Bloomin' Brands, Inc. Aktie

Greetings, and welcome to the Bloomin' Brands, Inc. Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that today's event is being recorded. It is now my pleasure to introduce your host, Tara Kurian, Senior Vice President, IR FP&A and International. Thank you, and you may begin.

Thank you, and good morning, everyone. With me on today's call are Mike Spanos, our Chief Executive Officer; and Eric Christel, Executive Vice President and Chief Financial Officer. By now, you should have access to our fiscal third quarter 2026 earnings release and our investor presentation slides, both of which can be found on our website at www.bloominbrands.com in the Investors section. Throughout this conference call, we will be presenting results on an adjusted basis. An explanation of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our earnings release and investor presentation on our website as previously described.

Before we begin formal remarks, I'd like to remind everyone that part of our discussion today will include forward-looking statements, including a discussion of recent trends. These statements are subject to numerous risks and uncertainties that could cause actual results to differ in a material way from our forward-looking statements. Some of these risks are mentioned in our earnings release, others are discussed in our SEC filings, which are available at www.sec.gov. During today's call, we'll provide a brief recap of our financial performance for the fiscal third quarter 2026, current thoughts on fiscal 2026 guidance and an update on our turnaround strategy. Once we've completed these remarks, we'll open the call up for questions. With that, I would now like to turn the call over to Mike.

Thanks, Tara, and good morning, everyone. I will discuss our third quarter results and provide an update on our turnaround. Eric will then review our financial results and Q4 and full year guidance. Before I review our results, I want to briefly discuss an event that occurred earlier this week. One of our Outback domestic franchisees Out West filed for bankruptcy protection. This is specific to Out West and is not reflective of our other franchisees or company-owned operations. As part of the bankruptcy process, Out West is selling their 61 restaurants. We are working collaboratively with Out West and their lenders to ensure there is no immediate impact to guests, restaurant teams or day-to-day operations and these restaurants continue to operate normally.

As we announced earlier this week, Bloomin' Brands entered into a stalking horse purchase agreement for the 61 restaurants. We believe this agreement aligns with our strategy to invest in the base business. Should our bid be accepted, we look forward to welcoming Out West to the Blooming Brands team. We anticipate this process to take a couple of months and we will be able to provide more details on our next earnings call.

Turning to our third quarter results. Our Q3 U.S. comparable restaurant sales were up 190 basis points with traffic down 180 basis points. Average check was up 370 basis points. We continue to see less mix headwind as we improve affordability offer returns. Our focus remains on strengthening the what you get for what you pay for value equation by delivering quality food, craveable service and affordable price points across our brands. While we recognize both sales and traffic metrics were below the industry black box metric, we know our success will not be linear, and we remain committed to driving sustainable and profitable traffic growth over the long term.

Outback's Q3 comp sales were up 190 basis points with traffic down 150 basis points. Outback economic guest scores improved year-over-year for the fifth consecutive quarter. Compared with Q3 last year, Outback's guest scores increased across service by 3 points, atmosphere by 3 points, intend to return by 3 points, value by 2 points and food by 1 point. What excites me most is both the continued improvement and seeing Outback guest metrics at parity or higher than our key competitors. These results reinforce the turnaround strategy and our focus on consistent execution. We are getting better every day.

Carrabba's comp sales were up 60 basis points with traffic down 290 basis points. The brand is all about bringing people together with authentic Italian cooking and heartfelt hospitality. The team is focused on execution and elevating in-restaurant dining, including experiential wine dinners, day-of-week offers with Tuesday $6 Sangrias, pizza and pour Wednesdays and dinner value offers. We will continue to leverage off-premise as a convenience and recruitment channel.

Bonefish's comp sales were up 530 basis points with traffic down 80 basis points. The second half of 2026 reflects more difficult traffic lapse for Bonefish, offset by better average check trends. The brand continued to generate strong sales growth through its modern coastal experience with an energetic bar. Guests continue to respond to Martini Monday, Bang Bang Shrimp Wednesday, and the prefixed launch everyday value offer. These offers complement the core menu that delivers a variety of cross land and seafood proteins.

Fleming's comp sales were flat with traffic down 190 basis points. The team is focused on consistent execution and service to deliver elevated hospitality as well as approachable offers such as Tomahawk Tuesday, Steak Board Sunday and a 3-course dinner value. The team relaunched social hour to provide guests with a casual bar experience with shareable options. Lastly, Fleming's opened Atlanta Midtown last month and Riverside, California opens next week.

Turning to an update on our turnaround focus on Outback Steakhouse. The turnaround was anchored on 4 strategic platforms as previously communicated, which are: first, deliver a remarkable dine-in experience; second, drive brand relevancy; third, reignite a culture of ownership and fun; fourth, invest in our restaurants. These platforms are supported by non-guest-facing productivity savings, balanced capital allocation, and a strong management team.

Starting with an update on the first platform to deliver a remarkable dine-in experience. The first step was the launch of our steak line up in November of last year. With a year of data, we continue to see our steak scoring in the top box. Consistent with Technomic, our ZIA guest scores are showing noteworthy improvements year-over-year across food quality stake temperature, value, service and intent to return. Additionally, last year, we reintroduced annual stake certifications for our multiunit leaders in conjunction with the stake lineup. Outback President, Pat Haffer will again lead teams to the annual stake certification training next month. Each multiunit leader is required to pass steak certification tests before they coach, train and certify their restaurant leadership. We acknowledge that closest never good enough for Outbackers and remain dedicated to our leadership and steak authority.

Moving to the next element of a remarkable dining experience, craveable service. Last quarter, we successfully rolled out our new service model to all Outbacks, reducing our ratio to 4 tables per server during peak hours. In August, we also rolled out front of house training on our enhanced hospitality experience model to deliver a fun, casual, as, no rules just right experience. Guest feedback continues to reinforce what we've made the right changes. Similar to what we saw in Q2, absolute service scores in Q3 were over 90% top box with a nearly 2-point increase year-over-year. Q3 value scores also improved nearly 2 points year-over-year.

Guests are telling us they see the difference in our steak quality, craveable service and value. Improving what you get for what you pay for value equation.

Our second strategic platform is driving brand relevancy to differentiate Outback. In October, we launched our best steaks ever campaign, which embraces our Aussie brand roots and showcases our steak authority and the affordability of Aussie 3-course. For a limited time, we introduced the 6-ounce sirloin in the entry price tier of Aussie 3-course at $15.99. Initial reactions to both the campaign and the limited time offer have been very encouraging. As a test or culture, we will use these early learnings to inform next year's plans and the evolution of the Aussie 3-course brand platform.

We increased our marketing spend this year, primarily within the second half of2026 that aligns with the launch of our best steaks ever campaign. As we mentioned at the start of the turnaround, we are moving more of our marketing dollars towards social and digital. By the end of this year, we will be approximately 60% digital and 40% linear TV compared to 30% digital and 70% linear TV historically.

Reignite a culture of ownership and fun is our third strategic platform. Our people are the key to our turnaround, and we are focused on having strong leadership throughout our restaurants, starting with our managing partners. We implemented an updated MP compensation model in April this year, which was to ensure a competitive base salary at the local market level and keep compensation tied to the growth of sales and profit of the restaurant. Changes have been positively received by our partners. Our fourth and last strategic platform, invest in our restaurants, we are on track with our goal to touch nearly all the Outback restaurants by the end of 2028 through targeted interior and exterior refresh initiatives. These refreshes are designed to improve the ambiance and the guest dine-in experience with expected average spend between $350,000 and $400,000 per refresh location.

We have completed approximately 61 Outback refreshes through the end of October and remain on track to complete around 85 for the full year of 2026. Separately, as we mentioned on the last earnings call, we completed the rollout of our [ charge ] expansion across Outback. We now have the optimal cooking platform for our steak and nonstate proteins.

Let me turn it over to Eric to review our financial performance for Q3 and guidance for the balance of fiscal 2026.

Thank you, Mike, and good morning, everyone. I would like to start by providing a recap of our continuing operations financial performance for the fiscal third quarter of 2026. Q3 total revenues were $944 million compared to $929 million last year. This quarter's total revenue includes approximately $13 million in gift card revenue, resulting from a change in accounting estimate. Excluding that item, total revenues were essentially flat compared to last year.

As Mike mentioned, U.S. comparable sales were positive 1.9% and traffic was negative 1.8%. Average check increased by 370 basis points with pricing partially offset by negative mix as we continue to invest in affordability offers for our guests. Off-premise sales were 25% of total U.S. sales in the quarter, consistent with Q3 last year. Outback's off-premises mix was 27% in the quarter and Carrabba's was 34%.

Q3 adjusted diluted loss was $0.17 per share compared to an adjusted diluted loss of $0.03 per share last year. The difference between GAAP and adjusted GAAP operating results reflects approximately $12 million of adjustments in Q3 2026, primarily related to the gift card accounting breakage adjustment I mentioned previously.

Q3 adjusted operating margin was 0.3% versus 0.8% last year, the approximately 50 basis point decline was primarily driven by lower restaurant margin and higher general and administrative expense as a percentage of revenue, excluding the gift card breakage adjustment. Adjusted restaurant margin was 9.3%, down approximately 20 basis points year-over-year.

All of Outback's planned turnaround investments are included in restaurant expenses, including food quality, service model, managing partner compensation, hospitality, front-of-house training, new uniforms and an increase in advertising, which drove higher restaurant expenses. Additionally, COGS inflation was 4.6% and labor inflation was 3.5%. Other restaurant operating expense improved approximately 60 basis points, driven by productivity initiatives and better P&L cost controls, offset by an increase in advertising spend by approximately $4 million year-over-year.

General and administrative was higher this year driven by a lap of lower equity compensation from last year. We recognized a loss of approximately $2 million in Q3 from our 33% retained ownership in Brazil. That ownership was classified as an equity method investment. We still expect the full year loss to be approximately $3 million to $4 million.

Turning to the balance sheet. At the end of Q3, net debt was approximately $677 million and our lease adjusted net leverage ratio was 3.8%. This compares to net debt of $896 million and a lease adjusted net leverage ratio of 4.3% in Q3 of last year. During the quarter, we successfully completed a $1.2 billion refinancing of our revolving credit facility, proactively capitalizing on favorable bank market conditions and our recent business performance. The new 5-year revolving credit facility reduces refinancing risk provides long-term financing flexibility and better staggers our debt maturities.

Year-to-date, capital expenditures were $115 million. We expect full year capital expenditures to be approximately $185 million. Consistent with our previous communication, our capital allocation priorities are to, one, invest in the base business; and two, pay down debt. The teams are committed to these priorities to provide a platform for the turnaround and a strong balance sheet to support growth.

Turning to our guidance this year. As it relates to the full year fiscal 2026, we expect U.S. comparable restaurant sales to be between 1% and 1.5%. Average check is still expected to be approximately 3.5%. We are tightening and raising adjusted diluted earnings per share to be between $0.97 and $1.02. Our previous guidance was between $0.90 and $1. As a reminder, we are in a tax benefit situation driven by FICA tip credits relative to earnings. We expect an adjusted tax benefit in the range of approximately $14 million to $16 million for the full year. As it relates to the fourth quarter of 2026, we expect U.S. comparable restaurant sales to be between 0% and 1%. Comp sales in the fourth quarter is impacted by, first, an approximate 2% headwind to traffic from holiday shifts, including Christmas and lapping a holiday promotional offer from last year; and second, we made a strategic decision to delay previously planned Q4 pricing actions at both Outback and Bonefish, which did lower Q4 comp sales from our prior expectations.

We expect Q4 adjusted diluted earnings per share to be between $0.07 and $0.12. As it relates to Out West, we do not anticipate a material impact on our Q4 results. As Mike mentioned, this is the beginning of a bankruptcy process. We do not expect any changes to our strategy or to our capital allocation priorities nor do we expect the potential acquisition to have a measurable impact on our lease adjusted net leverage target of 3.0% by the end of 2028. We will be able to provide further detail on our next earnings call.

Let me now turn it back over to Mike.

Thanks, Eric. The key takeaway is that the Outback Steakhouse brand remains strong. Our commitment to consistency of execution is building momentum for the Outback turnaround. We remain focused on our say versus due quotient. We are implementing and executing what we said we would do. Guests and Outbacker feedback tells us our strategy is sound, which is to: one, deliver a remarkable dine-in experience to improve state quality, enhance service and consistency of execution; two, drive brand relevancy to differentiate Outback; three, reignite a culture of ownership and fun with a commitment to our people; four, invest in our restaurants to refresh approximately 100% of Outbacks by 2028.

Investment in the turnaround is supported by non-guest-facing productivity savings with a balanced capital allocation led by an outstanding set of leaders that are seasoned restaurant operators. We are committed to our strategy to provide long-term sustainable profit growth and improving every day in how we operate our business. We will continue to be transparent in our progress. I want to close today's call by thanking all of our teams in the restaurants and restaurant support center. Our current results and our future potential would not be possible without the dedication, hard work and commitment of our Outbackers, our MCOs, our Anglers and our associates to deliver remarkable guest experience every day. With that, let me open up the call for questions.

[Operator Instructions] Today's first question comes from Alex Slagle with Jefferies.

You just mentioned some that I wanted to ask more on the 4Q same-store sales. I guess, really just the full year being tightened slightly despite the 3Q coming in at the upper end of expectations. I guess you knew the calendar shift, so essentially all of this is related to the delay in pricing is what it seems, if you could confirm that. And then just your thought process on pricing and sort of what you're seeing and decisions to delay that.

Yes. Alex, it's Mike. First, to the latter part of your question, we've been consistent. We want to be balanced in our pricing, in our revenue management. There's a balance what we deal with from an inflationary standpoint and also meeting the guests where they are, and that hasn't changed. And that is part of why we decided to delay pricing specifically in Outback.

Specific to your question about Q4, in terms of early reads on Q4, I feel real good about where we're at. We are cautiously optimistic. We remain committed to the in-restaurant consistency of execution. We do see probably 3 things impacting Q4 in terms of the comp sales. The first 2 were -- which is about 2 points of headwind on the traffic. You've got a holiday shift between Halloween, but Christmas moves to a Friday, and we lose one operating day the last week of the quarter. And the other item, which I already mentioned is just this conscious decision not to chase dilutive traffic. We've talked about that in previous calls, and we do have some laps from Q4 of last year where we had some holiday promotions that over mixed, and we're not going to chase those.

And then lastly, as I just communicated, we made this very thoughtful decision to delay pricing actions at Outback and Bonefish and it's the latter part of your question, we just feel it's the right thing to do. It's consistent with our strategic guidance to not take in more pricing than we need. And that's how it rolls up.

Okay. That's helpful. And then, I guess, I don't know if there's -- if you're going to start negotiations soon sort of early reads on '27 kind of how you see these inflation heading over the next few quarters?

Yes. Yes, it's Eric. Unfortunately, just based on the timing, we're not there yet. We'll definitely have that for you in February. This year, we're still seeing high single digit on beef, so no new news.

And our next question is from John Ivankoe with JPMorgan.

I wanted to kind of talk about October, if I can, and just excuse me for this, the overall kind of launch of best steaks ever, whether that social media campaign really achieved what you wanted. Obviously, there is a shift in social which we would very rarely see year-over-year. I mean, going from going from 60% of your mix -- from 30% of your mix, you're nearly doubling social. So I guess, if we were to kind of rewind the clock and think about what maybe we could have done differently, did we absolutely nail the social digital influencer campaign or might we have an opportunity to make some tweaks and have some better results that I would argue you deserve?

Yes. John. So one, I'm really pleased with our best stakes ever campaign. It's been really good to see in terms of, one, what's been really nice is we're seeing an absolute visible conversation about our business, about our steak quality, what we've done. And it gets back to the brand, which is fun, casual Aussie-themed steakhouse. And in addition to that, you've seen that we've also had some affordability offers in the communication between Aussie 3-course and then the equity, as you mentioned.

But I think the other point, John, we were very conscious to be thoughtful in the sequencing. We didn't want to do the best steaks ever or really increase the market until we felt great about our consistency of execution, our service model, the total guest experience. And that's why in October, to your point, we really punched that up in a big way. I am very encouraged with our initial results between consumer engagements and what we're seeing in traffic.

Just financially, just as a reminder, we increased our marketing by $10 million in '26 and that is back half loaded. The only other thing I would say, John, which is important to your question, there's -- I feel real good about our social. There's a bit of -- I'll start with the who. We have been very strategically targeting who our guests personas and who the consumer is. And that in itself gets us to where we think about competitive conquesting audiences, how you think about high-performing contextual environments, that's important.

The second is the where. We've been really good knowing where the high-impact environments are, streaming TV, streaming sports, online video, YouTube asset. These are really good places to get the right consumer attention. The how is we've been really good. We're quite good and nimble in taking advantage of auction-based digital CPMs, and we're very good in our ongoing optimization. So our returns are really good. We'll continue to optimize and learn John, but feel really good about it. But I wanted to give you that detail because we're in that level of granularity in terms of the returns on our marketing, and that's important to us.

The next question is from Brian Harbour with Morgan Stanley.

What -- I guess, just with respect to the pricing discussion, what -- what are you thinking it will be next year? Was this sort of just a matter of basically in the environment right now, let's kind of hold off? What -- but then when we go forward, where are you thinking pricing should be?

Yes. Brian, it's Mike. It gets back to what Alex asked me that we're just being balanced. I think consistent that we're going to be balanced in terms of how much pricing we take, where is the consumer and how that impacts the P&L. When you look at -- I'll stick to this year, when you look at Q4, our pricing is roughly 4%, our average check is 3.5%. In full year, our average check is going to be about 3.5%. We just don't feel we need to take more pricing than inflation. It really boils down to that.

Yes, makes sense. Okay. What have been the main areas where you've seen some productivity savings so far?

Yes. In terms of non-guest-facing productivity, and Eric can jump in, we've had a number of areas I'm excited about, and it all goes back to nonguest-facing productivity. That's the principal because we don't want to take anything out of food quality or service, and that's important. And a matter of fact, by the way, we're almost nearly self-funding the investment in Outback with non-guest-facing productivity. So the first one I'd start to is really our labor tool, our half schedules has been very exciting because not only is that helping us shed labor on the shoulders, it's helping us know when to flex labor up on peak. So it's a traffic enabler. It's also a productivity lever.

The second one which I think has been really good is just we're able to use a lot of technology in terms of bringing items into the restaurants that partners don't have to think about in terms of how they think about their water usage, their utilities other types of costs that come in, we're giving them tools and processes via technology that's helping.

The third is we got a great supply chain team. They've done some phenomenal job leveraging our scale to get better deals. I've talked about toys and our drinks where our procurement team got after cut cost by 50%, same toy, same everything, just a process that gives you 7 digits of productivity. And then the last thing is we had suppliers step up with us, and this is an important point as we've made investments in food, in service. We've had suppliers say, we want to be part of the investment because you're putting the money in the right places, which drive sustainable, profitable long-term results, so it's all of the above.

Yes. The only thing I would add is we also feel good about next year, nothing's changed, similar levels of commitment to get to around $30 million in productivity for next year.

The next question is from Jeff Farmer with Gordon Haskett.

Just sort of dialing back on the same-store sales again for Q3. Was there anything notable as it relates to either regional or demographic same-store sales trends that you saw for the core Outback concept.

No. SP1 Jeff, it's Mike. What I would say No, we didn't. There's -- what I would just say is we've been pretty consistent on this. We're -- in terms of the consumer, we're cautious. We're cautiously optimistic kind of the consumer. There's some macro choppiness. But what we're seeing with the consumer is, casual dining is still an affordable luxury. Consumers, they're resilient financially, they are cautious, and they continue to be discerning about when, where and how often they dine out. So it just gets to the what you get for what you pay for dynamic.

And when we get it right, people are showing up. The only thing I would say in terms of sensitivity, which we flagged in previous quarters, there's a little bit of sensitivity on check with households that are under that $75,000 range. And it's a little bit on the older guests where we're seeing some check management. That's probably the only specific thing I would say, we saw at Outback to your point.

