Bloomin’ Brands (BLMN) Q3 2026 earnings review
Bloomin’ Brands raises full-year profit outlook, but diner traffic falls
Bloomin’ Brands, the owner of Outback Steakhouse, beat its third-quarter profit plan on higher diner checks while customer visits kept falling. Comparable U.S. restaurant sales rose 2% because a 4% increase in spending per guest outweighed a 2% drop in foot traffic. Chief executive Mike Spanos raised the full-year profit outlook after a smaller-than-planned third-quarter loss, but he trimmed the full-year sales ceiling.
| U.S. comparable restaurant sales | +1.9% traffic -1.8%, average check +3.7% |
|---|---|
| Loss per share, excluding one-offs | $(0.17) planned $(0.27) to $(0.22); $(0.03) a year ago |
| Full-year profit per share outlook, excluding one-offs | Raised 4.5c to $0.97–$1.02 (down 13% from 2025) |
| Full-year U.S. comparable sales outlook | Trimmed to 1%–1.5% (from 1%–2%); Q4 at 0%–1% |
⚖️ Verdict: 🔴 Bearish
The story got worse because higher marketing spending failed to stop customer traffic declines and the fourth-quarter outlook weakened. Bonefish Grill lost its two-quarter streak of positive traffic, and the new fourth-quarter profit plan of 7 to 12 cents per share sits below the 14 cents the previous full-year plan pointed to by our math. In addition, major Outback franchisee Out West filed for bankruptcy, and the company offered to buy its restaurants.
The question now is whether the weak fourth-quarter outlook is just another low bar or proof that cost inflation and slow foot traffic are overtaking menu price increases. Either the group beats its fourth-quarter target as it has for five straight quarters, or food, labor and ad bills squeeze end-of-year profit. Fourth-quarter traffic and restaurant margins will settle it.
🐂 Bull Case
Higher Spend Per Diner Carried Sales and Earnings
Bloomin’ Brands, the restaurant operator behind Outback Steakhouse and Carrabba’s Italian Grill, relies on higher menu prices and pricier meal choices to grow sales while fewer customers visit. That pattern held in the third quarter, as average spending per U.S. diner rose 3.7% from a year ago and pushed comparable sales up 1.9%.
- Outback Steakhouse average check: up 3.4% from a year ago, lifting comparable sales 1.9%
- Bonefish Grill average check: up 6.1%, lifting comparable sales 5.3%
- Carrabba’s Italian Grill average check: up 3.5%, lifting comparable sales 0.6%
- Third-quarter loss per share, excluding one-offs: 17 cents, beating the 22-to-27-cent loss plan
Stronger spending per guest allowed management to raise its full-year profit outlook excluding one-offs by 4.5 cents at the middle of the range, to between $0.97 and $1.02 per share. Because the third-quarter beat was 7.5 cents against the middle of the prior plan, the full-year raise passes through most of the third-quarter outperformance.
What to watch: U.S. average check growth in the fourth quarter against the 0% to 1% comparable sales plan. A check increase below 3% would show that diners are trading down to cheaper menu items.
Outback Customer Survey Scores Improved for Fifth Quarter
Chief executive Mike Spanos has centered his turnaround plan on improving food quality and table service at Outback Steakhouse, which represents more than half of the group's U.S. locations. Spanos pointed to "five consecutive quarters of year-over-year improvement in Outback guest scores" as evidence that diners notice the operational changes.
Outback's U.S. comparable sales rose 1.9% from a year ago, improving from 1.4% growth in the second quarter and a 0.3% decline in the first quarter. Its customer traffic decline also narrowed to 1.5% from 2.8% last quarter, even against a harder prior-year comparison of 0.0% traffic in the third quarter of 2025.
What to watch: Outback customer traffic in the fourth quarter, when the chain laps its only quarter of positive traffic (up 0.9%) from last year. Positive traffic against that benchmark would show that higher survey scores are finally bringing more guests through the doors.
