Bloomin' Brands Faces Near-Term Pressure, Analyst Highlights Peer Brinker's Turnaround Roadmap

Company Overview - BofA Securities analyst downgraded Bloomin' Brands Inc (BLMN) from Neutral to Underperform and reduced the price forecast from $18.00 to$13.00 [1] - Bloomin's transaction growth has averaged a decline of approximately 2% per year over the last decade, with its largest brand, Outback, experiencing a -1.1% compound annual growth rate (CAGR) in traffic [1] Revenue Insights - Outback US accounted for about 51% of Bloomin's revenue in FY24, expected to rise to around 53% following the Brazil licensing [2] Market Position and Competition - The casual dining sector generally experiences slow growth, and Bloomin's challenges have allowed competitors to gain a larger market share [3] - The new management's primary focus is on reversing the decline in traffic [3] Performance Metrics - Despite a consistent decrease in volumes, Bloomin's margins have remained unexpectedly strong, with domestic same-store transaction counts roughly 10% lower than in 2019, while restaurant margins have only dropped by 70 basis points [4] - Flow-through margins are around 40% on additional transactions, indicating a smaller margin decline than anticipated [4] Pricing Strategy - Bloomin's pricing has been on par with or higher than competitors like Texas Roadhouse in the steak category [5] - Unlike Chili's, which historically underpriced its competitors, Bloomin's brands have maintained competitive pricing but lack the scale advantages to outspend rivals on marketing without compromising margins [6] Future Outlook - Although BLMN is currently priced below its historical average, revenue and earnings projections are expected to face pressure in the near future [7] - BLMN shares are trading lower by 0.36% at $12.27 [7]