Q2 2025 Bloomin' Brands Inc Earnings Call
Around Outback.
As we complete our enterprise-wide strategy, we have implemented an organizational structure that builds capability is effective and efficient and consists of a set of leaders that are deep in restaurant. And operational experience, enhancing our transformation and strategic muscles as we lead the future business.
Turnaround. Outback is our highest priority as a result. Michael Healey will move into a newly created role Executive Vice President, strategy and transformation.
He will lead the Strategic initiative Central to our turnaround efforts. His extensive experience with over 16 years, across the organization and supply chain brand leadership.
And both Outback CFO as well as the company's CFO. Make him the ideal candidate for this role.
He also lead the revenue management work. I'm excited to see this transformation capability which will allow us to insource. External Consulting support driving cost efficiencies.
I'd like to welcome Eric Crystal who has joined the company as Executive Vice President, and Chief Financial Officer elect. Eric is a seasoned Finance leader with nearly 2 Decades of experience in the food and beverage sector including senior roles at Campbell snacks and PepsiCo.
Most recently he served as senior vice president and Chief Financial Officer of Campbell's. Snack division, we led the finance teams through a period of growth transformation and operational efficiency.
His leadership helped grow sales and profitability through strategic pricing marketing Investments and international expansion.
Prior to Campbell's Eric served as senior vice president of Chief Financial Officer of the Americas at densu.
He has deep experience across financial planning and analysis, operating finance strategy, and transformation and franchising, as well as company-owned operations with large operating P&Ls.
Eric will spend the next month getting Hands-On restaurant training, immersed in our restaurant, and brand cultures.
Michael will remain the company's Executive, Vice President and Chief Financial Officer until September 8th, and will collaborate closely with Eric to ensure a smooth and effective transitional responsibilities.
They will work closely together on our go forward strategy and financial processes.
Jessica mtori will join our team officially next week as senior Vice President, Chief Human Resources officer.
She will oversee Human Resources, compensation and benefits recruiting employee development and Performance Management.
Jessica joins us from Advanced Auto Parts where she was senior vice, president Global total rewards and employee experience. And prior to that was at Pepsi Beverages North America,
Jessica has worked in complex businesses in both company-owned and franchised operations her entire career.
She brings broad HR experience of people first mentality, and financial Acumen to support the employee value proposition.
Ali will join our team as senior vice president, guest insights and Analytics.
He will lead the company, strategic and marketing brand positioning.
Guest insights and analytics in our digital capabilities, he brings over 20 years of experience in consumer insights strategy and Marketplace analytics across restaurants and consumer-facing brands.
He most recently served as senior vice president of strategy and insights at Darden Restaurants.
He will lead the brand positioning of our four founder-inspired brands and will work in partnership with each brand's marketing team.
Raphael Sanchez, senior vice president and Chief Information. Officer joined our team at the end of June.
Raphael has over 25 years of it, leadership, across the restaurant retail, hospitality and entertainment Industries.
He recently served as senior vice president of Information Technology at Davidson Hospitality Group.
Prior to Davidson Hospitality Group, he was a Chief Information officer of 6, Flags entertainment and Feld Entertainment.
His extensive background will be instrumental in integrating our technology to enhance the guest experience while also helping our team members to work more effectively.
Randy scrubs has been promoted to senior vice presidents supply chain. He has over 20 years of experience in the food industry recently serving as our VP of supply chain.
He and his team have collaboratively driven productivity with our partners, while improving quality and specification standards.
His expertise in sourcing and Logistics and his passion. For supporting our restaurant teams has been instrumental in the quality. We provide our guests,
Tara, Curry and has been promoted to senior vice president ir fpna and International.
Business.
She will also partner with Michael on the strategy and transformation team as the primary Financial lead.
She recently served as our VP of corporate finance investor relations, her deep Financial expertise, Banking and business Acumen position her. Well to succeed in this role
Susan Klein has been promoted to group vice president, strategy, and transformation, and will support Michael Healey, in his new role.
Susan's 30 years of operational experience, started as a Hostess and managing partner at Outback will be critical and grounding our project management work from an Outback or perspective and guests on our ends.
