Transcript: Bloomin Brands Q2 2026 Earnings Conference Call

Bloomin Brands (NASDAQ: BLMN ) held its second-quarter earnings conference call on Wednesday. Below is the complete transcript from the call. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

02 billion, with positive comparable restaurant sales of 230 basis points. The company is focused on a turnaround strategy for Outback Steakhouse, emphasizing consistency in execution, brand relevancy, and investment in restaurant refreshes. Outback's guest scores improved significantly year-over-year, with notable enhancements in service, atmosphere, and food quality, contributing to better customer satisfaction. Strategic initiatives include a new steak lineup, a revised service model with reduced table ratios for servers, and increased marketing spend focused on digital channels.

Despite positive guest metrics, traffic remained down, with management attributing this to the long-term nature of building sustainable and profitable growth. 5% last year, supported by productivity savings and better control of non-guest-facing costs. 00, reflecting improved mix trends and cost controls. Bloomin Brands plans to refresh nearly all Outback restaurants by 2028, with 85 refreshes expected for 2026, focusing on improving guest ambiance.

Full Transcript OPERATOR Greetings and welcome to the Bloomin Brands fiscal second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow management's prepared remarks. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Please note this event is being recorded. It is now my pleasure to introduce your host, Tara Kurian, Senior Vice President, IR, FP&A, and International. Thank you, Ms. Kurian.

You may begin. Tara Kurian, SVP, IR, FP&A, and International Thank you and good morning everyone. With me on today's call are Mike Spanos, our Chief Executive Officer, and Eric Christel, Executive Vice President and Chief Financial Officer. By now you should have access to our fiscal second quarter 2026 earnings release and our investor presentation slides, both of which can be found on our website at in the Investors section.

Throughout this conference call we will be presenting results on an adjusted basis. An explanation of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our earnings release and investor presentation on our website as previously described. Before we begin formal remarks, I'd like to remind everyone that part of our discussion today will include forward-looking statements, including a discussion of recent trends. These statements are subject to numerous risks and uncertainties that could cause actual results to differ in a material way from our forward-looking statements.

Some of these risks are mentioned in our earnings release. Others are discussed in our SEC filings which are available at During today's call, we'll provide a brief recap of our financial performance for the fiscal second quarter 2026, current thoughts on fiscal 2026 guidance and an update on our turnaround strategy. Once we've completed these remarks, we'll open the call up for questions. With that, I would now like to turn the call over to Mike Spanos.

Mike Spanos, Chief Executive Officer Thanks, Tara, and good morning everyone. I will discuss our second quarter results and provide an update on our turnaround. Eric will then review the financials and our thoughts on guidance. First, I want to congratulate our team on the progress on both the Outback turnaround plan and our financial results.

Our focus on consistency of execution, on food quality, service experience, and providing affordable offers is making an impact. As Pat Haffner, President of Outback, told his team at our Managing Partner Conference in June, motivation gets you going. Consistency of execution keeps you growing. We remain committed to consistency of execution that delivers a cumulative impact in delivering a great guest experience.

While our success will not be linear, we believe these commitments will lead to sustainable and profitable growth in the long term. Turning to our second quarter results, Outback's guest metric scores continue to improve with year-over-year gains for the fourth consecutive quarter, reinforcing that we are getting better every day. This is the power of consistency of execution. In Q2 of this year compared to Q2 of last year, Outback's guest scores increased across service by 7 points, atmosphere by 7 points, value by 6 points, intent to return by 5 points, food by 4 points, and brand trust by 2 points.

I will share more details of our Outback turnaround progress shortly. S. comparable restaurant sales were positive 230 basis points with traffic down 190 basis points. We have continued to narrow the gap versus the industry as defined by Black Box each quarter, and our Q2 comp sales were in line with Black Box while traffic trailed by 110 basis points.

Affordable entry price points at our casual dining brands combined with consistent execution and craveable service is improving our what you get for what you pay for value equation. Outback's Q2 comp sales were up 140 basis points with traffic down 280 basis points. As we mentioned in our first quarter earnings call, we chose not to lap some dilutive traffic offerings from Q2 2025, particularly in our third-party delivery space. While third-party delivery remains a key part of our business and plays an important role for convenience, our focus is on delivering a remarkable dining experience to drive sustainable traffic growth.

