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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Bloomin' Brands, Inc.    BLMN

BLOOMIN' BRANDS, INC.

(BLMN)
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Bloomin' Brands : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

10/30/2020 | 03:16pm EST

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's discussion and analysis of financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes. Unless the context otherwise indicates, as used in this report, the term the "Company," "we," "us," "our" and other similar terms mean Bloomin' Brands, Inc. and its subsidiaries.

Cautionary Statement


This Quarterly Report on Form 10-Q (the "Report") includes statements that
express our opinions, expectations, beliefs, plans, objectives, assumptions or
projections regarding future events or future results and therefore are, or may
be deemed to be, "forward-looking statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. These forward-looking statements can generally
be identified by the use of forward-looking terminology, including the terms
"believes," "estimates," "anticipates," "expects," "feels," "seeks,"
"forecasts," "projects," "intends," "plans," "may," "will," "should," "could" or
"would" or, in each case, their negative or other variations or comparable
terminology, although not all forward-looking statements are accompanied by such
terms. These forward-looking statements include all matters that are not
historical facts. They appear in a number of places throughout this Report and
include statements regarding our intentions, beliefs or current expectations
concerning, among other things, our results of operations, financial condition,
liquidity, prospects, growth, strategies and the industry in which we operate.

By their nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that may or may not
occur in the future. Although we base these forward-looking statements on
assumptions that we believe are reasonable when made, we caution you that
forward-looking statements are not guarantees of future performance and that our
actual results of operations, financial condition and liquidity, and industry
developments may differ materially from statements made in or suggested by the
forward-looking statements contained in this Report. In addition, even if our
results of operations, financial condition and liquidity, and industry
developments are consistent with the forward-looking statements contained in
this Report, those results or developments may not be indicative of results or
developments in subsequent periods. Important factors that could cause actual
results to differ materially from statements made or suggested by
forward-looking statements include, but are not limited to, the following:

(i)The severity, extent and duration of the COVID-19 pandemic, its impacts on
our business and results of operations, financial condition and liquidity,
including any adverse impact on our stock price and on the other factors listed
below, and the responses of domestic and foreign federal, state and local
governments to the pandemic;

(ii)Consumer reactions to public health and food safety issues;

(iii)Our ability to compete in the highly competitive restaurant industry with many well-established competitors and new market entrants;

(iv)Minimum wage increases and additional mandated employee benefits;

(v)Economic conditions and their effects on consumer confidence and discretionary spending, consumer traffic, the cost and availability of credit and interest rates;


(vi)Our ability to protect our information technology systems from interruption
or security breach, including cyber security threats, and to protect consumer
data and personal employee information;
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                             BLOOMIN' BRANDS, INC.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

(vii)Fluctuations in the price and availability of commodities;

(viii)Our ability to comply with governmental laws and regulations, the costs of compliance with such laws and regulations and the effects of changes to applicable laws and regulations, including tax laws and unanticipated liabilities;

(ix)Our ability to effectively respond to changes in patterns of consumer traffic, consumer tastes and dietary habits;


(x)Our ability to implement our remodeling, relocation and expansion plans due
to uncertainty in locating and acquiring attractive sites on acceptable terms,
obtaining required permits and approvals, recruiting and training necessary
personnel, obtaining adequate financing and estimating the performance of newly
opened, remodeled or relocated restaurants;

(xi)The effects of international economic, political and social conditions and legal systems on our foreign operations and on foreign currency exchange rates;

(xii)Our ability to preserve and grow the reputation and value of our brands, particularly in light of changes in consumer engagement with social media platforms;


(xiii)Any impairment in the carrying value of our goodwill or other intangible
or long-lived assets and its effect on our financial condition and results of
operations;

(xiv)Seasonal and periodic fluctuations in our results and the effects of significant adverse weather conditions and other disasters or unforeseen events;


(xv)The effects of our substantial leverage and restrictive covenants in our
various credit facilities on our ability to raise additional capital to fund our
operations, to make capital expenditures to invest in new or renovate
restaurants and to react to changes in the economy or our industry, and our
exposure to interest rate risk in connection with our variable-rate debt; and

(xvi)Such other factors as discussed in Part I, Item IA. Risk Factors of our
Annual Report on Form 10-K for the year ended December 29, 2019 and Part I, Item
IA. Risk Factors in this Report.

In light of these risks and uncertainties, we caution you not to place undue
reliance on these forward-looking statements. Any forward-looking statement that
we make in this Report speaks only as of the date of such statement, and we
undertake no obligation to update any forward-looking statement or to publicly
announce the results of any revision to any of those statements to reflect
future events or developments. Comparisons of results for current and any prior
periods are not intended to express any future trends or indications of future
performance, unless specifically expressed as such, and should only be viewed as
historical data.

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                             BLOOMIN' BRANDS, INC.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Overview

We are one of the largest casual dining restaurant companies in the world with a
portfolio of leading, differentiated restaurant concepts. As of September 27,
2020, we owned and operated 1,152 restaurants and franchised 312 restaurants
across 47 states, Puerto Rico, Guam and 20 countries. We have four
founder-inspired concepts: Outback Steakhouse, Carrabba's Italian Grill,
Bonefish Grill and Fleming's Prime Steakhouse & Wine Bar.
Executive Summary

Our financial results for the thirteen weeks ended September 27, 2020 ("third quarter of 2020") include the following:


•A decrease in Total revenues of 20.3% in the third quarter of 2020, as compared
to the third quarter of 2019, primarily due to: (i) significantly lower
comparable restaurant sales and franchise revenues principally attributable to
the COVID-19 pandemic, (ii) the net impact of restaurant closures and openings
and (iii) the effect of foreign currency translation of the Brazil Real relative
to the U.S. dollar.

