Outback Steakhouse Parent Keeps Bloomin' Over Its Rivals
Bloomin' Brands (BLMN) -- the parent company of Outback Steakhouse, Carrabba's Italian Grill, Fleming's Prime Steakhouse and Bonefish Grill -- posted quarterly results this week, finding a way to grow its traffic sales, and profitability during a quarter that proved challenging for many rivals.
Revenue climbed 5 percent during the period, fueled by positive comparable-restaurant sales at all four concepts. Given so many chains that sputtered during this past summer's ho-hum season only to see performance worsen toward the end of the year, seeing Bloomin' go four-for-four is as refreshing and rare as a baseball player hitting for the cycle.
G'day Mate: You Could Say That Again
Outback Steakhouse remains the key driver at Bloomin', accounting for 988 of the parent company's 1,508 locations. Outback was a market darling as a standalone concept in the early 1990s when the casual dining steakhouse chain was as sizzling as its signature meats. Patrons who couldn't afford the premium chophouses but didn't want to settle for ordinary fare trekked to Outback, Lone Star, LongHorn and Texas Roadhouse (TXRH).
With the initial success of Outback and Lone Star, smaller casual steakhouse concepts went public. Timber Lodge, Roadhouse Grill and Sagebrush hopped on the bandwagon, taking the IPO route long before they were big enough to justify being publicly traded. The frenzy didn't last. The smaller concepts sputtered, and when the larger chains struggled, they either went private -- as Outback and Lone Star did -- or were acquired. as we saw in 2007 when Darden (DRI) snapped up LongHorn.
Texas Roadhouse bucked the trend by going public. Lone Star remains privately held, but Outback's private owners couldn't stay away from the easy access to capital and exposure that being public provides. It went public again two summers ago as Bloomin' Brands, taking on the name of the steakhouse's popular Bloomin' Onion appetizer.
Sizzlin' When Everybody Else is Getting Smoked
A lot of former darlings in the casual dining arena struggled to attract diners during the final three months of 2013. Cracker Barrel Old Country Store (CBRL) and BJ's Restaurants (BJRI) have recently reported negative comps for the quarter.
%VIRTUAL-article-sponsoredlinks%But Outback Steakhouse found a way to shine. Its comps rose 1.1 percent during the quarter. Bloomin' Brands across all four concepts saw its comparable-restaurant sales climb 1.4 percent, powered by both an uptick in traffic and the average check. It's a baby step that doesn't even keep up with inflation, but consider the alternative: industry watcher Knapp-Track's gauge shows the sector average declining by more than 2 percent during the same period.
Some may argue that Bloomin' Brands still needs to prove itself. Outback did post slightly negative comps during the prior quarter. It can also be argued that Bloomin' helped make its own luck by expanding lunch service at some locations. The market isn't going to nitpick. Bloomin' Brands shares still opened sharply higher on the news.
At a time when many chains have fallen short, Bloomin' Brands has now come through with better than expected earnings in four of the past five quarters. Outback and its smaller sister concepts are gaining market share at a time when everybody else is scrambling. Fancy chophouses may look down their noses when someone orders a steak overcooked, but Outback had no problem serving up this quarter well done.
Motley Fool contributor Rick Munarriz owns shares of Cracker Barrel Old Country Store. The Motley Fool recommends BJ's Restaurants and Texas Roadhouse. The Motley Fool owns shares of BJ's Restaurants. Try any of our newsletter services free for 30 days.