All sizzle and no steak.
That might be the most appropriate description for Bloomin' Brands (BLMN +4.62%) stock these days. Shares of the restaurant chain have been heading south all year. They're down 48% so far in 2025 -- and they've cratered 12% since Nov. 5.
NASDAQ: BLMN
Key Data Points
The Tampa, Florida-based company owns the Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, and Fleming's Prime Steakhouse brands. But Bloomin' shareholders are not dining well these days.
A turnaround strategy
On Nov. 6, the company released its third-quarter financial results, as well as a turnaround strategy focused on its flagship Outback Steakhouse chain. As part of that plan, management shuttered 21 restaurant locations -- most of them presumably Outback locations, which account for 678 of the company's 1,118 US-based restaurants -- and said another 22 restaurants across its portfolio will close within four years.
Bloomin' reported a loss of $0.54 a share in the quarter, much worse than its loss of $0.01 per share a year ago. Revenue, however, was up 2.1% to $929 million, slightly above Wall Street estimates of around $906 million.
Management's turnaround plan includes some $75 million of new investments in Outback restaurants over the next three years, $50 million of that in 2026. The plan entails menu improvements, better service, restaurant renovations, and simplified operations. To help fund the turnaround, the company said it has suspended its dividend.
Losing ground
Yet Outback Steakhouse continues to lose ground to competitors like LongHorn Steakhouse, owned by Darden Restaurants, and Texas Roadhouse. Darden posted a 5.5% increase in comparable location sales in its recent quarter, and Texas Roadhouse increased sales by 5.8%.
The poor Q3 Bloomin' performance was hardly a new experience for beleaguered shareholders. In the second quarter, the company saw revenues rise 0.3% year over year, but adjusted earnings fell from $0.51 to $0.33 per diluted share.
Worse, the company's restaurant-level operating margin shrank from 14% to 12% in the quarter, and management predicted a net loss of at least $0.10 a share for Q3. As we now know, that outlook was positively rosy compared to reality. The stock plunged 28% on Aug. 6, the day Bloomin's Q2 results were posted.
Image source: Getty Images.
A tough environment
Casual dining chains like Outback are facing a more difficult environment at the moment, as Americans face cost increases elsewhere in their budgets and, as a result, are becoming much more discriminating in where and how they dine out. A few chains, including Texas Roadhouse, Applebee's, and Chili's, have benefited, while others -- including Outback and other Bloomin' brands -- are losing share.
All this means management's planned turnaround is unlikely to be fast or easy.