Okay. And then just as a follow-up, I appreciate that you probably can't say too much, but I'm going to ask it anyway. So thinking about Out West as sort of a collection of franchise restaurants. Is there anything you can offer color as it relates to that group of restaurants same-store sales, AUV margin performance, whatever metric you want to look at, how that group was performing relative to your company-owned restaurants, anything that stands out?.

Yes. No, Jeff, I appreciate the question. I'll answer it this way. I've got to be thoughtful because there is a process that's going on. And I've got to be respectful of that process. But here's what I would tell you, that situation at Out West, it's a really great team out there. That was a very unique and specific situation to that set of locations. And if you had followed our Qs and our Ks, you would have seen us disclosing information about the idiosyncratic nature of that business and the lending aspect. And that situation was going to run its course by the end of December of this year. That was -- we put that out there publicly.

Our other franchisees, they're healthy, they're operating well. They're investing in the business. They're growing their employee base. They're growing their store counts. This one is quite unique. So we've got to get through the process. If we are designated as the stalking horse in terms of the future state, we're going to welcome the Out West team, and they're good stores, and we think there's good potential there.

Our next question is from Sara Senatore with Bank of America.

This is Ashley on for Sara. With the 61 refresh has done so far this year, getting to about 85 means roughly 2 dozen more in -- and this is kind of during a stretch where you plan to slow down for peak season. Is 85% still the target? Or does some of that flip into 2027 potentially?

Yes. No, we feel really, really good about hitting that 85%. It's really just timing right? So the ones that will close in Q4, all of them were started or most of them were started in Q3. So we don't feel like that's going to carry over into next year. We'll have a -- essentially, the expectation is another approximately $100 million for next year. So nothing changes.

Got you. And then just a follow-up on that. I know historically, you talked about like 100 to 200 bps traffic lift that came from Outback that had heavier remodels over the last few years. Just how confident are you that the lighter refresh gets you somewhat of a similar lift? And are you seeing anything in early guest scores at the first refresh units that kind of point to that direction?

Yes. Ashley, it's Mike. First of all, that information or that data before, we actually didn't imply or infer that they were, as you called it, heavier remodels. Those are based on refreshes or lighter remodels that we saw at Carrabba's and we've seen throughout the industry where we saw about 100 to 200 basis points lift in traffic over a course of about 12 to 18 months. That's the first thing. Second is, yes, if you look at our leading indicators, you look at ambience, you look at the atmosphere, those scores have grown and they grew again in Q3. And I think it's indicative of not only the refreshes, but it's indicative of the cumulative effect of what we're doing we're getting that flywheel moving. You're seeing those green shoots in those guest indicators.

The next question comes from Andrew Strelzik with BMO.

First, I wanted to ask about the change in the outback labor model at peak. What are you seeing as a result of that change after having a full quarter with that rolled out? And any operational metrics you can share would be great.

Yes, Andrew, it's Mike. I'll start with what I just mentioned to Ashley. If you look at our leading indicators are guest metric scores and Technomic, we saw the fifth straight quarter of improvement. Service was the biggest jump. And actually, if you look at us now in an absolute score, and by the way, this is with all the Technomic scores, but especially on service, we are comparable or higher than our peers on absolute economic scores now. And I think that's an absolute proof point that what we did on the service model is working.

When you look at our ASP scores, which we track, those also grew significantly, intent to return, service, every metric that's associated with it grew. Importantly, our Outbackers as we've tracked it, they're making the same amount of money or slightly more in this model because they're not giving up as much in tip share, and we're seeing a slight increase in percent increases in the tip levels as we've gone to this model. And you've also just got -- to your point about peak, it's a really good one. For a server, they're just not dealing with the stress that used to deal with. You've got 4 tables at peak, if you're running at 6, which was historically where we're at and somebody calls out sick during peak on a Friday or a Saturday night, that's a pretty bad night as a server when you got about 10 tables. So we've made those improvements, our guests are acknowledging it, and our Outbackers are acknowledging it.

Okay. Great. And my second question, I wanted to ask about kind of the longer-term opportunity at Carrabba's, which continues to be on a nice run of positive comps, locked another really strong period from the year ago. This quarter, how are you thinking about the growth potential there? Anything incrementally into '27 that you're thinking about doing with that brand? Any color would be great.

Yes. I agree. I really feel good about the Carrabba's brand. It's a very good brand. It has a lot of potential. The headline focus in Carrabba's is in restaurant execution. And that hits to the fact that 34% of their business today is off-premise, that off-premise business has got to play a role, its convenience and its recruitment of a younger, different cohort. And I want those OPD guests coming in restaurant. But at the end of the day, Carrabba's is about serious, authentic Italian food with warm hospitality which we have great land and sea proteins in there, and we're going to continue to punch that up.

And the next question is from Dennis Geiger with UBS.

First, a quick follow-up on Jeff's earlier question about what you're seeing with your customer, but I'm curious, especially in recent months as it relates to your performance maybe versus the category, you're clearly executing on your playbook seeing results from that. Anything you would flag though about the category itself, take away from home.

Do you think there's been any impact from some moderation in beef inflation at grocery, where maybe that's having some impact, whether it's on new folks at all or the broader away-from-home category?

Dennis, it's Mike. I've been consistent on this. On steak category overall, it's a very resilient and growing category. There's a lot of growth in the steak category for everyone. Second, when you look at our in-restaurant experience as a consumer, which you show up and get in terms of food service experience versus what you're doing at home on the grill And if you screw it up at home on the grill, it's on you. If we screw up in the restaurant, it's on us. Now by the way, you get that stake with 2 sides, and you get just a way better experience.

I think the relative value is driving more consumers in that direction because away-from-home food has continued to grow. I've been studying consumers and guests since 1993 when I got off active duty in the Marine Corps. And that has not stopped. And when you look at the fact GDP and the labor market remains strong, I think casual dine remains an affordable luxury.

That's good color. Makes good sense. And then just on value, if there's much more to add on where value is the AL3 cores. I know you probably can't say too much about next year yet. But if any thoughts on adjustments into value next year. If you feel like at this point, you've kind of cracked the code and are generally where you want to be from a value and value strategy perspective?

Well, I like the question. When I start with Aussie 3-course, it actually has become a platform and a sub-brand of Outback. We've got great brand equity in Aussie 3-course our guests know it means craveable food, great service with compelling affordability. It really hits on what we want in terms of giving guests what they want. And we've seen that in our value scores. Our value scores have also continued to grow 5 quarters in a row. And I do believe it's because of that trust that we're getting from the guests and increase in intent to return.

The other thing I would say is we look at it, we're a test-and-learn culture, and we're going to continue to look at the price points in the tiers and the offers within that. We did some regional tests during quarter 3, and we're doing some live national tests right now in terms of the price points and the value and we're evaluating it. And right now, we're very pleased and encouraged with what we're seeing in terms of guest engagement and traffic improvements.

The next question is from Brian Vaccaro with Raymond James.

I wanted to circle back on the fourth quarter comp guidance. And I guess if you look at the third quarter, you saw Outback 2-year comps improved sequentially, but the 4Q blended guide seems to imply a little bit of a giveback on a 2-year basis. So I wanted to ask, is that entirely due to the promo and calendar shift? Or maybe you could also just clarify, does your blended comp guide embed negative comps for any brand?

Yes. So Brian what I'll start with, we've not guided by brand nor will we at this point. However, I like your question. To answer your question answer is yes, meaning we want to say, yes, what we're calling for Q4 is due to the items that we called out. I would not read into it that we're really seeing a change in the consumer or what's going on.

Again, this is repetitive, what I said before is, but when you look at Q4, we're cautiously optimistic. We're just seeing 3 things driving the change in our comp sales guide for fourth quarter. As I said, you got a holiday shift that started with Halloween that played out exactly as we thought. Christmas moves to a Friday, we lose an operating day. That's number one.

The second is, as we've called out, we had this holiday promotion in Q4 in '25. We just decide we're going to chase it. We're going to go after dilutive traffic. And then the last is we just made the decision to delay pricing moves at Outback and Bonefish more so Outback in terms of we're going to move that into Q1 of 2025. We just think that's the right thing to do in terms of -- like I said, we're going to be balanced, and we don't think we need to take more pricing versus the inflationary rates. That's what it is. We've seen the consumers hang in there is based on what we're seeing.

Okay. Okay. That's helpful. And I guess my follow-up, you mentioned the Outback off-premise mix ticking up a little bit year-on-year. I think it was '27 versus; 26, which is fairly minor, but it does seem to reflect an acceleration maybe in the off-premise trends particularly. Is that accurate? And if so, what might be driving some of the reacceleration, if you want to call it that, in your off-premise business?

Yes, it's Eric. I don't think that's the case. We can follow up, but I don't think that's really a driver of either Q3 or Q4 for Outback.

Okay. All right. I'm yes, '27 versus -- we maybe follow up offline.

Yes. We did call out Q2 for both Carrabba's and Outback that they were lapping in Q2 prior year off-premises promotions, but those are -- that was largely a first half phenomenon. And really in the second half, it really -- we don't see that impact.

Yes. Brian, to your question, maybe I'll add on to it. What you -- whatever want you take away is off-premise to us is a channel convenience or recruitment, that's how we're treating it. We're going to continue to be disciplined in our off-premise pricing index versus in-restaurant pricing. That has not changed. We are a little more thoughtful in terms of how we leverage marketing within off-premise, but that's part of that recruitment and convenience aspect of the channel.

All right. And I guess if I could just -- one more on the Q4 guide. Eric, you mentioned just the tax benefit in the year. Can you just level set the fourth quarter for us, given there's a lot of adjustments in the first 3 quarters, that would be great.

Yes. Yes, we're seeing about a $2 billion to $3 billion tax benefit for Q4, and that compares to about a $5 million expense in Q3. So full year, we're in the $14 million to $16 million tax benefit zone.

And this does conclude today's question-and-answer session. I would now like to turn the conference back over to Mike Spanos for any closing remarks.

Thank you once again for your investment and support of Bloomin' Brands. I want to close by thanking our people for their passion and commitment to each other and our guests. Thank you.

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.

Thank you. Greetings and welcome to the Blumenbrand's Fiscal Second Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow management's prepared remarks. Should you need assistance, please signal a conference specialist by the star key followed by zero. Please note this event is being recorded. It is now my pleasure to introduce your host, Tara Kurian, Senior Vice President, IRFP&A and International. Thank you, Ms. Kurian. You may begin.

Thank you and good morning everyone. With me on today's call are Mike Spanos, our Chief Executive Officer, and Eric Christel, Executive Vice President and Chief Financial Officer. By now, you should have access to our fiscal second quarter 2026 earnings release and our investor presentation slides, both of which are available on our website. found on our website at www.bloomandbrands.com in the investor section. Throughout this conference call, we will be presenting results on an adjusted basis. An explanation of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our earnings release and investor presentation on our website as previously described. Before we begin formal remarks, I'd like to remind everyone that part of our discussion today will include forward-looking statements, including a discussion of recent trends. These statements are subject to numerous risks and uncertainties that could cause actual results to differ in a material way from our forward-looking statements.

Some of these risks are mentioned in our earnings release. Others are discussed in our SEC filings, which are available at www.sec.gov. During today's call, we'll provide a brief recap of our financial performance for the fiscal second quarter 2026, current thoughts on fiscal 2026 guidance, and an update on our turnaround strategy. Once we've completed these remarks, we'll open the call up for questions. With that, I would now like to turn the call over.

to Mike Sannos. Thanks, Tara, and good morning, everyone. I will discuss our second quarter results and provide an update on our turnaround. Eric will then review the financials and our thoughts on guidance. First, I want to congratulate our team on the progress on both the Outback Turnaround Plan and our financial results. Our focus on consistency of execution on food quality, service, experience, in providing affordable offers is making an impact. As Pat Hafner, president of Outback, told his team at our Managing Partner Conference in June, Motivation gets you going. Consistency of execution keeps you growing.

We remain committed to consistency of execution that delivers a cumulative impact in delivering a great guest experience. success will not be linear, we believe these commitments will lead to sustainable and profitable growth in the long term. turning to our second quarter results. Outback's guest metric scores continue to improve, with year-over-year gains for the fourth consecutive quarter reinforcing that we are getting better every day. This is the power of consistency of execution in contention. In Q2 of this year compared to Q2 of last year, Outback's guest scores increased across service by seven points, atmosphere by seven points, value by six points, intent to return by five points, food by four points, and brand trust by two points. share more details of our Outback turnaround progress shortly. Our Q2 U.S. comparable restaurant sales were positive 230 basis points with traffic down 190 basis points. We have continued to narrow the gap versus the industry as defined by black box each quarter and our Q2 comp sales were in line with black box while traffic trailed by 110 basis points. Affordable entry price points at our casual dining brands, combined with consistent execution and craveable service, is improving our what-you-get-for-what-you-pay-for value equation.

Outback's Q2 comp sales were up 140 basis points with traffic down 280 basis points. As we mentioned in our first quarter earnings call, we chose not to lapse some dilutive traffic offerings from Q2 2025, particularly in our third-party delivery space. While third-party delivery remains a key part of our business and plays an important role for convenience, our focus is on delivering a remarkable dining experience to drive sustainable traffic growth. Outback continues to drive traffic and loyalty from the Aussie 3 course affordability offering with about 60% of the guests consistently trading up from the entry price point into the higher price tiers and approximately 20% trading up on the dessert option. Parabas comp sales were up 170 basis points with traffic of negative 250 basis points. Similar to Outback, we chose to not lap some dilutive third-party delivery offerings from prior year. This is the sixth consecutive quarter that Carrabba's drove positive comp sales, driven by continued focus on the in-restaurant experience and delivering elevated, authentic Italian food with warm hospitality.

We are seeing positive results and increased guest satisfaction from our updated day of week offers and continued strong interaction with our experiential wine dinners. Bonefish's comp sales were up 810 basis points with traffic of positive 450 basis points. Bonefish continues to steadily improve traffic growth with momentum in day of the week offers such as Margarita and Martini Mondays and Bang Bang Shrimp Wednesdays. The team has done an excellent job engaging guests with an energetic bar in a polished casual seafood environment, leveraging our core menu items for exciting affordability offers. Fleming's comp sales were up 160 basis points, with traffic down 280 basis points, and achieving the eighth consecutive quarter of positive comp sales growth. The team continues to provide memorable special occasions for our guests through disciplined execution and approachable offers. I will now update you on our turnaround focused on Outback Steakhouse.

The turnaround is anchored on four strategic platforms as previously communicated, which are, first, deliver a remarkable dining experience, second, drive brand relevancy, third, reignite a culture of ownership and fun, fourth, invest in our restaurants. These platforms will be supported by non-guest-facing productivity savings, balanced capital allocation, and a strong management team. Starting with an update on the first platform to deliver a remarkable dine-in experience. The first step was the launch of our new steak lineup in November of last year. We continue to see our steak score in the top box. Consistent with Technomic, our Ziosk guest scores are showing noteworthy improvements year-over-year across intent to return, food quality, service, steak temperature, and value. The commitment to consistency of execution has driven four quarters of year-over-year improvements in Outback guest metric scores.

Moving to the next element of a remarkable dining experience, craveable service. As we have previously communicated, we identified that our one server to six table station ratio during peak hours did provide the right level of guest interaction and satisfaction. In Q2, we successfully rolled out our new service model to all Outbacks, reducing our ratio to four tables per server during peak hours. We are receiving positive guest feedback from this change. Our Q2 absolute service scores were over 90% top box and increased by nearly 3%. three points year over year. Like our state quality, guests are telling us they see the difference in our enhanced service model, improving the what you get for what you pay for value equation. Outbackers continue to leverage the tabletop ZEOS data to drive accountability and close any gaps in performance in each restaurant.

We will continue our commitment to delivering a great guest experience with training for front-of-the-house outbackers this month on our enhanced hospitality experience model to deliver a fun, casual, Aussie, no-worlds-just-right experience. Our second strategic platform is driving brand relevancy at Outback to differentiate the brand. We will embrace the core of our OSSE brand roots by inviting customers to come as our guest and leave as our mate. Our brand communication will primarily showcase the quality of our stake lineup with a balance of brand equity and the affordability of our OSSE III course offer and craveable service. We are increasing our marketing spend year over year in the second half of this year, and will continue to shift our marketing mix into social and digital channels. Marketing will bring them in with a no rules, just right, aussie irreverence, and a relentless focus on consistent execution will bring guests back. Reignite a Culture of Ownership and Fund is our third strategic platform.

People are the key to our turnaround, and we are focused on having strong leadership throughout our restaurants, starting with our managing partners. Reigniting a culture of ownership and fun begins with recognizing the achievements of our partners and Outbackers. We held our Outback Managing Partners Conference in June. This was the first time since 2019 that we have had our partners together, and it was a great event to get them energized around the elements of the turnaround. We have great partners. and they are clear on their ownership to deliver a great guest experience. We were privileged to have one of our Outback founders, Tim Gannon, who invented the Bloomin' Onion, spend two days with our team, inspiring them on the core of the brand, our special culture, and the potential of our business based on the turnaround plan. What was particularly motivating was Tim's feedback. that we are doing the right things to turn around Outback.

I want to congratulate Market Vice President Robbie Atkins for being named Outbacker of the Year. Robbie exemplifies our principles and beliefs as a leader, setting the standard that success is growth in sales and profits and is the result of taking care of our people and guests. Congratulations, Robbie. Additionally, consistent with what we communicated in our previous earnings call, we implemented the first phase of an updated MP compensation model during Q2. The first phase of our MP compensation program has two key goals. First, to ensure total cash compensation is competitive with the local market. market, starting with a competitive base salary, and second, to ensure that total cash compensation remains tied to the growth of sales and profit of the restaurant. Lastly, let me update you on our fourth strategic platform, Invest in Our Restaurants. We are on track with our goal to touch nearly all of the Outback restaurants by the end of 2028 with targeted initiatives to refresh the interior and exterior, expecting to spend on average between $350,000 and $400,000 per restaurant. refresh location.

We have completed approximately 31 Outback refreshes through the end of July and are on track to complete around 85 for the full year of 2026. asset refresh approach focuses on improving guest ambiance in the restaurant interior and exterior. which will improve the dine-in experience. Additionally, we have completed the rollout of our chargrill expansion across Outback. This cooking platform enhancement allows our Outbackers to have the optimal cooking platform for our new steak proteins and non-steak proteins. Let me now turn it over to Eric to review our financial performance for Q2 and guidance for Q3.

FULL YEAR FISCAL 2026. THANK YOU, MIKE, AND GOOD MORNING, EVERYONE. I WOULD LIKE TO START BY PROVIDING A RECAP OF OUR CONTINUING OPERATIONS FINANCIAL PERFORMANCE FOR THE FISCAL SECOND QUARTER OF 2026. Q2 TOTAL REVENUES WERE 1.02 BILLION COMPARED TO 1 BILLION LAST YEAR, REFLECTING A 1% INCREASE. RESTAURANT SALES WERE UP, DRIFTING TO THE BOTTOM OF THE driven by positive comparable restaurant sales of 230 basis points. We remain very focused on narrowing the gap to the industry in the near term and positioning ourselves to lead the industry in the long term. Average check increased by 420 basis points compared to 2025, with pricing partially offset by negative mix as we continue to invest in affordable offers for our guests. We are seeing an improvement in our mix compared to our original forecast, driven by the leadership and efforts of our Outback team in three key areas.

First, we have enhanced our menu design to incent our guests to enjoy our combo offerings, which feature our outstanding steak and non-steak proteins together. Second, we are seeing guests trade up to more premium steak cuts once they engage with our servers and see the steaks on the menu. Third, we are seeing continued momentum from our non-alcoholic mocktails, providing a premium and experiential beverage experience to include low-calorie options such as our strawberry peach refresher and to complement our Aussie-themed mock crock and sharky temple. As a result of what we are seeing in MIX, this has a positive impact on the turnaround investment dollars, which I will explain in detail shortly. Off-premises sales were 24% of total US sales in the quarter, consistent with Q2 last year. year. Outback's off-premises mix were 26% in the quarter and Carrabba's were 34%. Our gap diluted earnings per share was 37 cents compared to earnings of 29 cents per share last year.

