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Outback & First Watch Are Losing Customers in 2024—Here's Why

The two sit-down chains both reported declines in customer visits during the past quarter.

The first few months of 2024 were a challenging time for the restaurant industry as several major chains reported declining customer visits and sales. According to newly released data, Outback Steakhouse and First Watch are among the chains dealing with these mounting financial woes.

Outback Steakhouse's parent company Bloomin' Brands released its earnings results for the first quarter of 2024 on May 7, reporting a 4.2% drop in customer traffic at the chain's American restaurants and a 1.2% drop in domestic same-store sales. This means that customers in the United States have not only been visiting Outback less, but also spending less when they did.

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First Watch—a breakfast and lunch chain known for its rotating menu and high-quality ingredients—also reported its quarterly earnings results on May 7. Customer traffic declined by 4.5% during the quarter and same-store sales rose 0.5%, which is notably lower than 5% same-store sales increase First Watch saw in the fourth quarter of 2023.

Outback's and First Watch's struggles aren't likely to let up now that the second quarter is in progress. Bloomin' CFO Michael Healy said during a May 7 earnings call that even though "Outback continues to outpace the industry" on customer traffic, they expect customer visits to be in the negative again this quarter.

First Watch CEO Chris Tomasso made similar comments during a separate earnings call this week, saying they expect traffic to be flat or negative throughout the rest of the year. To explain the slowdown, he pointed out that budget-conscious consumers have been cutting back on eating out industry-wide as inflation is still on the rise.

First Watch storefront
First Watch

"Turning to the consumer…there appears to be clear signs of a slowdown. The reality is that consumers are being more cautious and more discerning, resulting in fewer dining-out occasions across the industry," Tomasso said.

While discussing its earnings results, Bloomin' also pointed to a slowdown in spending from lower-income consumers across all of its restaurant brands, which include Outback, Carrabba's Italian Grill, Bonefish Grill, and Fleming's Prime Steakhouse & Wine Bar.

"There has been somewhat of a pullback on the low end in our company, in our concepts," Bloomin' CEO David Deno said.

Looking ahead, Bloomin' hopes to improve Outback's fortunes by investing more in marketing and potentially rolling out more new menu items that offer good value to customers. Deno also said that they're considering cutting down the Outback menu to make it simpler for guests.

 6 Major Changes You'll See at Outback Steakhouse This Year

Meanwhile, First Watch hopes to drive traffic by bringing back more limited-time menu items that guests loved in the past. For example, Tomasso noted that they brought back their popular Shrimp & Grits dish as part of their seasonal spring menu for 2024. The offering is not only a "big customer favorite," but it's also a "high-margin" dish that drives solid profits, he said.

First Watch won't, however, resort to discounts or value promotions to bring more customers into its restaurants.

"In our view, broad discounting is a short-term fix with potentially negative long-term implications," Tomasso added.

Outback and First Watch are only the latest companies to report mixed or disappointing earnings in recent days. KFC and Starbucks, for example, both recently announced drops in sales and customer traffic during the first quarter of the year. Meanwhile, McDonald's quarterly same-store sales increased but were lower than analysts expected—a rare miss for the chain.

Zoe Strozewski
Zoe Strozewski is a News Writer for Eat This, Not That! A Chicago native who now lives in New Jersey, she graduated from Kean University in 2020 with a bachelor’s degree in journalism. Read more about Zoe