Turning to our brands, John Benton will join the company at the beginning of September as Senior Vice President and President of Bonefish Grill.
John is a strategic and operational leader with over 30 years of experience within the restaurant industry where he began his career as a sous. Chef
He most recently served as Chief Executive Officer of Miller's, Ale House, and prior to, that was CEO of the Palm Restaurant Group.
His strategic leadership operational experience and guests. Central approach are well suited as we develop our future strategic plans for bone, fish grow
I want to thank Mark wrath for his years of dedicated service to our organization.
His leadership helped shape our company’s success and laid the foundation for the future of our brands.
Mark will work with John to ensure a smooth transition over the next couple of months.
the remainder of our executive and brand leadership teams Remains the Same
Our brand leaders have spent their careers as operators, growing sales and profits serving guests with a passion and making an impact on people.
I am excited that we have the right team in place to foster a culture grounded in accountability. Hospitality inclusion and fun.
We are in the early stages of turning around Outback.
This team believes in our potential and is committed to the hard work to grow sales and profits in each restaurant.
Before I move on to the business update, I wanted to thank our people, the more time I spend with our people and our guests in the restaurants, as well as with our restaurant support center, team members increasingly, see the passion are people have about serving our guests taking care of each other and making it happen every day. I'm proud to have the privilege of leading this organization
I will now discuss our second quarter results and progress on our operational priorities.
Our second quarter results, highlight the progress. We are making on our operating priorities. We saw sequential improvements in US traffic, which was down 2% in Q2, 190 basis points better than q1.
Our Q2 sales comp of -10 basis points. Reflected in improvement from q1 of -50 basis points. We had solid Mother's Day and Father's Day holidays. Are cross our brains
Traffic performance at Outback. Strengthened throughout the quarter driven by the Aussie 3 course offering
We also saw continued positive comp sales, growth at kabas driven by strong off premises, including catering and experiential line dinners.
Fleming's maintained sales, momentum with strong holiday and in restaurant, traffic driven by events and Catering platforms.
While we are making progress, we're still losing share in the industry. As defined by blackbox
We know our in restaurant dining is our biggest opportunity.
We know that it will take time to reverse our market share Trends, given the state of our business and we remain focused on improving our execution every day.
We've made progress on our operational priorities. I'll first discuss simplify the agenda and driving consistency of execution, before we discuss the Outback turnaround.
Menu reductions across brands are now fully implemented.
We expect further reductions to the Outback menu to be implemented as we learn more and conduct tests.
We streamline menus both on and off premise removed items with low sales mix.
Low satisfaction scores are items that do not travel well.
We removed seasonal LTO from Outback, which has allowed the team to focus on everyday execution.
We introduced Aussie 3 course as the everyday value offer which is easy for the restaurants to execute and is a great value for the guests.
OC3 course was a large contributor to the traffic improvement. We sought that out back in Q2.
The mix continues to be in line with our expectations and the value within the offer creates a mix of headwind for us.
In the first half of the Q3 we are laughing. OC 3 course from last year and then we expect a favorable app for the second half of the quarter,
we have favorable apps for the entire fourth quarter to finish the Year Strong.
And we'll iterate as needed.
Our leadership teams including brand, presidents jvp's and MVPs are spending more time in restaurants, during peak hours and conducting multi-day visits to gather feedback from employees and guests.
The goal is to identify and remove obstacles to deliver more consistent execution.
We are leading with an operational mindset.
Zeos or as our, outbacker is called a device table. Mates have been completely rolled out and Outback for a little over 3 months now.
Over 85% of guests are electing to use table mates, to complete payments. In the restaurants. Improving table turns by about 5 to 7 minutes.
Additionally, we continue to gather real-time feedback through surveys and leverage AI tools to help managing Partners efficiently address, any service gaps.
The good news is, we are seeing Traction in our simplification and consistent execution at Outback.
We are seen improvements in customer metrics and key areas like food and intent to return.
While we are encouraged by the improvements. We know we need to do more in our everyday operations to deliver a consistent experience.
Beyond the everyday execution, we are focused on the Outback turnaround.
We know we have three key areas to address in the "what you get for, what you pay for" equation, and that is state quality.
