OUTBACK Steakhouse has announced price changes on their menu due to fluctuations in consumer spending.
The popular chain Outback Steakhouse is altering the prices of their food menu to keep up sales and to keep consumers happy.
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The CEO of Outback's parent company, Bloomin' Brands, is especially cognizant of the chain's decrease in profit.
“Driving traffic growth may be challenging with consumers more careful with their discretionary spending,” said CEO David Deno.
PRICE CHANGES
In light of the wavering sales, the company aims to tread lightly when it comes to menu price increases.
Luckily for consumers, Outback will not raise prices again this year and they plan to take precaution regarding price changes next year.
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CFO of Bloomin' Brands, Chris Meyer, commented on the pricing situation, saying: “We do believe that going in with the mindset to keep pricing as low as possible is the right place to be.”
DROPPING SALES
As money has gotten tighter for consumers due to the approaching holiday season, Outback Steakhouse's sales have seen the effects.
Outback Steakhouse same-store sales have consistently fallen 1.1% for several years in the third quarter of the year.
The chain attributes this drop to a "softer industry backdrop," referring to the less favorable conditions within the restaurant industry.
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Sales noticeably slowed down after Labor Day in September, as consumers anticipate higher spending for the upcoming holidays and subsequently limit their budget elsewhere.
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Outback noticed fewer transactions taking place in their restaurants as well as customers spending less per dinner check.
Other casual-dining chains experienced similar decreases in revenue, meaning that the holidays are impacting consumers and restaurants alike.
Following the initial slowdown, Outback has noticed a rise in sales.
The executives of Bloomin’ Brands anticipate that same-store sales will range from being flat to showing a 1% increase in the upcoming quarter.
Despite this increase, Bloomin’ Brands lowered their sales expectations for the remainder of the year.
Initially they projected a same-store sales growth of 2% to 4% across their brands.
However, they have adjusted their forecast to a lower range, expecting same-store sales growth of 1.5% to 2 % for the rest of the year.
CHANGES ELSEWHERE
Instead of increasing menu prices, Outback plans to offset the impacts of inflation by improving the operations of the restaurants.
For example, Outback replaced the traditional pen and paper with handheld server tablets. The tablets are in use at all 689 US Outbacks.
From operations initiatives like this, Outback expects to see $55 million in productivity benefits.
Meyer commented on how this increased productivity will result in more customers for the chain. He said: “When you provide excellent service at a great value to a guest, they want to come back.”
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