The stock of Bloomin’ Brands, the parent company of Outback Steakhouse, experienced a 9% increase in premarket trading after an activist investor, Starboard Value, disclosed its interest in the restaurant company. According to a regulatory filing, Starboard Value now owns 9.9% of Bloomin’s shares. This development has sparked curiosity and speculation about the future of Bloomin’ Brands.
Slowing Sales Growth
In recent quarters, Bloomin’ Brands has seen its sales growth slow down significantly. The company’s U.S. same-store sales grew by only 0.8% in the second quarter, with a decline in restaurant foot traffic. This underperformance raises concerns about the effectiveness of Bloomin’s current strategies in attracting customers and driving revenue.
Apart from Outback Steakhouse, Bloomin’ Brands also owns other notable restaurant chains, including Carrabba’s Italian Grill, Bonefish Grill, and Fleming’s Prime Steakhouse and Wine Bar. This diverse portfolio allows the company to cater to different culinary preferences and attract a wider customer base. However, it also requires effective management and coordination to ensure the success of each brand.
The plans and strategies that Starboard Value intends to push for at Bloomin’ Brands are yet to be revealed. Previous activist investors, such as Jana Partners and Barington Capital Group, have tried to pressure the company to cut costs and spin off some of its brands. Starboard Value, known for successful turnarounds at other restaurant companies, might bring a fresh perspective and implement strategic changes to revive Bloomin’s growth.
Starboard Value has a proven track record in the restaurant industry. In 2014, the investment firm took control of Darden Restaurants’ board, resulting in several positive changes that boosted sales and the company’s stock. Their initiatives, such as improving Olive Garden’s breadsticks, demonstrated their ability to identify and address areas of improvement. Additionally, Starboard Value’s recent agreement with Papa John’s in 2019 showcased their expertise in resolving crises and revitalizing struggling brands.
The Changing Landscape
It is important to note that the restaurant industry is constantly evolving, with changing consumer preferences and technological advancements. Restaurants must adapt and innovate to stay competitive and meet the evolving demands of their customers. Bloomin’ Brands, under the guidance of an activist investor, has the opportunity to reinvent itself and align with the changing landscape of the industry.
The recent disclosure of Starboard Value’s interest in Bloomin’ Brands has sparked excitement among investors and industry observers. With a proven track record and potential strategic changes on the horizon, Bloomin’ Brands could experience a turnaround in its sales and growth trajectory. However, only time will tell whether this activist investor intervention will lead to long-term success for the company and its popular restaurant chains.
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