Our Q2 adjusted diluted earnings was 39 cents per share versus earnings of 32 cents per share last year. The difference between GAAP and adjusted GAAP operating results is approximately 3 million of adjustments in Q2 2026, primarily as a result of transformational and restructuring activities. The U2 adjusted operating margins were 4.0% versus 3.5% last year. The 50 basis point difference between this year and last year was driven by improved restaurant margins. Within restaurant margin, COGS was elevated compared to last year, driven by commodities inflation of 5.7%. Labor was favorable, driven by the lap of higher health insurance costs in the prior year, and And other restaurant operating expense favorability was driven by non-guest-facing productivity. As it relates to our 33% retained ownership in Brazil, which is classified as an equity method investment, we recognize the loss of approximately $900,000 in Q2.

We still expect the full year loss to be approximately $3 to $4 million. According to our capital structure in Q2, total debt net of cash is $636 million. As of the end of Q2 2026, our leverage metrics were 3.7 times on a lease-adjusted net leverage basis and 2.0 times on a net debt to adjusted EBITDA basis. adjusted net leverage ratio goal remains 3.0 times. Capital expenditures in the quarter were $44 million. We expect to complete a large amount of refreshes in Q3 of this year and taper off in Q4 as we focus on serving our guests during peak season. We still expect the full-year capital expenditures to be in the range of $185 to $195 million. Consistent with our previous communication, our capital allocation priorities are to, one, invest in the base business, and two, pay down debt.

Teams are committed to these priorities to provide a platform for the turnaround and a strong balance sheet to support growth. As I mentioned, we are seeing improved mixed trends at Outback, which has a positive impact on the turnaround investment needed in 2026. We had allocated $25 million for food investments, of which $18 million was spent on food. specifically for mix, we now expect the mix investment to be $4 million. The turnaround investments now total $36 million down from $50 million. Productivity savings remain on track for $30 million for a net investment in 2026 of $6 million. Turning to our guidance this year, as it relates to the full year fiscal 2026, we expect U.S. comparable restaurant sales to be between 1% and 2%. We expect sales mix to improve by approximately 100 basis points, offset by slightly lower traffic as we make the strategic decision to not repeat. profit dilutive offers from last year.

We now expect our adjusted diluted earnings per share to be between 90 cents and $1. Our previous guidance was between 75 cents and 90 cents. The increase in our earnings per share guidance range is attributable to our year-to-day performance, improved mixed trends, and better middle of the P&L cost controls. As it relates to the third quarter of 2026, we expect Q3 U.S. comparable restaurant sales to be between 1 and 2 percent. We expect Q3 adjusted diluted earnings per share to be between negative 27 cents and negative 22 cents. We expect to have a tax expense of approximately $5 million in the quarter. Our full year tax rate is expected to be negative, which will drive a tax expense in Q3 due to our negative earnings outlook.

We expect our 33% Brazil EMI to be approximately negative $2 million. Let me now turn it back over to Mike. Thanks, Eric. Overall, we are on track with our Outback turnaround, implementing and executing what we said we would do. We are building momentum in our guest feedback and Outbacker feedback. feedback tells us our strategy is sound. Our strategy is consistent and is, one, deliver a remarkable dining experience through improved steak quality, enhanced service, and consistency of execution. Two, Two, drive brand relevancy to differentiate Outback. Three, reignite a culture of ownership and fun with a commitment to our people.

Four, invest in our restaurants to refresh approximately 100% of Outback's by 2028. Investment in the Turnaround is supported by non-guest-facing productivity savings with a balanced capital allocation led by an outstanding set of leaders that are seasoned restaurant operators. We acknowledge that success is not linear, and we will continue to responsibly pace and sequence the investments to deliver a great guest experience and foster positive team member engagement. The leadership team continues to be committed to our strategy to provide long-term, sustainable profit growth and improving every day in how we operate our business. We will continue to be transparent in our progress. I want to close today's call by thanking all of our teams in the restaurants and restaurant support center. Our current results and our future potential would not be possible without the dedication, hard work, and commitment of our Outbackers, our MECOs, our Anglers, and our associates to deliver remarkable results. guest experience every day.

With that, let me open up the call for questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Alex Slagle with Jefferies. Please go ahead.

Thanks. Good morning, everyone. I wanted to ask on, I guess, as you're looking at the outcomes, the stake upgrades, service changes, are there any notable surprises to how you're seeing the improved performance and experience metric shake out? I don't know if it's fairly broad-based and even, or if it's still more varied and dependent upon quality of the teams and the management teams you have in place, and also, you know, the improved mix and check performance that drove the guidance upside. Is that really more a direct reflection of some of the service changes and many.

changes just trying to get the core of that. Yes, morning Alex. It's Mike. So I'll break that down based on what seems to be three questions there. So on stake, We're really excited about what we're seeing in the stake lineup. It's performing really well. Our outbackers are excited to sell it. Our back of the house is really excited as well executing it. We're seeing top box scores across the board. And the second piece of on stake, which has been a nice surprise, and it gets also to your mix question, we are seeing gas trade up more and more into the premium cuts.

That's been better than what we had seen in our tests when we did the test in 2025. The third thing I would say, and this also gets to your mix question, is what's also been very encouraging is seeing the combo reaction to not only the new steak lineup, but guests also engaging in what are differentiated non-steak proteins. So when I look at all that, I feel really good. We're still focused on consistency. consistency of execution, leverage in Ziosk to get it right. So that's the stake lineup. I think Pat and the team have done a great job. And the other adjacent point on that too is having the chargrill expansion done. That just gives us a lot more capacity to nail the lineup and we feel really good about our optimal cooking platform In terms of your question on the service, that one is playing out in early stages exactly as we wanted it to.

Meaning, as we said, we wanted to get to one server for table station ratio during peak. That has worked really well. What has been really encouraging as we looked at the results is the pay of servers is almost exactly the same as it was before. We're seeing tips up as a percentage, tips shared down. And what we think is starting and we're seeing happening is we're just back to the ownership culture we have. where the server owns the table. That's just so core to what Outback was back when it was great, and that's good. So we wanted to make sure we felt good about where the servers were, we wanted to feel good about the guests were, and our ZS results are showing us that in terms of the likelihood to recommend a server, intent to return, feel good about that. The last thing I'll say to your question on mix that I didn't cover, the other part that was really positive on mix, the team did a great job on the menu design, and I mentioned guests trading up on the premium cuts.

But we've got really nice leverage on sides. Premium side steak toppers have been just. well received by guests, that gives us nice tailwind. And we also did some work on premium sides, which is really nice, whether we have a Parmesan creamed corn that we introduced that has done very well. Our desserts have been up as well, whether it's guests trading up on the chocolate thunder or the chocolate chip skillet. That's been a nice surprise. seeing guests spending when they feel great in a restaurant. Great. Thanks for that.

Thank you. The next question comes from Sarah Senator with Bank of America. Please go ahead.

Hi, this is Aisling on for Sarah. Congrats on the results. So you noted in the prepared remarks Outback's guest metrics improved for a fourth consecutive quarter, and you called out positive guest feedback from the full rollout of the new service model, but Outback's traffic was still down 2.5% in 2Q. How should we think about the bridge from, better guest scores to actual traffic conversion. You know, are there any early markets or restaurants where, you know, these guest metric gains are already translating into higher frequency by customers? Yes.

Yes, hey Ash, good morning. As I've said, our focus is long-term. Our focus is sustainable traffic, profitable traffic, and as I've said, our success is not going to be linear. There's a cumulative effect, especially in this industry when our average gas frequency is about twice a year, where you combine what is momentum in the stake lineup, the service lineup, a service model that we have, the experience we're going to be rolling out and hospitality experience training over the next few weeks, and then the affordability offers. My experience in turnarounds, there's a flywheel on this. It takes time. I also know our outbackers are telling us we're on the right path. I know our guests are telling us we're on the right path. One of our co-founders at a conference just said, we are absolutely on the right path, and we have locations, whether there's franchisees or current restaurants, when they have been doing what is true to the core of the brand, we grow traffic and we grow comp sales sustainably.

So the last thing I would say is I'm going to be super transparent and candid with our results about what's happening and what has happened. We're going to be careful not to over-project what we think is going to happen in terms of future traffic, et cetera. But confident it's going to come because we're seeing the results.

Great. Thank you for that color. I'll pass it back. Thank you. The next question comes from John. I have an.

with JP Morgan. Please go ahead. JP Morgan, Hi, thank you. It's definitely interesting to kind of see your success and actually pushing or having your customers push the Outback brand higher through premium steaks, sides, toppings, what have you. So that's obviously an achievement that says a lot about your historic brand. So the question, I guess, is kind of on the other side, which is the opportunity that you have, you know, to achieve value through price points. In other words, you know, the brand I know was promoting things kind of in the mid-teens for a while, three-course, what have you. Does it make sense to kind of come back and really, you know, re-establish that? that part of the menu and maybe engage in a core high-low, or should we just be focused on the core and the higher-end part of the menu for this point?.

Yes, morning, John. How you doing? I think we're doing that. What I mean by that is, in all the Casual Dime brands, and I'll stick out back, which is your question, we've been real sharp on providing barbell pricing. look at it, and that really starts with off-seat three-course, that is the entry point. That's the entry point of affordability, and that's especially the entry point for those households that are running under $100,000, and we're seeing good retention and frequency of use, and there's a lot of good items in there. You've got CHOP State, you've got Terri-Otter you got a great burger at the entry price point. So somebody can come in at $14.99 and feel really good about that value. The other end, which we've seen, is we, especially in the K-shaped economy this place, we're also seeing guests trade up to the premium cuts. So they can get the strip, they can get the food, our selection of ribeyes which is everything from a 13 ounce to 15 ounce in the boneless 20 ounce bone in we're seeing really good results there and so we're seeing that trade up as well so I don't think there's going to be any change there the other thing we've been really zoned in on is just consistency of execution, regardless of who it is.

They love the brand. What we hear from our guests is they love our brand when we do it right. I think that's going to be the approach and that's what we're seeing working right now.

OKAY, THANK YOU, AND IF I CAN, ON A FOLLOW-UP, IN TERMS OF THE REMODEL, INTERIOR AND EXTERIOR, FOR 350 TO 400,000, I DON'T NEED TO TELL YOU THIS, I DON'T THINK, BUT FOR A CASUAL DINER, ESPECIALLY WITH SOME AGE ON IT, THAT'S A REALLY LIMITED you know, so firstly, congratulations on being able to achieve that. And, you know, Mike, the question I'll ask you is, would you like to spend more if you could spend more? So in other words, are we kind of nailing it, you know, at this 350 to 400 where we won't have to revisit it for 10 years? Or might, you know, this remodel, you know, be completely canceled? kind of what's necessary as part of maybe a multi-stage remodel process as your overall financials allow you to.

Yes, John, it is enough. And I say this on the last earnings call. First of all, we're focused on the right ambiance and the right touch points, interior and exterior, one that gives the guests the feel on the interior that we've updated items that matter to them, as well as on the exterior, which sends a signal to those driving by some things have changed. So, one, I'll focus on what we're doing and then the numbers. On the inside, it's predominantly tables, chairs, floors, some ceilings. We're also doing some touch-up on bar, the TV package. When you look at the exterior, there's a landscape, there's some painting, and there's lights. That's what it is, and that gets into that average of 350 to 400.

Now if you look at the numbers John, I mentioned this on the last call, if you just assume roughly just short of 600 total outbacks, roughly half of them have already had either their new or had pretty heavy remodels the last few years. So that leaves you a remainder of 300 outbacks and we're looking to get to about 100 a year we think we'll get to approximately 85 this year and and that's that's the plan and as I said before the results we've seen is we like the traffic lift after we've done those we go see a nice hundred to two hundred basis point left about six months.

to a year after we get those done. Thank you, and I look forward to more time in restaurants.

Yes, we'd like that, John. Thank you. The next question comes from Jeff Farmer with Gordon Haskett. Please go ahead.

Thanks. A couple for you guys. So I'm just curious what the menu pricing versus commodity inflation. spread will look like as you get into the back half of the year, just sort of what that dynamic will look like and potentially how it will impact your margins as you move forward.

Sure. Hey, this is Eric. So we still see commodity inflation running basically four and a half to five and a half for the year. That's been consistent. We see pricing in about the four and a half range. So pretty balanced. That's been our approach all year and will continue to be our approach.

Okay, and then you did touch on it, but as it relates to advertising weights, just as you move into the back half of this year, can you talk a little bit Can you give us some context in terms of what that will look like in terms of advertising dollars versus what it was in the back half of 2025? And then just a little bit more color as it relates to how you guys are going to use those advertising dollars.

Yes, I'll go ahead and give the dollars and then I'll let Mike comment on the sort of strategy. Essentially, we're going to be up roughly 15 million versus prior year for the full year. That's roughly 3% of sales for the full year. It's about 10 million more in Outback and then the rest of the brands have a couple million apiece. So just right in line with our plan. A lot of that is second half weighted as well. So right in plan. But about $15 million for all four brands, about $10 million more for Outback.

Jeff, it's Mike. First on the pricing, which I think is important too, before I go to the market, remember that the check's going to probably move by about 3.5% because the mixed impact, we had to call out about 2.5% last call. But as Eric mentioned in the prepared remarks, we've just seen that mixed improvement as the Outback team's done a better job, as I mentioned. So that's what's moving that number up. On marketing, consistent with what I've been saying, first of all, I'm really excited what I'm seeing out of the marketing team in terms of the work that they've put together. And we're going to, from a strategic brand position, we're going to be all about the brand. about OSSE, it's about being a steakhouse, and that's the core of the brand with that irreverence, we're going to punch that up. The brand communication will absolutely be steak-centric, and that's going to reinforce what we're doing on steak excellence, it'll have the affordability, and there will be equity in there. We'll start to see that. We're going to start to increase that in the second half.

We've got what we're calling our hospitality training, which is going to further train up the front of the house how to bring that experience and energy into the restaurant. So you'll start to see that. And we'll have that split between equity, communication, and affordability. That'll be centered on our C3 course. Eric already touched on the financials. The last thing I would say is just the mix. We'll continue to move the mix more into about a 60% digital, 40% linear TV as we move forward because the linear is important. but as we recruit more Gen X, Gen Zs, Millennials, we need to be more in that social digital space, which is where we're shifting.

Okay, thank you. Thank you. The next question comes from Brian Millen with Piper Sandler. Please go ahead.

Hello, this is Alison for Brian. Thank you for the question. Sure.

question? OK, you're you're go ahead.

Thank you. Hi, this is Allison Archer-Mond for Bryan. Thank you for the question. You hosted the Managing Partners Summit for Outback for the first time since 2019, so I wanted to ask about anything interesting or surprising that you learned from a boots-on-the-ground perspective from the operators. Thank you.

Yes, thanks for the question. It was an awesome session. The biggest takeaway to me was how energized our team was our partners were with the Outback Turnaround Plan. So the engagement was extremely important. And Pat and the team did such a good job. There was an element of fun. There was an element of recognition. But there was an element of training and ownership.

So everybody knows their roles and responsibilities and what exactly has got to be done because that's our culture of accountability. So I start there. And what was also very special was having Tim Gannon there, as I mentioned. When you have one of your co-founders there for two days telling the team we're doing the right things, and Tim, he's got it. I mean, he is on, and he was very clear with we're doing the right things. It was just great. to have him there. So we all walked away. As Pat said, motivation gets you going, but it's about consistency of execution that keeps you growing. That's where we're at.

Awesome, thank you. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Mike DeSpanos for any closing remarks.

Thank you once again for your investment in support of Bloomer Brands. I want to close by thanking our people for their passion and commitment to each other and our guests. Thank you.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Greetings, and welcome to the Bloomin' Brands Fiscal First Quarter 2026 Earnings Conference Call. [Operator Instructions] It is now my pleasure to introduce your host, Ms. Tara Kurian, Senior Vice President, IR, FP&A and International. Thank you, Ms. Kurian. You may begin.

Thank you, and good morning, everyone. With me on today's call are Mike Spanos, our Chief Executive Officer; and Eric Christel, Executive Vice President and Chief Financial Officer. By now, you should have access to our fiscal first quarter 2026 earnings release and our investor presentation slides, both of which can be found on our website at www.bloominbrands.com in the Investors section.

Throughout this conference call, we will be presenting results on an adjusted basis. An explanation of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our earnings release and investor presentation on our website as previously described.

Before we begin formal remarks, I'd like to remind everyone that part of our discussion today will include forward-looking statements, including a discussion of recent trends. These statements are subject to numerous risks and uncertainties that could cause actual results to differ in a material way from our forward-looking statements.

Some of these risks are mentioned in our earnings release. Others are discussed in our SEC filings, which are available at www.sec.gov. During today's call, we'll provide a brief recap of our financial performance for the fiscal first quarter 2026, current thoughts on fiscal 2026 guidance and an update on our turnaround strategy. Once we've completed these remarks, we'll open the call up for questions.

With that, I would now like to turn the call over to Mike Spanos.

Thanks, Tara, and good morning, everyone. On today's call, I will discuss our first quarter results and provide an update on our turnaround strategy. Eric will then review the financials and our guidance. I want to start by thanking our teams in the restaurants and the restaurant support center for their hard work and dedication to our business and our guests.

They supported their local communities by operating safely during some challenging weather conditions this quarter. The team focused on controlling what they could control, delivering a great experience to our guests while also driving productivity. Turning to our first quarter results.

We launched our turnaround strategy in Q4 of last year with a focus on consistent execution across food, service, experience and value to deliver a great guest experience at Outback Steakhouse. This focus is driving improvement in underlying guest metrics, reinforcing our belief that we are on the right track to deliver sustainable traffic and profit growth.

Outback's guest metric scores increased year-over-year for the third consecutive quarter. In Q1 of this year compared to Q1 of last year, Outback's brand trust increased by 4 points, guest scores increased across service by 6 points, value by 5 points, atmosphere by 5 points, food by 4 points and intent to return by 4 points.

Given that our average guest visits approximately twice per year, we expect the cumulative impact of these initiatives to become increasingly visible in traffic momentum as more guests experience the improvements we have made. I will share more detail of our progress shortly. Our Q1 U.S. comparable restaurant sales were positive 90 basis points with traffic down 180 basis points.

We experienced approximately 240 basis points of weather impact this year, driven by the winter storms experienced in the earlier part of the quarter. This was lapping approximately 130 basis points of negative impact from Q1 last year. Although we trail the industry as defined by Black Box by 30 basis points on comp sales and 70 basis points on traffic, we continue to narrow the gap versus the industry each quarter.

We remain focused on improving the what you get for what you pay for value equation, which is driven by consistent execution in the restaurant, combined with offering affordable entry price points to meet the guests where they are economically across all of our casual dining brands.

Outback's Q1 comp sales were down 30 basis points with traffic down 240 basis points. As we mentioned in our previous earnings call, in comparison to Q4 2025, we adjusted our offers in 2026 to be more balanced across check average and traffic. Outback continues to drive traffic and loyalty from the Aussie Three Course offering with about 60% of our guests trading up from the entry price point of $14.99 and into the higher tiers of $17.99 and $20.99 and approximately 20% trading up on the dessert option.

Carrabba's comp sales were up 130 basis points with traffic of negative 270 basis points. This is the fifth consecutive quarter that Carrabba's drove positive same-store sales growth, driven by their continued focus on the in-restaurant experience. From experiential wine dinners to revamped Happy Hour and our recently launched day of week offers, we are seeing positive results and guest satisfaction. Bonefish's comp sales were up 610 basis points with traffic of positive 300 basis points.

Bonefish has steadily improved traffic growth, driven by the team's focus on compelling day of the week offers like Martini Mondays and Bang Wednesdays and prefixed lunch affordability offers. Fleming's comp sales were up 80 basis points with traffic down 290 basis points and reflects the seventh consecutive quarter with positive comp sales growth.

Team has capitalized on special occasions and created experiential events with approachability to drive demand while remaining focused on elevating service to create memorable experiences for our guests. I would now like to update you on our turnaround strategy focused on Outback Steakhouse.

Our strategy is based on 4 strategic platforms, which are to: first, deliver a remarkable dine-in experience; second, drive brand relevancy; third, reignite a culture of ownership and fun; fourth, invest in our restaurants. These platforms will be supported by non-guest-facing productivity savings, balanced capital allocation and a strong management team.

