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Bloomin’s staff retention during pandemic blunts labor woes
News Source/Courtesy: www.nrn.com

Bloomin’ Brands Inc., the parent to Outback Steakhouse, Carrabba’s Italian Grill and others that did not furlough workers during the COVID-19 pandemic, has emerged into the vaccine era with few complaints about the labor market, which have grown into a Greek chorus in the industry.

The Tampa, Fla.-based Bloomin’ Brands, which also owns the Bonefish Grill, Fleming’s Prime Steakhouse & Wine Bar, Aussie Grill by Outback and Tender Shack virtual brand, did not furlough or lay off any employees during the pandemic.

“This decision has contributed to low turnover,” said David Deno, Bloomin’ Brands CEO, in a first-quarter earnings call Thursday.

“Maintaining a motivated and well-trained and engaged employee base is critical to our long-term success,” Deno said. “As sales volumes are now exceeding pre-pandemic levels, these actions provide a competitive advantage to retaining talent as the industry faces some staffing challenges.”

Deno said that was a competitive advantage. “That gave us a higher staffing base, a more committed employee base, higher retention and very low turnover,” he said. “That base is extremely important as we go forward.”

Bloomin’ was ready as customers began to return. Sales at domestic Outback locations were up 4.1% in the first quarter as compared to last year, when the pandemic was declared in March. Same-store sales were up 3.3% in the same period.

“Through the first four weeks, second quarter U.S. comparable sales are up 12.6% on a two-year basis versus 2019,” Deno said. “It is clear, customers want to come back to restaurants, and we are confident in our ability to provide a safe and welcoming dining experience.” Chris Meyer, Bloomin’ Brands chief financial officer, said U.S. restaurants have continued to average $75,000 a week in sales per restaurant in the second quarter.

Deno said the Bloomin’ restaurants have maintained off-premise sales as dining rooms reopened and are considering off-premise carryout and delivery an “incremental occasion,” which should contribute to same-store sales growth.

The Bloomin’ concepts also honed operations during the pandemic, when local governments closed dining rooms and restaurant brands turned to off-premise channels for sales.

“We are realizing efficiencies through simplification efforts and across operations, menus and marketing,” Deno said. “This has led to lower waste, reduced prep and training hours and improved execution. These benefits translate into lower costs in the restaurants and in the restaurant support center. We will continue to look for ways to reduce complexity, improve consistency and increase profitability across revenue channels.”

Calling the labor market “a very different world” than before the pandemic, Meyer added: “There's no question that we are running — and we'll continue to run — a more favorable and efficient labor model than we did in 2019. Between the simplification efforts with the menus driving favorability, we have a reduction in prep hours.” He said he expected favorable labor margins continuing into the second quarter.

Meyer noted that restaurant performance still varies by region, depending on capacity restrictions.

In past four weeks, he said, states like Alabama, parts of Florida, Georgia, Tennessee and Texas, which have lifted most capacity restrictions on indoor dining, have shown quarter-to-date comps in the range of positive 15% to 20%, compared to 2019.

“And then of course, you have the flip side where it's the same states we've talked about where you have a little more in terms of restrictions,” Meyer said. “New York, New Jersey, Michigan, Minnesota, those have been a little behind in terms of our overall sales performance, but still even behind, they're in that either slightly down on a two-year basis or positive in the low single digits on the two-year basis. We're seeing sort of a sea change across the portfolio, but there definitely is some regional bias.”

For the first quarter ended March 28, Bloomin’ Brands swung to a net profit of $70.2 million, or 63 cents a share, from a loss of $38.1 million, or 44 cents a share, in the prior-year period. Revenues were down 2.1% to $987.5 million from $1.008 billion in the same quarter last year.

Combined same-store sales for the first quarter at all domestic Bloomin’ restaurants were up 3.3%, including an increase of 4.1% at Outback, an increase of 8.9% at Carrabba’s, a decline of 2.9% at Bonefish Grill and a decline of 2.3% at Fleming’s.

Bloomin’ Brands has more than 1,450 restaurants under the brands Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. It operates in 47 states, Guam and 20 other countries.

The company last year introduced the virtual delivery-only Tender Shack brand with the third-party DoorDash platform and expanded it to 750 locations in February.

“When the restaurant dine-in occasion opened back up, the sales at Tender Shack did soften a bit,” Deno said. “We do believe that the $75 million annualized sales goal is attainable, but we have some work to do on that.

“With the restaurants reopening, we've got to increase the brand awareness, we've got to add some potentially some additional products, we've got to look at pick up opportunity in our restaurants,” Deno said. “And we're looking at some partnerships.”

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