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David Deno, Bloomin' Brands CEO, joined Yahoo Finance Live to discuss the company's latest earnings report and his outlook for the year.
SEANA SMITH: Stock to watch today is Bloomin' Brands. And you can see its shares soaring up just around 8 and 1/2%, hitting an all-time high on the heels of its very strong quarterly earnings. So we want to bring in their CEO, David Deno. He's the CEO of Bloomin' Brands, along with Yahoo Finance anchor, Brian Sozzi. And David, it's great to have you here on Yahoo Finance. A very strong quarter for you guys. In your earnings release, I just want to read a quick thing that you wrote. You said that you are well positioned to grow sales and also capture additional market share. Is your business-- is it safe to say that your business has fully recovered to those pre-pandemic levels?
DAVID DENO: Well, it's the business has been terrific. We have had strong off-premises, delivering carryout business throughout the pandemic. And we've kept that as dining rooms have reopened. And so our same store sales growth versus 2019, not 2020, but 2019, is up 12.6%. So we're well above 2019 levels right now.
BRIAN SOZZI: So David, when families come back into an Outback-- in many case, I imagine they haven't been there in a good bit because of the pandemic. What are you seeing them order in terms of food?
DAVID DENO: Well, people are actually treating themselves a little bit more. They get a little fancier cuts of steak or larger steaks. And what we call attachment rate, which is people getting appetizers and desserts or some alcohol is higher. And so people are clearly treating themselves in this new environment.
BRIAN SOZZI: Are you seeing them come back--
ADAM SHAPIRO: And we blame for the extra inch on our waistline, especially from Outback. I got to ask you-- it's Adam, by the way, David. Thank you for joining us. I'm curious in different parts of the country, given what's happening with commercial real estate in New York City, for instance, does that give you an opportunity to renegotiate leases for the space? Because I know that restaurants are operating. But could you use that to your advantage to get better deals for the long-term space rental?
DAVID DENO: Well, first of all, let me answer. If you're concerned about your waistline, get a six ounce filet and some broccoli at Outback Steakhouse. It's delicious, and it's great for you. But on a real estate standpoint, what's happening is we are seeing more sites available to us because of the turnover in the real estate market. We're not so much renegotiating leases. But if you go to cities throughout our land, you'll see real estate opportunities throughout. And with a credit like ours and what we bring, people are very interested in signing leases with us.
BRIAN SOZZI: David, I talked to the folks at Wingstop this morning. And they told me that second quarter so far, they're seeing sales very strong in the second quarter. What are you seeing so far, quarter to date?
DAVID DENO: Very strong. Like I mentioned earlier, up 12.6% versus 2019, so pre-pandemic, which is just a remarkable performance for us.
SEANA SMITH: David, your digital revenue is also a massive standout in the latest quarter, jumping 147% from a year ago. When you take a look at this, I guess, how do you plan to continue to grow that portion of your business?
DAVID DENO: Well, people are really using online ordering. And we've upped our capability of our online ordering system and tools, faster, stronger, more reliable. You can add on easily. And you can deliver alcohol now in a lot of places. So there's a lot of attachment opportunities here going forward. So we're going to invest in the-- continue to invest in our online ordering capability. And then people love to use their phone. So if you want to order ahead, if you want pay at the table and do these kind of things with digital, that clearly also is possible.
ADAM SHAPIRO: David, everything I hear you say at least would interpret for some of us as expand, expand, expand. Because I think most of us are sick and tired of cooking at home. Do you see maybe a year or two years out the growth at the levels we've seen continuing?
DAVID DENO: Yeah, it's clearly the habits have changed in America. It's been my pleasure to be in this business for many years. And convenience-- and people found the convenience that casual dining can offer during this pandemic. What does that mean? Carryout, delivery, the food comes to you fast. It's delicious. And I think that is a permanent. We're going to see a permanent step change in our business in off-premises between delivery and carryout. And we're going to see people still want to go out to eat and have that opportunity as well. So that's a game changer for us.
BRIAN SOZZI: But David, are you finding it difficult to find the workers you need to meet some of that demand?
DAVID DENO: Yeah, well, one of the things that we did as a company a year ago at the height of the pandemic, we did not let one person go. We didn't furlough anybody. We didn't fire anybody. We didn't let them go. So when the restaurants opened back up, we had trained and committed staff available to us. And so our retention levels are very high. Our turnover rates are very low. So as our sales have come back and even gone beyond what we expected, we had a very high level of staffing in our restaurants. Now, with 12% same store sales growth versus 2019, you got to have more staff. And we are working on getting additional staff. But it's normal course of business for us. It's nothing unusual that we have to do to get the staff. But we are staffing up our restaurants.
BRIAN SOZZI: So I imagine you've seen some wage inflation. We've talked to a lot of consumer companies that the cost of their goods are going up, whether it's packaging or their food itself. Have you had to take price increases? And where have you taken them?
DAVID DENO: No, we are not taking price increases. We want to keep that value equation going for our customer. One of the things our supply chain team did, which is typical for us, we lock in our prices in the fall of the prior year. So 85% of our commodity costs, all the food and everything else is locked for the year. So we're set. So there's no need to take prices. We don't want to take prices. We think we can manage the cost, increase cost in labor through our normal course of business and productivity. So we're in great shape. And if I may say one other thing, I think you saw on our earnings release, our margin expansion was quite large versus 2020 and 2019.
SEANA SMITH: David Deno, CEO of Bloomin' Brands, thanks so much for taking the time to join us today. And again, congratulations on a great quarter. The stock today hitting an all-time high. And Brian Sozzi, thanks so much for bringing that interview to us.