BLMN Q3 2026 earnings call transcript, November 6, 2026

what you get for what you pay for value equation by delivering quality food, craveable service, and affordable price points across our brands. While we recognize both sales and traffic metrics were below the industry black box metric, we know our success will not be linear, and we remain committed to driving sustainable and profitable traffic growth over the long term. Outback's Q3 comp sales were up 190 basis points, with traffic down 150. basis points. Outback Technomic guest scores improved year-over-year for the fifth consecutive quarter. Compared with Q3 last year, Outback's guest scores increased across service by three points, atmosphere by three points, intent to return by three points, value by two points, and food by one point. What excites me most is both the continued improvement and seeing Outback guest metrics at Outback. or higher than our key competitors. These results reinforce the turnaround strategy and our focus on consistent execution. We are getting better every day. Caraba's comp sales were up 60 basis points with traffic down 290 basis points. The brand is all about bringing people together with authentic Italian cooking and heartfelt hospitality. The team is focused on execution and elevating in-restaurant dining, including experience. experiential wine dinners, day of week offers with Tuesday $6 sangrias, pizza and pour Wednesdays, and dinner value offers. We will continue to leverage off-premise as a convenience and recruitment channel. Bonefish's comp sales were up 530 basis points with traffic down 80 basis points. The second half of 2026 reflects more difficult traffic laps for Bonefish, offset by better average check trends.

The brand continued to generate strong sales growth through its modern coastal experience with an energetic bar. Guests continue to respond to Martini Monday, Bang Bang Shrimp Wednesday, and the Prefix Lunch Everyday Value Offer. These offers complement the core menu that delivers variety across land and seafood proteins. Fleming's comp sales were flat with traffic down 190 basis points. Focused on consistent execution and service to deliver elevated hospitality, as well as approachable offers such as Tomahawk Tuesday, Steakboard Sunday, and a three-course dinner value. The team relaunched social hours to provide guests with a casual bar experience with shareable options. Lastly, Fleming's opened Atlanta Midtown last month, and Riverside, California opens next week. Turning to an update on our turnaround focused on Outback Steakhouse. The turnaround is anchored on four strategic platforms, as previously communicated, which are, first, deliver a remarkable dine-in experience. Second, drive brand relevancy. Third, reignite a culture of ownership and fun. Fourth, invest in our restaurants. These platforms are supported by non-guest-facing productivity savings, balanced capital allocation, and a strong management team. Starting with an update. On the first platform, to deliver a remarkable dine-in experience. The first step was the launch of our steak lineup in November of last year.

With a year of data, we continue to see our steak scoring in the top box. Consistent with Technomic, our ZEOS guest scores are showing noteworthy improvements year-over-year across food quality, steak temperature, value, service, and intent to return. Additionally, last year, we reintroduced annual steak certifications. for our multi-unit leaders in conjunction with the steak lineup. Outback President Pat Hafter will, again, lead teams through the annual steak certification training next month. Each multi-unit leader is required to pass steak certification tests before they coach, train, and certify their restaurant leadership. We acknowledge that close is never good enough for Outbackers and remain dedicated to our leadership and steak authority. Moving to the next element of a remarkable... ...and experience craveable service. Last quarter, we successfully rolled out our new service model to all Outbacks, reducing our ratio to four tables per server during peak hours. In August, we also rolled out front-of-house training on our enhanced hospitality experience model to deliver a fun, casual, Aussie, no-rules-just-right experience. Guest feedback continues to reinforce we've made the right changes. Similar to what we saw in Q2... Absolute service scores in Q3 were over 90% top-box, with a nearly two-point increase year-over-year. Q3 value scores also improved nearly two points year-over-year. Guests are telling us they see the difference in our state quality, craveable service, and value, improving the what-you-get-for-what-you-pay-for value equation.

Our second strategic platform is driving brand relevancy to differentiate Outback. In October, we launched our Best Stakes Ever campaign, which embraces our Aussie brand roots and showcases our stake authority and the affordability of Aussie 3Course. For a limited time, we introduced the six-ounce sirloin in the entry price tier of Aussie 3Course at $15.99. Initial reactions to both the campaign and the limited-time offer have been very encouraging. As a test-and-learn culture, we will use these early learnings to inform next year's plans and the evolution of the Aussie 3Course brand platform. We increased our marketing spend this year primarily within the second half of 2026 that aligns with the launch of our Best Stakes Ever campaign. As we mentioned at the start of the turnaround, we are moving more of our marketing dollars towards social and digital. By the end of this year, we will be approximately 60% digital and 40% linear TV compared to 30% digital and 70% linear TV historically. Reignite a Culture of Ownership and Fun is our third strategic platform. Our people are the key to our turnaround, and we are focused on having strong leadership throughout our restaurants, starting with our managing partners. We implemented an updated MP compensation model in April this year, which was to ensure a competitive base salary at the local market level and keep compensation tied to the growth of sales and profit of the restaurant.