Starting with an update on the first platform to deliver a remarkable dine-in experience. In November last year, we launched our new steak lineup as part of our commitment to steak excellence. This is a critical component to delivering a remarkable dine-in experience at Outback, and our Outbackers are proud to serve our best steak lineup.

We are excited that all of our craveable steak cuts and burgers are scoring high in the top box of menu satisfaction, and we continue to have strong and improving guest satisfaction and reorder intent scores driven by our tender sirloin, standout barrel cut filet, our new signature Delmonaco Boneless ribeye, new 20-ounce bone-in ribeye and new 0.5 pound burger that you can also get with great tasting Bloom petals.

We are very pleased with what we are seeing from the new steak lineup. The commitment to steak quality is complemented by a relentless focus on consistency of execution. In the Outback principles and beliefs, we commit that close is never good enough for Outbackers. Our Outbackers are leveraging the tabletop Ziosk data, both from guest feedback as well as specific KPIs to drive accountability and close any gaps in performance across restaurants.

Specific to steak quality, the team is conducting monthly steak reviews and training to build consistency and accuracy by each multiunit leader. We are recognizing our top performers and coaching the bottom-performing restaurants to drive consistency of execution and bring them up to brand average.

As we hone in on our consistency of execution on steak accuracy scores, we are measuring intent to return, food quality and overall service scores. The Ziosk data, combined with guest feedback enables our multi-unit leaders and managing partners to quickly coach and provide feedback by location and by shift. We believe our focus on consistency of execution has translated into improved brand scores.

As I mentioned earlier, we had the third consecutive quarter of year-over-year improvements in Outback guest metric scores. Moving to the next element of a remarkable dining experience, Craveable Service. Last year, we identified that our 1 server to 6 table station ratio during peak hours didn't provide the right level of guest interaction and Outbacker satisfaction.

We tested and validated that a reduced ratio of 4 tables per server during peak times enables our Outbackers to provide a more consistent and enhanced experience for our guests. We are pleased to have kicked off this new service model in April. As part of the national rollout, we are gathering feedback from our guests and Outbackers as well as using the Ziosk tabletop data to measure specific KPIs, including intent to return, server attentiveness, overall service scores and labor scheduling.

We will provide a more meaningful update on the progress of this turnaround initiative on our next earnings call. Our second strategic platform is to drive brand relevancy at Outback and differentiate the brand. The core of our Aussie brand roots is inviting customers to come as our guests, leave as our mate with a sharpened brand positioning centered on steak leadership, craveability and a casual fun environment.

We continue to plan for an increase in marketing spend year-over-year concentrated in the second half of this year, which comes after our investments in steak quality and the service model enhancements. Marketing will bring them in, but consistent execution brings the guest back. More to come on this platform later this year. Reignite a culture of ownership and fun is our third strategic platform.

Our people are the key to our turnaround, and we remain focused on our managing partners. Their names as value leaders are above the door of each restaurant. We know that to retain and recruit the best partners, they need to be compensated competitively and incentivized to drive operational performance. The goals of our updated MP compensation model are simple.

First, ensure total compensation is competitive with the local market; and second, aligning total compensation to the growth of sales and profit of the restaurant. Through these changes, we are able to create a competitive compensation program that continues to drive accountability and ownership. [indiscernible] rollout of changes across our managing partner group in April will continue the changes through the balance of this year.

We know that when we take care of our Outbackers, they serve our guests with pride and ownership. Lastly, let me update you on our fourth strategic platform, invest in our restaurants. Our goal is to touch nearly all the Outback restaurants by the end of 2028 with targeted initiatives to refresh the interior and exterior, expecting to spend on average between $350,000 and $400,000 per location.

With this asset refresh approach, we are focusing on guest-facing areas, the areas that make a positive impact on restaurant ambiance. Additionally, we have started to expand the char grill capacity in our Outback locations to support the steak lineup and expect to be done by the middle of this year.

Let me now turn it over to Eric to review our financial performance for Q1 and guidance for Q2.

Thank you, Mike, and good morning, everyone. I would like to start by providing a recap of our continuing operations financial performance for the fiscal first quarter of 2026. Q1 total revenues were $1.06 billion compared to $1.05 billion last year, reflecting a 1% increase. Restaurant sales were up, driven by positive comparable restaurant sales.

This was partially offset by a decline in franchise revenue as Q1 last year included 1 additional month of intercompany Brazil royalties. As Mike mentioned, U.S. comparable restaurant sales were up 90 basis points and traffic was down 180 basis points. We remain very focused on narrowing the gap to the industry in the near-term and positioning ourselves to lead the industry long-term.

Average check increased by 270 basis points compared to 2025, with pricing offset by negative mix as we continue to invest in affordable offers for our guests. Off-premises sales were 23% of total U.S. sales in the quarter, consistent with Q1 last year. Outback's off-premises mix were 25% in the quarter and Carrabba's were 33%. Our GAAP diluted earnings per share was $0.64 compared to earnings of $0.50 per share last year.

Our Q1 adjusted diluted earnings was $0.67 per share versus earnings of $0.59 per share last year. The difference between GAAP and adjusted GAAP operating results is approximately $3 million of adjustments in Q1 2026, primarily as a result of transformational and restructuring activities. Q1 adjusted operating margins were 5.9% versus 6.1% last year.

This is down 20 basis points despite an increase in restaurant margin and more favorable depreciation and G&A due to higher impairment and restaurant closure costs year-over-year. Within restaurant margin, COGS and labor were both slightly elevated compared to last year, driven by commodities inflation of 4.6%, labor inflation of 3.1% and an increase in health insurance expense.

This was offset by lower other restaurant operating expenses driven by lower advertising spend and an improvement in productivity initiatives. As it relates to our 33% retained ownership from Brazil, which is classified as an equity method investment, we recognized a loss of approximately $200,000 in Q1. We still expect the full year loss to be approximately $3 million to $4 million. Turning to our capital structure in Q1. Total debt net of cash is $681 million.

As of the end of Q1 2026, our leverage metrics were 3.8x on a lease adjusted net leverage basis and 2.2x on a net-debt-to-adjusted EBITDA basis. Capital expenditures in the quarter was $25 million. We would expect expenditures to be higher in the remaining quarters of 2026 as the timing of refreshes and remodels ramps as we move through the year.

We still expect the full year capital expenditures to be in the range of $185 million to $195 million. As we mentioned in the last call, our capital allocation priorities are to: one, invest in the base business; and two, pay down debt. Turning to our guidance this year. As it relates to the full year fiscal 2026, we reiterate the guidance for the full year communicated on our last earnings call in February.

As it relates to the second quarter of 2026, we expect Q2 U.S. comparable restaurant sales to be between 1% and 2%. We expect Q2 adjusted diluted earnings per share to be between $0.27 and $0.32. We expect the tax benefit to be between $4 million and $5 million in the quarter. We expect our 33% Brazil EMI to be between approximately negative $1.2 million and negative $1.7 million.

Let me now turn it back over to Mike.

Thanks, Eric. While it's still early innings in our turnaround, we are highly confident that our strategy will put Outback Steakhouse in the right course for sustainable long-term profitable growth. The brand is strong.

Our confidence is based on the foundation of a strong management team with extensive years of restaurant operating experience, positive guest feedback as demonstrated by our improvements in leading guest indicators over 3 quarters and the excitement and pride to serve our best stakes from our Outbackers.

Overall, we have a clear strategy in place, which is to: one, deliver a remarkable dining experience, improved steak quality, enhanced service and consistency of execution; two, drive brand relevancy to differentiate Outback; three, reignite a culture of ownership and fun with a commitment to our people; four, invest in our restaurants to refresh approximately 100% of Outbacks by 2028.

Strategy is supported by non-guest-facing productivity savings with a balanced capital allocation. Our leadership team is aligned and committed to the turnaround. We will continue to be transparent in our progress and our actions. Lastly and most importantly, I want to thank our people in the restaurants and restaurant support center for making this strategy a reality, both in terms of their exceptional input and hard work to make it happen at the moment of truth with our guests.

With that, let me open up the call for questions.

[Operator Instructions] And our first question for today will come from Alex Slagle with Jefferies.

Congrats on the momentum here. I guess I wanted to start on Outback and I mean it looked like the check growth was pretty solidly positive. And I know there was some more pricing, but it seems like the mix component of check also seems to stabilize after being more negative in recent quarters.

Just wonder if you could break that down a bit and your outlook for 2Q and beyond, if that sort of check and that mix component can be a little bit less negative than it's been for a while. And I know Carrabba's also had pretty solid check growth, but you could touch on that.

Good morning Alex. Yes, I'm really pleased and excited about the progress we had at Outback. I think it's great what we've said we would do and what we've accomplished executionally. And on your point about pricing, the way I look at it is our check average at Outback is going to grow by about 2.5% to 3%.

It's very balanced. And we talked about this in Q4. If you remember, as we were doing some test and learn, the mix got a little heavier than we liked. We got much more disciplined in terms of the mix. And we've been balanced, and we'll continue to be balanced across the levers of traffic, how we think about inflationary pricing, how we think about mix and reinvesting that pricing, a portion of it back into affordable entry price points.

And that's why all of our casual dining brands have provided those affordability price points. The latter part of your question, if you look at the full year, the way we're looking at the balance is you should assume -- we know we're expecting about 4.5 to 5.5 points of commodity inflation.

We're balancing that with -- that's really predicated on we got high single-digit inflation on beef. By the way, that's in our guidance, and we're locked for the year on our beef. We exited 2025 with about 3.5 points of pricing.

Full year is probably about 4 to 5 points of pricing. But remember, 2 points of that is carryover from 2025. And the other half of that pricing is actions we've taken into 2026. So again, it gets back to what I said, the net on a per check average gets to that 2.5% to 3%, which we think is the right balance in terms of how we're dealing with the guests in the commodity environment.

Okay. Makes sense. And a question on labor as a percentage of sales seem to flatten out year-over-year for the first time in like 12 quarters or so. And maybe you could talk more about the drivers behind that and views on maybe the server ratio changes that start in April. Does that start to impact us a little bit? Maybe the underlying improvements are sustainable, but there's a little impact from those server ratio changes.

Sure. Thanks, Alex. It's Eric. On Q1, we're very pleased with our labor performance, especially given the weather. So we had really, really good middle of the P&L management across all cost levers, including labor.

We have a huge focus on using HotSchedules, which is a bit of an AI tool to help us dynamically make sure that we have the right service for our guests at the peak times. The service model you mentioned actually just launched in April. So we're very pleased about that and very bullish on that impact on the guest experience.

Your next question will come from Jeffrey Bernstein with Barclays.

Great. My question is just on the core Outback comp trends. Encouraging to see the brand scores continue to improve. Just looking at the absolute comp for the first quarter, it looks like it fell short of The Street. I'm wondering where that was maybe versus your internal expectation.

And if you can share maybe some color on the sequential trends through the quarter and I guess, for the month of April. I know you mentioned a 240 basis point headwind from weather in the first quarter. Wondering whether you saw any volatility increasing from gas price spikes. So any color you could provide on the trends through the first quarter and into April relative to expectation? And then I had one follow-up.

Yes. Jeff, on Outback, I'm very pleased with where we're at on Outback, and our results were very much within where we expected to be within the guide. When you look at it, I feel really good because we know our success is not going to be linear. We're totally focused on long-term profit, long-term sustainable traffic and comp sales growth.

So to me, we start with Q4, we launch the steak lineup and the team is doing a great job on that. You mentioned the economic scores, the guest is giving us credit and especially when you look at brand trust and especially when you look at intent to return, those are great leading indicators 3 quarters in a row.

As Eric mentioned, in April, we launched the service model, great initial feedback on that. We did through our tests. Later in the summer, we'll launch 6-star hospitality piece. We've also launched and communicated our MP compensation update, and we're executing our char grill expansion, which we'll have those done by the summer. So I feel really, really good about that and where they landed was consistent with where I expect them to be.

Second part of your question, if -- around the results. We start off 2026 nicely, really strong. And then we saw that tough weather hit at the end of January, early February. Our Valentine's Day, and I mentioned this on the last call, our Valentine's weekend and Valentine's week was very strong. All 4 brands grew traffic, all 4 brands grew comp sales.

And then you look at Easter, we had a good Easter week like week year-over-year, growing comp sales in all the brands. And for the weekend of the day, all 4 brands grew traffic and comp sales. So that tells me our guests like us from an occasion. Then if I go to what did March-April look like, which is your other part of your question, we saw sequential improvement in March versus January and February.

And then we saw April step up as well from there. And our early read on Mother's Day, I mean it's quite early, is also very positive. So all this is embedded in our guide. It's how we're thinking about the comp sales. So I actually like where the guest and the consumer is right now. They're engaging in our brands. They're seeing casual dine and eating out as a very affordable luxury. And we're going to keep dialing in on what you get for what you pay for and keep the guests engaged.

That's very encouraging to hear that there was sequential improvement in March and then further in April. And you actually got me a little nervous, but I missed Mother's Day, but it's still coming up. You're just talking about what you're seeing ahead of time. So that's.

Yes. No, you're good, you're good. I guess you're helping your mom. We're just -- you got till this Sunday, Jeff. But there's a couple of the brands we know ahead of time based on reservations and open tables where they're trending and where they're pacing. And we like what we're seeing.

Got it. And my follow-up is just on the restaurant margin. I don't think it was mentioned in this call, but if you're reiterating everything, I think last quarter, you said you expected a mid-11% range for the full year with the first half higher than the second half.

If that's true, I'm just wondering, maybe if you look by quartile, like as an indication, like where are the best units running? Just wondering how that comes into your thought process as you think about where the margin should be longer term relative to, again, the 11% for the system or just maybe that top quartile is doing something much better? Just trying to get a sense for the long-term opportunity on restaurant margin.

Yes, Jeff, we haven't gotten into breaking down the margins across different quartiles, et cetera. What we're focused on is controlling what we can control being disciplined in the strategic plan, that's going to bring sustainable traffic. That's going to bring sustainable comp sales.

That's going to unlock good restaurant margin expansion with that sustainable growth in sales. And we -- as Eric said, we've got real -- we've got great operators here. We know how to manage the side of the P&L and how to manage costs appropriately without taking it away from the guests or taking away from our people.

Got it. But no published longer-term restaurant margin guidance specifically?

No.

Your next question will come from Brian Harbour with Morgan Stanley.

Could you guys remind us how you -- like roughly the timing of marketing this year and how you plan to handle that and how we should sort of just kind of factor that into our margin expectations?

Yes. Brian, in terms of marketing, I'll start and Eric can add on. I'd start with -- the first thing is our marketing, we've gotten very disciplined in terms of connecting it to our strategic framework, which is all about driving brand relevancy. And for us, that starts with, with Outback being true to the core of the brand, which is about that hospitality, the Australian reverence, no rules just right.

Our brand communication, as I've said before, is going to be very steak-centric. It's going to be about casual. It's going to be about fun. It's going to bring together what we're doing, which is the steak lineup, the service model and that 6-star hospitality model. As far as how we plan the year, we said we're going to go from a legacy of 70% linear TV, 30% digital, we're flipping that. We're now at a 60% digital, 40% linear TVs, we're going to be much more digitally focused, and we'll continue to evaluate that.

We also -- I really am excited about the marketing mix models. Our marketing performance returns have increased significantly. We are just getting a better bang for the buck in terms of the right message and then which channels we're putting in and when we're running our marketing. And then as we said, broadly, we're going to be in that kind of low 2s to mid-2s as a percent of revenue on marketing for the full year.

The increased investment, which we've talked about approximately an extra $10 million of marketing is in the back half of the year. But that will follow when we feel really good about our consistency of execution that we're running the elements of delivering a remarkable dine-in experience the right way, and we'll step that up. And we can measure the returns. If we like it, we'll step it up more. If we don't, we'll dial it down.

Okay. Got it. And with the new service model in April, I mean, I would guess there's some impact on sort of how servers are paid, right, if you're changing their table count. I appreciate that it's sort of the right thing for the customer, but how do you sort of like manage through that and make sure that it's not kind of disruptive for the servers?

Yes. I think it's a really good question. I start with ownership and connecting it to our principles and beliefs. What I heard from our servers and we know from the past is our servers want to own the guest relationship. And that's how the model was set up. Two, remember, we did test this.

And when we tested it, we saw overall comp and tips were about the same and tips might -- were actually slightly up on a per check basis because remember, the tip share changes in this model versus the previous server, server assistant model. So we see our servers making the same, especially on a shift basis, which is really important.

And part of that as well, we really like what we're seeing in terms of intent to return, attentiveness of the server, likelihood to recommend the server. And it's less stress. If you're a server and you used to have during peak, 6 tables as a server during the peak dinner hour and somebody else calls out, that stress level is really high.

And that's not a good guest experience. It's not a good team member experience. And we like where we've landed and the initial feedback is very good. We'll have that fully rolled out by the end of Q2. We started in April.

And the next question will come from Jeff Farmer with Gordon Haskett.

As it relates to that, I think you said roughly 4.5% menu pricing for the year. What was the number in Q1? And how should we be thinking about the cadence of pricing across the balance of the year?

Yes. Pricing was about 5% in Q1. It's going to be a little bit higher in Q2. That's due primarily to the lap of off-premises promotions we did prior year. So full year, we're still basically in the 4.5% to 5% range on pricing.

Okay. And then G&A, I think on the last call, you mentioned $215 million in G&A. Is that number still in play? And then it sounds like it is, but same question. How should we be thinking about the cadence across quarters?

Yes, that's still our number. We had a little bit of favorability in Q1, probably more timing than anything. So we basically see mid-5s getting down to basically low 5s, 5.3% approximately for G&A full year as a percent of sales, but right on that $215 million number.

Yes. Jeff, it's Mike. I'll just add one point Eric touched on, which I think is important. As we communicated in Q4, how we're going to just be more balanced on mix and being disciplined. Eric hit on it. Part of that, especially this is important for Q2, we're not going to chase dilutive traffic. We're going to be really focused on what's sustainable long-term.

And what that means is we decided not -- as we go into Q2, we're not going to lap what we thought was some dilutive type traffic in the third-party channel. We're just going to be very balanced. So you'll see that -- that moderates, by the way, as we finish up the first half of the year. But I think it's important -- we're focused primarily on delivering that remarkable dine-in experience.

The next question will come from Sara Senatore with Bank of America.

I have, I guess, quick questions about some of the capacity investments you're making. But maybe first, if you could talk about the Steakhouse category, it's been very strong for the last few quarters.

And I was just curious, as you look at Outbacks improving momentum, is that kind of tracking with the Steak category or is it -- are you sort of exceeding that? Just trying to understand kind of how much might be category strength versus -- clearly, you have company initiatives that are working, but just disaggregating it.

Yes, morning Sara. I think it's both. One, we're getting momentum and I'm really pleased with the momentum we're getting. And I already covered it in the previous questions. What we're seeing on the leading indicators, really impressive. We're getting good momentum, a consistency of execution.

So that is us controlling what we can control. The category, I believe, is very resilient. We've talked about this. The category is resilient. The pure proteins, in our case, we have great steak proteins. We have great non-steak proteins. But the bottom line is we're seeing Americans continuing to engage in beef. We're seeing that with our new steak lineup.

They were thrilled with the cuts we offer. And I've said this before as well, we deliver a great relative value. You come in and you get a meal with us, that steak is going to be right. We're going to make sure it's right. And you're going to get your sides and you're going to get your Coke or your Bloomin' Blonde and you're going to get your dessert.

If you buy that steak and you cook it at home and screw it up, it's on the guest. We make it right. And we also give you a great experience. And I think that's why the category remains robust, and I see it looking that way in the future as well based on everything we're hearing and seeing from our guests.

Okay. Right. Understood. I just wasn't sure if sequentially, there was any kind of change in category dynamics, but it sounds like 4Q to 1Q, no real change in the category. So obviously, more Outback specific. Is that fair?

Yes, Sara, as I said, we saw a step-up across all brands, including Outback March versus that Jan, Feb and then again in April and our early read going into Mother's Day. If you look -- if you're asking about it on a short-term and over the long haul, we're seeing a steady resilience in the category and strength in the category.

