Outback Steakhouse Closed Dozens of ‘Underperforming’ Restaurants

Customers arrive at an Outback Steakhouse restaurant on November 02, 2021 in Skokie, Illinois. Scott Olson/Getty Images

The parent company of fast-casual restaurant Outback Steakhouse announced it will close several-dozen locations across the United States due to performance issues.

In a recent earnings call for the most recent quarter, CEO David Deno said that “we periodically review our asset base and, in our latest review, we made the decision to close 41 underperforming locations,” adding that the “majority of these restaurants were older assets with leases from the ‘90s and early 2000s,”

“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.”

Another spokesperson told Nation’s Restaurant News that of 41 locations, 33 restaurants have already been shut down as of Feb. 23.

“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.

The firm didn’t provide locations of the closed Outback Steakhouses, but local reporting suggests that restaurants in Iowa, Hawaii, and Pennsylvania have been shutdown. Subsidiary restaurants in Virginia, New Jersey, and New York were also shuttered.

Other national brands that have closed locations in recent years. For example, Burger King shut down about 800 locations throughout 2023, according to its fourth quarter earnings call released this month.

As of mid-2023, a report noted that Applebee’s shut down about 13 stores last year and closed 300 locations since 2016 across the United States. Buffalo Wild Wings, meanwhile closed about45 locations, it said.

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.”

Reuters contributed to this report.