Positives this quarter didn't test
Two operational drivers from the standing turnaround plan had no updated figures in the third-quarter earnings release because management typically reports them on the conference call or in the quarterly filing.
- Outback restaurant remodels: the release gave no count toward the full-year target of roughly 85 refreshed stores; the fourth-quarter call will show whether the 2026 class finished on schedule.
- Server staffing model and kitchen upgrades: no standalone dining-room efficiency metrics appeared in the release; restaurant labor cost ratios in the annual report will test their savings.
🐻 Bear Case
Customer Traffic Fell Across Every Restaurant Chain
Spanos said the group remains focused on "consistent execution across food, service, experience, and affordability to strengthen the guest experience and drive sustainable long-term growth". Yet higher advertising spending in the third quarter still failed to bring more diners into the restaurants, and Bonefish Grill lost its positive traffic streak.
- Combined U.S. traffic: down 1.8% from a year ago, matching the 1.8% drop across the first nine months
- Bonefish Grill traffic: down 0.8%, reversing gains of 3.0% in the first quarter and 4.5% in the second quarter
- Carrabba’s Italian Grill traffic: down 2.9%, worse than the 2.5% decline last quarter
- Fleming’s Prime Steakhouse traffic: down 1.9%, with comparable sales at 0.0%
Bonefish Grill's reversal shows the limit of price increases: as its average check growth jumped from 3.6% in the second quarter to 6.1% in the third, customer visits turned negative again. Management also trimmed the top end of its full-year U.S. comparable sales outlook from 2% to 1.5% and set the fourth-quarter plan at 0% to 1%.
What to watch: combined U.S. traffic and Bonefish Grill traffic in the fourth quarter. A fourth straight quarter of company-wide traffic declines near 2% would mean the 0% to 1% sales plan rests entirely on higher check sizes.
Inflation and Marketing Pushed Underlying Margins Down
Bloomin’ Brands reported a higher restaurant-level margin on paper, but that increase came from a one-time $13.2 million accounting adjustment for unused gift cards. Excluding one-offs, restaurant-level margin fell 0.2 percentage points from a year ago to 9.3%, and consolidated operating margin dropped 0.5 percentage points to 0.3%.
The company said price increases and cost-saving programs were offset by "higher commodity, operating and labor costs, mainly due to inflation", along with higher advertising expense. By our math, excluding the gift card adjustment, food and beverage costs rose 0.3 percentage points of restaurant sales to 30.5%, and adjusted labor costs rose 0.4 percentage points to 32.7%.
Cost pressure also weighs on the fourth-quarter outlook. Management plans for fourth-quarter profit per share excluding one-offs of $0.07 to $0.12, down 63% at the middle of the range from $0.26 a year ago, and about 3 cents below what the prior full-year plan pointed to.
What to watch: fourth-quarter restaurant-level operating margin excluding one-offs, compared with 11.6% in the fourth quarter of 2025. A drop of more than 1 percentage point would confirm that menu pricing is not keeping pace with food, labor and marketing expenses.
Franchisee Out West Entered Bankruptcy, Prompting Buyout Offer
Out West Restaurant Group, the largest U.S. Outback franchisee, received a lender default notice in the second quarter. In this release's risk disclosures, Bloomin’ Brands revealed "the Chapter 11 proceedings initiated by Out West" and cited risks around "whether our offer to buy Out West's restaurants is ultimately accepted".
Taking over those franchised restaurants would require cash or debt and bring store-level operating costs onto the balance sheet just as the company works to pay down borrowings. Total debt already climbed by $65.2 million from the second quarter to $768.0 million, lifting net debt by $41.1 million to $677.2 million.
What to watch: the purchase price and store count in any court-approved agreement for Out West's locations. Acquiring the stores with debt would slow progress toward the company's 2028 debt-reduction goal.