Changes have been positively received by our partners. Our fourth and last strategic platform, invest in our restaurants. We are on track with our goal to touch nearly all of the Outback restaurants by the end of 2028 through targeted interior and exterior refresh initiatives. These refreshes are designed to improve the ambiance and the guest dining experience with expected average spend between $350. and $400,000 per refresh location. We have completed approximately 61 Outback refreshes through the end of October and remain on track to complete around 85 for the full year of 2026. Separately, as we mentioned on the last earnings call, we completed the rollout of our chargrill expansion across Outback. We now have the optimal cooking platform for our steak and non-steak proteins. Let me turn it over to Eric to review our financial performance for Q3 and guidance for the balance of fiscal 2026.

All of our... Outback's planned turnaround investments are included in restaurant expenses, including food quality, service model, managing partner compensation, hospitality, front-of-house training, new uniforms, and an increase in advertising, which drove higher restaurant expenses. Additionally, COGS inflation was 4.6% and labor inflation was 3.5%. Other restaurant operating expense improved approximately 60 basis points, driven by... ...initiatives, and better P&L cost controls, offset by an increase in advertising spend by approximately $4 million year-over-year. General and administrative was hired this year, driven by a lap of lower equity compensation from last year. We recognized a loss of approximately $2 million in Q3 from our 33% retained ownership in Brazil. That ownership is classified as an equity method investment. We still expect a full... ...year loss to be approximately $3 to $4 million. Turning to the balance sheet. At the end of Q3, net debt was approximately $677 million and a lease-adjusted net leverage ratio was $3.8. This compares to net debt of $896 million and a lease-adjusted net leverage ratio of $4.3 in Q3 of last year. During the quarter, we successfully completed a $1.2 billion... ...refinancing of a revolving credit facility, proactively capitalizing on favorable bank market conditions, and our recent business performance. The new five-year revolving credit facility reduces refinancing risk, provides long-term financing flexibility, and better staggers our debt maturities. Year-to-date, capital expenditures were $115 million. We expect full-year capital expenditures to be approximately...

$485 million. Consistent with our previous communication, our capital allocation priorities are to, one, invest in the base business, and two, pay down debt. The teams are committed to these priorities to provide a platform for the turnaround and a strong balance sheet to support growth. Turning to our guidance this year, as it relates to the full-year fiscal 2026, we expect U.S. comparable restaurant sales to be between... ...percent and 1.5%. Average check is still expected to be approximately 3.5%. We are tightening and raising adjusted diluted earnings per share to be between $0.97 and $1.02. Our previous guidance was between $0.90 and $1.00. As a reminder, we are in a tax benefit situation driven by FICA tip credits relative to earnings. We expect an adjusted tax benefit in the range of approximately... to $16 million for the full year. As it relates to the fourth quarter of 2026, we expect U.S. comparable restaurant sales to be between 0% and 1%. Comp sales in the fourth quarter is impacted by, first, an approximate 2% headwind to traffic from holiday shifts, including Christmas and lapping a holiday promotional offer from last year. And second, we made a strategic decision to delay previously planned Q4 pricing. Actions at both Outback and Bonefish, which did lower Q4 comp sales from our prior expectations. We expect Q4 adjusted diluted earnings per share to be between $0.07 and $0.12. As it relates to OutWest, we do not anticipate a material impact on our Q4 results. As Mike mentioned, this is the beginning of a bankruptcy process. We do not expect any changes to our strategy or to our capital allocation priorities, nor do we expect a potential acquisition.

and to have a measurable impact on our lease-adjusted net leverage target of 3.0 by the end of 2028. We will be able to provide further detail on our next earnings call. Let me now turn it back over to Mike.

The key takeaway is that the Outback Steakhouse brand remains strong. Our commitment to consistency of execution is building momentum for the Outback turnaround. We remain focused on our... Say versus do quotient. We are implementing and executing what we said we would do. Guest and Outbacker feedback tells us our strategy is sound, which is to, one, deliver a remarkable dining experience to improve state quality, enhance service, and consistency of execution. Two, drive brand relevancy to differentiate Outback. Three, reignite a culture of ownership and fun. One, with a commitment to our people. Four, invest in our restaurants to refresh approximately 100% of Outbacks by 2028. Investment in the turnaround is supported by non-guests facing productivity savings with a balanced capital allocation led by an outstanding set of leaders that are seasoned restaurant operators. We are committed to our strategy to provide long-term sustainable profit growth and improving every day in how we operate our business.

We will continue to be transparent in our progress. I want to close today's call by thanking all of our teams in the restaurants and Restaurant Support Center. Our current results and our future potential would not be possible without the dedication, hard work, and commitment of our Outbackers, our Micos, our Anglers, and our Associates to deliver a remarkable guest experience every day. With that, let me open up the call for questions.

Farmer with Gordon Haskett. Please go ahead.