Visitors walk into Bloomin ‘Brands’ Outback Steakhouse at Queens Place Mall in Queens, New York.
Victor J. Blue | Bloomberg | Getty Images
Shares of Bloomin ‘Brands, parent company of Outback Steakhouse, fell more than 11% in Tuesday morning trading after the restaurant company said it expected $ 170 million in additional spending next year due to inflation.
Bloomin estimates that commodity prices will rise by 10% in 2022, driving up costs by about $ 100 million. There has also been an average growth in labor costs, accounting for about $ 45 million in additional costs. In addition to this, typical inflationary costs are expected to be around $ 25 million.
To compensate for the higher costs, customers will have to pay more for food. In November, the company plans to raise menu prices by 3%.
“It’s important to note that we have not been accepting pricing since 2019,” CFO Chris Meyer told analysts. “And so I am not saying that we have all kinds of stock and the ability to charge, but we are certainly in a good position in the industry with regard to pricing.”
Executives said they will continue to monitor inflation to decide if they need to increase prices.
Bloomin ‘is also cutting promotions to maintain its profits, such as killing the Outback steak and lobster deal. However, in some cases, the company is cutting prices to encourage consumers to spend more. For example, he lowered the price of an eight-ounce steak at Outback, so customers are more likely to choose a larger six-ounce steak.
In response to expectations of higher food and labor costs in the fourth quarter, Bloomin said it estimates fourth-quarter revenue at at least $ 1 billion and adjusted earnings per share at least 50 cents.
Executives said they will provide a more detailed forecast in February when the company reports fourth-quarter results. Bloomin doesn’t decide on commodity contracts until early December.
For third quarterBloomin ‘posted an adjusted earnings per share of 57 cents, beating estimates of analysts polled by Refinitiv at 55 cents. However, the company’s revenues of $ 1.01 billion fell short of expectations of $ 1.04 billion.
Bloomin’s shares are up 4% this year, bringing the company’s market value to $ 1.8 billion.