BLMN — Q2 2026 Financial Report Analysis
Q2 · Fiscal year 2026 · Published by Pham Hop
Bloomin' Brands lifted Q2 2026 diluted EPS to $0.37 from $0.29 on revenue up 1.3% to $1.02B, as 4.2% higher average checks and cost cuts offset a 1.9% drop in U.S. guest counts (Outback −2.8%); full-year EPS guidance raised.
- Revenue
- $1.0B
- +1.3% YoY
- Net income
- $31M
- +23.3% YoY
- Diluted EPS
- $0.37
- +27.6% YoY
- Operating margin
- 3.8%
This period vs a year ago
- Same period last year
- This period
Year-ago figures (≈) are worked out from the growth rate the company reported. Each row has its own scale.
Q2 2026: higher menu prices drove profit up while fewer guests came in
Bloomin' Brands, which owns Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill and Fleming's, grew second-quarter revenue just 1.3% to $1,015.8 million, but net income attributable to the company rose 23.3% to $31.3 million and diluted EPS from continuing operations rose to $0.37 from $0.29. Almost all of the gain came from charging more per guest (average check up 4.2%) and from cost cuts. The number of guests fell 1.9% across the U.S. restaurants, and 2.8% at Outback, the brand the company's turnaround plan centres on. Management raised full-year EPS guidance anyway.
At a glance
- U.S. comparable restaurant sales +2.3%, traffic −1.9%. Same-restaurant sales grew only because each guest spent more; fewer people came through the door than a year ago.
- Restaurant-level operating margin 12.4% vs 12.0%. Restaurants kept slightly more of each dollar of sales, because price increases and productivity savings outpaced food and wage inflation.
- Full-year diluted EPS guidance raised to $0.85–$0.95 from $0.70–$0.85, even though the top of the U.S. comparable-sales range was cut to 2.0% from 2.5%. The higher profit outlook comes from costs, not from expected sales growth.
Key figures
| Metric | Q2 2026 | Q2 2025 | YoY Change |
|---|---|---|---|
| Total revenues | $1,015.8M | $1,002.4M | +1.3% |
| Income from operations | $38.3M | $29.7M | +29.0% |
| GAAP operating margin | 3.8% | 3.0% | +0.8 pts |
| Adjusted operating margin | 4.0% | 3.5% | +0.5 pts |
| Restaurant-level operating margin | 12.4% | 12.0% | +0.4 pts |
| Net income attributable to Bloomin' Brands | $31.3M | $25.4M | +23.3% |
| Diluted EPS (continuing operations) | $0.37 | $0.29 | +27.6% |
| Adjusted diluted EPS | $0.39 | $0.32 | +21.9% |
| U.S. comparable restaurant sales | +2.3% | −0.1% | +2.4 pts |
| U.S. traffic (guest counts) | −1.9% | −2.0% | +0.1 pts |
| U.S. average check per person | +4.2% | +1.9% | +2.3 pts |
Comparable restaurant sales ("comps") compare sales only at restaurants open at least 18 months, so openings and closures don't distort the trend. Restaurant-level operating margin is a company-defined (non-GAAP) measure: restaurant sales minus food, labor and other restaurant running costs, before corporate overhead, depreciation and impairments. The 13-week quarter ended June 28, 2026.
Price, not people, carried the quarter
Comps split into two parts: how many guests came (traffic) and how much each spent (average check, which includes menu price changes, what people order and discounts). In Q2 every brand except Bonefish lost guests:
| Brand (U.S., company-owned) | Comparable sales | Traffic | Average check |
|---|---|---|---|
| Outback Steakhouse | +1.4% | −2.8% | +4.2% |
| Carrabba's Italian Grill | +1.7% | −2.5% | +4.2% |
| Bonefish Grill | +8.1% | +4.5% | +3.6% |
| Fleming's | +1.6% | −2.8% | +4.4% |
| Combined U.S. | +2.3% | −1.9% | +4.2% |
Outback matters most: 544 of the 949 company-owned U.S. restaurants at quarter end are Outbacks, and the turnaround announced in November 2025 is focused on it. Its traffic decline actually got worse, from −1.0% in Q2 2025 to −2.8% now, so its +1.4% comp is entirely price and mix. Bonefish's standout +8.1% is partly an easy comparison: a year ago its comps fell 5.8% and its traffic 11.4%. Over the two years combined, Bonefish's traffic is still down about 7%.
Where the profit came from
Restaurant-level operating income rose $6.3 million to $124.1 million. The 10-Q breaks down each cost line as a share of restaurant sales:
- Food and beverage rose to 30.7% of restaurant sales from 30.3%: commodity inflation added 1.6 points, and higher average check offset 1.4 points of that.
- Labor fell to 31.3% from 32.0%. Higher check took off 0.8 points and lower health-insurance costs 0.2 points, against 0.4 points of wage inflation.
- Other restaurant operating costs fell to 25.5% from 25.7%. Productivity initiatives saved 0.5 points, higher check 0.3 points and fewer new-restaurant openings 0.3 points of pre-opening cost, partly offset by 0.5 points of extra advertising.
