Restaurant company Bloomin’ Brands (NASDAQ: BLMN) beat Wall Street’s revenue expectations in Q2 CY2025, but sales fell by 10.4% year on year to $1.00 billion. Its non-GAAP profit of $0.33 per share was 13.1% above analysts’ consensus estimates.

Is now the time to buy BLMN? Find out in our full research report (it’s free).

StockStory’s Take

Bloomin’ Brands faced a challenging Q2, with the market reacting sharply to its declining sales and margin pressures despite modest improvements in U.S. traffic and a slight revenue beat. Management attributed the quarter’s performance to ongoing operational changes, including menu simplification and renewed focus on Outback Steakhouse’s guest experience. CEO Michael Spanos acknowledged, “We are still losing share in the industry as defined by Black Box,” highlighting the uphill battle against broader casual dining headwinds. Executives also pointed to cost inflation, particularly in labor and product inputs, as key factors affecting profitability.

Looking ahead, management’s forward guidance reflects continued caution, driven by ongoing investments in quality, service, and value initiatives for Outback, as well as anticipated cost headwinds. CEO Michael Spanos emphasized, “The turnaround takes time,” noting that efforts like expanded test markets and service model changes are expected to be gradual, with benefits materializing over several quarters. The company highlighted a deliberate shift of capital towards restaurant remodels and a focus on operational discipline but warned that macroeconomic pressures and industry competition remain significant risks to near-term performance.

Key Insights from Management’s Remarks

Management credited improved traffic trends and enhanced guest satisfaction at Outback to new value offers and operational simplification, while also highlighting pressing cost and leadership transitions.

• Outback traffic initiatives: The Aussie 3-course value offering drove sequential improvements in Outback Steakhouse traffic, with approximately two-thirds of guests opting for higher-priced tiers. Management sees this as a key factor in stabilizing guest counts, though it brings some profit mix pressure.
• Menu simplification: Outback and sister brands fully implemented menu reductions, eliminating low-performing or hard-to-execute items. This streamlining improved operational consistency and guest satisfaction, with plans to further reduce menu size based on ongoing testing.
• Leadership restructuring: Multiple senior leadership changes were announced, including a new Chief Financial Officer-elect, Chief Human Resources Officer, and strategic hires in guest insights and information technology. These moves aim to bolster transformation and execution capabilities, with Michael Healy shifting to a dedicated strategy and transformation role.
• Operational efficiency tools: The rollout of table-side payment devices (Ziosk/tablemates) at Outback accelerated table turns and enabled real-time feedback collection, supporting faster service and improved customer metrics.
• Cost headwinds and investments: Management cited persistent food and labor inflation, as well as higher insurance and ongoing investments in test markets and remodels. The company noted that these factors, combined with no additional pricing actions in the near term, are expected to weigh on margins for the remainder of the year.

Drivers of Future Performance

Bloomin’ Brands’ outlook is shaped by Outback’s multi-pronged turnaround plan, ongoing cost inflation, and the company’s strategic capital allocation toward core brand improvements.

• Expansion of test initiatives: The company is increasing the number of Outback restaurants involved in turnaround testing from 14 to 42, focusing on new service models, improved steak quality, and differentiated value propositions. Management believes that successful outcomes here will guide future systemwide changes but acknowledged that guest frequency patterns mean benefits will be gradual.
• Cost structure and margin pressures: Persistent labor and food inflation, as well as higher general liability insurance costs, are expected to continue impacting margins. CFO Michael Healy stated that wage inflation has remained around 4% and is likely to persist, while the company’s new initiatives will require careful investment prioritization to drive returns.
• Shift toward remodels and asset optimization: With new restaurant openings paused, capital is being redirected to remodel existing locations based on a detailed repair and maintenance survey. Management expects these updates to enhance guest experience and brand perception, but signaled that operational discipline and cost-saving opportunities (including indirect expenses and supply contracts) will be essential to support profitability.

Catalysts in Upcoming Quarters

Over the coming quarters, the StockStory team will focus on (1) the effectiveness and guest response to Outback’s expanded test initiatives and menu innovation, (2) progress in operational efficiency and cost control amid inflationary pressures, and (3) the pace and impact of restaurant remodels and asset optimization efforts. Additional attention will be paid to leadership transitions and any signs of sustained market share recovery within the casual dining segment.

Bloomin' Brands currently trades at $6.40, down from $8.98 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

Our Favorite Stocks Right Now

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.