•Loss from operations of $(14.3) million in the third quarter of 2020, as
compared to income from operations of $22.0 million in the third quarter of
2019, was primarily due to: (i) significantly lower comparable restaurant sales
and costs incurred in connection with the COVID-19 pandemic, including
incremental delivery related costs, and (ii) certain costs incurred in
connection with our transformation initiatives. These decreases are partially
offset by: (i) reduced advertising, utilities and operating expenses, (ii) a
reduction in prep labor hours, offset by higher labor costs, and (iii) cost
savings from waste reduction initiatives.

Recent Developments - COVID-19


In response to the COVID-19 pandemic, governmental authorities took dramatic
action in an effort to slow the spread of the disease. Along with many other
restaurant businesses across the country, we temporarily limited our services in
the U.S. to carry-out and delivery only beginning March 20, 2020. In early May
2020, we began to reopen our restaurant dining rooms with limited seating
capacity in compliance with state and local regulations. As of September 27,
2020, our restaurant dining rooms have reopened but many are still subject to
seating capacity restrictions. The temporary closure of our dining rooms and the
limitations on seating capacity in our reopened dining rooms has resulted in
significantly reduced traffic in our restaurants.

It remains uncertain whether customer traffic will return to levels prior to the
outbreak of COVID-19. Even if consumer demand fully recovers, governmental
restrictions may continue to limit the capacity of our dining rooms or services
we may provide in the future. As a result, our results for the foreseeable
future may be significantly adversely impacted.

In response to the pandemic, we have tightly managed expenses while taking steps
to secure our liquidity position. See the subsection below entitled "Liquidity
and Capital Resources" for further details.


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                             BLOOMIN' BRANDS, INC.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Key Performance Indicators

Key measures that we use in evaluating our restaurants and assessing our business include the following:


•Average restaurant unit volumes-average sales (excluding gift card breakage)
per restaurant to measure changes in customer traffic, pricing and development
of the brand;

•Comparable restaurant sales-year-over-year comparison of sales volumes (excluding gift card breakage) for Company-owned restaurants that are open 18 months or more in order to remove the impact of new restaurant openings in comparing the operations of existing restaurants;


•System-wide sales-total restaurant sales volume for all Company-owned and
franchise restaurants, regardless of ownership, to interpret the overall health
of our brands;

•Restaurant-level operating margin, (Loss) income from operations, Net (loss)
income and Diluted (loss) earnings per share - financial measures utilized to
evaluate our operating performance.

Restaurant-level operating margin is widely regarded in the industry as a useful
metric to evaluate restaurant level operating efficiency and performance of
ongoing restaurant-level operations, and we use it for these purposes, overall
and particularly within our two segments. Our restaurant-level operating margin
is expressed as the percentage of our Restaurant sales that Food and beverage
costs, Labor and other related and Other restaurant operating (including
advertising expenses) represent, in each case as such items are reflected in our
Consolidated Statements of Operations. The following categories of our revenue
and operating expenses are not included in restaurant-level operating margin
because we do not consider them reflective of operating performance at the
restaurant-level within a period:

(i)Franchise and other revenues which are earned primarily from franchise
royalties and other non-food and beverage revenue streams, such as rental and
sublease income.
(ii)Depreciation and amortization which, although substantially all of which is
related to restaurant-level assets, represent historical sunk costs rather than
cash outlays for the restaurants.
(iii)General and administrative expense which includes primarily
non-restaurant-level costs associated with support of the restaurants and other
activities at our corporate offices.
(iv)Asset impairment charges and restaurant closing costs which are not
reflective of ongoing restaurant performance in a period.

Restaurant-level operating margin excludes various expenses, as discussed above,
that are essential to support the operations of our restaurants and may
materially impact our Consolidated Statement of Operations. As a result,
restaurant-level operating margin is not indicative of our consolidated results
of operations and is presented exclusively as a supplement to, and not a
substitute for, Net (loss) income or (Loss) income from operations. In addition,
our presentation of restaurant-level operating margin may not be comparable to
similarly titled measures used by other companies in our industry;

•Adjusted restaurant-level operating margin, Adjusted (loss) income from operations, Adjusted net (loss) income and Adjusted diluted (loss) earnings per share-non-GAAP financial measures utilized to evaluate our operating performance.


We believe that our use of non-GAAP financial measures permits investors to
assess the operating performance of our business relative to our performance
based on U.S. GAAP results and relative to other companies within the restaurant
industry by isolating the effects of certain items that may vary from period to
period without correlation to core operating performance or that vary widely
among similar companies.
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                             BLOOMIN' BRANDS, INC.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
However, our inclusion of these adjusted measures should not be construed as an
indication that our future results will be unaffected by unusual or infrequent
items or that the items for which we have made adjustments are unusual or
infrequent or will not recur. We believe that the disclosure of these non-GAAP
measures is useful to investors as they form part of the basis for how our
management team and Board of Directors evaluate our operating performance,
allocate resources and administer employee incentive plans; and

•Customer satisfaction scores-measurement of our customers' experiences in a variety of key areas.


