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Generated Title: Outback's Turnaround: Is It Just Smoke and Mirrors?
Bloomin' Brands, the parent company of Outback Steakhouse, is in the midst of what they're calling a "turnaround strategy." This involves shuttering underperforming locations – 21 this past month, with another 22 slated for closure as leases expire over the next four years – and reinvesting $75 million into the remaining restaurants. The goal? Better menus, improved service, and spiffed-up interiors by the end of 2028. But is this a genuine revitalization, or just financial engineering disguised as a customer-centric plan?
The Shrinking Outback
Let's look at the closures. Bloomin' Brands isn't exactly forthcoming with a list, but reports indicate locations in Alabama, Florida, Louisiana, Maryland, New York, and Wisconsin have already bitten the dust. The company claims these were underperforming restaurants, selected after a "periodic review" considering sales, traffic, trade areas, and potential investment needs. Fine, but "underperforming" is a relative term. Were these locations marginally below average, or hemorrhaging cash? The lack of transparency is concerning.
And here's where I start to get skeptical. The company also says it will not renew leases on an additional 22 restaurants. All of those are expected to expire within four years. Is this a cost-cutting exercise disguised as a turnaround? Closing restaurants and not renewing leases certainly frees up capital, but it doesn't necessarily improve the dining experience at the locations that remain open.
The Remodeling Mirage
The $75 million reinvestment plan sounds promising. The surviving Outbacks will get makeovers: brighter interiors, smaller kitchens, and bigger order pickup stations. (Takeout steak? I've never understood the appeal.) But spread across 670+ locations, that's a little over $110,000 per restaurant. That's not nothing, but it's hardly a transformative sum when you consider the scope of a full remodel. Are we talking new paint and some updated furniture, or a complete overhaul? The devil, as always, is in the details.
The company also plans to improve menus and customer service. Again, vague promises. Will they be adding higher-quality cuts of meat? Investing in employee training? Or just tweaking the font on the menu and telling servers to smile more? This is the part of the report that I find genuinely puzzling. Bloomin' Brands is pausing shareholder dividends to "preserve cash for future restaurant investments and debt repayments." Pausing dividends is a serious move, usually done when a company is facing significant financial pressure. Is Outback's turnaround plan a last-ditch effort to salvage a struggling brand?
Meanwhile, competitors like LongHorn and Texas Roadhouse are thriving, reporting sales increases of over 5% in their latest earnings reports. Texas Roadhouse, in particular, has cultivated a reputation for affordable steaks, even as prices creep upward.
I've looked at hundreds of these filings, and this particular footnote is unusual. The CEO, Mike Spanos, says Outback Steakhouse has "incredible brand equity" and is the "pioneer of the casual steakhouse industry." True enough, but brand equity doesn't pay the bills if customers are voting with their wallets and heading to the competition.
What’s everyone talking about? Diners have been left scrambling recently after restaurant shutdowns from Denny’s, Ruby Tuesday, and Outback Steakhouse. Denny’s announced earlier this spring that it would be shuttering 150 locations nationwide by the end of 2025. Ruby Tuesday is also conducting more closures this winter as it continues to struggle to recover from a 2020 bankruptcy filing. Restaurant closures in 2025 Denny’s – Denny’s has confirmed that up to 150 locations are set to close in the US by the end of the year as many of them are no longer profitable. Red Lobster – The chain has said that it plans to close over 100 stores across the country this year as new CEO Damola Adamolekun takes over. TGI Friday’s – TGI Friday’s is still being forced to shutter locations thanks to a bankruptcy filing, including 30 in April alone. Applebee’s – This chain is projecting a loss of 20 to 35 Applebee’s spots in 2025 but is teaming up with IHOP to introduce dual-branded locations with a curated menu of the two’s best items. Noodles & Company – This emporium is set to close between 17 and 21 locations in 2025 following a difficult 2024. Denny’s, Outback Steakhouse & Ruby Tuesday abruptly closing dozens of locations leaving diners scrambling
All Hat, No Cattle?
Outback's "turnaround" feels more like a managed decline. They're shrinking the footprint, making cosmetic improvements, and hoping for the best. But without a fundamental shift in strategy – a genuine commitment to quality, value, and customer experience – it's hard to see how they'll reverse the trend. The market doesn't reward nostalgia; it rewards performance.