Perfect. And then just on the investments like the reimagery remodel, if you can just remind me, I mean, are you looking for a specific same-store sales lift or is this more kind of table stakes you need to have the assets look as good or comparable to the service model and the quality of the food. So trying to think through the kind of returns on the capital.

Yes. So one, as we said, you start with -- we've got about half of the Outbacks have already been touched in the last few years, whether they're new or they were remodeled. So you've got about approximately 300 left that we're going to execute this asset refresh, which is light touch -- an average of about $350,000 to $400,000. We'll get those done through 2028.

And what we're focused on is that which drives a good restaurant ambience and adds the cumulative effect to the guests. So inside, that's going to be tables, it's chairs, it's [ booths ], some ceilings, maybe some light bar touches on the outside, you're hitting the landscape and you got some paint and lighting.

And what we've seen in tests and other brands before is we typically see about 100 basis point to 200 basis point tailwind in traffic right after those refreshes as we do them. So we'll continue to [ bring ] them out in a smart way. We want to do it when the restaurants aren't jammed. So you'll see that more in some of the lighter quarters, but it's table stakes in terms of how we think about capital.

Your next question will come from Christine Cho with Goldman Sachs.

Congrats on the great momentum. A follow-up to Jeff's question earlier. Could you please help further unpack the margin drivers for the quarter? So I think you noted the higher restaurant level margin driven by check and cost savings and lower ad costs as key factors. Could you quantify these impacts and discuss whether you expect these trends to persist for the second quarter and the remainder of the year?

Yes. Christine, it's Eric. So the main driver of our margins and profit performance in Q1 really was we delivered top line at the top of our range, so about 1%. We also had better mix.

And those 2 combined with sort of very good cost controls in the middle of the P&L, again, despite the weather, that all added up to essentially our ability to kind of hold slightly expand restaurant margins. So we see that -- so everything that's baked into our guidance is the flow-through resulting from the top line guidance. We remain committed to, as we mentioned, labor management as well.

Great. And then the last quarter, I think you mentioned there were some check management in some of the older consumer cohorts. Have you seen any changes there? Have you seen any shift in trends in other demographics that you would call out?

Yes. Chris, it's Mike. Yes, that's the right recall. We're -- as I've been saying, we're cautiously optimistic on the consumer. There's been some choppiness, but we see an engaged guest. We have, to your point, when we look at number of guests, the guests in Outback that tend to run above age 55, 60 with household incomes under that $75,000 range, they are managing their checks.

But what's quite interesting, they're adding frequency of visitation. So they're actually remaining very engaged. And this is why we've kept the affordability offers. And that group, especially has resonated within Aussie Three Course within Outback. So when you look at a loyalty hook or increase in frequency, Aussie Three Course has played very well for that cohort that is balancing that. As I also said, what we see is the opposite, too, Christine, which we like.

If I stay on Aussie Three Course, we see younger cohorts with bigger household incomes, they're coming in and they're -- whether they're new or frequent, they're trading up into the higher tiers. They're going into that $17.99. They're going into the $20.99. They're enjoying that experience and they're moving up the incentive curve.

The next question will come from Christabel Rocha with JPMorgan.

This is [ Christopher on for John ]. The first question is on expanding char grill capacity that you mentioned by the summer. Can you remind us, is this moving away from your clamshells?

No, no. It's about creating the optimal cooking platform. We know and we've tested what is the best cooking platform, whether it's a steak or non-steak protein. So the whole point of char grill and bringing back broilers as well was we want to have enough capacity on the flame for our new steak lineup.

We also -- we love our clamshells for a number of steak and non-steak proteins. And the other thing I pointed out on the previous earnings call, this was also feedback from our Outbackers. As you look at what we're doing with the char grill capacity, which again, we'll have done by the end of the summer, it actually created better visibility on the line, the way it's set up.

So the flow and the teamwork, it's much easier to see on the peripheral vision. It gives us more refrigeration, capacity storage space in the base of the line. So this actually helps us from pace and execution simplicity in the back of the house.

And then on the remodels, you mentioned an average spend of like $350,000 to $400,000. It kind of feel slow, especially like you might be overdue for a remodel? Is this just Phase 1 of a multiphase effort?

And is there any like downtime that you're seeing that you need? And how are you communicating these changes to the customer without significant exterior work?

Yes, I think your third question first. So no downtime. We're able to do these off hours. The scope of the refreshes typically do not require permits. So it's very easy for us to do it sort of non-guest-facing, non-guest impacting.

Your first question was -- I think to answer, we basically see this as getting caught up to where we will now have a normal refresh cycle for -- across all of our concepts, including Outback. So by getting to what Mike mentioned, getting 100% of our Outbacks touched by 2028, that allows us to then continue to invest on a normal cycle past that.

Yes. Remember, Chris, we -- one of the decisions, if you go back, as we've brought down the future capital on new restaurants, we're reallocating to the refresh because before we were putting that same level or more level of capital into those new ones. And our point is we need to invest -- as Eric said, we want to invest in the base of the business first and then pay down debt in terms of capital allocation.

The next question will come from Brian Vaccaro with Raymond James.

Just 2 quick clarifications for me. Just back to the Outback comps, obviously underperformed a little bit, as you noted, the Black Box casual dining category in Q1. But you noted the improvement in March-April.

So I was curious if Outback is outperforming segment trends in more recent months? And then second, on the commodity inflation, it sounds like that might have come down a little bit, maybe 50 bps on each range. Just curious what might be moving a little bit more favorable in the basket.

On Outback, when you look at the last year, Brian, I would -- we've improved our performance versus Black Box. So if you look at it, we've narrowed that gap both in terms of comp sales and traffic and the same for Total Bloomin' Brands.

We obviously want to be at a point where we're leading Black Box, as I said in my prepared remarks, but we made progress and momentum versus that standard or that comparison. And we also, in the short-term, like I said, Outback and Total Bloomin', we saw an improvement in comp sales when you look at March versus Jan, Feb and April versus March and out of the gates here early as we go into Mother's Day.

In terms of commodities, and Eric can add on, we were pretty clear with our commodities. We assumed them to be roughly 4.5% to 5.5% with that high single-digit inflation on beef. We're about 85% locked in terms of -- if you look at our commodity basket, we're locked in on 85%. Our beef is locked in. And Eric can give you more on the details of the pace and how that looks.

Yes. Q1 came in a little bit favorable due to dairy and poultry primarily. We had also a pretty good inventory management in terms of commodities. But for the full year, we're still in the 4.5% to 5.5% range on total commodities inflation. So no change to the full year.

Okay. I might have been mistaken. I thought it was 5% to 6% previously, but it's a small change either way. Just curious if something moved there, but that's helpful. Okay. Perfect. And I guess the last one for me. As it relates to your second quarter EPS guidance, and this just ran some quick back of the envelope math, but it seems to embed maybe some year-on-year store margin contraction.

I just wanted to ask if that's right? And if it's right, can you help square what might be driving a little bit of year-on-year contraction in the second quarter after Q1 was flat on a lower comp, assuming you hit the 1% to 2% for Q2. Just anything on the Q2 margin dynamics?

Yes. No, I would assume more flat margins flat margins -- flat at the midpoint of the guidance. And it really just embeds some cautious optimism that we see with consumers and guests. We feel great about the momentum.

And that will conclude our question-and-answer session. I would like to pass the call back over to Mr. Mike Spanos for any closing remarks.

Thank you once again for your investment and support of Bloomin' Brands. I want to close by thanking our people for their hard work, their passion and commitment to each other and our guests. Thank you.

That will conclude our conference call for today. Thank you for attending today's presentation. You may now disconnect.

Greetings, and welcome to the Bloomin' Brands, Inc. fourth quarter 2025 earnings conference call. [Operator Instructions] Please note, this event is being recorded. It is now my pleasure to introduce your host, Tara Kurian, Senior Vice President, Investor Relations, FP&A and International. Thank you. Ms. Kurian, you may begin.

Thank you, and good morning, everyone. With me on today's call are Mike Spanos, our Chief Executive Officer; and Eric Christel, Executive Vice President and Chief Financial Officer. By now, you should have access to our fiscal fourth quarter 2025 earnings release and our investor presentation slides, both of which can be found on our website at www.bloominbrands.com in the Investors section.

Throughout this conference call, we will be presenting results on an adjusted basis. An explanation of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our earnings release and investor presentation on our website as previously described.

Before we begin formal remarks, I'd like to remind everyone that part of our discussion today will include forward-looking statements, including a discussion of recent trends. These statements are subject to numerous risks and uncertainties that could cause actual results to differ in a material way from our forward-looking statements. Some of these risks are mentioned in our earnings release. Others are discussed in our SEC filings, which are available at www.sec.gov.

During today's call, we'll provide a brief recap of our financial performance for the fiscal fourth quarter 2025, current thoughts on fiscal 2026 guidance and an update on our turnaround strategy. Once we've completed these remarks, we'll open up the call for questions. With that, I would now like to turn the call over to Mike Spanos.

Thanks, Tara, and good morning, everyone. On today's call, I will discuss our fourth quarter results and provide an update on our turnaround strategy focused on Outback. Eric will then review the financials and 2026 guidance. Starting with our fourth quarter results, 2025 was centered on aligning the organization around operational priorities to build the foundation for our turnaround strategy with a focus on consistency of execution in food, service, experience and value to deliver a great guest experience.

We are seeing continued improvements in guest metric scores and traffic gains, reinforcing that our focus is driving momentum. We were pleased with our fourth quarter results and the steady gains we are seeing on traffic growth. Our Q4 comp sales were flat with U.S. traffic up 50 basis points. Although we trailed the industry as defined by Black Box by 40 basis points on comp sales, we narrowed the gap versus the industry by 280 basis points quarter-over-quarter. On traffic, we outperformed Black Box by 190 basis points in the quarter for the first quarter in 2025 that we beat the industry.

Our beat reflected a quarter-over-quarter improvement of 400 basis points from the third quarter. All of our casual dining brands executed affordable entry price points to meet the guests where they were economically. Between consistency of execution and providing affordable price points, we will continue to improve the what you get for what you pay for value equation. In Q4, Outback comp sales were down 60 basis points with traffic up 90 basis points. This was the first quarter of positive traffic growth for Outback since quarter 4 of 2021. Outback continues to drive traffic from the Aussie 3-Course offering, both from increased frequency of use from our loyal Dine Rewards members and from recruitment of new users into the brand.

With three value tiers starting with an entry price point of $14.99, we continue to see about 60% of the guests trading up to the higher tiers of $17.99 and $20.99. Carrabba's comp sales were up 160 basis points with traffic of negative 90 basis points. In-restaurant experiential wine dinners, lunch, catering and off-premises all continue to provide positive results and guest satisfaction.

Bonefish's comp sales were down 10 basis points with traffic of positive 230 basis points. Bonefish has steadily improved traffic growth in 2025, and this was the first quarter of positive traffic comp growth for the brand since Q1 of 2022. Improvements in traffic are the result of the team remaining focused on compelling day-of-the-week offers like the Martini Mondays and Bang Wednesdays and value offers such as the Ocean Mixed Grill and Prix Fixe Lunch.

Fleming's comp sales were up 10 basis points with traffic down 240 basis points. Fleming's has maintained its sales momentum driven by experiential dinners, elevated service and events and catering. I will now review the key elements of our turnaround strategy that we discussed during our last earnings call, primarily focused on Outback. We feel confident in our results and the strong foundation we established to launch our turnaround strategy in November of 2025. 2026 will be an investment year to generate sustained traffic and profit growth.

Our strategy is based on 4 strategic platforms, which are to: one, deliver a remarkable dine-in experience; two, drive brand relevancy; three, reignite a culture of ownership and fun; four, invest in our restaurants. These platforms will be supported by non-guest-facing productivity savings, balanced capital allocation and a strong management team. We have a phased approach with the turnaround initiatives and investments, starting with delivering a remarkable dine-in experience. We have also kicked off work on the last strategic platform to invest in our restaurants as well as on generating non-guest-facing productivity savings.

As we move throughout the year, we will communicate transparently our progress across each of the platforms. I will now provide an update on our platform, starting with deliver a remarkable dine-in experience. We know delivering a remarkable dine-in experience at Outback starts with a commitment to steak excellence. In November last year, we launched our new steak lineup, and the results are encouraging. We have strong and improving guest satisfaction and reorder intent scores, driven by our standout sirloin, new bone-in ribeye and new half-pound burger. The sirloin, bone-in ribeye and burger all demonstrated immediate improvements in both guest satisfaction and reorder intent scores, while all new steak items are in the top box of menu satisfaction scores.

Our sirloins are tracking to where our fillets are on reorder intent, and we consider our fillets to be best-in-class in casual dining. Additionally, we've introduced a 15-ounce Delmonico ribeye, a cut that we are very proud of and is demonstrating very encouraging satisfaction scores. Outback Steakhouse is the only casual diner with this steak offering. Steak excellence also means a commitment to coaching and training to ensure our restaurant field leaders are subject matter experts on steaks. We completed an in-depth steak excellence certification training for our multiunit leaders at Outback.

Each leader is required to pass steak certification tests before they coach, train and certify their restaurant leadership. Combined with guest feedback by restaurant, gathered by using our Ziosk tabletops, we are measuring and ranking each location enabling our multiunit leaders and managing partners to quickly coach and recognize executional opportunities. Within the Outback principles and beliefs, we commit that close is never good enough for Outbackers. We are getting back to our roots on steak leadership and will ensure steak certification training is part of our culture.

Our training and certification reinforces another element of delivering a remarkable dining experience, which is consistency of execution. Our trained and certified leaders are in the restaurants during peak hours to focus on operational excellence and accountability to standards. Coaching and KPIs center on steak accuracy, quality, guest intent to return and satisfaction. We believe our focus on consistency of execution has translated into improved brand scores. In Q4, we saw a year-over-year increase in Outback's brand trust by 7 points, guest scores across food increased 5 points, service by 5 points, value by 3 points and atmosphere by 3 points.

The strong guests and team member response we are seeing in steak leadership and brand scores gives us the conviction to launch our next turnaround element of a remarkable dining experience, which is craveable service. We remain on schedule to introduce a revised service model in Q2 of this year. Last year, we identified that our 1 server to 6 table station ratio during peak hours didn't provide the right level of guest interaction and Outbacker satisfaction. We believe a reduced ratio of 4 tables per server during peak hours, which is more in line with casual dining best practices and gets us back to our Outback roots will allow our Outbackers to provide a more consistent and enhanced experience for our guests.

As we improve our new steak lineup and service model, we also need to drive brand relevancy at Outback and differentiate the brand. We will embrace the core of our Aussie brand roots by inviting customers to come as our guest, leave as our mate. Sharpened brand positioning starts with our leadership as a steakhouse. Steak-centric brand communication will serve as the foundational element of our turnaround, helping to recruit new guests, reengage lapsed users and drive increased frequency amongst our loyals.

We are shifting our marketing approach to more digital than linear TV. In 2026, our media mix will be approximately 60% digital and 40% linear TV compared to approximately 33% digital and 67% linear TV in 2025. We are encouraged with our improved media ROIs. With discipline in communicating the right message in the right channels and at the right times, we are driving efficiency and effectiveness. We plan to increase marketing spend year-over-year concentrated in the second half of the year as we are confident in the consistency of execution in the steak lineup and service model enhancements.

Eric will provide more details on the phasing of investments. Reignite a culture of ownership and fun is our third platform. Our people are the key to our turnaround, and we remain focused on our managing partners. They are our owners and leaders. To retain and recruit the best partners, they need to be compensated competitively and incentivized to drive the operational priorities. We are committed to our people, and we know that when we take care of them, our Outbackers serve each other and the guests with pride and ownership.

An update on the fourth platform, which is to invest in our restaurants. As I've said on prior calls, we need to invest back in our restaurants. Our goal is to touch nearly all of the Outback restaurants by the end of 2028 with targeted initiatives to refresh the interior and exterior, spending between $350,000 and $400,000 per location. With this asset refresh approach, we will focus on guest-facing areas, areas that make a positive impact on restaurant ambiance. Additionally, we will begin expanding char grill capacity in our Outback locations to support the new steak lineup. We expect to be done by the end of this year.

Lastly, we will maintain a test-and-learn culture at Outback. We have integrated the 42 test cell locations with steak quality, menu innovation, enhanced service models and value components. We will continue to use these restaurants to test innovation, value offerings, menu design and new ideas. We are confident that we have the right plan in place and are pleased with our progress to date. Let me turn it over to Eric to review our financial performance for the quarter and how we are thinking about guidance for 2026.

Thank you, Mike. Good morning, everyone. I would like to start by providing a recap of our continuing operations financial performance for the fiscal fourth quarter of 2025. Q4 total revenues were $975 million, compared to $972 million last year. Restaurant sales were up, driven by the net impact of restaurant openings and closures. This was partially offset by a decline in franchise revenue, as the royalty rate on Brazil this year is less than the intercompany royalty received in 2024.

As Mike mentioned, U.S. comparable restaurant sales were flat and traffic was up 50 basis points. While comparable sales were below the casual dining industry, our traffic beat the industry by 190 basis points, the first quarter this happened in 2025.

Average check declined by 50 basis points compared to 2024, as we continue to invest in affordable offers for our guests. Off-premises sales were 24% of total U.S. sales in the quarter, consistent with Q4 last year.

Outback's off-premises mix of sales were 26% in the quarter, and Carrabba's were 35%. Our GAAP diluted loss per share was $0.14, compared to earnings of $0.12 per share last year. Our Q4 adjusted diluted earnings was $0.26 per share versus earnings of $0.22 per share last year. $0.26 was within our guidance range of $0.23 to $0.28. The difference between GAAP and adjusted GAAP operating results is approximately $46 million of adjustments in Q4 2025, primarily as a result of Bonefish goodwill impairment, restaurant closures and impairments, and transformational and restructuring activities.

Q4 adjusted operating margins were 3.4% versus 3.5% last year. The 10 basis point difference between this year and last year was driven by an 80 basis point decline in restaurant margin that was offset by lower G&A expenses, as well as lower impairment and closure costs. Within restaurant margin, COGS and labor were both elevated compared to last year, driven by commodities inflation of 4.7%, labor inflation of 3.2%, unfavorable product mix as we offered more value to our guests, and an increase in health insurance claim expense. COGS and labor were offset by lower other restaurant operating expenses, driven by lower advertising spend and lower general liability insurance expense.

As it relates to our 33% retained ownership in Brazil, which is classified using equity method investment accounting, we recognized a loss of $1.3 million in Q4. The full year loss was $4.7 million. Turning to our capital structure in Q4, total debt net of cash is $728 million, which reflects approximately $241 million of debt repaid in 2025. This was in large part driven by the proceeds received from the Brazil refranchising transaction.

We received the second installment in November and applied the proceeds to our revolver. This second installment was approximately $124 million, which included approximately $13 million of interest income on the receivable, net of withholding taxes.

As of the end of 2025, our leverage metrics were 3.9x on a lease-adjusted net leverage basis and 2.4x on a net debt to adjusted EBITDA basis. We have reduced our total debt from over $1 billion at the end of 2024 to $787 million at the end of 2025 through the Brazil proceeds and our disciplined prioritization on capital allocation. Before I get into the specifics of guidance, I want to reiterate the magnitude and phasing of our planned turnaround investments in 2026.

We plan to invest approximately $50 million this year, which will be offset by approximately $30 million of non-guest facing productivity, for a net investment of approximately $20 million.

The $50 million will support the investments in center-of-the-plate food quality, including Steak Excellence improvements and menu redesign of approximately $25 million, investments in service and the guest experience of approximately $7 million, and investments in our managing partners of approximately $8 million. We also intend to increase our marketing by approximately $10 million as part of the overall $50 million investment.

In terms of phasing of the investments, the majority of the investments will be made in Q2 through Q4. We expect to see a step-up in marketing spend in the back half of this year. Productivity initiatives are in areas that are non-guest facing and will total approximately $30 million in 2026, spread relatively evenly throughout the year.

