Outback's Turnaround: Contradictions in Strategy, Menu Focus, and Labor Costs in 2025Q2 Earnings Call

Outback's turnaround strategy, menu simplification and focus, advertising and marketing strategy, and labor cost optimization are the key contradictions discussed in Bloomin' Brands' latest 2025Q2 earnings call.



Operational Improvements and Outback Turnaround:
- Bloomin' Brands reported sequential improvements in U.S. traffic at Outback, down 2% in Q2 compared to Q1, with a 190 basis point improvement.
- The company's sales comp was negative 10 basis points, showing improvement from Q1's negative 50 basis points.
- The Outback turnaround efforts focus on menu simplification, service model optimization, and enhancing steak quality, driven by the goal of improving the guest experience and increasing frequency.

Financial Performance and Guidance Adjustment:
- Total revenues for Q2 2025 were $1 billion, with U.S. comparable restaurant sales down 10 basis points and traffic down 200 basis points.
- Adjusted diluted earnings per share was $0.32, above the guided range of $0.22 to $0.27.
- The company adjusted its full-year guidance due to tariff impacts, increased liability insurance expenses, and investments in quality and service improvements for Outback.

Menu and Brand Strategy:
- Bloomin' Brands implemented menu reductions across brands, with Outback's menu reduced to the low 70s from the mid-80s.
- The introduction of the Aussie 3 Course offer contributed significantly to traffic improvements at Outback.
- The company is focusing on strategic brand positioning for Outback, aiming to differentiate itself within casual dining.

Leadership Changes and Strategic Focus:
- The company announced a series of leadership changes, including the appointment of Eric Christel as Chief Financial Officer-elect and Jessica Mitory as Chief Human Resources Officer.
- Michael Healy's role was expanded to lead the strategic initiatives central to the Outback turnaround, emphasizing the company's focus on operational excellence and strategic muscle development.