Service and value.
Addressing these 3 areas, we believe will drive sustainable traffic growth at Outback.
We have 14 restaurants and test earlier this year which was largely focused on menu simplification Innovation and guest experience we are encouraged by what we have seen in the tests which provided guests learnings and outbacker feedback that is allowed us to expand testing to a total of 42 restaurants by the end of September.
These restaurants will have integrated test cells with enhanced service models, state quality menu, innovation, and value components.
we believe the expansion tests will create a meaningfully improved guest experience and will be the foundation for the Outback turnaround
starting with the service model. We know we need to improve our service model to deliver a consistent guest experience.
2 years ago, we implemented handheld technology for our servers to Aid in Pace and accuracy, increasing the server to table station. Ratios above industry standards.
We transition to a 1 to 6 ratio with server supported by server assistance.
The increased table ratio has not delivered a consistent guest experience. I have seen this challenge for our teams and guests especially during peak hours.
We believe a lower server to table station, ratio of 1 to 4 offset by reduction in server assistance, support will lead to a more consistent execution and speed of service.
We are currently testing this revised service approach to select markets in our encouraged by what we are seeing.
At State quality. We completed a thorough menu satisfaction survey earlier this year.
With the survey results combined with Zas table, mates, item level data, we are working with our strategic Partners to improve our center of the plate proteins. Primarily our stake lineup and spec tolerances to enhance quality and crave availability.
We have tests and selected markets and include enhanced product specs and updated execution processes.
As a steakhouse, we have to lead with great steak quality.
On menu Innovation and value. We are testing opening price points, across categories.
As well as different offerings leveraging, work we are doing on Revenue growth management.
Through testing that has enhanced service models, State, quality, menu, Innovation and value components. We believe, we will drive greater frequency from our loyal guests as well as visits from elapsed and new guests.
Given our average guest frequency of 2 times per year, it will take some time to see the traffic benefits and we will provide updates as we learn more.
We also started our brand positioning work which complements changes in quality service and value. Outback is a casual and craveable Steakhouse at its core with great equities. And we need to be sharper in our positioning and consumer communication to differentiate ourselves within casual dining.
This will enhance the effectiveness of our marketing.
It is exciting work and the results will amplify the efforts. We are doing to improve the guest experience.
As I've said, in our prior calls, we are focused on getting to the best outcome for the brand, for our Outbacks, and for our guests, and we will continue to test until we have the right approach.
To more restaurants requires approximately $3 million of investments in 2025, which was not included in our prior guidance.
as it relates to our assets, we have a thorough assessment underway that is looking at our network of restaurants analyzing repair and maintenance costs, developing a refresh and remodel approach and completing a restaurant level analysis, based on profitability site, quality, and trade area demand,
We completed the repair and maintenance survey at the end of the second quarter. And we use the findings to help, prioritize the remodel scopes.
We will do approximately 10 Outback remodels this year that have 3 different levels of spending scopes.
These remodels will inform our approach for the next few years as we work through the balance of the system.
As we have pulled back on new restaurant openings, we intend to repurpose those capital dollars towards remodels over the next few years.
We are working diligently and urgently on our strategic plan. We know we need to make changes for the long term health of the business.
We are encouraged by the expansion of the test cells to 42 restaurants and we believe the test expansion will be the foundation for the Outback. Turnaround
Our attention is to be transparent as we work through our plan and provide elements of our strategy by the end of this year.
Before I turn it over to Michael. I want to reiterate that our priorities remain reinvesting, back into our restaurants.
Reducing our debt, leverage post, the Brazil, transaction and returning Capital to our shareholders.
Our liquidity is ample, and our cash flow is healthy. We are committed to getting our leverage back to below a 3 times lease adjusted net, leverage ratio, but we know the solution will require a focus on Debt, Pay down as well as completing the Outback turnaround.
With that, I would now like to turn the call over to Michael to review our financial performance.
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 2025,
Total revenues were 1 billion compared to 9999 Million last year. Restaurant sales were up driven by net impact of restaurant openings and closures. This was all set 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.