Selected Operating Data

The table below presents the number of our restaurants in operation as of the
periods indicated:
Number of restaurants (at end of the period):                      SEPTEMBER 27, 2020              SEPTEMBER 29, 2019
U.S.:
Outback Steakhouse
Company-owned                                                                 567                             579
Franchised                                                                    140                             147
Total                                                                         707                             726
Carrabba's Italian Grill
Company-owned                                                                 199                             204
Franchised                                                                     21                              21
Total                                                                         220                             225
Bonefish Grill
Company-owned                                                                 181                             190
Franchised                                                                      7                               7
Total                                                                         188                             197
Fleming's Prime Steakhouse and Wine Bar
Company-owned                                                                  65                              69
Other
Company-owned                                                                   5                               3
U.S. total                                                                  1,185                           1,220
International:
Company-owned
Outback Steakhouse-Brazil (1)                                                 104                              99

Other (2)                                                                      31                              28
Franchised
Outback Steakhouse-South Korea (2)                                             88                              70
Other (3)                                                                      56                              54
International total                                                           279                             251
System-wide total                                                           1,464                           1,471


____________________
(1)The restaurant counts for Brazil are reported as of August 31, 2020 and 2019,
respectively, to correspond with the balance sheet dates of this subsidiary.
(2)As of September 27, 2020, we had 14 international "dark kitchen" locations
that offer delivery and carry-out only. One of these locations was included
within Company-owned Other and 13 were included in Franchised Outback Steakhouse
- South Korea.
(3)Includes three and two fast-casual Aussie Grill locations as of September 27,
2020 and September 29, 2019, respectively.

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                             BLOOMIN' BRANDS, INC.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Results of Operations


The following table sets forth, for the periods indicated, the percentages of
certain items in our Consolidated Statements of Operations in relation to Total
revenues or Restaurant sales, as indicated:
                                                       THIRTEEN WEEKS ENDED                               THIRTY-NINE WEEKS ENDED
                                           SEPTEMBER 27, 2020        SEPTEMBER 29, 2019         SEPTEMBER 27, 2020        SEPTEMBER 29, 2019
Revenues
Restaurant sales                                       99.4  %                   98.4  %                    99.2  %                   98.5  %
Franchise and other revenues                            0.6                       1.6                        0.8                       1.5
Total revenues                                        100.0                     100.0                      100.0                     100.0
Costs and expenses
Food and beverage costs (1)                            30.1                      31.6                       31.3                      31.4
Labor and other related (1)                            32.2                      30.3                       32.6                      29.6
Other restaurant operating (1)                         27.0                      25.3                       27.0                      23.9
Depreciation and amortization                           5.6                       5.0                        5.8                       4.7
General and administrative                              7.4                       6.9                        8.4                       6.7

Provision for impaired assets and
restaurant closings                                        (*)                    0.1                        2.8                       0.2

Total costs and expenses                              101.8                      97.7                      107.1                      95.3
(Loss) income from operations                          (1.8)                      2.3                       (7.1)                      4.7
Loss on modification of debt                              -                         -                           (*)                      -
Other income (expense), net                                  *                         *                        (*)                       (*)
Interest expense, net                                  (2.4)                     (1.4)                      (2.0)                     (1.1)
(Loss) income before (benefit) provision
for income taxes                                       (4.2)                      0.9                       (9.1)                      3.6
(Benefit) provision for income taxes                   (1.9)                     (0.1)                      (3.0)                      0.2
Net (loss) income                                      (2.3)                      1.0                       (6.1)                      3.4
Less: net (loss) income attributable to
noncontrolling interests                                   (*)                         *                        (*)                    0.1
Net (loss) income attributable to Bloomin'
Brands                                                 (2.3) %                    1.0  %                    (6.1) %                    3.3  %


________________
(1)As a percentage of Restaurant sales.
*  Less than 1/10th of one percent of Total revenues.

RESTAURANT SALES

Following is a summary of the change in Restaurant sales for the periods indicated: (dollars in millions)

                              THIRTEEN WEEKS ENDED           THIRTY-NINE WEEKS ENDED
For the periods ended September 29, 2019         $               951.8          $                3,069.1
Change from:
Comparable restaurant sales                                     (157.6)                           (661.3)
Restaurant closures                                              (17.5)                            (42.0)
Effect of foreign currency translation                           (12.6)                            (31.4)
Divestiture of restaurants through refranchising
transactions                                                         -                             (11.2)
Restaurant openings                                                2.4                              15.8
For the periods ended September 27, 2020         $               766.5          $                2,339.0



The decrease in Restaurant sales during the thirteen weeks ended September 27,
2020 was primarily due to: (i) significantly lower comparable restaurant sales
principally attributable to the COVID-19 pandemic, (ii) the closure
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                             BLOOMIN' BRANDS, INC.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

of 43 restaurants since June 30, 2019 and (iii) the effect of foreign currency translation of the Brazilian Real relative to the U.S. dollar.


The decrease in Restaurant sales during the thirty-nine weeks ended September
27, 2020 was primarily due to: (i) significantly lower comparable restaurant
sales principally attributable to the COVID-19 pandemic, (ii) the closure of 51
restaurants since December 30, 2018, (iii) the effect of foreign currency
translation of the Brazilian Real relative to the U.S. dollar and (iv) domestic
refranchising. The decrease in Restaurant sales was partially offset by the
opening of 31 new restaurants not included in our comparable restaurant sales
base.

