Outback Steakhouse Makes Important Announcement About 2024 Price Increases
Price increases are no joke. We've seen food costs soar this year, including Halloween candy, weekly groceries, and classic menu items at our favorite restaurants.
Luckily, at least one chain is planning to keep prices as steady as possible. Despite the rising costs of food, rent, labor, and more, Outback Steakhouse says it's going to be 'treading lightly' on price increases in 2024. The bigger goal? Continue attracting customers to its restaurants and encouraging them to splurge on reasonably priced Bloomin' Onions and signature sirloins.
"We're going to be very, very, very conscious of price changes at Outback," said David Deno, CEO of Ourback's parent company Bloomin' Brands, in a recent earnings call. "We do believe that going in with the mindset to keep pricing as low as possible is the right place to be."
Following a 1.1% drop in same-store sales in the third quarter of 2023 (particularly after Labor Day), Outback Steakhouse is looking to turn around the trend of smaller check sizes and fewer overall transactions at its restaurants, according to Restaurant Business Online. And to do so, the company is looking at increasing marketing efforts and new products (that means deals), all while keeping prices steady.
Bloomin' Brands (BLMN), which owns Outback Steakhouse, just released its Q3 2023 financial report, and shareholders may be treating themselves to a little extra filet mignon this winter.
"We saw strong earnings per share growth in the quarter," said Deno. "We remain focused on driving traffic and maintaining margins as we navigate the near-term sales environment. We are confident that the investments we made in food, service and technology will elevate the guest experience and lead to sustainable, long-term sales and profit growth."
Maintaining margins can go either way, with the restaurant raising prices to prevent profit loss, but with share prices up 22% since this time last year, it looks like the company is confident in keeping prices stable to attract repeat customers.
Inflation still comes into play, but that doesn't have to translate to the prices you'll be paying for your steak. Restaurant operating expense inflation is now at 5.2%, and in Bloomin' Brands' most recent earnings call, executives addressed how that affects business and consumers.
"Pricing plus productivity offsets inflation," said Bloomin' Brands CFO Chris Meyer. Prices can stay low with more efficient service, which is achievable with tech additions to Outback's operating system including handheld devices for servers and proprietary advanced grills and ovens in the kitchen, all of which make service faster (and perhaps limit the need for human staffing, which can save the restaurant on the costs of employment and recruitments).
"[Productivity initiatives] reduce the need to take as much pricing as you would normally need to take to offset that inflation because we're obviously pretty mindful of where the consumer is," Meyer continued. "And we do believe that going in with a mindset to keep the pricing as low as possible is the right place to be."
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