BLMN Q1 Earnings Call: Menu Simplification and Value Initiatives Dominate Turnaround Efforts

Restaurant company Bloomin’ Brands (NASDAQ:BLMN) announced better-than-expected revenue in Q1 CY2025, but sales fell by 12.2% year on year to $1.05 billion. Its non-GAAP profit of $0.58 per share was in line with analysts’ consensus estimates.

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StockStory’s Take

Bloomin’ Brands’ first quarter results reflected a continued focus on operational streamlining and early-stage turnaround efforts, particularly at Outback Steakhouse. Management attributed performance to the simplification of menus across all brands, aiming to reduce complexity for both guests and staff. CEO Mike Spanos acknowledged, “We are not where we want to be, but I am encouraged by the progress we have made since our last earnings call on our operating priorities.” The company reported positive comparable sales at Carrabba’s and Fleming’s, while Outback continued to underperform its casual dining peers, with management citing value perception and consistency issues. The rollout of tabletop technology and organizational redesign were highlighted as steps toward improving guest experience and cost structure, though leadership was clear that the turnaround remains in its early stages.

Looking ahead, management’s guidance is shaped by a cautious outlook due to continued consumer uncertainty and a choppy macroeconomic environment. Spanos stated, “Our Q2 and balance of year guidance assumes a continuation of this choppy macro environment and cautious consumer, and the reality is we are in the early stages of a multiyear turnaround on Outback.” Planned investments in everyday value offerings, further menu simplification, and technology adoption are expected to pressure short-term margins but are aimed at driving profitable traffic over time. CFO Michael Healy highlighted that the company’s approach will remain flexible to consumer trends, stating, “We will assess the health of the consumer and adjust accordingly.” Strategic priorities include reinvesting in restaurants, managing debt levels, and iterating on value platforms to support sustainable sales growth.

Key Insights from Management’s Remarks

Management attributed first quarter results primarily to ongoing menu simplification, targeted value promotions, and organizational restructuring, while acknowledging continued share loss in the steakhouse segment and mixed consumer demand.

• Menu Simplification Across Brands: The company reduced menu items by 10-20% at Outback, Carrabba’s, Bonefish, and Fleming’s, eliminating low-performing items to simplify operations and improve consistency for both guests and staff. Outback’s April menu now has about 10% fewer items, with further reductions planned by year-end.

• Operational Efficiency Initiatives: Organizational redesign efforts led to greater-than-expected general and administrative (G&A) cost savings in the quarter. Management expects annual G&A to be about $10 million lower, with ongoing scrutiny of all expenses and third-party consultants engaged to identify further cost savings.

• Value Platform Adjustments: The Aussie 3 Course value offer is now a core menu feature, with management noting it resonates with price-sensitive guests. While its impact was limited in the first quarter due to promotional overlap, it is expected to drive greater traffic and mix in the second half of the year.

• Technology Rollout to Enhance Experience: The Ziosk tabletop payment system has been fully deployed at Outback, with over 85% of guests using it. Management noted improved table turns and the ability to collect real-time feedback, which is used to guide operational changes and enhance staff coaching.

• Challenging Consumer Environment: Leadership pointed to a cautious consumer, particularly among households earning under $100,000, and noted softer-than-expected trends during key holiday periods. Beverage sales saw declines, while appetizers and desserts remained stable, suggesting selective spending patterns.

Drivers of Future Performance

Bloomin’ Brands expects near-term performance to be shaped by consumer caution, ongoing menu and service adjustments, and cost pressures from both inflation and strategic reinvestment.

• Consumer-Driven Value Initiatives: Management plans to further iterate on value offerings across brands—especially Outback—responding to consumer sensitivity on pricing and perceived value. The company expects these initiatives to help stabilize traffic, though they may negatively affect average check and margins in the short term.

• Continued Menu and Service Model Simplification: Additional reduction of menu items and ongoing testing of service models are intended to improve operational consistency and guest satisfaction. Management sees these efforts as foundational for long-term traffic growth but acknowledges that benefits will take time to materialize.

• External Cost and Margin Headwinds: Inflationary pressures on labor and supplies, as well as potential tariffs in the back half of the year, remain key risks. Management is working with suppliers to mitigate impacts, but has explicitly excluded potential tariff costs from its current guidance, reflecting ongoing uncertainty.

Catalysts in Upcoming Quarters

In coming quarters, the StockStory team will be closely watching (1) the effectiveness of menu simplification and value offers in regaining traffic and market share at Outback, (2) the company’s ability to offset cost pressures through further operational efficiencies and supplier negotiations, and (3) the pace of guest adoption and impact of new service technologies. Progress on strategic planning for Outback and the outcome of ongoing test initiatives will also be important to monitor.

Bloomin' Brands currently trades at a forward P/E ratio of 6.3×. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).

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