Dive Brief:
- Bloomin’ Brands expects to implement incremental pricing during late Q3 or early Q4, which would put menu prices up about 6.5% year-over-year in the second half of the year, CFO Chris Meyer said Friday during the company’s second quarter earnings call.
- Average check size was up 7.9% during the second quarter, which included 5.8% menu pricing and 2.1% menu mix, he said.
- This 5.8% menu pricing was not enough to offset inflation, Meyer said, as labor costs rose almost 10% and commodity inflation neared the high teens.
Dive Insight:
By staying below inflation, the company hopes to maintain its value, especially when it comes to its combo meals, which it offers at Outback Steakhouse, and family bundles, which are offered at Carrabba’s and Bonefish Grill, Bloomin’ CEO David Deno said. Family meals start at about $40 at Carrabba’s and $42.90 at Bonefish Grill. The company doesn’t plan any deep discounting, he said.
With quarterly margins up 320 basis points compared to 2019 levels, Bloomin’ remains comfortable with the decision not to keep pace with inflation, Meyer said.
Other casual chains are planning to or have taken similar pricing approaches this year as well. Darden executives said during the company’s fiscal Q4 2022 call in June that they continue to price below inflation as well, while Cracker Barrel said in February it plans to increase prices by 6% during the last half of its fiscal 2022. At Applebee’s, franchisees boosted prices between 5% to 6% during the first quarter. Texas Roadhouse continues to evaluate the pricing it took of about 4% in October, but didn’t see any significant pushback from guests, executives said last week.
In addition to its menu pricing strategy, Bloomin’ has also been installing kitchen display systems for meal pacing and handheld technology for servers to reduce costs and improve customer service, Deno said.
“We are also deploying more targeted marketing to build awareness and drive frequency,” Deno said.
Sales were up 12% compared to 2019, bolstered by growth in off-premise sales, Meyer said. Off-premise quarterly sales made up 25% of U.S. sales, slightly down from the 26% mix seen in Q1 following as customers traded curbside occasions for meals in restaurants, Meyer said. Third-party delivery continues to grow, accounting for 12% of U.S. revenue during the quarter compared to 11.5% in the first quarter.
“We continue to benefit from simplified menus and operations, growth in our international business, as well as increased average check,” Meyer said.