Across both the brands and at the corporate level, we are renegotiating costs with suppliers, optimizing product selections, and eliminating unnecessary vendor spending. We are also focused on tighter processes in the restaurants, leveraging technology for increased data visibility and outlier management. We are optimizing labor scheduling and focusing on areas where we can simplify operations in the back of the house.

We remain committed to our three-year target of $80 million in productivity savings from 2026 to 2028. Turning to our guidance this year, as it relates to fiscal 2026, we expect U.S. comparable restaurant sales to be between 0.5% and 2.5%. We expect total commodity inflation to be between 4.5% and 5.5%, driven in large part by beef inflation of high single digits.

Our supply chain team has worked diligently to keep inflation in both beef and other categories in check. We expect labor inflation to be similar to last year in the 3% to 3.5% range. We expect our adjusted diluted earnings per share range to be $0.75 to $0.90. Similar to last year, we are in a tax benefit situation driven by FICA tip credits relative to earnings. We expect an adjusted tax benefit in the range of approximately $15 million to $18 million in 2026, which reflects a negative annual effective tax rate.

We expect our 33% Brazil EMI ownership to reflect approximately negative $3 million to negative $4 million of impact this year, which is included in the adjusted diluted earnings per share guidance.

We expect capital expenditures to be between $185 million and $195 million for the full year. We are shifting capital dollars away from new units to refresh-type remodels.

Across remodels and normal course maintenance, this will be roughly 60% of our capital spend. We remain committed to refreshing nearly all of our Outback fleet by 2028 and expect to make good progress towards this in 2026. We expect to open 6 to 8 new units, and this total will reflect approximately 20% of spend, and the remainder will be for IT and infrastructure investments. As we mentioned in the last call, our capital allocation priorities are to, one, invest in the base business and two, pay down debt.

As it relates to the first quarter of 2026, thus far into the quarter, we have been negatively affected by the winter weather by approximately 2.2% on U.S. comparable restaurant sales and approximately $0.08 of adjusted diluted earnings per share. This weather is included in our guidance. Additionally, we expect Q1 U.S. comparable restaurant sales to be between flat and up 1%. We expect Q1 adjusted diluted earnings per share to be between $0.57 and $0.62. We expect the tax benefit to be the highest in the first quarter. Let me now turn it back over to Mike.

Thanks, Eric. While it is still early days in our turnaround, we are highly confident that our strategy will put Outback Steakhouse on the right course for sustainable, long-term profitable growth. We have a strong management team in place and a foundation rooted in operational excellence and consistent execution. We are pleased with our improvements in guest leading indicators, including 2 quarters of growth in brand scores and guest feedback. We are highly encouraged by our initial progress on the new steak lineup with positive feedback from our guests and our Outbackers.

We have a solid strategy in place, which is to: one, deliver a remarkable dine-in experience through improved steak quality, enhanced service and consistency of execution; two, drive brand relevancy to differentiate Outback; three, reignite a culture of ownership and fun with a commitment to our people; four, invest in our restaurants to refresh approximately 100% of Outbacks by 2028. The strategy is supported by non-guest-facing productivity savings with a balanced capital allocation.

Our leadership team is aligned and committed to the turnaround. We will continue to be transparent in our progress and our actions. Lastly and most importantly, I want to thank our people in the restaurants and restaurant support center. Their hard work and resilience during the recent snowstorms has been superb, operating safely and reopening quickly to serve our local communities. Thank you for your commitment. With that, let me open up the call for questions.

[Operator Instructions]

Today's first question comes from Jeffrey Bernstein at Barclays.

Great. My first question is just on the comp trends you're seeing. If you could maybe share the sequential trend you saw through the fourth quarter. It looks like comps came in a little bit light of expectation and maybe any color on the first quarter, quarter-to-date. I'm just wondering whether the comp at Outback and the broader system, where it sits relative to the flat to 1% guidance. I'm trying to figure out what you're assuming for the remainder of the quarter. Obviously, it's been choppy thus far, but any sequential trends that you could share would be helpful. And then I had one follow-up.

I'd start with -- in terms of Q4, which is where I think you were going, we did see a change in trend. The first half of the quarter, we saw some strong trends. But in the back half, consistent with the industry, predominantly the last 6 weeks of the quarter, we did see a noticeable step down in traffic. To Q1, we saw a very strong start to the initial part of 2026 until we started dealing with some pretty extreme weather. I will point out Valentine's weekend, Valentine's week was very strong in terms of sales and profits. And I'll leave it at that in terms of Q1.

Okay. But your confidence level in that flat to plus 1, I know you mentioned 220 basis point hit to weather. Are you assuming any change in underlying consumer? Or is that purely just extrapolating what you've seen thus far and therefore, the flat to plus 1 reasonable?

Yes, the latter. It's -- we don't see a big change in the trend of the underlying consumer. That's correct.

Got it. My follow-up was just more broadly speaking, it seems like you're encouraged. I mean it's only been a few months since you announced the turnaround plan, but positive traffic at Outback, definitely encouraging. I'm just wondering if you kind of thought about what inning are you in, in this turnaround? I assume it's quite early, but maybe what aspect do you believe is going to prove the most challenging to address. Clearly, you're having success in some components, but just wondering your feedback from consumers and operators, what do you think is going to be the most difficult part to turn?

Yes, Jeff, I'd say the second part of your question, the biggest hurdle and challenge and where we're most focused is on consistency of execution. What we're really oriented on is the long term and getting the leading indicators, what matters to the guests, what matters to our Outbackers. And I'd start there. I like our numbers there. As I said in the prepared remarks, we like the executional focus. It's yielding results.

When you look at Outback and you look at Technomic, we saw brand trust grow by 7 points. We saw food grow by 4 points, service by 4 points, value by 3 points, atmosphere by 3 points. And that was consistent with growth in Q3 as well. It is early innings. We got other things to do. What I also like is we've been really focused on the phasing. So if you think about the other area I really like that is consistent with what we articulated in the last calls, I really like our steak execution lineup launch. I thought it was really good. The Outbackers are excited about it. We like what we did in November of '25. The sirloin, the fillets, the bone-in ribeye, burger are really showing great scores.

And I really give a big hats off to Pat Hafner. The steak excellence certification of our JVPs multiunit operators was tremendous, and that's going to flow into the managing partners in terms of coaching and recognition. The last thing I would say on that, Jeff, which I like a lot is, remember, we got the team in place broadly in Q4. And the fact that we got brand presidents that are just seasoned operators that average about 34 years of experience per operator running restaurants is a big deal when you think about the long-term potential of the business.

And our next question today comes from Brian Harbour at Morgan Stanley.

I wonder if you could also just talk about sort of value in the fourth quarter, like the Aussie 3-Course and such and how that sort of contributed to the results?

So Aussie 3-course, as I said, we continue -- I'll start there. We continue to feel real good about that. And as I said in the prepared remarks, we like the fact that about 60% of the guests are trading up to the $17.99 and $20.99. And we're getting a good uptick in dessert, up spends from the Cheesecake to the other desserts. That's been running over 10% and it continues to grow. And good balance of more frequency out of loyals and some good recruitment out of new guests as well. We'll continue to evaluate that. So that's point one.

Second, maybe to the broader issue, we also -- we're test and learn culture, and we have some really strong traffic, and it was definitely punched up during the holiday periods. And so we know we got to turn the dial a bit on this. Our plan is to be right around that 2 points of mix into the pricing and getting to PPA, and we'll stay balanced. And I think that's the key is we're going to be very balanced in terms of the consumer value proposition, what we're doing with inflation to deal with the commodities, the spend back on mix to meet the guests where they are and how that gets into the PPA traffic equation.

Okay. And can you remind us sort of the timing you expect for some of the remodels you're doing and how some of the most recent ones have performed?

Hey Brian, it's Eric. So consistent with what we said in the fall, we expect to touch nearly all of our Outbacks over the next 3 years. We expect 2026 to make really good progress towards that goal. We're a little bit more back half weighted on the reset -- I'm sorry, the refresh timing. That's just more timing. And we referenced this last fall, but we've seen really, really good traffic pickup in Carrabba's.

When they did a light refresh program, they saw 1 to 2 points of traffic growth. And so we're not necessarily betting on that, but we're encouraged by the results we saw in Carrabba's, and we expect something similar for Outback as well. Yes. And the level of investment is essentially about $350,000 to $400,000 per restaurant, and that's fully contemplated in our capital plan.

And our next question today comes from Christine Cho at Goldman Sachs.

So could you help us unpack some of the key variables in your 0.5% to 2.5% comp guidance for the year? How should we think about composition of price, mix traffic, particularly for Outback? And what are some of the factors that would get you closer to the high end of that range?

Sure. Christine, it's Eric. Thanks for the question. Yes, so to unpack the comp sales guidance, essentially, you start with pricing. We see pricing in the mid-4s, so call it, 4.5% range of pricing. We -- just what Mike mentioned, we have an implied mix investment of about 2 points to continue to deliver value to our guests. That puts the average check PPA in at about 2.5% to 3%. And so the pricing at mid-4s is essentially we see commodities 4.5% to 5.5%, and we see total inflation 4% to 5% for full year.

Great. Another one on the investment and savings plans. I think you mentioned a couple of buckets where you can drive savings. Are there specific initiatives that are critical to achieving that $30 million in non-guest-facing productivity gains? And how confident are you in delivering the full $30 million in '26 without impacting kind of the restaurant level execution to support?

Yes, it's a good question. Yes, we're very confident. First reference point, I would say is we delivered $25 million of productivity in 2025. So the $30 million, while not easy, it gives us confidence we can do that. Second, I would say the composition, consistent with what we said in the fall, it's non-guest-facing. It hits the buckets of indirect labor and G&A. And a couple of examples, we're basically finding a lot of opportunity in essentially negotiating with our vendors proactively to try to basically go after spend and also reduce spend. We're finding a lot of opportunity as we look at each brand and also look at the concentrated spend across the brands. Yes, a lot of it boils down to contract negotiations, Christine, and we're just finding a lot of opportunity there.

And our next question today comes from Jeff Farmer at Gordon Haskett.

A lot of moving pieces, obviously, but how should we be thinking about the restaurant level margin for the full year?

Yes. Jeff, it's Eric again. Essentially, restaurant margins, you should think about that in the sort of mid-11s range for the year. And it's basically impacted mainly by the planned investments that we have in plan.

Okay. And then tougher question to respond to. But in terms of the tax benefit range that's captured in your 2026 EPS guidance, any sort of help you can provide there?

Yes. So $15 million to $18 million in full year tax benefit, and we feel like that's the highest we're going to see is actually in Q1. It's all related to the FICA tip credits that we have. And so as we -- as the quarters have more or less earnings, we're able to use those FICA tip credits as much as possible. So it's basically $15 million to $18 million full year benefit.

And our next question today comes from Brian Mullan at Piper Sandler.

Just coming back to Outback. It sounds like steak Excellence seeing a positive response. Presumably service and execution is going to get better with the labor changes soon. With that in mind, can you just talk about where you think the awareness stands on some of the changes you're making? And then what the marketing message will be as you ramp up the spending in the back half of the year and beyond?

Yes. Good question. I'd start with the brand overall has incredible awareness. If I just look at the brand, that is not an issue as we've done studies. Now as far as the awareness of what we're doing from driving a remarkable dine-in experience, we're going to focus the marketing in the back half of the year. But first, as I said, we're going to be very sequential because I want to be sequential in terms of the Outbackers dealing with the change management and very chunk-sized bites. The first bite was launching the steak lineup in November of 2025. We're going to still stay very focused on that. Step 2 becomes rolling out the service model.

And then we're also going to be rolling out some MP compensation elements, which we'll describe live directly to our MPs. When we're feeling good about the consistency of execution, the ability to deal with that change management, we'll then start being clear with our marketing message because we know marketing brings folks in, but I want repeat and repeat is driven by executing every day in a great way. So they feel great about the quality, the service and the overall restaurant experience. That cumulative effect brings them back.

Okay. And then just a question on the guidance, a clarification on the prior answer around productivity. Can you speak to what is embedded in the guidance from a G&A dollar perspective for 2026?

Yes. G&A of $215 million. If you look at percent of sales, it's about 5.3% of sales.

And our next question today comes from John Ivankoe with JPMorgan.

First, a question on remodels. $350,000 to $400,000 for freestanding casual dining box with some age on it is not a high number. So the question I would ask is, are you limited by balance sheet and just overall cash allowances, the amount that you can spend? In other words, how did you land on that $350,000 to $400,000? And I ask that in the context of, is this just one part of what might be a multiphase remodel as cash flow and overall brand economics permit?

We feel real good about the asset refresh plan. We're being very prudent. We're being very focused and disciplined. And remember, we did a very detailed outside maintenance survey by restaurant in 2025. And we've been really dealing with solving those specific issues by rooftop. And so we do feel good about the $350,000 to $400,000. As we've said before, remember, about half of the locations have been already hit over the last few years, whether they're new or the remodel. So we're really dealing with about half of the fleet over the next 3 years.

So what we learned from Carrabba's, we've seen some good results when you do a good interior and exterior light touch. You hit the tables, you hit the chairs, you hit the floors, you hit the ceilings. On the outside, we're going to be sharp on the paint, the landscape and the lighting. We feel good about that, and we're focused on what's meaningful to the guest.

And just so I understand, the $350,000 to $400,000, that's not on average for all of your units, that's just for the half that need to be done. Is that correct?

Yes, yes, exactly right, John. That's an average. You're going to have some that will spend more, and there may be some we don't spend given what we've already done with them. So that is an average. We got that average down. We communicated previously about $400,000. We're seeing the average number sort of that range between the $350,000 and $400,000 number.

So. okay. Maybe I misunderstood this. So maybe half of your units are spending $700,000 to $800,000 and then another half are spending close to zero? Or am I oversimplifying that?

Yes, that would be an oversimplification, John. We would have some outliers that you could spend up where we're doing a true remodel. But the broad amount of the Outbacks, okay, the broad amount, the median would be right in that $350,000 to $400,000 range.

Okay. I think I understand that. Okay. And the next question, you mentioned in your prepared remarks a couple of things, but a lot of things actually. Tighter controls, I think, specifically maybe around just cost and tolerance at the store level, but you also have, I think, an admirable intention to increase employee satisfaction and the amount of fun working environment that they have. Now I mean, a lot of us know from a lot of different ways, it's like kind of the tighter the controls, maybe the less fun the employee actually has. So hopefully, that question is kind of coming across kind of correctly. So in a very human resource kind of dynamic environment, how do we balance improved employee satisfaction with what sounds to be even tighter controls around tolerances at the store level?

Yes, John, I like the question. I would describe it as connected autonomy. We're an entrepreneurial culture, and that's not changing. We -- if you look at our principles and beliefs, we define success at the restaurant by the sales and profit growth that is enabled by that managing partner that serves that guest. That's not going away. So part of that is -- and I'll get to the MP comp. We have got to be competitive. Part of that reducing turnover, having a lot of fun is people walking in the door at the partner level feeling they've got a competitive wage, competitive total compensation so we can retain and recruit the best talent. That's good for the team. It's good for turnover. It's good for the brand. It's good for the guest experience.

Now there's also things, John, Second, we're finding that we can lift and shift great ideas from the restaurants, use technology where we're not burdening our partners with a lot of work where we can get productivity. That can be technology and labor, that can be in our indirect spends, the way we deal with a lot of the suppliers, the way we buy toys that go into drinks, you name it. So what we -- that's what we're balancing. And so we know we're very local and we're local to our communities. That's not going to change.

And our next question today comes from Andrew Strelzik at BMO.

First, I was hoping you could talk a little bit about what you're seeing in terms of the new service model test, maybe in terms of traffic or frequency, guest metrics versus the rest of the system or any other learnings from that test? And maybe how that's built through the course of the test as you get ready for the 2Q rollout?

Andrew yes, so we really like the service model in terms of what we saw in the test. As I'd mentioned on a previous call, and we continue to see it where we had a run in a test. When we saw intent to return, attentiveness to the server, likelihood to recommend the server, those scores all popped positively. And we also got good feedback from our Outbackers. And remember, we're using our Ziosk data, our tabletops to understand how this is working by location and by shift. I feel really good about it. So again, we'll go from 1 server to 6 table station ratio to 1 server to 4 tables during peak. And we think that's the right level of interaction. We think that's consistent with the balance of casual dining. It really goes back to the root of the brand when we started as well. It's about a $7 million investment because the nice thing with this one is there's a lot of redeployment of labor. We've got a pretty heavy SA or server assistant pool that's out there. So a lot of those folks get redeployed into server roles. And this is why we're also being very sequential and thoughtful.

You got to train up all the folks that are going into server roles, whether you're recruiting from the outside or you're training up your SAs into those roles. And I want to make sure we get Steak Excellence right first before we start putting that additional change management on the partners.

Okay. That's helpful. And then just on the commodity inflation, how much visibility do you have to that at this point? Maybe how much you have locked in and kind of the cadence of that inflation through the year?

Andrew, thank you. Good question. So on commodities, just as a reminder, we have a pretty unique supplier relationship where we pretty much lock in beef. So we've locked that in for the year, basically high single digits. That's part of our overall guidance. We feel good about that. And at this point in the year, approximately 70% to 80% of our costs are already locked up.

And our next question today comes from Lauren Silberman with Deutsche Bank.

I wanted to just start on the average check. I know most of the mix pressure you're seeing is intentional initiatives. Outside of that, are you seeing any signs of check management, changes in behavior, whether that's attachment on apps, alcohol or anything else to call out?

Yes, Lauren, if I look at Q4, specific to that, the only place we probably did see some sensitivity was in some of the older cohorts. They manage their checks across all the brands a bit. When I look at all of our mix levers or attachments, be it desserts, appetizers or BWL, we really didn't see any changes that were material at all. So it's really that elderly cohort that we saw a little bit of sensitivity on check management.

Great. And then I just want to follow up on the restaurant margin cadence. How we should think about pressure or puts and takes across line items as we move through the year? Could we assume a little bit more pressure in the back half given the investments that you're making? Or any color that you can give there? I don't know if commodity inflation you expect pretty similar in the 4.5% to 5.5% range throughout the year.

Yes. thank you for your question. So first quarter, we expect to have the highest and then it basically lowest as we get to the second half of the year.

And our next question today comes from Dennis Geiger at UBS.

I wanted to ask about the 42 test locations. And maybe when you guys spoke to the service model and test, maybe you were kind of covering those 42 test locations. But if not, is there anything incremental to share on those locations? What kind of sales lift maybe you're seeing? I don't know if that would make sense given they are just test locations. Anything more to share on the latest update on those locations?

No, Dennis. What I would say is we really encouraged what we saw in the initial stages of the 42 test locations. We had really good cumulative results in terms of steak quality, service model, experience marketing and the value components. And they showed nicely and highly encouraging across traffic, guest satisfaction, value scores and the Outbacker feedback. So all positive. It definitely validated what we're doing. It validated that we got the right strategic plan. We're confident that we can grow traffic and execute the platforms with success.

And it really helped us know we got some no-regret investments, which I like to call them. We know we got to get steak quality right, service right, and that hospitality experience right. Where we're pivoting as we've integrated those 42 test locations, we're really now focused on leveraging them to learn on menu design, innovation, affordable opening price points and value. So it will enhance our test and learn culture. And as we learn more, it allow us to launch and learn a lot faster.

That's great. Makes good sense. And then just on the comp outlook for the year, curious on the cadence. Obviously, you gave us the first quarter, so we've got a good sense for where the next 3 quarters have to be, of course. Anything though in thinking through the cadence there over the 2Q through 4Q as you layer in the marketing and some of the initiatives through the year? Do we see a strengthening of the traffic as the expectation as you go through the year? Any color there to share?

Well, I'd say, first, we're cautiously optimistic on what we're doing across the board. I think that's very clear in the guidance we laid out there. And obviously, we're learning as we go. We want to start with the steak. We want to start with service. And then the back half of the year, we want to ramp up the marketing. But where our focus is on what we can control. We're focused on the strategic horizon. We're focused on controlling execution, getting the consistency right. And if we do that well, the numbers will follow.

And our next question today comes from Brian Vaccaro at Raymond James.

