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Bonefish Grill Is Bloomin’ Brands’ Main Focus for Unit Growth

Investin' in Bloomin' Brands: A Key Business Overview (Part 12 of 15)

(Continued from Part 11)

Focus on Bonefish Grill

Bloomin’ Brands (BLMN) has a total of 1,490 restaurants in its system, which excludes the 20 Roy’s restaurant units. Unit growth is an important driver of revenue. Bloomin’ Brands’ management stated in its annual filings that it will continue to focus on growing more Bonefish Grill restaurants in the US in 2015. There were a total 206 Bonefish Grill restaurants in the system as of fiscal 2014. Over the next three to five years, the company plans to open 300 Bonefish restaurants.

Unit growth

From looking at the chart above, it’s easy to see why Outback contributed to half of Bloomin’ Brands’ revenue in fiscal 2015. About 65%, or 975, of the restaurants units are Outback Steakhouses, of which 815 restaurants are company-owned. The company plans to grow about 100 Outback restaurants along with Carraba’s Italian Grill in Brazil. The Carrabba’s Italian Grill restaurant concept will open as Abbraccio in Brazil.

Bloomin’ Brands gets to keep all the revenues of its company-owned restaurants, compared to just the royalties and fees it earns from franchises . Learn more about the restaurant business model in An in-depth overview of the US restaurant industry.

Unit growth can be the most important driver for growing concepts such as Bonefish Grill, Chipotle Mexican Grill (CMG), and The Habit Grill (HABT) as opposed to established concepts such as McDonald’s (MCD) or KFC, under the umbrella of Yum! Brands (YUM). Unit growth is also positive for the Consumer Discretionary Select SPDR ETF (XLY), which holds about 4% of MCD, 1.5% of YUM, and 0.3% of Darden Restaurants (DRI).

As for international growth, Bloomin’ Brands plans to focus on Brazil and China. In terms of choosing between company-owned restaurants and franchised restaurants, Bloomin’ Brands will commit to opening more company-operated restaurants in markets that have a “potential for significant number of restaurants.”

Continue to Part 13

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