👓 Other Themes
Gift Card Accounting Change Lifted Reported Revenue
Third-quarter revenue included $13.2 million from "an adjustment to gift card breakage revenue resulting from a change in accounting estimate" — money from unused gift cards recognized earlier than before. By our math, without that bookkeeping change, total revenue grew 0.3% from a year ago rather than the reported 1.7%. Management excluded the $0.15 per share gain from its results excluding one-offs.
💲 Other KPIs
International franchise revenue grew 9.7% from a year ago, reversing a 3.8% decline in the first half of the year. Segment operating profit rose 9.3% to $7.6 million as franchisees opened five net new Outback restaurants in Brazil and two in South Korea during the quarter.
The U.S. store fleet shrank by 3 locations during the third quarter and is down 14 locations since the end of 2025. Bloomin’ Brands opened two company-owned Outback restaurants while closing two company-owned Outbacks, two franchised Outbacks and one Bonefish Grill.
Diluted shares rose 0.6% from a year ago because the group suspended share buybacks and dividends last year to fund restaurant remodels and debt reduction. The fourth-quarter outlook assumes diluted shares will rise further to about 88 million.
🔮 Guidance
Cut. Management trimmed the top end of its full-year U.S. comparable sales target by 0.5 percentage points, lowering the middle of the range from 1.5% to 1.25%. After 1.7% growth across the first three quarters, the reduced full-year ceiling reflects the slower 0% to 1% growth planned for the fourth quarter.
Raised. The middle of the range moved up 4.5 cents, to a 13% decline from last year's $1.14. Because the third-quarter beat was 7.5 cents against the middle of the prior plan, the raise passes through less than the full beat. Across the last three quarters, the full-year midpoint moved by $0.00, +$0.125 and +$0.045.
Raised. The middle of the range increased by 18.5 cents, comparing against $0.10 in fiscal 2025 when the restaurant operator booked heavy store-closure and goodwill charges. Most of the higher GAAP outlook comes from the 15-cent third-quarter gain on the gift card accounting change and a surplus property sale.
New. The plan calls for 0.5% growth at the middle of the range, slowing from 1.9% in the third quarter and 2.3% in the second quarter. In the fourth quarter of last year, U.S. comparable sales were 0.0% as a 0.5% traffic gain was offset by a 0.5% drop in average check.
Cut against the prior implied middle of the range. The plan points to 9.5 cents at the middle of the range, down 63% from 26 cents a year ago and down from 13.5 cents implied three months ago by our math. If its three-quarter average beat of 8 cents holds, fourth-quarter profit would reach about 18 cents.
New. The fourth-quarter GAAP forecast matches the outlook excluding one-offs at 9.5 cents at the middle of the range, with no new restructuring or accounting adjustments planned. That compares with a GAAP loss of 14 cents per share from continuing operations in the fourth quarter of 2025.
❓ Key Questions
What are the terms of the Out West buyout offer?
The release disclosed an offer to buy bankrupt franchisee Out West's restaurants, which numbered 71 Outbacks in the second quarter. Investors need to know the purchase price, how it will be funded, and how much profit or loss those stores generate.
Why is fourth-quarter profit planned down more than 60%?
The fourth-quarter outlook of $0.07 to $0.12 per share excluding one-offs sits far below last year's $0.26 and 3 cents below the prior implied midpoint. Management did not quantify in the release how much of that drop comes from marketing, food inflation or dilution.
Why did Bonefish Grill traffic turn negative again?
Bonefish Grill customer traffic fell 0.8% after two straight quarters of 3% to 4.5% growth, just as average check growth jumped to 6.1%. Management should explain whether price increases or reduced promotions drove guests away.
How many Outback remodels finished in the third quarter?
Management previously targeted about 85 Outback restaurant refreshes for 2026, with 31 completed through July, and cited a 65-million-dollar debt increase this quarter. The release gave no update on remodel counts or their sales lift.