Average Restaurant Unit Volumes and Operating Weeks

Following is a summary of the average restaurant unit volumes and operating weeks, for the periods indicated:

                                                     THIRTEEN WEEKS ENDED                         THIRTY-NINE WEEKS ENDED
                                                                      SEPTEMBER 29,         SEPTEMBER 27,         SEPTEMBER 29,
                                            SEPTEMBER 27, 2020             2019                  2020                  2019
Average restaurant unit volumes (weekly):
U.S.
Outback Steakhouse                         $       59,929$    66,084$      58,771$    70,925
Carrabba's Italian Grill                   $       47,940$    51,989$      46,230$    56,185
Bonefish Grill                             $       42,439             $   

53,549 $ 40,988$ 59,066Fleming's Prime Steakhouse & Wine Bar$ 58,989

             $    

71,954 $ 59,014$ 81,695International Outback Steakhouse - Brazil (1)

            $       23,919$    72,791$      36,884$    71,459

Operating weeks:
U.S.
Outback Steakhouse                                  7,365                   7,527                 22,330               22,592
Carrabba's Italian Grill                            2,587                   2,653                  7,887                8,212
Bonefish Grill                                      2,366                   2,470                  7,300                7,395
Fleming's Prime Steakhouse & Wine Bar                 845                     897                  2,575                2,717
International
Outback Steakhouse - Brazil                         1,358                   1,297                  4,015                3,750


____________________
(1)Translated at average exchange rates of 5.34 and 3.88 for the thirteen weeks
ended September 27, 2020 and September 29, 2019, respectively, and 4.60 and 3.86
for the thirty-nine weeks ended September 27, 2020 and September 29, 2019,
respectively.

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                             BLOOMIN' BRANDS, INC.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Comparable Restaurant Sales, Traffic and Average Check Per Person Increases
(Decreases)
Following is a summary of comparable restaurant sales, traffic and average check
per person increases (decreases), for the periods indicated:
                                                       THIRTEEN WEEKS ENDED                               THIRTY-NINE WEEKS ENDED
                                           SEPTEMBER 27, 2020        SEPTEMBER 29, 2019         SEPTEMBER 27, 2020        SEPTEMBER 29, 2019
Year over year percentage change:
Comparable restaurant sales (stores open
18 months or more):
U.S. (1)
Outback Steakhouse                                    (10.4) %                    0.2  %                   (17.4) %                    1.7  %
Carrabba's Italian Grill                               (9.0) %                    0.1  %                   (18.1) %                   (0.4) %
Bonefish Grill                                        (22.5) %                   (2.2) %                   (31.0) %                      -  %
Fleming's Prime Steakhouse & Wine Bar                 (20.3) %                    0.4  %                   (29.7) %                    0.8  %
Combined U.S.                                         (12.8) %                   (0.2) %                   (20.7) %                    1.0  %

International

Outback Steakhouse - Brazil (2)                       (54.8) %                   11.2  %                   (36.9) %                    6.1  %

Traffic:
U.S.
Outback Steakhouse                                    (13.6) %                   (1.1) %                   (18.1) %                   (1.1) %
Carrabba's Italian Grill                              (11.7) %                    0.5  %                   (15.1) %                   (0.8) %
Bonefish Grill (3)                                    (14.7) %                   (2.9) %                   (19.4) %                   (2.1) %
Fleming's Prime Steakhouse & Wine Bar                 (23.3) %                   (0.3) %                   (26.6) %                    0.6  %
Combined U.S. (3)                                     (13.6) %                   (1.0) %                   (17.9) %                   (1.1) %
International
Outback Steakhouse - Brazil                           (37.6) %                   10.0  %                   (25.9) %                    2.8  %

Average check per person (4):
U.S.
Outback Steakhouse                                      3.2  %                    1.3  %                     0.7  %                    2.8  %
Carrabba's Italian Grill                                2.7  %                   (0.4) %                    (3.0) %                    0.4  %
Bonefish Grill                                         (7.8) %                    0.7  %                   (11.6) %                    2.1  %
Fleming's Prime Steakhouse & Wine Bar                   3.0  %                    0.7  %                    (3.1) %                    0.2  %
Combined U.S.                                           0.8  %                    0.8  %                    (2.8) %                    2.1  %
International
Outback Steakhouse - Brazil                           (16.2) %                    0.8  %                   (11.0) %                    3.3  %


____________________
(1)Relocated restaurants closed more than 60 days are excluded from comparable
restaurant sales until at least 18 months after reopening.
(2)Excludes the effect of fluctuations in foreign currency rates. Includes
trading day impact from calendar period reporting.
(3)In Q2 2020, Bonefish Grill replaced guest count with entrée count to measure
restaurant traffic. Bonefish Grill and Combined U.S. traffic for the thirty-nine
weeks ended September 27, 2020 were calculated using the entrée count
methodology for Bonefish Grill as if the new methodology was in effect at the
start of the fiscal year, which would have increased traffic for Bonefish Grill
and Combined U.S. for the thirteen weekend ended March 29, 2020 by 3.1% and
0.5%, respectively.
(4)Average check per person includes the impact of menu pricing changes, product
mix and discounts.
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                             BLOOMIN' BRANDS, INC.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Franchise and other revenues

                                               THIRTEEN WEEKS ENDED                    THIRTY-NINE WEEKS ENDED
                                        SEPTEMBER 27,       SEPTEMBER 29,         SEPTEMBER 27,        SEPTEMBER 29,
(dollars in millions)                       2020                 2019                 2020                  2019
Franchise revenues (1)                  $      4.2$      12.4$       15.7$      39.0
Other revenues                                 0.6                  2.9                   3.4                  9.1
Franchise and other revenues            $      4.8$      15.3$       19.1$      48.1


____________________

(1)Represents franchise royalties, advertising fees and initial franchise fees. Franchise revenues declined during the thirteen and thirty-nine weeks ended September 27, 2020 primarily due to lower franchise sales and deferral of certain royalties and advertising fees.