Us comparable restaurant sales were down 10 basis points and traffic was down 200 basis points. These results were above our expectations. However, they were below the casual dining industry.
Average check increased 1.9% compared to 2024 as we invested in value offers for our guests.
Our off premises sales was 24% of total Us sales in the quarter, consistent with Q2 last year.
Outback's off premise sales was 26% in the quarter and karabas was 35%.
Our Gap diluted earnings per share was 29 cents compared to 28 cents. Last year, our Q2 adjusted diluted earnings per share was 32 cents versus 45 cents last year.
32 cents was above, our guidance of range of 22, cents to 27 cents.
The primary difference between gaap and adjusted diluted earnings per share is due to approximately 3.5 million of adjustments, incurred in Q2 2025, as a result of the transformational and restructuring activities and approximately 2 million in connection with the foreign currency forward contracts. That we entered into to partially offset, the risk associated with the purchase, price installment payments on the Brazil, transaction.
Q2 adjusted operating margins were 3.5% versus 6.0% last year. The 250 basis point difference between this year and last year was driven by a decline in overall adjusted restaurant level margin by 200 basis points.
Cogs inflation of 3.3%.
Similar to the first quarter. We used higher priced inventory and had another quarter of negative product cost, mix. We expected to normalize in the back half of 2025.
Labor inflation of 3.4% as we continue to experience, inflationary pressure on wages.
Additionally, we had approximately 50 basis points from an increase in our health insurance costs.
And higher restaurant operating expense year-over-year driven by a higher operating and Supply expenses, mostly driven by inflation as well as 50 basis points from higher Insurance expense.
Depreciation was slightly higher from last year, driven by new unit development.
We had approximately 6 million of tax benefit in Q2 driven largely by the reduction in our full year, expectations and FICA tip credits, which I will explain more shortly.
Ship in Brazil, which is classified using Equity method investment accounting, we recognized and impact of negative 1.8 million in Q2.
This was driven by the depreciation and amortization on the stepped-up fair value basis of accounting for the assets, as well as interest expense from the acquisition debt on the company.
Turning to our capital structure total debt, net of cash was 867 million at the end of Q2.
As a reminder, we received 104 million from the first installment of the Brazil, referencing transaction and apply. Those proceeds to our revolver balance in the first quarter.
our leverage metrics are 2.7 times on a net debt, to adjusted ebita basis and 4.1 times on a lease adjusted net, leverage basis,
Reducing our debt, leverage remains a primary component of our Capital allocation. And we are committed to at least adjusted leverage of less than 3.0 times.
We anticipate the next installment of Brazil proceeds to be received at the end of December, this year to be approximately, 96 million and in 10 to apply it to our revolver balance.
The board declared a quarterly dividend of 15 cents, a share that is payable on September the 3rd 2025.
We have 97 million remaining under our share authorization program, which expires on August 13th 2025.
We do not plan to execute share repurchases at this time.
Turning to our guidance.
We are adjusting our adjusted diluted earnings per share range. To be between a dollar and a dollar, ten driven, primarily by 4 items.
We shared last quarter that the Tariff impact was estimated to be a negative -20 to 40 basis points of impact to restaurant level margins in 2025.
Due to the fluid nature of last quarter. We did not include the estimated impact in our guidance.
As the environment has somewhat settled, we now expect to be on the lower end of that range or approximately 6 million spread across Q3, and Q4 and we have included it in our updated for your guidance.
Importantly, at this time, we are not contemplating additional pricing actions this year to offset these costs.
As a result of higher general, liability insurance claim, costs driven primarily by the pace and cost of older cases that are now working to the court system. We anticipate increasing our balance sheet reserves to account for these Trends, which will result in an approximately 6 to 8 million expense, in our forecast spread across Q3 and Q4.
The volume of claims has remained consistent year to year, but we are seeing an increase in the average cost per case, which impacts how we reserve for open cases.
This expense is included in our full year guidance.
We have a significant number of restaurants and tests, including the 42-restaurant expansion, as well as isolated tests for state quality and service.
We expect to incur approximately $3 million in investments in quality service and value, and that is now included in our full-year guidance.
The majority of this expense will impact Q4.
