Outback Steakhouse, the renowned American-style barbecue restaurant with an Australian twist, has experienced unexpected success in Brazil while its business in the United States has slowed down.
Interestingly, the South American market accounts for a staggering 83% of Bloomin’ Brands’ total international sales. In the first half of 2023, Outback’s sales in Brazil spiked by an impressive 61%, foot traffic increased by 42%, and the average check grew by 19.2% compared to the same period in 2022.
This significant growth in Brazil sharply contrasts Outback’s US operations, where sales only grew by 3.9%, foot traffic decreased by 5%, and the average check increased by a mere 8.9%.
This success can be largely attributed to Brazil’s burgeoning middle class, which plays a pivotal role in driving Outback’s popularity in the country.
Outback Steakhouse’s journey began in Tampa, Florida in 1988 and it opened its first Brazilian franchise in Rio de Janeiro in 1997. The Latin American market quickly became crucial to the company’s expansion and by 2020, it had already established 109 locations in Brazil.
However, Bloomin’ Brands’ revenue had stagnated in the years leading up to the pandemic. In 2020, there were rumors that the company might divest its assets in Brazil, which were valued at $472 million, in order to streamline operations and boost profitability. However, these plans fell through due to the impact of the pandemic.
In 2021, the Brazil segment experienced a significant rebound, with sales increasing by 26% year over year to reach $259 million. This segment accounted for 42% of the company’s international presence.
The unique combination of American and Australian-inspired barbecue cuisine resonates with Brazilian consumers, who have a deep-rooted appreciation for traditional barbecue culture. As the country has gradually recovered from the pandemic, consumers are actively seeking new dining experiences, including themed restaurants, which have gained widespread popularity nationwide, particularly in the southern and southeastern regions.
Outback strategically placed its restaurants in highly populated areas such as São Paulo, Rio de Janeiro, and Brasilia, where purchasing power and average earnings are on the rise.
According to a study by the Harvard Review of Latin America, nearly half (47%) of Brazil’s population of over 213 million people fall into the middle class category, known for their inclination to dine out.
In the second quarter, the Brazil segment reported a 4.1% growth in same-store sales, with a slight dip in foot traffic compared to the previous year. Restaurant sales in Brazil surged by $119.3 million, a substantial 20% increase, in stark contrast to the performance in the US market.
Bloomin’ Brands’ stock price has experienced a notable recovery, rising from its pandemic lows to $28.18 per share as of August 31. The surge in stock price was largely driven by activist investor Starboard Value’s acquisition of 9.9% of Bloomin’ shares in early August. Starboard Value is renowned for its successful involvement with companies such as Papa John’s and Darden Restaurants.
To learn more about how Outback Steakhouse won over Brazil, watch the video above.
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