COSTS AND EXPENSES

Food and beverage costs
                                             THIRTEEN WEEKS ENDED                                         THIRTY-NINE WEEKS ENDED
                                                              SEPTEMBER 29,                          SEPTEMBER 27,        SEPTEMBER 29,
(dollars in millions)               SEPTEMBER 27, 2020            2019               Change               2020                2019               Change
Food and beverage costs            $         230.5            $    300.4$    731.0$    965.2
% of Restaurant sales                         30.1    %             31.6  %            (1.5) %             31.3   %             31.4  %            (0.1) %



Food and beverage costs decreased as a percentage of Restaurant sales during the
thirteen weeks ended September 27, 2020 as compared to the thirteen weeks ended
September 29, 2019 primarily due to 0.9% from increases in average check per
person and 0.8% from cost savings attributable to waste reduction initiatives.

Food and beverage costs decreased as a percentage of Restaurant sales during the
thirty-nine weeks ended September 27, 2020 as compared to the thirty-nine weeks
ended September 29, 2019 primarily due to 0.4% from increases in average check
per person and 0.3% from cost savings attributable to waste reduction
initiatives, partially offset by an increase as a percentage of Restaurant sales
of 0.3% from commodity inflation and 0.2% related to a reduction in vendor
rebates.

Labor and other related expenses

                                             THIRTEEN WEEKS ENDED                                         THIRTY-NINE WEEKS ENDED
                                                              SEPTEMBER 29,                          SEPTEMBER 27,        SEPTEMBER 29,
(dollars in millions)               SEPTEMBER 27, 2020            2019               Change               2020                2019               Change
Labor and other related            $         246.9            $    288.6$    761.7$    908.8
% of Restaurant sales                         32.2    %             30.3  %             1.9  %             32.6   %             29.6  %             3.0  %



Labor and other related expenses increased as a percentage of Restaurant sales
during the thirteen weeks ended September 27, 2020 as compared to the thirteen
weeks ended September 29, 2019 primarily due to: (i) 2.6% from decreased
restaurant sales, (ii) 0.6% from higher labor costs and (iii) 0.3% from employee
benefits in response to COVID-19. These increases were partially offset by a
decrease as a percentage of Restaurant sales of 1.8% from lower prep labor
hours.

Labor and other related expenses increased as a percentage of Restaurant sales
during the thirty-nine weeks ended September 27, 2020 as compared to the
thirty-nine weeks ended September 29, 2019 primarily due to: (i) 3.1% from
decreased restaurant sales, (ii) 1.2% from relief pay primarily for hourly
employees impacted by the closure of dining rooms due to COVID-19, offset by
employee retention tax credits, and (iii) 0.5% from higher labor costs. These
increases were partially offset by a decrease as a percentage of Restaurant
sales of 1.7% from lower prep labor hours.
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                             BLOOMIN' BRANDS, INC.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Other restaurant operating expenses

                                          THIRTEEN WEEKS ENDED                                         THIRTY-NINE WEEKS ENDED
                                                           SEPTEMBER 29,                          SEPTEMBER 27,        SEPTEMBER 29,
(dollars in millions)            SEPTEMBER 27, 2020            2019               Change               2020                2019               Change
Other restaurant operating      $         207.3            $    240.4$    631.7$    732.1
% of Restaurant sales                      27.0    %             25.3  %             1.7  %             27.0   %             23.9  %             3.1  %



Other restaurant operating expenses increased as a percentage of Restaurant
sales during the thirteen weeks ended September 27, 2020 as compared to the
thirteen weeks ended September 29, 2019 primarily due to: (i) the impact of
dining room seating capacity restrictions as a result of the COVID-19 pandemic
including, 2.5% from decreased restaurant sales and 1.9% from incremental
delivery related costs, (ii) 0.5% from gains on the sale of certain U.S. surplus
properties in 2019 and (iii) 0.2% from menu printing costs. These increases were
partially offset by a decrease as a percentage of Restaurant sales of 3.3% from
reduced advertising, utilities and operating expenses.

Other restaurant operating expenses increased as a percentage of Restaurant
sales during the thirty-nine weeks ended September 27, 2020 as compared to the
thirty-nine weeks ended September 29, 2019 primarily due to the impact of
shifting to an off-premise only operational model in March 2020 and dining room
seating capacity restrictions as a result of the COVID-19 pandemic including,
3.0% from decreased restaurant sales and 1.9% from incremental delivery related
costs. These increases were partially offset by a decrease as a percentage of
Restaurant sales of 1.8% from reduced advertising, utilities and operating
expenses.

Depreciation and amortization

                                   THIRTEEN WEEKS ENDED                                     THIRTY-NINE WEEKS ENDED
                            SEPTEMBER 27,        SEPTEMBER 29,                         SEPTEMBER 27,        SEPTEMBER 29,
(dollars in millions)            2020                 2019             Change              2020                  2019             Change
Depreciation and
amortization                $      43.4$      47.9$ (4.5)$      137.5$     147.2$ (9.7)

Depreciation and amortization expense decreased during the periods presented primarily due to impairment and the effect of foreign currency translation.

