Bloomin' Brands: Navigating Challenges and Opportunities in Q3 Earnings

Bloomin' Brands, Inc. (BLMN), the parent company of popular casual dining chains such as Outback Steakhouse and Carrabba's Italian Grill, reported its Q3 2024 earnings on November 8, 2024. The company's financial performance was marked by a decline in earnings and revenue, reflecting the challenges faced in the casual dining sector and the impact of recent hurricanes. However, Bloomin' Brands' strategic refranchising of its Brazil operations and partnership with Vinci Partners offer promising growth prospects for the future.

Diluted EPS and Adjusted Diluted EPS
Bloomin' Brands reported diluted EPS of $0.08 and adjusted diluted EPS of $0.21 for Q3 2024, representing a significant decline from the same period in 2023, when the company reported diluted EPS of $0.45 and adjusted diluted EPS of $0.41. The decrease in earnings can be attributed to several factors, including lower comparable restaurant sales, the impact of foreign currency translation, and increased costs related to labor, commodities, and general and administrative expenses.

Revenue and Operating Margins
The company's revenue decreased by 3.8% year-over-year to $1.038 billion, primarily due to lower comparable restaurant sales and operational disruptions from natural disasters. GAAP operating income margin decreased from 5.4% in Q3 2023 to 1.7% in Q3 2024, while adjusted operating income margin decreased from 5.3% to 3.0%. Restaurant-level operating margin also declined, from 13.8% in Q3 2023 to 12.5% in Q3 2024.

Strategic Refranchising of Brazil Operations
Bloomin' Brands' strategic refranchising of its Brazil operations, along with the announced partnership with Vinci Partners, has significantly contributed to the company's revenue growth and expansion. By selling a 67% stake in its Brazil operations for R$1.4 billion (approximately $243 million in U.S. dollars), Bloomin' Brands has unlocked substantial value, reflecting a total enterprise value of R$2.06 billion Brazilian Reais or 6.5x trailing twelve months EBITDA, net of royalties. This strategic move includes an ongoing royalty stream, ensuring continued revenue generation for Bloomin' Brands. The partnership with Vinci Partners, a local expert in the Brazilian market, is expected to maximize future growth potential by leveraging their local expertise and combining it with Bloomin' Brands' scale and brand leadership.


Future Outlook and Investment Considerations
Despite the recent challenges, Bloomin' Brands remains committed to enhancing guest experiences and driving long-term growth. The company has updated its full-year guidance, forecasting adjusted diluted EPS between $1.72 and $1.82. Investors should monitor the company's progress in addressing these challenges and capitalizing on growth opportunities, particularly in the Brazil market.


In conclusion, Bloomin' Brands' Q3 2024 earnings snapshot reflects the challenges faced in the casual dining sector and the impact of recent hurricanes. However, the company's strategic refranchising of its Brazil operations and partnership with Vinci Partners offer promising growth prospects for the future. As the company continues to navigate these challenges and adapt to changing consumer preferences, investors should closely monitor its progress in driving long-term growth and value creation.