Below the restaurants, general and administrative expense fell $5.9 million to $53.7 million. That is almost exactly the $5.8 million of restructuring and currency-hedge costs booked in G&A a year earlier that did not repeat. Excluding those, overhead was flat. Partly offsetting the savings: impairment and restaurant-closing charges rose to $4.0 million from $1.5 million, and depreciation rose $1.4 million, mostly because older kitchen equipment being replaced under the turnaround is now written off faster.
The U.S. segment's own operating income actually fell slightly, to $67.6 million from $68.5 million (6.8% margin vs 6.9%), because of inflation, more advertising, the faster equipment write-offs and impairments. Adjusted for the write-offs, it rose 2.9% to $70.5 million. Most of the consolidated improvement came from lower corporate costs.
What the headline numbers hide
- This quarter's growth didn't come from taxes, but the first half's partly did. Bloomin' records an income-tax benefit (negative tax) because federal FICA tip credits exceed the tax on its small pre-tax profit. In Q2 the benefit shrank to $6.7 million from $8.7 million, so pre-tax income grew faster (+43%, to $27.1 million) than net income. For the first half it went the other way: pre-tax income rose 13.6% but net income from continuing operations rose 28.7%, helped by a tax benefit of $17.0 million vs $7.8 million. The 10-Q explains this as lower forecast full-year profit making the fixed-size tip credits a bigger share of it. Half-year EPS of $1.01 (vs $0.79) owes a meaningful part of its gain to tax.
- GAAP vs adjusted is a small gap this year. The only adjustment in Q2 2026 is $2.9 million of accelerated depreciation on equipment replaced under the turnaround ($0.02 per share). Last year's $5.8 million covered severance, professional fees and Brazil-sale currency hedges. Unusually for a turnaround story, GAAP and adjusted EPS are only 2 cents apart.
- Cash conversion was strong. Operating cash flow from continuing operations was $166.4 million in the first half, vs $89.7 million of net income from continuing operations and $120.7 million of operating cash flow a year earlier. Capital spending fell to $69.2 million from $84.3 million, so free cash flow (operating cash flow minus capex) was about $97 million, against about $36 million in H1 2025. That cash went to debt: the revolving credit line fell to $405 million from $490 million at year-end, and total debt to $702.8 million from $787.4 million.
- Capex is back-loaded. Management still expects $185–195 million of capital spending for 2026, so roughly $116–126 million (about 1.7–1.8x the first half's total) is still to come in the second half. Free cash flow should fall sharply from here.
- No buybacks or dividends. The company paid no common dividend in the first half (vs $25.5 million a year ago) and bought back no stock in Q2. Diluted share count rose 1.3% to 86.2 million, so per-share growth slightly lagged profit growth. None of the EPS gain came from buybacks.
- Guidance mix shifted. The full-year U.S. comps range was narrowed to 1.0%–2.0% (previously 0.5%–2.5%) while GAAP EPS guidance rose $0.15 at the low end and $0.10 at the high end (adjusted: $0.90–$1.00 from $0.75–$0.90). With first-half comps at +1.6%, the Q3 comps outlook of 1.0%–2.0% implies no acceleration in sales.
Outlook: a loss in Q3, then a small profit in Q4
Management guided Q3 2026 diluted EPS to a loss of $0.28 to $0.23 (adjusted: a loss of $0.27 to $0.22). Subtracting first-half adjusted EPS of $1.06 from the new full-year adjusted range of $0.90–$1.00 means the second half as a whole is expected to lose about $0.06–$0.16 per share. Taking the Q3 range into account, Q4 is expected to earn roughly $0.11–$0.16. The release does not explain the Q3 loss. The second-half capex plan above is one sourced pressure on results, and the rest isn't broken out.
On financing, on September 29, 2026 Bloomin' extended its $1.2 billion revolving credit facility to September 2031 (from September 2029) with pricing and commitments "substantially unchanged", adding a new senior secured net leverage covenant. That removes refinancing risk for the next few years. Its $300 million of notes (5.13% interest) still mature in April 2029.
Our view: the cost side of the turnaround is working. Restaurant margins widened despite 1.6 points of commodity inflation, and the company paid down $85 million of revolver debt in six months. The demand side is not working yet. Outback's guest counts are falling faster than a year ago, and the full-year EPS raise rests on productivity and price rather than more diners. Raising checks 4% a year while guest counts shrink can only go on so long. The Q3 report (likely early November, based on last year's November 6 filing) is the test: if Outback traffic does not improve from −2.8%, the raised EPS guide depends entirely on further cost savings.
Takeaway: Bloomin' grew Q2 EPS 28% on revenue up only 1.3%, by raising prices about 4% and cutting costs. Outback, the brand the turnaround is meant to fix, served 2.8% fewer guests than a year ago, a steeper drop than the year before. Until traffic stabilises, the earnings improvement rests on margins, not on customers coming back.
Source: Bloomin' Brands Form 10-Q for the quarter ended June 28, 2026 (filed August 6, 2026), the Q2 2026 earnings release (Form 8-K Exhibit 99.1, August 5, 2026) and the September 29, 2026 credit-facility press release.