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                             BLOOMIN' BRANDS, INC.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
General and administrative
General and administrative expense includes salaries and benefits, management
incentive programs, related payroll tax and benefits, other employee-related
costs and professional services. Following is a summary of the change in General
and administrative expense for the periods indicated:
(dollars in millions)                                THIRTEEN WEEKS ENDED           THIRTY-NINE WEEKS ENDED
For the periods ended September 29, 2019           $                66.6          $                  209.1
Change from:
Compensation, benefits and payroll tax                              (3.6)                             (9.6)
Legal and professional fees                                         (1.7)                             (5.7)
Foreign currency exchange                                           (1.3)                             (3.0)
Severance                                                           (0.8)                              4.5
Travel and entertainment (1)                                        (0.5)                             (8.0)
Expected credit losses and contingent lease
liabilities                                                            -                               7.4
Transformational costs (2)                                           1.1                               8.6
Deferred compensation                                                0.2                              (3.3)
Other                                                               (2.6)                             (2.3)
For the periods ended September 27, 2020           $                57.4          $                  197.7


_________________

(1)Includes managing partner conference costs. (2)Primarily consists of consulting fees incurred in connection with our transformation initiatives.

Provision for impaired assets and restaurant closings

                                    THIRTEEN WEEKS ENDED                                        THIRTY-NINE WEEKS ENDED
                             SEPTEMBER 27,         SEPTEMBER 29,                          SEPTEMBER 27,          SEPTEMBER 29,
(dollars in millions)            2020                  2019              Change               2020                   2019              Change
Provision for impaired
assets and restaurant
closings                    $       (0.1)$        1.4$ (1.5)         $         66.2          $        6.9$ 59.3



During the thirty-nine weeks ended September 27, 2020, we recognized asset
impairment and closure charges of $56.4 million and $3.6 million within the U.S.
and international segments, respectively, primarily related to the COVID-19
pandemic. Included in the amount for the thirty-nine weeks ended September 27,
2020 were pre-tax asset impairments and closure costs of $20.9 million in
connection with the closure of 22 restaurants and from the update of certain
cash flow assumptions, including lease renewal considerations. We also
recognized asset impairment charges during the thirty-nine weeks ended September
27, 2020 of $6.2 million which were not allocated to our operating segments,
primarily related to transformational initiatives.

Impairment and closure charges during the thirteen and thirty-nine weeks ended
September 29, 2019 resulted primarily from locations identified for remodel,
relocation or closure and certain other assets.

See Note 4 - Impairments, Exit Costs and Disposals of the Notes to Consolidated Financial Statements for further information.

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                             BLOOMIN' BRANDS, INC.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

(Loss) income from operations

                                       THIRTEEN WEEKS ENDED                                             THIRTY-NINE WEEKS ENDED
                                                          SEPTEMBER 29,                         SEPTEMBER 27,             SEPTEMBER 29,
(dollars in millions)      SEPTEMBER 27, 2020                 2019               Change              2020                     2019              Change
(Loss) income from
operations                $         (14.3)               $     22.0$ (36.3)$   (167.7)$    147.9$ (315.6)
% of Total revenues                  (1.8)   %                  2.3    %          (4.1) %             (7.1)  %                   4.7  %          (11.8) %



Loss from operations generated during the thirteen weeks ended September 27,
2020, as compared to income from operations during the thirteen weeks ended
September 29, 2019 was primarily due to: (i) significantly lower comparable
restaurant sales and costs incurred in connection with the COVID-19 pandemic,
including incremental delivery related costs, and (ii) certain costs in
connection with our transformation initiatives. These losses were partially
offset by: (i) reduced advertising, utilities and operating expenses, (ii) a
reduction in prep labor hours, offset by higher labor costs, and (iii) cost
savings from waste reduction initiatives.

Loss from operations generated during the thirty-nine weeks ended September 27,
2020, as compared to income from operations during the thirty-nine weeks ended
September 29, 2019 was primarily due to: (i) significantly lower comparable
restaurant sales and costs incurred in connection with the COVID-19 pandemic,
including asset impairment charges, incremental delivery related costs and
relief pay (net of tax credits), and (ii) commodity inflation. These losses were
partially offset by: (i) reduced advertising, utilities and operating expenses,
(ii) a reduction in prep labor hours, offset by higher labor costs, and (iii)
cost savings from waste reduction initiatives.

Interest expense, net

                                         THIRTEEN WEEKS ENDED                                     THIRTY-NINE WEEKS ENDED
                                  SEPTEMBER 27,        SEPTEMBER 29,                         SEPTEMBER 27,        SEPTEMBER 29,
(dollars in millions)                  2020                 2019             Change              2020                  2019             Change
Interest expense, net             $      18.3$      13.3$  5.0$       46.6$      36.9$  9.7



The increase in Interest expense, net for the thirteen weeks ended September 27,
2020 as compared to the thirteen weeks ended September 29, 2019 was primarily
due to interest expense from our convertible senior notes issued in May 2020,
partially offset by lower outstanding revolving credit facility borrowings and
lower interest rates on our unhedged variable rate debt balances.

The increase in Interest expense, net for the thirty-nine weeks ended September
27, 2020 as compared to the thirty-nine weeks ended September 29, 2019 was
primarily due to interest expense from our convertible senior notes issued in
May 2020 and additional draws on our revolving credit facility, partially offset
by lower interest rates on our unhedged variable rate debt balances.