We will scrutinize these Investments to make sure we invest in areas where we expect a meaningful return.
To be clear. This is not indicative of a full system launched, we would seek to our find, the analysis and returns identify cost offsets and design a stage. Roll out with Pace sequencing and results paying for future Investments.
We are excited by these 42 restaurants. As we believe they represent the holistic solution to our value service and quality opportunities.
For the Bonefish Grill, brand traffic Trends, have been challenging while the team remains very focused on improving the trend. We still see risk in this brand and have Incorporated this in our guide.
With this reduction in earnings per share, we will be in a higher tax benefit situation, which is driven by the tax benefit of FICA tip credits relative to lower earnings.
We would expect a tax benefit in the range of approximately $11 to $14 million on the year, which is included in our updated guidance.
We will be on the low end of our Capital guidance range, or approximately 190 million for the full year.
As Mike mentioned, we are doing a thorough assessment of our network of restaurants, based on the outcome of this assessment, there may be operating or financial implications that are not included. In our guidance, we will be a transparent as we conclude this work later. This year.
As we focus on the turnaround at Outback, we are also aggressively looking for cost-saving opportunities and have engaged and external partner to work with us.
Best facing or negatively impact operations. They will focus on other areas including indirect expenses. Contract, negotiations and supplies among others.
We will share more as we identify opportunities to fund the Outback turnaround.
As it relates to the third quarter 2025, we expect us comparable, restaurant sales to be between flat and negative 100 basis points.
We expect Aussie 3 course, to be a bigger impact on our sales. In the back, half of Q3, as we are lapping, underperforming promotions from 2024.
We expect Q3 adjusted diluting earnings per share to be between negative -5 cents and -10 cents.
This earnings per share range includes an estimated negative impact from our 33% Brazil ownership to be approximately 1 to 2 million dollars.
And with that, we will open up the call for questions.
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're using a speaker-phone, please pick up your handset before pressing the keys to withdraw your question. Please. Press star then 2
At this time, we will pause momentarily to assemble our roster.
The first question.
Comes from John ivanco with JP Morgan.
Please go ahead.
Hi, thank you. Good morning. The question is on outbound general managers. Obviously, your average unit volumes are not as high as some peers, which might limit you in certain styles of compensation. So, I'm curious if you are considering other methods of change at the GM level. Perhaps, uh,
Create desired uh desired Financial or other operational outcomes uh for this important position. Thank you.
John, good morning. How you doing? Um, John our goal is to pay at the market, uh, average in terms of comp and our, our current structure is good and we're assessing the structure as part of the Strategic plan. And we want a variable component, just like, the model was set up to drive growth in sales and profits. And that's a success of the restaurant. We were made committed to that model.
Okay, thank you.
The next question comes from Jeff, Bernstein with bark leaves, please go ahead.
Hi, good morning. This is product on for Jeff.
Mike. Um, just a bigger picture question on the Outback turnaround. Um, clearly you're doing a lot of work. Um, in improving the service, the quality, the value you're doing remodels. So, um, obviously there's a lot of initiatives currently going on. Can you just help us prioritize where you see the biggest opportunity in the near term? And you know, if we were to kind of gauge this. What inning do you think you are in this process? Thanks.
Well, as I've said, we're in the early Innings and the turnaround takes time, uh, and I I think we'll continue to learn as we go forward. And I, I think the fundamental of this is it's it's all about. We want to have a really good equation in terms of what you pay for what you get for and what that means is we're going to be very focused on service model. We're going to be very focused on state quality and we're going to be very focused on our value components. Uh and we're going to continue to test and learn
Appreciate that.
The next question comes from Alex legal with Jeffrey's, please. Go ahead.
Thanks. Good morning. Uh, wanted to ask a little bit more on the OSU 3 course. And if you can dial in a little bit more on what you learned about these transactions and customers that ordered.
uh, the deal just if there's any
Any info on some of the check size, or add-ons, or, or frequency. Um,
and and just maybe some more thoughts on how you want to keep this offer fresh and evolve. It going forward.
