BLMN

• Outback Turnaround Strategic Progress

  • Four core turnaround platforms are on track: deliver a remarkable dining experience, drive brand relevancy, reignite a culture of ownership and fun, and invest in restaurant assets. All planned Q2 milestones have been completed.
  • The new steak lineup launched in November 2025 has delivered four consecutive quarters of year-over-year guest score improvements across food quality, temperature consistency, value, and intent to return. The full chargrill capacity expansion rollout across all Outback locations is complete, supporting optimal cooking for the new menu.
  • The new 4-tables-per-peak-server service model (reduced from 6 tables) was fully rolled out to all Outback locations in Q2. Early results show top-box service scores over 90%, up nearly 3 points year-over-year, with stable server total pay and improved table ownership culture. Upfront hospitality training for all front-of-house staff is scheduled for August 2026.
  • 31 Outback location refreshes were completed through the end of July 2026, with 85 total refreshes targeted for full-year 2026. Refreshes cost an average of $350,000-$400,000 per location, focusing on high-impact interior and exterior updates, and the company plans to refresh nearly all Outback locations by the end of 2028. Early results show a 100-200 basis point traffic lift 6-12 months post-refresh.
  • The first phase of the updated Managing Partner compensation model was implemented in Q2, with two core goals: ensure market-competitive base salaries, and keep total compensation tied directly to restaurant sales and profit growth. The first Outback Managing Partner Conference since 2019 was held in June 2026, with strong partner engagement and validation of the turnaround plan from co-founder Tim Gannon.

• Brand and Marketing Updates

  • Outback will lean into its core Aussie brand identity, with marketing focused on steak quality, balanced with promotion of the affordable Aussie 3 Course entry offer and craveable service. Total marketing spend will increase year-over-year in H2 2026, with the mix shifting to 60% digital/social and 40% linear TV to reach younger guest cohorts. Total full-year marketing spend is up $15 million versus 2025, with $10 million of the increase allocated to Outback.
  • All brands maintain a barbell pricing strategy: a low-priced entry point (the $14.99 Aussie 3 Course offer for Outback) to serve value-focused guests, plus a range of premium menu options that drive guest trade-up and improve margin mix.

• Financial and Operational Highlights

  • The company intentionally chose not to repeat profit-dilutive third-party delivery offers from Q2 2025, which explains the temporary traffic headwind in Q2 2026. The company remains focused on driving profitable, sustainable dine-in traffic growth.
  • 60% of Outback guests that use the Aussie 3 Course entry offer consistently trade up to higher price tiers, with 20% trading up to premium desserts. Menu design changes, combined with the new steak lineup and improved service, have driven stronger-than-expected guest trade-up to premium cuts, sides, and add-ons, reducing the planned 2026 turnaround mix investment from $18 million to $4 million.
  • Total planned 2026 turnaround investment is now $36 million, down from the prior $50 million. Productivity savings remain on track to hit $30 million for 2026, for a net turnaround investment of just $6 million. Commodity inflation for the full year is expected to hold at 4.5-5.5%, balanced by 4.5% pricing, resulting in a balanced spread.
  • The company's capital allocation priorities are first investing in the core business, then paying down debt. Net leverage is currently 3.7x lease-adjusted, with a long-term target of 3.0x. Full-year 2026 capital expenditures are expected to remain in the $185-$195 million range.

• Full-year fiscal 2026 US comparable restaurant sales guidance is maintained at 1% to 2% growth. The company expects sales mix to improve by ~100 basis points, offset by slightly lower traffic from the strategic decision to forgo 2025's dilutive promotional offers.
• Full-year adjusted diluted earnings per share guidance was raised upward to $0.90 to $1.00, from the prior guidance range of $0.75 to $0.90. The upward revision is driven by stronger year-to-date performance, better-than-expected sales mix, and improved middle-of-the-P&L cost controls.
• Third quarter 2026 guidance calls for US comparable restaurant sales of 1% to 2% growth, and adjusted diluted earnings per share between -$0.27 and -$0.22. A $5 million Q3 tax expense is expected due to the full-year expected negative tax rate and negative Q3 earnings outlook.
• The 33% equity method investment in Brazil is expected to generate a full-year 2026 loss of $3 to $4 million, with a $2 million loss projected for Q3 2026.

