef costs rising in the mid-single digits. Approximately 76% of commodity needs are locked in. -
Driving Traffic and Market Share
Q: How will you drive traffic and win market share?
A: By focusing on consistent execution and offering abundant everyday value like the Aussie 3-Course, the company aims to increase frequency of visitation and build brand trust. They expect casual dining traffic to be down about 3%, but plan to outperform through these strategies. -
Capital Allocation and Dividend Policy
Q: Will the dividend be reduced further?
A: The dividend reduction is part of a holistic capital allocation strategy following the Brazil sale. The company intends to maintain the dividend as the most reliable and consistent way to return cash to shareholders, while also focusing on reducing debt to achieve a 3.0 lease leverage ratio. -
Menu Simplification and Value Strategy
Q: How does menu reduction impact operations and value?
A: Simplifying the menu by reducing items by 10–15%—and up to 20% at Outback—enhances quality and consistency, lowers prep labor costs, and improves guest satisfaction. Offering everyday value items like the Aussie 3-Course drives traffic without the complexity and costs associated with frequent limited-time offers. -
Remodels and Capital Expenditure
Q: What are your plans for remodels and capital spending?
A: Approximately 50% of stores will be remodeled over the next two to three years, primarily focusing on Outback. Capital previously allocated for new units (about $40 million) will shift to fund these remodels starting in 2026. -
Board Alignment and Activist Investor
Q: How is the relationship with the Board and activists?
A: The Board and activists, including Starboard, are fully aligned and have a constructive and collaborative relationship. They are focused on driving sales, profit, and sustainable traffic growth. -
Check Management Trends
Q: What trends are you seeing in check management?
A: There has been a slight increase in check management, with a 100 to 150 basis point decline from Q4 to Q1 due to lower appetizer, beverage, and dessert attachment, especially among households under $100,000 income. The company is innovating in these areas to meet guest needs, including introducing mocktails. -
Operational Execution
Q: What is the main opportunity to improve guest experience?
A: Improving consistency of execution in quality, value, and guest experience is key to driving frequency of visitation and intent to return. The focus is on ensuring guests leave excited to return. -
Store Closures and Underperforming Assets
Q: Will there be store closures in 2025 or beyond?
A: The company has action plans to improve underperforming assets but will assess them as part of a holistic strategy. Decisions on renewing leases will be made if improvements are not satisfactory.