Thanks for all the color on the initiatives. You noted some investments that you're going to be making in the managing partners. Can you just remind us or elaborate on what that investment looks like and if there are structural changes there or new incentive targets that you're implementing?

Brian, I won't get into the specifics because I do want the managing partners to hear that from Pat directly. What I would say is this, it's consistent what I answered in the previous question, which is we need to start with making sure we have our folks in the competitive position in the market, whether we're retaining or recruiting our partners. They got to be competitive, and that reduces turnover in the restaurant. Of course, we're going to always want them tied to the P&L of the restaurant while we also make sure they're feeling good about that base salaries as they come in. And we're going to want to make sure [Technical Difficulty] organization. But it gets back to the principles and beliefs. At the end of the day, what we want is a competitive wage, and we want success to be amplified, which is defined by growing the sales and profits of our restaurants.

Understood. Okay. And sorry if I missed it earlier, but on CapEx, did you say how many remodels do you expect to complete in '26? And what's a good sort of annual maintenance CapEx run rate to be thinking about?

Yes. Brian, it's Eric. The way you should think about it is approximately 100 a year for the next 3 years. That puts us in the zone of touching all the remaining Outbacks. And then your other question was on maintenance capital.

Yes. Yes, maintenance CapEx within the cash flow statement, not R&M on the P&L, but in the CapEx number.

Yes, it's about $75 million a year, pretty consistent. We're not expecting that to really go massively up or down versus prior year.

Okay. And then last one, just on marketing. You noted it was down in the fourth quarter. Could you level set -- I know it will be in the 10-K, but could you level set where marketing spend came in for the year overall? And then is first half marketing down year-on-year in those first 2 quarters? Or should we think about it more as flat year-on-year and then it's up year-on-year in the back half of the year?

Yes. So advertising came in for the full year 2025 at about 2.4% of revenue. Q4 came in at about 2.2% of revenue, so just slightly less than the full year. And then for the full year 2026, we see it basically being mid- to high-2s, and that's mostly driven by the Outback investments. And it's mostly second half, again, to correspond with the phased investments to come right after the service model.

And that concludes our question-and-answer session. I'd like to turn the conference back over to Mike Spanos for any closing remarks.

Thank you once again for your investment and support of Bloomin' Brands. I want to close by thanking our people for their passion and commitment to each other and our guests. Thank you.

Thank you. And that concludes our conference call for today. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.

Greetings, and welcome to the Bloomin' Brands Fiscal Third Quarter 2025 Earnings Conference Call. [Operator Instructions] It is now my pleasure to introduce your host, Tara Kurian, Senior Vice President, IR, FP&A and International. Thank you, Ms. Kurian. You may begin.

Thank you, and good morning, everyone. With me on today's call are Mike Spanos, our Chief Executive Officer; and Eric Christel, Executive Vice President and Chief Financial Officer. By now, you should have access to our fiscal third quarter 2025 earnings release and our Investor Presentation slides, both of which can be found on our website at www.bloominbrands.com in the Investors section.

Throughout this conference call, we will be presenting results on an adjusted basis. An explanation of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our earnings release and Investor Presentation on our website as previously described.

Before we begin formal remarks, I'd like to remind everyone that part of our discussion today will include forward-looking statements, including a discussion of recent trends. These statements are subject to numerous risks and uncertainties that could cause actual results to differ in a material way from our forward-looking statements. Some of these risks are mentioned in our earnings release.

Others are discussed in our SEC filings, which are available at www.sec.gov. During today's call, we'll provide a brief recap of our financial performance for the fiscal third quarter 2025, current thoughts on fiscal 2025 guidance and our turnaround strategy. Once we've completed these remarks, we'll open the call up for questions.

With that, I would now like to turn the call over to Mike Spanos.

Thanks, Tara, and good morning, everyone. On today's call, we will discuss three topics. First, I will summarize my observations during my first year and our actions against our operational priorities that we communicated in February to simplify the agenda, deliver a great guest experience and turnaround Outback.

Second, Eric and I will review our third quarter results and updated guidance for this year. And third, I am very excited for Eric and I to share the details of our turnaround strategy. I would also like to welcome Eric to his first earnings call. Let's start with my observations and our progress against our operational priorities. We have a great culture and team, and it is a privilege to lead this team as we embark upon our turnaround. Bloomin' Brands is a company of restaurants with four founder-inspired brands.

Our culture and spirit as an organization is grounded in our principles and beliefs inspiring how we serve each other and our guests. It unites us with a common vision that our success achieved one restaurant at a time, measured by growth in sales and profits and is the result of taking care of our people and guests. To build upon that culture and execute a strategic transformation, it is important to get the right leadership team in place.

The changes made to the team this year have reinforced the culture grounded in our founders' principles and beliefs, executing with an operational mindset and a passion for guest hospitality. We each bring different but critical and complementary experiences and skills to the table. Our recently announced Fleming's brand President, Pat English, exemplifies a passion for the team, our guests and consistency of execution.

Pat has 35 years of fine dining operational leadership experience, including two decades with Fleming's. Our brand Presidents are all new to role this year. And importantly, they are all operators that collectively average 34 years of restaurant industry experience. I would also like to thank Sheilina Henry for her leadership and impact on the Fleming's and Bloomin' Brands business over her impressive 13-year career with the organization.

We wish her the best in her future. In addition to our culture and team, we have iconic brands with strong equity, strong cash flow, a healthy balance sheet and ample liquidity to enable a turnaround. We compete in large and growing categories like steak and Italian. However, we faced several critical challenges, including overly complex menus, unclear brand positioning, inconsistent guest experiences, a gap in steak quality and diminishing value perception.

We had drifted away from making decisions centered on the guest experience. Solving these challenges, especially at Outback, are necessary to turn around the company. Our leadership team started addressing these problems with a focus on the three operating priorities. Our approach is to control what we can control, meet the guests where they are while keeping execution simpler for our restaurant teams.

To simplify the agenda, we refranchised our restaurants in Brazil, streamlined our corporate structure by removing layers, reduced menu SKUs by 10% to 20% and reduced LTOs that added complexity in the restaurants. To deliver a great guest experience, we knew we needed to address the consistency of execution in food, service, experience and value; the what you get for what you pay for value equation.

We introduced everyday value offers in all of our casual dining brands, leading with the Aussie 3-Course at Outback, which is resonating with our guests and is easily executed. Part of delivering a great guest experience is making it simpler and smoother. In order to achieve that while gaining critical service feedback at the individual restaurant level, we installed Ziosk across the Outback system. Over 85% of our guests use Ziosk to pay for their meal, saving them time and improving table turns by about 5 to 7 minutes.

We are also using guest feedback on their experience as a recognition and coaching tool at each restaurant. Our Ziosk data shows that our efforts are working. We have seen dine-in customer metrics improve several points across intent to return, steak accuracy, value and overall satisfaction. And the last of our operating priorities was to turn around Outback. We all believe that we can reenergize the brand and deliver sustainable growth.

And most importantly, our Outbackers believe in the future potential. In addition to these elements I've already mentioned, Pat Hafner and the Outback team committed themselves to listening, learning and serving our Outbackers and guests and focusing on being in restaurant during peak hours and days. The success of our restaurant business is determined on the ground, and there is no substitute for getting our leaders in the restaurants when it matters.

Between Ziosk and over 200 restaurant visits by Pat and myself, we are committed to raising the bar on standards and recipe execution for great food and service while removing complexity for our Outbackers. We also needed to test and learn. Earlier this year, we had 14 restaurants in test, which were largely focused on menu simplification, innovation and guest experience. In September, we expanded the test to 42 restaurants across several markets.

These restaurants have integrated test cells with steak quality, menu innovation, enhanced service models and value components. Throughout this year, we also ran isolated tests focused specifically on steak quality and changes to the service model.

These tests have accelerated our learnings, influenced our immediate business actions, validated our strategic initiatives and provided us with a better understanding of the change management realities of scaling improvements, which heavily influenced the sequencing we have planned for the initiatives in our turnaround strategy for Outback.

We will maintain a test-and-learn culture here at Outback, and we plan to use our test environments to continue to refine and test new ideas. Turning to our third quarter results and updated guidance for 2025. Our focus this past year on our operational priorities is translating into improved guest metrics and sales and traffic gains, putting us in a strengthened position to execute our turnaround strategy.

We believe our Q3 momentum is reflective of these foundational efforts. Our Q3 sales comp was up 120 basis points, which was 130 basis points better than Q2. And U.S. traffic was negative 10 basis points, which was 190 basis points better than Q2. While our focus has been primarily on Outback over the last year, all brands achieved positive comp sales growth this quarter for the first time since Q1 2023. All casual dining brands executed value offers to meet the guests where they are economically.

Outback comp sales were up 40 basis points with traffic flat. This was the first quarter of positive comp sales for Outback since Q2 of 2023. Outback continues to see traffic from the Aussie 3-Course offering, which starts with an entry price point of $14.99, and we continue to see about two-thirds of guests trading up to the higher tiers of $17.99 and $20.99.

We have also seen a significant improvement in Outback's brand trust by plus 6 points year-over-year and improvements in guest scores across food, service, value and atmosphere. Additionally, we are encouraged by our improved media ROI as we are being disciplined in communicating the right message in the right channels and at the right times to drive efficiency and effectiveness.

Our higher returns gives us increased conviction in the marketing investment we have planned to make as part of the Outback turnaround. Carrabba's comp sales were up 410 basis points with positive traffic of 60 basis points. Its growth was led by in-restaurant value of Dinner and Dolce for two for $45, experiential wine dinners, lunch and off-premises. Bonefish comp sales were up 80 basis points with traffic of negative 170 basis points.

This was the first quarter of positive comp sales for Bonefish since Q2 of 2023. Its recent improvement has been driven by day of the week offers with $5 Martini Margarita Mondays and $7 Bang Wednesdays and its pre-fixed lunch offerings Sardine at $14.90. Fleming's comp sales were up 120 basis points, with traffic down 120 basis points.

Fleming's has maintained its sales momentum with in-restaurant traffic driven by experiential events, elevated service and its events and catering platforms. We are excited with our momentum, but we know we need to continue to improve our results to grow market share. We know in-restaurant dining is our biggest opportunity. We know it will take time to reverse our market share trends, and we remain focused on improving our execution every day.

Let me turn it over to Eric to review our financial performance for the quarter before we cover the strategy update.

Thank you, Mike, and good morning, everyone. I would like to start by providing a recap of our continuing operations financial performance for the fiscal third quarter of 2025. Total revenues were $929 million compared to $910 million last year. Restaurant sales were up, driven by the net impact of restaurant openings and closures as well as U.S. comparable restaurant sales.

This was partially offset by a decline in franchise and other revenue as the royalty rate on Brazil this year is less than the intercompany royalty received last year. As Mike mentioned, U.S. comparable restaurant sales were up 120 basis points and traffic was down 10 basis points. Though these results were below the casual dining industry, they exceeded our expectations as improvements begin to take hold.

Average check increased 1.3% compared to 2024 as we continue to invest in value offers for our guests. Off-premises sales were 24% of total U.S. sales in the quarter, consistent with Q3 last year. Outback's off-premises mix of sales were 26% in the quarter, and Carrabba's were 34%. Our GAAP diluted loss per share was $0.54 compared to a loss of $0.01 per share last year. Our Q3 adjusted diluted loss was $0.03 per share versus earnings of $0.11 per share last year.

Negative $0.03 was above our guidance range of negative $0.10 to negative $0.15. The primary difference between GAAP and adjusted diluted loss per share is approximately $43 million of adjustments incurred in Q3 2025 as a result of the restaurant closures and impairments, transformational and restructuring activities, foreign currency forward contracts that partially offset risk associated with the purchase price installment payments on the Brazil transaction and a change in our employee benefits policy.

Q3 adjusted operating margins were 0.8% versus 2.3% last year. The 150 basis point difference between this year and last year was driven by: one, COGS inflation of 4.9%. We lapped a significant rebate from Q3 of last year, which drove a higher inflation rate this quarter. We expect the full year COGS inflation to be between 3% and 3.5%. Two, labor inflation of 3.3% as we continue to experience inflationary pressure on wages.

We expect the full year labor inflation to be approximately 3.5%. And three, higher operating and supply expenses, mostly driven by inflation as well as 60 basis points from higher insurance expense. As it relates to our 33% retained ownership in Brazil, which is classified using equity method investment accounting, we recognized a loss of $300,000 in Q3. This was slightly better than our expectation, driven by updated estimates on the stepped-up fair value basis of accounting for the assets.

We expect the total impact on the full year to be approximately negative $5 million. Turning to our capital structure in Q3. Total debt net of cash is $896 million. Our leverage metrics are 4.3x on a lease adjusted net leverage basis and 2.9x on a net-debt-to-adjusted-EBITDA basis. We expect the second installment of the Brazil refranchising transaction to be received this month, and we will apply the proceeds to our revolver.

We anticipate this payment to be approximately $122 million, adjusting for an updated FX rate and withholding taxes. This does include approximately $15 million of interest income on the receivable. We expect lease adjusted net leverage to move from 4.3x to 4.0x and net-debt-to-EBITDA to move from 2.9x to 2.5x on a pro forma basis with the proceeds applied to the Q3 balance. Turning to our guidance.

We are raising our U.S. comp sales guidance range for the full year to be between flat to positive 50 basis points, driven primarily by our current momentum. We are raising our adjusted diluted earnings per share range to be $1.10 to $1.15. As a reminder, we are in a tax benefit situation driven by FICA tip credits relative to earnings.

We expect an adjusted tax benefit in the range of approximately $10 million to $12 million in 2025, which is included in our updated guidance. We continue to track toward capital expenditures of approximately $190 million for the full year. As it relates to the fourth quarter 2025, we expect U.S. comparable restaurant sales to be between positive 50 basis points and positive 150 basis points.

We expect Aussie 3-Course to continue to have a positive impact on our sales as we are lapping underperforming promotions from 2024. We expect Q4 adjusted diluted earnings per share to be between $0.23 and $0.28. This earnings per share range includes an estimated negative impact from our 33% Brazil ownership to be approximately $1.5 million.

Let me turn it back over to Mike to walk through the strategy update.

Thanks, Eric. As I mentioned, our strong Q3 results and operating momentum give us confidence to now launch our holistic turnaround strategy focused on Outback Steakhouse. Through our testing this year, we identified no-regret investments that are critical to the success of the turnaround.

Our Outbackers and our guests are telling us that these are the right things to do and are consistent with our foundation in terms of quality, service and experience. And we know they are required to deliver sustainable profit growth and market share gains. We have identified approximately $75 million of investments across 2026 through 2028, with approximately $50 million being spent in 2026.

The investments will be across state quality, service, our people, the guest experience and marketing. We will offset the turnaround investments with approximately $80 million of non-guest-facing productivity in 2026 through 2028 with approximately $30 million occurring in 2026. In simple terms, 2026 is the year with the majority of investments with a net investment of approximately $20 million.

Eric will provide additional details of how this is allocated across each of these areas. Our turnaround strategy is based on four strategic platforms, which are to: one, deliver a remarkable dine-in experience; two, drive brand relevancy, a steakhouse. Our investments include investing in the quality and cuts of the steaks to deliver a competitive and craveable lineup that delivers value.

We are also investing in our cooking equipment, including expanding [ chart roll ] capacity that we will have the optimal cooking platform across steaks and other proteins. We are committed to the consistent training necessary to ensure we continue to have the exceptional steak quality, taste, specs and accuracy. In our tests, these steak enhancements delivered an average 10-point lift across guest satisfaction, taste, value, intent to reorder and quality perception.

These gains, combined with enthusiastic Outbacker feedback, give us strong conviction to move forward with investing in our steak quality nationally later this month. Another element of our remarkable dine-in experience is craveable service. As I mentioned on the last call, we identified that our 6 tables to 1 server ratio during peak hours wasn't providing the right level of guest interaction and Outbacker satisfaction.

We believe a reduced ratio of four tables per server during peak times, which is more in line with casual dining best practices, will allow our Outbackers to provide a more consistent and enhanced experience for our guests. Similar to steak excellence, we ran independent tests earlier this year with a reduced table-to-server ratio. We saw an increase in our intent to return, attentiveness and likelihood to recommend service scores from our guests.

Our operators in the test also had positive feedback because servers have the time to positively engage with their guests. These results and feedback give us confidence in rolling the service model out across the Outback system starting in Q2 of next year once we have the execution of our enhanced steak lineup right. The final element of delivering a remarkable dining experience is consistency of execution.

We are leading with an operational mindset that prioritizes the guest first and is delivered with great food and great service. As I mentioned earlier, our leaders are in our restaurants during peak hours to focus on operational excellence and accountability to standards. We are leveraging technology to help our restaurant leaders more easily check for outliers and guest metric scores.

Our strong focus on consistency of execution this past year as demonstrated by the strong business momentum in Q3 and improved guest metric scores gives us further confidence in the turnaround plan. The second platform is to drive brand relevancy. We need to make Outback more relevant. Outback Steakhouse has incredible brand equity. It is the pioneer of the casual steakhouse industry.

We have strong brand awareness and a tremendous opportunity to convert that awareness into restaurant visits. To do so, we must differentiate Outback's brand positioning, building greater relevancy while deepening the connection with our guests and emphasizing that we are first and foremost a steakhouse. Fundamentally, we are going back to the core greatness of the Outback brand.

Outback led through craveable food, value and an emotional connection with the server and managing partner. However, the key differentiator was the fun, casual and adventuresome Australian spirit. Focusing on No Rules, Just Right and hospitality is the core of the brand culture and the heart of the experience that created loyalty with our guests. Our intent is simple, come as our guest, leave as our mate.

Sharpened brand positioning will serve as a foundational element of our turnaround, helping to recruit new guests, reengage lapsed users and drive frequency among our loyal base. We are also leaning into steak-centric equity in our brand communication. We're reasserting Outback's authority in steak through menu redesign, refreshed creative and elevated food photography that showcases our craveable steakforward offerings.

Guests will see our revamped high-quality steak lineup front and center, highlighting the thickness, freshness and craftsmanship of every cut, along with our signature Outback seasoning that sets us apart. The steak-centric focus will also strengthen our value equation by offering menu variety and affordability across multiple price points, enhancing what guests get for what they pay for.

We will continue to lead with depth and steak excellence while leveraging our non-steak protein variety with disciplined breadth. Supporting the brand's relevancy is marketing effectiveness. Over the past year, we've significantly improved our marketing efficiency by redirecting spend towards digital channels and simplifying our message to make it more focused and impactful.

Our marketing actions earlier this year drive our conviction to further evolve our media strategy, shifting from a legacy mix of 70% linear TV and 30% digital to approximately a mix of 40% linear TV and 60% digital. This change reflects how guests now consume media ensures we deliver the right message through the right channels and at the right time to maximize traffic and returns.

With renewed confidence in our brand positioning and turnaround momentum, we plan to increase our marketing investments next year. The third platform, reignite a culture of ownership and fun. Our turnaround will be delivered by and through our people. Every brand has a feel guide. It's a small booklet that explains the principles and beliefs for the brand. Every Outbacker has one, I have one.

It states that our success is based on our belief that people want to be part of something they can be proud of, is fun and that includes and values them. Outbackers have pride and ownership in the success of the restaurant. To enhance our already strong culture, we are making investments across leadership development, engagement, training, field compensation and recognition.

This begins with ensuring we have the right managing partner for every one of our restaurants. Our managing partners are owners and leaders. Restaurants with stability in the managing partner role have been proven to be our most successful, including having the lowest hourly turnover and strong engagement, leading to improved performance. To retain the best partners, they need to be compensated competitively and incentivized to drive the operational priorities.

We are committed to our people, and we know that when we take care of our people, our Outbackers serve each other and the guests with pride and ownership. Our fourth platform is invest in our restaurants. As I've said on prior calls, we need to invest back into our restaurants. Our goal is to touch nearly all of the Outback restaurants by the end of 2028 with targeted initiatives to refresh the interior and exterior.

With this asset refresh, we will focus on guest-facing areas, the areas that make a positive impact in restaurant ambience. We have tested various remodel scopes this year, and we'll leverage learnings as we roll out the asset refresh broadly. These investments and this renewed focus gives us confidence that our guests will have a better in-restaurant experience to complement the other platforms of the turnaround.