You've seen that about 2/3 of the guests are trading up to the higher higher levels at the 1799 and 2099, which has been good. Uh, there is a bit of a mixed headwind out of it which uh, but we know it's necessary and it's included in our guide. Um, I also like when you look at it, we've got about 20% of the guests or trading up on desserts as well. Uh, so I like the behavior that guests like the value, they, they know the incentive curve and, uh, a big bunch of them are, are paying more for more.
Thanks.
The next, the next. The next question, Jeff. Farmer with Gordon haskett. Please go ahead. Um, thanks and good morning. Um, you did touch on it a bit but just drilling down on the the initial 14, Outback test restaurants, can you just share um some of the more impactful or I would say, surprising early findings from this test group. What's, what's really got? Your, your attention and your focus. As you've looked at these 14 restaurants, even though it's been just a short period of time,
Yeah, good morning. Uh, well, the first thing I we learned and I learned is the, the potential of the brand is tremendous.
And and the second is that guest lover, craveable food in a fun casual environment, where there's a no rules. Just right? Uh, approach, Reverend attitude. Uh, what we've also learned is there's, there's a cumulative impact, which is part of getting the service model, right? Getting the state quality, right? Getting the value, right? And the ambience, right? And and the last is like anything, there's change management. You you've got to train and drive execution, consistency of execution and our Outback are incredibly proud to serve what we're doing in these tests restaurants. So I'm very excited and uh you know, it takes time to build, you got to build momentum uh but I'm really excited about based on what we've seen and that's why we're moving to 42 to get a a broader learning in terms of more geographies and see how we continue to to build build the brand and build the turnaround.
Uh, yeah, thank you for that and just 1 more quick follow-up. Um, you did note that the traffic performance at Outback,
Strengthened throughout the quarter and it sounds like you're attributing uh, the The Lion Share of that improved performance to the Aussie 3 course. But uh, with the offering in place for the entire quarter, um, what drove that improved momentum? Um, again, understanding that it's been in place the entire quarter, but you did get stronger as a quarter of progress. So help us understand how, or what rule, the LG 3 course played in in, in driving that improve.
Momentum, as you as you move through the quarter.
Well, the the laps helped us, uh, in terms of, it was just a better offer than what we have in terms of, uh, dine under, uh, previously. But, but I also want to give credit to Pat Hafner and the team. We're, we're, we're executing with more consistency. Our leaders are in the restaurants on the weekends, they're there during peak hours. We're driving consistency of execution, recipe, adherence. And uh I think that's a big part of it. And then what what you've got is? We're marketing, getting folks in the restaurants with obviously 3 course, but we're getting folks to come back as we're improving our service and our excellence. And I think that's formula. We've got to drive moving forward.
Thank you.
the next question comes from Brian, Glenn with
Piper Sandler. Please go ahead.
Hey thanks. I want to ask about the the menu reduction actions and Outback. I I think in April you reduced by by 10% I guess 1 can just talk about how that's going from a guest experience uh and an employee experience perspective and then 2
From the private remarks. It sounds like you might see the opportunity to take off more even if you do need to test it. So just
Talk about what's making you think? There's still more room to go?
Well, our our Outback is really like it because we've we've simplified the operation and we're also seeing our guests. Give us a response that we're just creating and developing and executing better products and executing much better more consistently. Um, in terms of the numbers we're we're down about 15%, um, and the menu if you just go off the rough numbers, we were in the mid 80s, we got down to low 70s with the reduction in terms of menu items and we'll continue to iterate and and look to get into probably the mid-60s over time. That that seems to be the right formula as we've been looking at the menu Innovation and and we'll continue to do more.
There are.
Some strategic changes going on at KB is underway as well.
We, we did kravis team. Uh, I'm really impressed with how they're thinking about day park conversion. So I start there, that that team has done a good job in terms of channels and converting guests across the day and specifically strength. We we saw a good momentum on the experiential line, dinners events that bring in guests, both for lunch and dinner on in restaurant. Well, I was seeing really nice momentum on catering. Uh, we've had good luck with our beastro sandwiches that that have been driving the catering business, as well as our OPD has continued to grow. So it's all the above
The next question comes from Sarah Senator, with Bank of America, please go ahead.