(Benefit) provision for income taxes

                                     THIRTEEN WEEKS ENDED                                                THIRTY-NINE WEEKS ENDED
                          SEPTEMBER 27, 2020       SEPTEMBER 29, 2019          Change          SEPTEMBER 27, 2020        SEPTEMBER 29, 2019          Change

Effective income tax rate            45.4  %                  (7.6) %            53.0  %                   32.7  %                   5.5  %             27.2  %



The effective income tax rate for the thirteen and thirty-nine weeks ended
September 27, 2020 increased by 53.0 and 27.2 percentage points as compared to
the thirteen and thirty-nine weeks ended September 29, 2019. These increases
were primarily due to the benefit of the tax credits for FICA taxes on certain
employees' tips, the forecasted 2020 pre-tax book loss and changes to the
estimate of the forecasted full-year effective tax rate relative to prior
quarters in 2020.

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                             BLOOMIN' BRANDS, INC.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

SEGMENT PERFORMANCE


We consider our restaurant concepts and international markets as operating
segments, which reflects how we manage our business, review operating
performance and allocate resources. Resources are allocated and performance is
assessed by our CEO, whom we have determined to be our CODM. We aggregate our
operating segments into two reportable segments, U.S. and international. The
U.S. segment includes all restaurants operating in the U.S. while restaurants
operating outside the U.S. are included in the international segment. The
following is a summary of reporting segments:
REPORTABLE SEGMENT (1)                   CONCEPT                                       GEOGRAPHIC LOCATION
U.S.                                     Outback Steakhouse
                                         Carrabba's Italian Grill                      United States of America
                                         Bonefish Grill
                                         Fleming's Prime Steakhouse & Wine Bar
International                            Outback Steakhouse                            Brazil, Hong Kong/China
                                         Carrabba's Italian Grill (Abbraccio)          Brazil


_________________

(1)Includes franchise locations.


Revenues for both segments include only transactions with customers and exclude
intersegment revenues. Excluded from Income (loss) from operations for U.S. and
international are certain legal and corporate costs not directly related to the
performance of the segments, most stock-based compensation expenses and certain
bonus expenses.

During the thirteen and thirty-nine weeks ended September 27, 2020, we recorded
$4.2 million and $28.8 million, respectively, of pre-tax charges as a part of
transformational initiatives implemented in connection with our previously
announced review of strategic alternatives. These costs were primarily recorded
within General and administrative expense and Provision for impaired assets and
restaurant closings and were not allocated to our segments since our CODM does
not consider the impact of transformational initiatives when assessing segment
performance.

Refer to Note 21 - Segment Reporting of the Notes to Consolidated Financial Statements for a reconciliation of segment income (loss) from operations to the consolidated operating results.


Restaurant-level operating margin is widely regarded in the industry as a useful
metric to evaluate restaurant-level operating efficiency and performance of
ongoing restaurant-level operations, and we use it for these purposes, overall
and particularly within our two segments. See the Overview-Key Performance
Indicators section of Management's Discussion and Analysis for additional
details regarding the calculation of restaurant-level operating margin.

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                             BLOOMIN' BRANDS, INC.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
U.S. Segment
                                                  THIRTEEN WEEKS ENDED                          THIRTY-NINE WEEKS ENDED
                                            SEPTEMBER 27,       SEPTEMBER 29,
(dollars in thousands)                          2020                2019             SEPTEMBER 27, 2020         SEPTEMBER 29, 2019
Revenues
Restaurant sales                            $  719,406$  835,753$       2,141,062$       2,737,182
Franchise and other revenues                     2,332              12,691                     12,253                     39,988
Total revenues                              $  721,738$  848,444$       2,153,315$       2,777,170

Restaurant-level operating margin                 11.4  %             12.0  %                     9.4  %                    14.5  %
Income (loss) from operations               $   29,574$   50,318

$ (21,968) $ 242,167 Operating income (loss) margin

                     4.1  %              5.9  %                    (1.0) %                     8.7  %



Restaurant sales

Following is a summary of the change in U.S. segment Restaurant sales for the
periods indicated:
(dollars in millions)                              THIRTEEN WEEKS ENDED           THIRTY-NINE WEEKS ENDED
For the periods ended September 29, 2019         $               835.8          $                2,737.2
Change from:
Comparable restaurant sales                                     (101.0)                           (550.0)
Restaurant closures                                              (16.9)                            (39.8)
Divestiture of restaurants through refranchising
transactions                                                         -                             (11.2)
Restaurant openings                                                1.5                               4.9
For the periods ended September 27, 2020         $               719.4          $                2,141.1



The decrease in U.S. Restaurant sales during the thirteen weeks ended September
27, 2020 was primarily due to significantly lower comparable restaurant sales
principally attributable to the COVID-19 pandemic and the closure of 34
restaurants since June 30, 2019.

The decrease in U.S. Restaurant sales during the thirty-nine weeks ended
September 27, 2020 was primarily due to: (i) significantly lower comparable
restaurant sales principally attributable to the COVID-19 pandemic, (ii) the
closure of 42 restaurants since December 30, 2018 and (iii) the refranchising of
certain Company-owned restaurants. The decrease in U.S. Restaurant sales was
partially offset by the opening of nine new restaurants not included in our
comparable restaurant sales base.

Income (loss) from operations


The decrease in U.S. income from operations generated during the thirteen weeks
ended September 27, 2020 as compared to the thirteen weeks ended September 29,
2019, was primarily due to significantly lower comparable restaurant sales and
costs incurred in connection with the COVID-19 pandemic, including incremental
delivery related costs. These losses were partially offset by: (i) reduced
advertising, operating and utilities expenses, (ii) a reduction in prep labor
hours, offset by higher labor costs, and (iii) cost savings from waste reduction
initiatives.