Overall Blumenbrands fiscal Q2 2026 total revenues were $1.02 billion, a 1% increase from $1 billion in the prior-year period. US comparable restaurant sales grew 230 basis points overall, with average check up 420 basis points. Off-premises sales accounted for 24% of total US sales, consistent with Q2 2025.

• Outback Steakhouse: Comp sales up 140 basis points, traffic down 280 basis points. Off-premises sales contributed 26% of Outback's total US sales in the quarter. Outback represents the core brand of the turnaround strategy, accounting for the majority of the company's restaurant footprint.
• Carrabba's: Comp sales up 170 basis points, traffic down 250 basis points. Off-premises sales contributed 34% of Carrabba's total US sales in the quarter, marking the sixth consecutive quarter of positive comp sales.
• Bonefish: Comp sales up 810 basis points, traffic up 450 basis points, driven by strong day-of-the-week promotional offers that have steadily built traffic momentum.
• Fleming's: Comp sales up 160 basis points, traffic down 280 basis points, marking the eighth consecutive quarter of positive comp sales growth, supported by disciplined execution for special occasion dining.

GAAP diluted EPS was 37 cents (up from 29 cents in Q2 2025), adjusted diluted EPS was 39 cents (up from 32 cents in Q2 2025). Adjusted operating margins were 4.0%, up 50 basis points from 3.5% in the prior year.

• Turnaround success is not expected to be linear, and translation of improved guest experience metrics to sustained profitable traffic growth will take time due to the low average guest frequency of ~2 visits per year for Outback.
• Forward-looking statements related to the turnaround and financial performance are subject to material risks and uncertainties that could cause actual results to differ materially from projections, including commodity inflation volatility and changes in consumer dining behavior.
• The company continues to face industry-wide traffic headwinds, and Outback traffic has not yet turned positive despite four consecutive quarters of improving guest satisfaction scores.

Q: What surprises have come from the new steak and service changes, and do improved service/menu changes explain the better-than-expected mix performance that drove guidance upside? / A: The new steak lineup has exceeded test results from 2025, with higher-than-expected guest trade-up to premium cuts. The new 4-table service model is performing as planned, with stable server pay, rising tip percentages, and a restored culture of server table ownership that aligns with Outback's core brand. Menu design changes that incent combo meals and premium add-ons (steak toppers, new premium sides, and desserts) have also delivered stronger mix than forecast, leading to the guidance upside. Early results are broadly positive across locations, with consistency of execution remaining the core focus. (379 characters)

Q: Outback guest scores have improved for four straight quarters, but traffic is still down 2.8% in Q2. When will better guest metrics translate to traffic growth, and are there early signs of conversion? / A: The turnaround's focus is on long-term sustainable profitable traffic, not near-term linear gains. With average guest frequency of only twice per year, building the flywheel of improved experience, repeat visits, and word-of-mouth takes time. Early results from refreshed locations and locations with fully executed turnaround changes already show positive traffic lifts, and co-founder Tim Gannon and on-the-ground managing partners confirm the strategy is on the right path. Management is committed to transparent reporting of progress and will not overproject near-term traffic gains. (401 characters)

Q: Will the brand double down on its low-price entry point, or is the focus shifting entirely to premium offerings? What is the scope and plan for Outback restaurant remodels? / A: Blumenbrands will maintain its barbell pricing strategy for Outback: the $14.99 Aussie 3 Course entry offer will remain to serve value-focused households, while the premium menu tier will continue to be promoted for guests seeking higher-end cuts. The $350,000-$400,000 per-location refresh budget is sufficient to deliver meaningful guest experience improvements, focusing on high-impact updates (tables, chairs, flooring, lighting, exterior signage) rather than full gut remodels. The company targets ~85 refreshes in 2026, ~100 per year after that, and sees a 100-200 basis point traffic lift from completed refreshes. (482 characters)

Q: How much will marketing spend increase in H2 2026 versus last year, and how will the budget be allocated? / A: Full-year 2026 marketing spend is up $15 million versus 2025, with $10 million of the increase allocated to Outback, and most of the increase is weighted to the second half. Marketing will be steak-centric to reinforce the new menu rollout and highlight Outback's core identity as an Aussie steakhouse, balanced with promotion of the affordable Aussie 3 Course entry offer. The marketing mix is shifting to 60% digital and social, 40% linear TV to better reach younger guest cohorts. (312 characters)