Outback continues to drive traffic and loyalty from the Aussie three-course affordability offering with about 60% of the guests consistently trading up from the entry price point into the higher price tiers and approximately 20% trading up on the dessert option. Carrabba's comp sales were up 170 basis points with traffic of negative 250 basis points. Similar to Outback, we chose to not lap some dilutive third-party delivery offerings from prior year. This is the sixth consecutive quarter that Carrabba's drove positive comp sales, driven by continued focus on the in-restaurant experience and delivering elevated authentic Italian food with warm hospitality.

We are seeing positive results and increased guest satisfaction from our updated day-of-week offers and continued strong interaction with our experiential wine dinners. Bonefish's comp sales were up 810 basis points with traffic of positive 450 basis points. Bonefish continues to steadily improve traffic growth with momentum in day-of-the-week offers such as Margarita and Martini Mondays and Bang Bang Shrimp Wednesdays. The team has done an excellent job of engaging guests with an energetic bar in a polished casual seafood environment, leveraging our core menu items for exciting affordability offers.

Fleming's comp sales were up 160 basis points with traffic down 280 basis points and achieving the 8th consecutive quarter of positive comp sales growth. The team continues to provide memorable special occasions for our guests through disciplined execution and approachable offers. I will now update you on our turnaround focused on Outback Steakhouse. The turnaround is anchored on four strategic platforms as previously communicated, which are: 1) deliver a remarkable dining experience; 2) drive brand relevancy; 3) reignite a culture of ownership and fun; 4) invest in our restaurants.

These platforms will be supported by non-guest-facing productivity savings, balanced capital allocation, and a strong management team. Starting with an update on the first platform to deliver a remarkable dine-in experience, the first step was the launch of our new steak lineup in November of last year. We continue to see our steak score in the top box, consistent with Technomic. Our Ziosk guest scores are showing noteworthy improvements year over year across intent to return, food quality, service, steak temperature, and value.

The commitment to consistency of execution has driven four consecutive quarters of year-over-year improvements in Outback guest metric scores. Moving to the next element of a remarkable dine-in experience: craveable service. As we have previously communicated, we identified that our one server to six table station ratio during peak hours didn't provide the right level of guest interaction and satisfaction. In Q2, we successfully rolled out our new service model to all Outbacks, reducing our ratio to four tables per server during peak hours.

We are receiving positive guest feedback from this change. Our Q2 absolute service scores were over 90% top box and increased by nearly 3 points year over year. Like our steak quality, guests are telling us they see the difference in our enhanced service model, improving the what you get for what you pay for value equation. Our Outbackers continue to leverage the tabletop Ziosk data to drive accountability and close any gaps in performance in each restaurant.

We will continue our commitment to delivering a great guest experience with training for front-of-the-house Outbackers this month on our enhanced hospitality experience model to deliver a fun, casual Aussie, no rules, just right experience. Our second strategic platform is driving brand relevancy at Outback to differentiate the brand. We will embrace the core of our Aussie brand roots by inviting customers to come as our guests and leave as our mate. Our brand communication will primarily showcase the quality of our steak lineup with a balance of brand equity and the affordability of our Aussie three-course offer and craveable service.

We are increasing our marketing spend year over year in the second half of this year and will continue to shift our marketing mix into social and digital channels. Marketing will bring them in with a no rules, just right Aussie irreverence, and our relentless focus on consistent execution will bring guests back. Reignite a Culture of Ownership and Fun is our third strategic platform. Our people are the key to our turnaround, and we are focused on having strong leadership throughout our restaurants, starting with our managing partners.

Reigniting a culture of ownership and fun begins with recognizing the achievements of our partners and Outbackers. We held our Outback Managing Partners Conference in June. This was the first time since 2019 that we have had our partners together, and it was a great event to get them energized around the elements of the turnaround. We have great partners and they are clear on their ownership to deliver a great guest experience.

We are privileged to have one of our Outback founders, Tim Gannett, who invented the Bloomin Onion, spend two days with our team inspiring them on the core of the brand, our special culture, and the potential of our business based on the turnaround plan. What was particularly motivating was Tim's feedback that we are doing the right things to turn around Outback. I want to congratulate Market Vice President Robby Atkins for being named Outbacker of the Year. Robby exemplifies our principles and beliefs as a leader, setting the standard that success is growth in sales and profits and is the result of taking care of our people and guests.