I will now turn it back over to Eric to walk through the investments, productivity and capital allocation.

Thanks, Mike. As we think about the constructs for next year, Mike mentioned there are no regret investments that support and enable the turnaround. These total to approximately $50 million in 2026, we expect this to be the bulk of the turnaround investments. These investments will be offset by approximately $30 million of productivity for a net investment of approximately $20 million in 2026.

The $50 million of investment will primarily be concentrated in Q2 through Q4 of next year and will support the investments in center-of-the-plate food quality, including steak excellence improvements and menu redesign of approximately $25 million, investing in service and the guest experience of approximately $7 million and investing in our people of approximately $8 million.

We also intend to increase our marketing spend by approximately $10 million as part of the overall $50 million investment. In addition to the approximate $50 million of turnaround investments in 2026, we plan to invest approximately $25 million across 2027 and 2028 for a total investment cost of approximately $75 million. The majority of the $25 million will be an increase in marketing spend to support the turnaround efforts.

In addition to the approximate $30 million of productivity savings for 2026, we have identified an additional $50 million of non-guest-facing productivity across 2027 and 2028 for a total of approximately $80 million in productivity. For productivity, we are targeting areas that are non-guest facing. We are negotiating costs with suppliers, optimizing product selections and eliminating unnecessary vendor spend.

We are also focused on tighter processes in the restaurants, leveraging technology for increased data visibility and outlier management. We are optimizing labor scheduling and focusing on areas where we can simplify operations in the back of the house. In total, we estimate savings next year to be approximately $30 million spread relatively evenly throughout the year.

These savings apply across brands and at the corporate level. On our capital allocation, our strategy will be twofold: one, to invest in the base business as well as our restaurants; and two, to pay down debt. Capital expenditures next year will be slightly more than what we will spend this year with the primary change in capital being a shift of dollars previously spent on new restaurants towards restaurant asset refreshes and remodels.

As Mike mentioned, we are focused on refreshing nearly 100% of the Outbacks by the end of 2028. We will get started in Q1 next year, and we'll look to spend an average of $400,000 per unit. The great news is we are modeling our approach after Carrabba's, demonstrated the success of a lighter touch, guest-facing focused asset refresh strategy that also yielded traffic improvements and improved employee satisfaction.

This year, we completed a detailed review of our restaurant base and identified 21 underperforming restaurants, which we closed last week. We also identified 22 restaurants in which we would not renew the lease. Most of those leases expire in the next four years. Our goal is to focus our resources on the remaining healthier restaurants. As part of our new capital allocation strategy, we suspended the dividend.

We believe that the best use of capital today is to invest in our restaurants, our guests and our employees and are confident that this will deliver sustainable growth in our business. In terms of leverage, our goal is to reach 3.0x on a lease-adjusted leverage basis by the end of 2028. As such, we'll use available free cash flow to pay down debt.

As we think about 2026, there are two items we are monitoring closely that will influence our annual guidance, and that is: one, where beef inflation lands for next year; and two, visibility into expected tariff impacts. With this in mind and aligned with our historical cadence, we will provide detailed 2026 guidance on our February earnings call as well as how we are thinking of our go-forward multiyear targets once we establish our 2026 baseline.

Let me turn it back over to Mike.

Thanks, Eric. We have covered a lot of material, and we'll update you in February with further details, as Eric stated. In summary, we are highly confident our strategy will firmly place Outback Steakhouse on the right course for sustainable, long-term and profitable growth.

Through this strategy, we will, one, deliver a remarkable dining experience through improved steak quality, enhanced service and consistency of execution; two, drive brand relevancy to differentiate Outback with a return to our brand roots; three, reignite a culture of ownership and fun with a commitment to our people; four, invest in our restaurants to refresh approximately 100% of Outbacks by 2028.

We will enable this strategy with non-guest-facing productivity savings, a balanced capital allocation and a strong management team. We have the right team in place to execute this turnaround and have momentum. Our leadership team is aligned and committed to the turnaround. We all have confidence in the success of Outback Steakhouse and more broadly, Bloomin' Brands.

We know that when we invest in the guest, give Outbackers the tools to succeed and provide a quality dining experience, Outback can and does win. This is evident in the initial improvements in metrics such as guest satisfaction and intent to return. We will continue to be transparent on our progress and our actions.

Lastly and most importantly, all of our results and future potential would not be possible without the dedication, the commitment and the leadership of our people in the restaurants and the restaurant support center.

Every day, they show up and give their best to the guests and each other. I'm incredibly proud of our Outbackers, our [ Micos ], our anglers and our associates. Thank you for what you do and your commitment to making the Bloomin' Brands turnaround a success.

With that, let me open up the call for questions.

[Operator Instructions] Our first question comes from Jeff Bernstein with Barclays.

This is Anisha Datt on for Jeff Bernstein. I wanted to ask a question on comps. You highlighted strong momentum in Q3. Can you expand on whether that strength carried into October across all the brands and what factors contributed to sustaining that performance?

So our Q3 trends have continued into Q4, and our Q4 guidance and full year guidance assumes that those trends maintain. And second part of your question, I just think we're meeting the consumer where they're at. We're creating the right variety of affordable entry price points, value, an example of that's been the Aussie 3-Course.

Okay, great. And as a follow-up, are you seeing any underlying macro weakness that might be masked by your improved [ results ]?

We had encouraging trends across the board when I look at the quarter. Traffic improvements and growth, they were consistent in all the brands, and that was across income groups and ages. Check averages were also up low to mid-single digits across income groups and age groups.

And we did see larger party sizes offset by slightly lower PPA. Maybe where we saw a little bit of slight check management was in the cohorts over 65 years old, and that was predominantly in beer, wine and liquor. But importantly, what we liked is they chose to dine out based on the visitation results, which were positive. So to me, what this tells me is it's just another validation that dining out remains a very affordable luxury.

Consumers, regardless of their income levels or their age, they want to get out. They want to prioritize experiences, other forms of discretionary spending. And I think we did -- we're mindful of the environment, which means we got to keep meeting the consumer and the guests where they're at economically.

Our next question comes from Jeffrey Farmer with Gordon Haskett.

You just touched on it, but just I was hoping to get a little bit of a deeper dive into how the company materially outperformed the Q3 same-store sales guidance, specifically sort of the factors that contributed to that better or much stronger-than-expected result.

Jeff, I think it was a couple of things predominantly. One is we're just executing with more consistency of execution, and that starts with our leaders. Our leaders are tremendous. They're out there with the teams during peak hours. And I just think that's given us a great executional dividend. That's the first thing.

And then the second thing in all of our casual dining brands, I think our marketers and operators did a great job, again, focusing on meeting the guests where they are at regardless of the economic cohort. And you think about the brands, Aussie 3-Course at Outback, very, very positive. At Carrabba's, the team did a great job with experiential wine dinners.

Bonefish, we had everything from $5 Margarita Mondays. We had $14.90 prefixed lunch menus. And we've done a really nice job at Carrabba's and Outback with $10 take-home, just getting that average check up. So I think that's what it is. It's just really being there, meeting the guests where they're at and providing the right what you get for what you pay for relationship.

Okay. And again, you just touched on it with the cohorts. But obviously, as you know, there's a lot of focus on income cohorts, age cohorts, relative trends across those cohorts. But can you share some detail about what you're seeing with the Outback customer base? And maybe more specifically, how does the Outback customer base sort of stack out or shake out across income and age cohorts?

As I said, for the quarter, we saw consistent performance across all the age and the income groups across Outback, steady, consistent growth that was there. And we had flat traffic, and that was consistent in all those groups. There were no outliers. Value is working for us.

Our next question comes from John Ivankoe with JPMorgan.

This is [ Christopher ] for John. The question is on remodels. You mentioned an average CapEx of $400,000 per unit. But as there are some stores that are over 20 years old, it could suggest that there's a bit more needed. Could you potentially like bucket by number of units, what the various spend levels could be?

Well, I'm not going to get into the specifics of buckets per spend. But as Eric said, we're highly confident that our asset refresh plan, it enables us to touch every -- nearly every Outback over the next three years. And they're very targeted initiatives, and it allows us to refresh the interior and exterior at an average cost of about $400,000 per location.

We're going to focus on the guest-facing areas, and we're going to focus on what makes a positive impact to the guest. What I would add is, if you go back to previous calls, we talked about our outside maintenance survey data. We use that to really be very surgical. We also have tested various remodel scopes that we also talked about.

We're leveraging those learnings. And lastly, Pat led this at Carrabba's. We were very excited with what we saw post those light touch refreshes. We saw 100 basis points to 200 basis points of traffic lift post those. So some will be higher, some will be lower, but we think with targeted initiatives, we can really do a good job hitting nearly all of them by the end of 2028.

And as a follow-up on average check, do you see further investment here in order to drive component of value and ultimately traffic?

No, I don't think so. The way I would answer that is, first, based off the tests, feedback from our Outbackers, our own work, we believe this is the right investment level across each of the elements of the strategy.

Now we're going to be judicious in analyzing those investments and making sure we're getting the right returns. And it also implies that if we see really good returns and there's a benefit, we're going to consider looking to invest more. And as I said since I joined, we're going to be highly transparent about what we do every step of the way.

Our next question comes from Brian Mullan with Piper Sandler.

Just a question on the marketing part. I think you addressed this some in the prepared remarks, but it sounds like investments in marketing are going to be a part of the turnaround process.

Just talk about how maybe you're going to phase this in over the next couple of years. I imagine there's a balance that can drive traffic in the short-term, but maybe you want to make sure the product and service model is right. So just talk about the approach and how that will build.

Yeah, Brian, I'll take it to how we're thinking about the sequencing of investments. Specifically to marketing, the incremental marketing is assumed to begin predominantly in the second half of 2026. That's $10 million. And then as Eric said, we would look to add another $10 million in '27 and another $10 million in '28.

Obviously, it's pay-as-you-go. And you're right, we have thought about the total execution of the platforms in a more of a sequential manner because we want to be very thoughtful that we allow our Outbackers to be brilliant at the basics. We don't want to overload them with tasks. So step one was get the operational priorities, get the foundation of base execution right. That's what we've been honed in on this year.

Second, we're launching steak quality at the end of this month. And we're going to work hard at getting that right. And then in Q2 of '26, we'll launch the elements of the service model. And then after that comes the marketing. And then the nice thing about Ziosk, it's going to allow us to keep evaluating location-by-location, geography-by-geography on how we're doing on the execution.

Okay. And then just a modeling clarification on the closures. Can you give us a sense of what brands those will be at -- concentrated at? And then with all the assessing of the portfolio you've done this year, do you think you're done on the closure front or as you progress another year or two, could there potentially be a little bit more?

Yeah. The closures were Outback, Bonefish and Carrabba's. At this time, we don't see any more action needed. As we said, we've been very thorough in our asset evaluation over this last year, and that's where we're at, at this point.

Our next question comes from Jon Tower with Citi.

Maybe just digging into the Aussie 3-Course, can you help us think about or speak to how that mixed in during the third quarter? It sounds like it's been relatively successful in terms of the different levels that you're offering the guests. And how are you thinking about this business or this value platform going into 2026? Obviously, beef inflation is out there. It's well discussed amongst investors. How are you thinking about holding the line on pricing there should we run into a fairly significant wall of beef inflation over the next 12 or 24 months?

Yeah, Jon, so I got two questions there. So first on your question about Aussie 3-Course. We -- we're very pleased. We like the results in Aussie 3-Course, and it's mixing exactly where we expected it to. And as I said, what I like about it is two-thirds of the guests are trading up and that's $17.99, $20.99. And what I didn't comment as well, we got a lot of guests trading up on desserts as well, which is really encouraging.

They're spending an extra $3 to get a Chocolate Thunder versus getting the Cheesecake. So very consistent with what we expected. And our plans consistent with '25 are to continue in all the casual dining brands to have a value offer because we need to be very mindful of pricing with inflation, but we also have to meet the guests where they're at to get them to engage and a lot of them show up thinking they're going to buy the Aussie 3-Course course and they pick a picture on the menu and they eat something else.

And that's a good dynamic. In terms of beef, what I would say is for '25, we see this as a mid-single digits reality. We'll communicate what we see beef doing in February when we get to the 2026 guidance. But I'd say two other things. One, we like the resiliency of the beef category. It continues to grow. Americans are engaging it. And one other thing that I think is important is the relative value works for us.

And what I mean by that is we're getting a lot of guest feedback that guests know they can come into Outback, get a perfectly cooked steak at a great value, get a couple of sides, get a great experience and they're out of the house, but yet it's almost the same cost as what they're paying for beef at retail. And what that again tells me is Americans want to get out, they're going to prioritize getting out of the house into casual dining over other discretionary spending.

Yeah, it makes sense to me. People don't want to risk the idea of screwing up a steak at home, go to you guys and get a good experience in the process as well. So I guess one of the other questions that I had, you had offered a lot with respect to the business transformation over the next 12 to 36 months.

I'm curious, you talked about menu redesign and some of the savings behind are running through the P&L. I'm just curious, do you feel like the menu is also optimized today? I think you've gone through and cleaned up some of the SKUs of the past 12-plus months, but do you feel like there's more to be done there or are you at a good point today?

We can do more. Menu redesign is definitely a journey. I like what we did when we reduced 10% to 20% of the SKUs this last year to simplify the complexity for the back of the house as well as the front of the house. But revenue management is fluid.

Part of menu design is creating affordability and a variety of entry price points. We're going to continue to iterate on that. And that's also, by the way, what we're using our 42 test locations for. We're using that as a good learning lab across the board to understand assortment, choice, affordability and what the guest wants.

Our next question comes from Brian Vaccaro with Raymond James.

Thanks for all the detail and the turnaround, really helpful. Just on a couple of the aspects there. You talked about improving the steak quality. Could you elaborate on some of the changes you're making there, whether it be changes in product spec, the types of steaks maybe that you'll be featuring or changes in cooking procedures?

Yeah, Brian, it's a really good question. So in terms of steak quality, I start with what I said in the prepared remarks that we're getting back to our roots of steak excellence and just being a great steakhouse. And that's depth of our steak lineup. We're also going to have breadth and discipline in the non-steak proteins, which has been a big differentiator for us over the years going back to the founders.

We do with this steak lineup, we're going to launch the end of this month. We believe we've got the best steaks in the category. And right now, I think we've got the best barrel cut fillets out there. We're really excited about the Sirloin. We think it's going to have a better performance, better tenderness.

We're going to be -- I really like our Ribeye lineup that's going to be coming. And we're going to have just, I think, a great thick cut strip. And I'll leave it at that. But the Outbackers, they're really proud. The pride to sell is high. And to me, that's what just gives me a lot of conviction and confidence we're doing the right thing here.

All right. And also just on the guest experience and talking about the consistency of execution. Is there any way to level set either currently sort of -- or the rate of improvement, but just sort of level set what you're seeing in any metrics and what you're tracking on that?

Like do you track the percentage of guests with the problem or other metrics that you might be able to share and how that might be improving year-on-year across the system or within your test markets, your test pilot stores, the 42 stores?

And then maybe as a tack-on to that, you talked about investing in your managers. And just maybe some more color on the changes to their comp plan or how they're being incentivized sort of tying their compensation to the performance of the stores that they're managing.

Yeah, you bet, Brian. So on the survey data, we've looked at a few different things. One is we've looked at comprehensive satisfaction surveys. We've used that, especially on the steak work. We also have just leveraged the heck out of Ziosk. And specifically on Ziosk, we look at intent to return, we look at guest satisfaction.

We look at complaints per 10,000, and we're able to compartmentalize or bucket those by location, by JVP to really get at the issues. So that -- I think -- and we're going to continue to do that. In terms of the MP comp, what I'd say there is our principles and beliefs, the culture is grounded in our managing partners.

We know that growing the sales and profits of every restaurant starts with our partners. And therefore, we are making investments in the field compensation. We need to ensure we're competitive in the market. That allows us to have the right partners enroll. And that structure that drives that ownership aligns -- has got to align with our business objectives.

What's exciting is those investments in field compensation, they're going to always enhance the team member, the guest experience, and we've seen lower hourly, lower manager turnover when we have tenured partners enroll. As far as the specifics, I want to be -- I want to directly and first communicate to our partners. And I'll leave it at that here. Out of respect to them, we need to have the discussion directly with them on how we're moving forward.

Our next question comes from Sara Senatore with Bank of America.

Just I guess one quick housekeeping question and then a question about Ziosk. Could you just let me know how much price you had on the menu? I'm just trying to reconcile, I think it was probably like kind of 4% price versus a more modest increase in check, but then what you said about seeing some good spending patterns by -- across different cohorts. So if you could just talk to that dynamic? And then like I said, I have a question on Ziosk.

Sure. Hi Sarah, it's Eric. So our Q3 pricing was up 3.7%. That's just a tick slightly higher than our full year guidance of mid-3s. And also, we expect Q4 to also be in the mid-3s on pricing. So pretty balanced.

And then the mix component, was that smaller parties or I guess, was that mix across the different concepts? Just like I said, the average check was up less than that. So just wanted to make sure I understood that dynamic.

Yeah. So we're seeing pretty consistent mix within our expectations of about down 2%. It's really driven by the Aussie 3-Course, $10 Take Home, a lot of the experiential dinners and other events that are happening across the four brands.

Got it. Okay. And then could you talk about sort of the functionality that Ziosk has? I'm wondering how you kind of balance -- I mean, as you pointed out, the service experience is really important to full-service brands.

So how do you balance kind of what you digitize or automate through Ziosk versus what is an interaction with the server? I know different full-service brands have had different views on whether it should just be kind of pay at the table versus ordering capabilities versus things like games. So your, I guess, philosophy on that.

Well, part of a remarkable dine-in experience is the emotional connection that our guests feel with our servers and our partners. That is foundational. That's not going away. At the same time, we know a lot of guests want things simpler, faster, easier, and they want to engage in technology.

So what we get out of Ziosk, I think, are a few things that we like. Number one, we've got over 85% of our guests love to use it to pay, and that's really nice in terms of table turns and they get out of the restaurant faster, and we're going to continue to enable that. Second, we have -- we love the engagement rate where they give us feedback and that gives us real-time data at each restaurant by shift for coaching and recognition.

Third, we do leverage it for gaming. So that's worked. And then there are certain menu items that guests can reorder, order on their own. But it is -- to order off the menu, you're going through our server.

Our next question comes from Teddy Farley with Goldman Sachs.

I have a follow-up on the marketing part. Can you give any color on how you're planning on communicating the business turnaround with consumers to drive trial at Outback, particularly with lapsed guests who might have somewhat of an outdated image of what you'll be offering?

And then kind of similarly to that, any color on how you would be trying to drive trial and frequency, specifically with the younger cohort? I assume that the shift toward digital advertising is probably part of that, but any additional color you could add would be appreciated.

Yeah. You actually -- you got it right. First, you got to start with the marketing brings folks in the restaurant, but we got to execute really well because that brings them back. And that part of that is word of mouth. So to me, you start there.

In terms of the brand communication, which has been after a lot of good work on the strategic brand positioning, we will be steak-centric and there will also be an element of emotional connection and you're going to get that hospitality experience that's going to be in there as well as the value components we get. We're going to stay clear to that.

We're going to be back to the Aussie roots. And now as far as -- so that's the right message. As far as the channels, you're right, we're moving more towards a 40% linear TV, 60% digital. That's going to give us both better ROIs and also to be targeted in terms of retention and recruitment.

And so we'll look at which non-protein items that we get a little more direct on digital to recruit some younger cohorts, and that's part of the work we're doing. But again, what I want to stress is we're not going to do that -- we're not going to turn on that extra marketing until we're really confident we are tight on execution, consistency of execution on steak and service.

This concludes our question-and-answer session. I would like to turn the conference back over to Mike Spanos for any closing remarks.

Thank you once again for your investment and support of Bloomin' Brands. I want to close by thanking our people for their passion, their ownership and commitment to each other and our guests. We are on our path forward because of you. Thank you.

This concludes the conference. Thank you for attending today's presentation. You may now disconnect.