U.S. loss from operations generated during the thirty-nine weeks ended September
27, 2020, as compared to income from operations during the thirty-nine weeks
ended September 29, 2019, was primarily due to: (i) significantly lower
comparable restaurant sales and costs incurred in connection with the COVID-19
pandemic, including asset impairment charges, incremental delivery related costs
and relief pay (net of tax credits) and (ii) commodity inflation. These losses
were partially offset by: (i) reduced advertising, utilities and operating
expenses, (ii) a reduction in prep labor hours, offset by higher labor costs,
and (iii) cost savings from waste reduction initiatives.
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                             BLOOMIN' BRANDS, INC.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

International Segment

                                                      THIRTEEN WEEKS ENDED                      THIRTY-NINE WEEKS ENDED
                                                                       

SEPTEMBER 29, SEPTEMBER 27, SEPTEMBER 29, (dollars in thousands)

                       SEPTEMBER 27, 2020            2019                 2020                2019

Revenues

Restaurant sales                            $          47,081          $  116,063$   197,923$  331,963
Franchise and other revenues                            2,441               2,637                6,818               8,072
Total revenues                              $          49,522          $  

118,700 $ 204,741$ 340,035


Restaurant-level operating margin                        (1.5) %             18.7  %               5.7  %             19.8  %
(Loss) income from operations               $          (7,926)         $   10,550$   (18,209)$   31,179
Operating (loss) income margin                          (16.0) %              8.9  %              (8.9) %              9.2  %



Restaurant sales

Following is a summary of the change in international segment Restaurant sales
for the periods indicated:
(dollars in millions)                             THIRTEEN WEEKS ENDED           THIRTY-NINE WEEKS ENDED
For the periods ended September 29, 2019        $               116.0          $                  331.9
Change from:
Comparable restaurant sales                                     (56.6)                           (111.3)
Effect of foreign currency translation                          (12.6)                            (31.4)
Restaurant closures                                              (0.6)                             (2.2)

Restaurant openings                                               0.9                              10.9
For the periods ended September 27, 2020        $                47.1          $                  197.9



The decrease in international Restaurant sales during the thirteen weeks ended
September 27, 2020 was primarily due to significantly lower comparable
restaurant sales principally attributable to the COVID-19 pandemic and the
effect of foreign currency translation of the Brazilian Real relative to the
U.S. dollar.

The decrease in international Restaurant sales during the thirty-nine weeks
ended September 27, 2020 was primarily due to significantly lower comparable
restaurant sales principally attributable to the COVID-19 pandemic and the
effect of foreign currency translation of the Brazilian Real relative to the
U.S. dollar. The decrease in Restaurant sales was partially offset by the
opening of 22 new restaurants not included in our comparable restaurant sales
base.

(Loss) income from operations


International loss from operations generated during the thirteen weeks ended
September 27, 2020, as compared to income from operations during the thirteen
weeks ended September 29, 2019, was primarily due to: (i) significantly lower
comparable restaurant sales and costs incurred in connection with the COVID-19
pandemic, including incremental delivery related costs, and (ii) commodity
inflation. These decreases were partially offset by reduced utilities, operating
and advertising expenses and lower labor costs.

International loss from operations generated during the thirty-nine weeks ended
September 27, 2020, as compared to income from operations during the thirty-nine
weeks ended September 29, 2019, was primarily due to: (i) significantly lower
comparable restaurant sales and costs incurred in connection with the COVID-19
pandemic, including incremental delivery related costs and inventory
obsolescence, and (ii) commodity inflation. These decreases were partially
offset by reduced utilities, operating and advertising expenses and lower labor
costs.

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                             BLOOMIN' BRANDS, INC.

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Non-GAAP Financial Measures


System-Wide Sales - System-wide sales is a non-GAAP financial measure that
includes sales of all restaurants operating under our brand names, whether we
own them or not. Management uses this information to make decisions about future
plans for the development of additional restaurants and new concepts, as well as
evaluation of current operations. System-wide sales comprise sales of
Company-owned and franchised restaurants. For a summary of sales of
Company-owned restaurants, refer to Note 3 - Revenue Recognition of the Notes to
Consolidated Financial Statements.

The following table provides a summary of sales of franchised restaurants, which
are not included in our consolidated financial results. Franchise sales within
this table do not represent our sales and are presented only as an indicator of
changes in the restaurant system, which management believes is important
information regarding the health of our restaurant concepts and in determining
our royalties and/or service fees.
                                                      THIRTEEN WEEKS ENDED                      THIRTY-NINE WEEKS ENDED
                                               SEPTEMBER 27,        SEPTEMBER 29,         SEPTEMBER 27,          SEPTEMBER 29,
(dollars in millions)                              2020                 2019                   2020                  2019
U.S.
Outback Steakhouse                             $       76$        118          $         250          $        381
Carrabba's Italian Grill (1)                            8                    11                     25                    28
Bonefish Grill                                          2                     3                      6                    10
U.S. total                                     $       86$        132          $         281          $        419
International
Outback Steakhouse-South Korea                 $       64          $         50          $         174          $        154
Other                                                  19                    25                     45                    78
International total                            $       83          $         75          $         219          $        232
Total franchise sales (2)                      $      169$        207          $         500          $        651


_____________________
(1)In March 2019, we sold 18 Carrabba's Italian Grill locations, which are now
operated as franchises.
(2)Franchise sales are not included in Total revenues in the Consolidated
Statements of Operations and Comprehensive (Loss) Income.
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