Hey, good morning. Thanks for the question. Um, this is Isaiah on for Sarah. Uh, just wanted to ask really quickly about the decision to pull back on advertising in the quarter, seems to have helped out other Opex. Uh, and then I have a follow-up after that.
Yeah. So our, our advertising, we we run, uh, run about 2 and a half percent of sales, um, and and wasn't, I wouldn't call it a reduction. What we reduced, we've just gotten more effective with our marketing spends, we've reduced our non-working marketing, uh, less creative less content, more focus on our rois, which channels we're pushing. And that's allowed us to just be more efficient to
Effective with our marketing.
Got it. Thank you. Very helpful. Um, and then, just a quick question on labor, seems like it came in a little pressured this quarter and um, appreciating that you spoke earlier about this lowering, the server to table station ratio. Um, just want to know where we are with labor Investments. What more there is to come kind of how much has already.
Been invested into labor um year to date, just specially with labor inflation, being the primary driver of um of that higher labor cost of quarter. Thank you.
Well, I'll start with the service model. Um, in terms of the server to table station ratio, as we're testing, the 1, to 6, to 1, to 4, uh, there just to be clear. We're reallocating costs. Uh, we don't see that as a major investment, uh, just in terms of how your service assistant hours move off and then how you have your servers. So, so I don't, I don't see that in any way, as any type of major investment. Um, we also have really started improving and look at how we drive our hot schedule, AI laboring tools, and the Outback team's gotten very behind that in terms of just flexing labor to flex labor up, when we have more guests in the restaurants and flexing down, when we have less demand in the restaurant. So it's really about just getting the right amount of people at the right time to take great care of our guests. And, and that, that's where reflection more. And I, I think you'll see more more of that use of tools to be more efficient in the labor spend.
Yeah, just to just to share as far as overall, labor inflation, we've been running about 4% which is, which has been pretty consistent for actually almost a couple years now. And so, you know, we we anticipate that to be our our, our go forward inflation rate, at least through the end of this year.
Thank you.
The next question comes from Jared, ladzinski with BMO Capital markets, please go ahead.
Good morning, thanks for taking the question. So you mentioned that the repair and maintenance survey was completed and are planning for 10 remaining in 2025. Could you provide any additional details on for survey findings and scope of work needed to be done to bring some of the older assets off the standard. And then any initial thoughts for the level of remodels? We could potentially see in 2026.
I'd start with what we've done a lot of work on site quality as well as asset conditions. Uh, and I would say, broadly on site quality, we're not seeing that as a primary issue for us, in terms of the brand. And how we think about the brand going forward, we have focused more on asset condition, which is why we decided to launch, uh, the repair and maintenance survey, because I wanted to make sure that we had an environment that was good for our guests, good for our backers and also creates a good safe environment out there and that's helped us. Prioritize what we're going to do by restaurant. Uh we don't see that as a major increase in spend its
Just give me a good return on the money. We put into the restaurants, uh, from a refresh, which is more of a lighter touch, and we think we can do those, uh, well. So, you'll see us shifting, as I've said before, we're going to be shifting dollars from new restaurants into this remodel. Refresh scope moving forward.
Thank you. In the last call, you discussed scrutinizing all expenses with an expected G&A expense of $215 million for the year. Has anything changed in that outlook, and how should we view these savings? Additionally, how much is expected to be structural as we head into 2026? Thank you.
We we we don't uh anticipate any change that to 15 GNA number.
Great. Thank you.
The next question comes from Teddy, Farley with golden fact, please go ahead.
Okay, thanks for taking the question. I was curious if you could give some detail on how Outback is performing in various regions of the country. I previously mentioned some weakness across the South. Are you still seeing that? And, what, if anything, are you doing to position the brand better in those markets? Thanks.
No, in Q2 we we didn't see, uh, there was really no outliers. Uh, the cons, the performance was consistent across all geographies.
This concludes our question and answer session. I would like to turn the conference back over to Mike Spanos for an 8 closing. Remarks
Thank you. Once again for your investment. In support of Bloomin Brands. I want to close by thanking our people, for their passion, resilience and commitment to Texans. Thank you.
The conference has now concluded, thank you for attending today's presentation. You may now disconnect