Digital Ordering And Urban Demographics Will Shape Secular Trends

Key Takeaways

• Digital ordering technology, menu simplification, and data analytics are boosting efficiency, customer experience, and operational margins across the brand portfolio.
  
• Value-driven offerings and targeted international expansion are widening demographic reach, supporting revenue growth, and positioning for long-term market opportunities.
  
• Heavy reliance on outdated dining concepts and limited brand innovation threatens customer relevance and revenue growth amid rising costs and shifting consumer preferences.

Catalysts

Through its subsidiaries, owns and operates casual, polished casual, and fine dining restaurants in the United States and internationally.

• Accelerated adoption of digital ordering and off-premise dining—including the continued rollout and optimization of tech like Ziosk tablets and third-party delivery platforms—positions Bloomin’ Brands to capture incremental sales and engage a broader customer base, leading to higher revenues and improved net margins over time due to increased order volume and operational efficiencies.
  
• Menu simplification across the portfolio is reducing operational complexity, leading to faster service, lower training costs, and greater consistency—improving execution and guest satisfaction, which should drive repeat traffic and ultimately lift same-store sales and restaurant-level margins.
  
• Strategic focus on value platforms such as the Aussie 3 Course, alongside data-driven, iterative pricing and tiering, is expected to attract price-sensitive Millennials and Gen Z diners, widen demographic reach, and drive a recovery in traffic, thereby supporting revenue growth and offsetting short-term margin pressures.
  
• Enhanced use of real-time data and AI from digital touchpoints is enabling management to rapidly identify and implement best practices across locations, which should better leverage technology investments to maximize labor productivity, reduce waste, and enhance net earnings.
  
• The company’s ongoing international expansion and optimization of its brand portfolio—including re-investment of Brazil transaction proceeds, location pruning, and targeted remodels—will free up capital, bolster long-term cash flow, and create new avenues for compounding growth in international and emerging US markets.

Bloomin' Brands Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Bloomin' Brands compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Bloomin' Brands's revenue will grow by 2.0% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 2.0% today to 3.2% in 3 years time.
• The bullish analysts expect earnings to reach $133.0 million (and earnings per share of $1.54) by about July 2028, up from $77.1 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 10.4x on those 2028 earnings, down from 11.0x today. This future PE is lower than the current PE for the US Hospitality industry at 24.5x.
• Analysts expect the number of shares outstanding to grow by 0.11% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 11.6%, as per the Simply Wall St company report.

Bloomin' Brands Future Earnings Per Share Growth

Risks

• Bloomin’ Brands is experiencing declining comparable restaurant sales and negative traffic growth in the U.S., as well as underperformance relative to industry benchmarks, indicating potential long-term revenue and market share erosion due to shift in consumer preferences and heightened competition.
  
• The company is heavily reliant on legacy casual dining concepts like Outback Steakhouse, which are losing relevance among younger and health-conscious consumers amid long-term secular trends toward healthier, plant-based, and fast-casual dining options, risking future revenue growth and pressuring overall valuation multiples.
  
• Persistent labor inflation and regulatory pressures are increasing operating expenses, while management acknowledges that necessary investments in value, quality, and service could further compress restaurant-level and net profit margins in the near-to-medium term.
  
• Despite plans to invest in turnaround strategies, there is continued underinvestment in brand reinvention and store remodels, and a reliance on menu simplification and cost-cutting rather than meaningful innovation; this may exacerbate brand fatigue and reduce long-term customer relevance and repeat business, negatively impacting revenue and earnings growth.
  
• Volatility in beef and commodity prices, rising third-party delivery commission costs, unpredictable tariffs, and ongoing real estate inflation all represent structural risks that can drive cost volatility, reduce gross margins, and create further unpredictability in net earnings.

Valuation

• The assumed bullish price target for Bloomin' Brands is $11.7, which represents two standard deviations above the consensus price target of $9.15. This valuation is based on what can be assumed as the expectations of Bloomin' Brands's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $12.0, and the most bearish reporting a price target of just $7.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $4.2 billion, earnings will come to $133.0 million, and it would be trading on a PE ratio of 10.4x, assuming you use a discount rate of 11.6%.
• Given the current share price of $9.95, the bullish analyst price target of $11.7 is 15.0% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.