New handheld server tablets and kitchen equipment are beginning to pay off at Outback Steakhouse.
The tablets, which allow servers to send orders to the kitchen electronically, are now in use at all of Outback’s 691 U.S. restaurants, while the rollout of new grills and ovens will be complete this quarter. Executives said the impact of the new tools is beginning to show up in the form of better productivity, lower food costs and ultimately more profits.
Restaurant-level operating margins at parent Bloomin’ Brands rose to 16.4% in the second quarter, an improvement of nearly 1 percentage point year over year.
“That’s one of the reasons why the margins look so good,” CEO Dave Deno said of the upgrades. “And I think we've got some more in front of us because we are still rolling out the ovens.”
While Bloomin’s bottom line is growing, its top line has slowed. Same-store sales at Outback Steakhouse rose just 0.6% in the quarter. And traffic across all of its U.S. brands was negative 4.2%. It now plans to put some of its profits toward reversing that trend.
“We're going to use some of those margin dollars to reinvest back in the business and some of our offerings,” Deno said, according to a transcript on financial services site Sentieo. “I don't want to get into the details, but that's our philosophy.” He later suggested it might invest more in advertising, especially at Outback.
Like many of its casual-dining competitors, Tampa-based Bloomin’ has cut back on discounts and raised menu prices in recent quarters. That has hurt traffic, though executives noted it still outpaced the industry traffic average by 110 basis points. And Deno said consumers are still “hanging in there.”
The chain is already doing a few things to boost traffic. It is using digital marketing to encourage its most frequent customers to visit more often, and it has added “sales layers” at its concepts, such as Social Hour at Fleming’s and Wine Dinner at Carrabba’s.
And those profit-boosting investments in technology and better kitchen equipment should also help traffic, Deno said, by improving the customer experience.
“We're seeing the customers seeing better table turns, they're seeing better product, which will lead to greater traffic, and they're getting better service,” he said.
He added that Bloomin’ is already looking at bringing the upgrades to its other brands.
“I walk over to Carrabba’s and I say, ‘Well, look what Outback's done. Is there opportunity in Carrabba’s business to do similar things?’” he said.
Bloomin’ total revenues for the quarter were $1.2 billion, an increase of 2.4% year over year. Same-store sales rose 3.5% at Carrabba’s and 0.5% at Bonefish Grill and fell 2.5% at Fleming’s, which executives blamed on difficult comparisons from a year ago.
The company remains bullish on its Outback Steakhouse business in Brazil, where comps rose 4.1% in the quarter. Bloomin’ believes it can one day have as many as 300 Outbacks in the country.
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