The parent company of fast-casual restaurant Outback Steakhouse announced it will close several-dozen locations across the United States due to performance issues.
“Closing restaurants is never easy,” a Bloomin' Brands spokesperson told news outlets after the call was released. “This was a business decision that has no reflection on the staff or their service. Many team members will have the opportunity to transfer to open positions at another restaurant. Employees who do not will receive severance.”
“This decision considered a variety of factors including sales and traffic-trade areas and the investment that would have to be made to improve the restaurants,” Mr. Deno also said. “Despite this initiative, our confidence in our portfolio remains high as we plan to open 40 to 45 new restaurants across the system in 2024.”
Mr. Deno noted that higher inflation and higher interest rates has pushed the consumer to “be more careful with their discretionary spending,” adding that some of their products “offer the customer a great value.” He added, “We will continue to be thoughtful of our approach to overall pricing and discounting.”
But the CEO warned that U.S. consumers are “hanging in there.”
According to the call, for the fourth quarter that ended Dec. 31, 2023, the company’s net income was $43.3 million, which is about 25 percent lower than its income during the same quarter a year prior. On the other hand, revenues in the quarter rose to $1.194 billion from $1.095 billion in the period a year before that.
Inflation Issues?
Earlier this month, federal data revealed that U.S. consumer prices rose more than expected in January 2024 amid a surge in the cost of rental housing, but the pick-up in inflation did not change expectations the Federal Reserve will start cutting interest rates in the first half of this year.The increase in prices reported by the Labor Department in mid-February was the largest in four months. But January is typically a strong month for inflation readings as businesses push through prices increases at the start of the year, which some economists believed were not completely addressed by the model used by the government to strip out seasonal fluctuations from the data.
Analysts said inflation is slowing, but probably not fast enough to encourage Fed officials to start easing rates soon.
“It’s important not to overreact and jump to the assumption that an inflationary resurgence is developing,” said Seema Shah, chief global strategist at Principal Asset Management. “Inflation was partially driven by segments that are less important for the Fed’s favored core [Personal Consumption Expenditures Price Index] measure, while forward looking indicators suggest they will ease over the coming months.”