Congratulations, Robby. Additionally, consistent with what we communicated in our previous earnings call, we implemented the first phase of an updated MP compensation model during Q2. The first phase of our MP compensation program has two key goals: first, to ensure total cash compensation is competitive with the local market, starting with a competitive base salary; and second, to ensure that total cash compensation remains tied to the growth of sales and profit of the restaurant. Lastly, let me update you on our fourth strategic platform: invest in our restaurants.

We are on track with our goal to touch nearly all of the Outback restaurants by the end of 2028 with targeted initiatives to refresh the interior and exterior, expecting to spend on average between $350,000 and $400,000 per refresh location. We have completed approximately 31 Outback refreshes through the end of July and are on track to complete around 85 for the full year of 2026. This asset refresh approach focuses on improving guest ambiance in the restaurant interior and exterior, which will improve the dine-in experience. Additionally, we have completed the rollout of our char-grill expansion across Outback.

This cooking platform enhancement allows our Outbackers to have the optimal cooking platform for our new steak proteins and non-steak proteins. Let me now turn it over to Eric to review our financial performance for Q2 and guidance for Q3 and full year fiscal 2026. Eric Christel — Executive Vice President, Chief Financial Officer-Elect Thank you, Mike, and good morning everyone. I would like to start by providing a recap of our continuing operations financial performance for the fiscal second quarter of 2026.

02 billion compared to 1 billion last year, reflecting a 1% increase. Restaurant sales were up, driven by positive comparable restaurant sales of 230 basis points. We remain very focused on narrowing the gap to the industry in the near term and positioning ourselves to lead the industry in the long term. Average check increased by 420 basis points compared to 2025, with pricing partially offset by negative mix.

As we continue to invest in affordable offers for our guests, we are seeing an improvement in our mix compared to our original forecast, driven by the leadership and efforts of our Outback team in three key areas. First, we have enhanced our menu design to incent our guests to enjoy our combo offerings, which feature our outstanding steak and non-steak proteins together. Second, we are seeing guests trade up to more premium steak cuts once they engage with our servers and see the steaks on the menu.

Third, we are seeing continued momentum from our non-alcoholic mocktails, providing a premium and experiential beverage experience to include low-calorie options such as our Strawberry Peach Refresher to complement our Aussie-themed Mock Crock and Sharky Temple. As a result of what we are seeing in mix, this has a positive impact on the turnaround investment dollars, which I will explain in detail shortly. S. sales in the quarter, consistent with Q2 last year.

Outback's off-premises mix was 26% in the quarter and Carrabba's was 34%. Our GAAP diluted earnings per share was 37 cents compared to earnings of 29 cents per share last year. Our Q2 adjusted diluted earnings was 39 cents per share versus earnings of 32 cents per share last year. The difference between GAAP and adjusted GAAP operating results is approximately 3 million of adjustments in Q2 2026, primarily as a result of transformational and restructuring activities.

5% last year. The 50 basis point difference between this year and last year was driven by improved restaurant margins. 7%. Labor was favorable, driven by the lap of higher health insurance costs in the prior year, and other restaurant operating expense favorability was driven by non-guest-facing productivity.

As it relates to our 33% retained ownership in Brazil, which is classified as an equity method investment, we recognized a loss of approximately $900,000 in Q2. We still expect the full-year loss to be approximately $3 million to $4 million. Turning to our capital structure, in Q2 total debt, net of cash, is $636 million. 0 times on a net debt to adjusted EBITDA basis.

0x. Capital expenditures in the quarter were $44 million. We expect to complete a large amount of refreshes in Q3 of this year and taper off in Q4 as we focus on serving our guests during peak season. We still expect the full-year capital expenditures to be in the range of $185 to $195 million.

Consistent with our previous communication, our capital allocation priorities are to 1) invest in the base business and 2) pay down debt. The teams are committed to these priorities to provide a platform for the turnaround and a strong balance sheet to support growth. As I mentioned, we are seeing improved mix trends at Outback, which has a positive impact on the turnaround investment needed in 2026. We had allocated $25 million for food investments, of which $18 million was specifically for mix.

We now expect the mix investment to be $4 million. The turnaround investments now total $36 million, down from $50 million. Productivity savings remain on track for $30 million for a net investment in 2026 of $6 million. S.

comparable restaurant sales to be between 1% and 2%. We expect sales mix to improve by approximately 100 basis points, offset by slightly lower traffic, as we make the strategic decision to not repeat profit-dilutive offers from last year. 00. 90.

The increase in our earnings per share guidance range is attributable to our year-to-date performance, improved mix trends, and better middle-of-the-P&L cost controls.