Bloomin' Brands' Outback Turnaround Gains Traction as Guest Scores and EPS Guidance Rise
Q2 beat, guidance raised, and a deliberate traffic-for-profit trade as the steakhouse pivot takes hold.
BLMN · Earnings Call · 2026-08-05
Outback's Turnaround Is Showing Up in the Numbers
Bloomin' Brands' second-quarter results provided the clearest evidence yet that the Outback Turnaround is more than talk. The company reported Q2 U.S. comp sales up 230 basis points, boosted by a 420 basis point average check increase, and raised its full-year adjusted EPS guidance to $0.90–$1.00 from $0.75–$0.90. The beat was driven by better-than-expected mix, as guests responded to the revamped steak lineup and a new service model.
We now expect our adjusted diluted earnings per share to be between $0.90 and $1. The increase in our earnings per share guidance range is attributable to our year-to-date performance, improved mixed trends, and better middle of the P&L cost controls.
The improving guest metrics are the foundation of the story. Guest Metric Scores rose for the fourth consecutive quarter, with service, atmosphere, value, and intent-to-return all up year-over-year. “Outback's Guest Metric Scores continue to improve, with year-over-year gains for the fourth consecutive quarter reinforcing that we are getting better every day.” — Michael Spanos, Chief Executive Officer · 2026-08-05 The company also noted that guests are trading up to premium cuts at a rate that exceeded internal tests. “We are seeing guests trade up more and more into the premium cuts. That's been better than what we had seen in our tests, when we did the test in 2025.” — Michael Spanos, Chief Executive Officer · 2026-08-05The stronger mix is a direct result of the new steak lineup and the chargrill expansion that gives back-of-house more cooking capacity. Management's confidence is growing, but they remain measured.
The Cost of Traffic: A Deliberate Trade
Beneath the comp growth is a clear strategic choice: Bloomin' is deliberately sacrificing traffic to improve profitability. Traffic fell 190 basis points system-wide, and each brand except Bonefish saw negative traffic. The company chose not to lap "dilutive" third-party delivery promotions from the prior year, and management insists this is the right long-term approach. “Our focus is long-term. Our focus is sustainable traffic, profitable traffic, and as I've said, our success is not going to be linear.” — Michael Spanos, Chief Executive Officer · 2026-08-05This is a recurring theme. In the prior quarter's call, Mike Spanos emphasized the same balance: “we've been balanced, and we'll continue to be balanced across the levers of traffic, how we think about inflationary pricing, how we think about mix and reinvesting that pricing, a portion of it back into affordable entry price points.” — Michael Spanos, Chief Executive Officer · 2026-05-06The trade is also visible in the numbers. Free cash flow margin has recovered to 4.5%, and total revenue is stable, but the mix shift is all about the check, not the crowd.
From Test to Rollout: Execution Is the Watchword
Many of the elements driving today's optimism were previously small-scale tests. The new service model (1 server per 4 tables during peak) was rolled out to all Outbacks in Q2, after a successful pilot. The company is also increasing marketing spend by ~$15 million in the second half, shifting toward digital. The asset refresh program—targeting ~$350k–$400k per unit—is expected to touch nearly all Outbacks by 2028.Prior to the full rollout, management had already seen the pattern in other concepts. “we typically see about 100 basis point to 200 basis point tailwind in traffic right after those refreshes as we do them.” — Michael Spanos, Chief Executive Officer · 2026-05-06 Now the hope is that the combination of refresh, service, and steak quality will finally reverse the traffic tide.consistency is the company's mantra, and the financials are starting to confirm it. Operating income rebounded to $59M in the latest quarter, and free cash flow is strong enough to fund the reinvestment. Liabilities to assets continues to improve, supporting the capital allocation priorities of investing in the base business and paying down debt. Net debt stands at $636M, and the company is targeting a 3.0x lease-adjusted leverage ratio.The stock has re-rated accordingly, up 96% over the last 90 days as the market buys into the turnaround. But with a price-to-FCF multiple of only 4.2x, there is still room for optimism—provided the execution holds.