Outback Steakhouse Shuts 43 Restaurants Across U.S. as $33.2M Charge Triggers Layoffs

Bloomin’ Brands has closed 21 Outback Steakhouse locations nationwide in October 2025, with 22 additional restaurants marked for closure as leases expire through 2029. The parent company simultaneously announced a $75 million turnaround investment through 2028, addressing persistent sales declines at its 670-unit flagship brand.

The dramatic restructuring follows seven consecutive quarters of negative or minimal comparable sales growth at Outback.​

Stock Price Collapse Reflects Investor Concerns

Bloomin’ Brands stock has crashed from $25.80 in mid-2024 to just $6.48 as of January 2026, representing a catastrophic 75% value destruction.

The company suspended its quarterly dividend—previously yielding 10.6%—to preserve approximately $50 million annually for operational improvements. Market capitalization now stands at $552 million against total debt of $849 million, creating a debt-to-equity ratio of 2.77 that severely constrains financial flexibility.​

Texas Roadhouse and LongHorn Steakhouse Dominate Market Share

Competitors have systematically captured Outback’s customer base through superior value propositions and execution. Texas Roadhouse maintains prices approximately $6 lower per entrée than Outback’s $29 average check while achieving American Customer Satisfaction Index scores of 85 versus Outback’s 80.

LongHorn Steakhouse posted 7.5% comparable sales growth in Q2 2025, dwarfing Outback’s 0.4% increase during the same period.​

CEO Mike Spanos Brings Airline Operations Expertise

Bloomin’ Brands recruited Mike Spanos from Delta Air Lines in September 2024, seeking his customer experience optimization credentials to reverse Outback’s decline. Spanos previously served as Delta’s Chief Operating Officer and led Six Flags Entertainment through pandemic-era turnaround efforts.

Board Chairman Michael Mohan emphasized Spanos’ “customer-first mindset for leading established organizations through challenging environments” as critical for the transformation.​

Four-Pillar Strategy Targets Operational Weaknesses

The turnaround plan allocates $25 million to enhanced steak quality with premium sourcing and expanded grilling capacity. An additional $7 million funds service model transformation reducing server table assignments from six to four during peak periods.

Physical plant refreshes averaging $400,000 per location will modernize nearly all Outback restaurants by 2028. Marketing investments emphasize “authority in steak” positioning through creative showcasing thickness and craftsmanship.​

Test Market Results Show Promising Guest Satisfaction Gains

Early implementation of steak quality enhancements delivered a 10-point lift in guest satisfaction scores across taste, value, intent to reorder, and overall quality perception.

The revised service model tested at 42 locations produced statistically significant improvements including +8 points in intent to return, +12 points in attentiveness perception, and +9 points in likelihood to recommend. These results validate management’s strategic priorities if replicated system-wide.​

Financial Performance Reveals Severe Margin Compression

Bloomin’ Brands reported Q3 2025 restaurant-level operating margins of 9.2%, down from 11.1% year-over-year—a 190-basis-point contraction revealing acute cost pressures. The company posted a net loss of $45.9 million, or diluted loss per share of $0.54, though adjusted results exceeded analyst expectations.

Full-year 2025 guidance projects adjusted diluted EPS of $1.10-$1.15 with approximately $190 million in capital expenditures.​

Industry Bankruptcy Wave Threatens Casual Dining Survival

Over 20 restaurant chains filed Chapter 11 bankruptcy in 2024-2025, including Red Lobster, TGI Fridays, and Hooters. Private equity involvement characterized 10 of 21 bankruptcies, with leveraged buyout structures and sale-leaseback transactions creating unsustainable cost structures.

Restaurant operating expenses increased approximately 30% since 2019, necessitating 31% menu price increases just to maintain 5% pre-tax profit margins, according to National Restaurant Association analysis.​

Food and Labor Inflation Squeeze Restaurant Economics

Food cost inflation surged 35% cumulatively from 2019-2025, with August 2025 food-away-from-home inflation running at 3.9% year-over-year. Meanwhile, 89% of restaurant operators reported labor cost increases in 2025, with labor now consuming 20-30% of revenue versus historical 25-28%.

These simultaneous input cost pressures explain widespread margin compression across casual dining concepts struggling to pass increases to value-conscious consumers.​

Closure Strategy Targets Bottom-Quartile Performers

The 43 designated closures exhibit multiple distress signals including sustained traffic declines exceeding system averages, occupancy cost inefficiencies, and physical plant deterioration requiring capital investments exceeding projected returns.

Employees at closed locations received transition bonuses and transfer opportunities to nearby Bloomin’ Brands restaurants. The phased “rightsize without shock” approach avoids mass simultaneous closures that damage brand perception.​

Aussie 3-Course Promotion Demonstrates Value Sensitivity

Outback’s permanent value platform offers soup or salad, entrée, and cheesecake at $14.99/$17.99/$20.99 tiers, with two-thirds of guests selecting premium options. The promotion drove traffic improvements during Q3 2025 testing, validating that value-conscious consumers will pay for quality when propositions are compelling.

However, Outback must solve how to justify its 26% price premium over Texas Roadhouse when customer satisfaction scores lag competitors.​

Portfolio Brands Show Mixed Performance Results

Carrabba’s Italian Grill outperformed with 4.1% comparable sales growth in Q3 2025, driven by strong value platform execution. Bonefish Grill posted 0.8% growth, marking its first positive quarter since Q2 2023 following menu simplification initiatives.

Fleming’s Prime Steakhouse achieved 1.2% comparable sales increases, demonstrating resilience in the fine dining segment. Combined, the portfolio operates 1,466 restaurants with systemwide sales exceeding $3.7 billion.​

Leadership Restructuring Imports Outside Turnaround Expertise

Bloomin’ Brands appointed Eric Christel as CFO in September 2025, bringing Campbell’s Snacks Division financial discipline and PepsiCo turnaround experience.

Michael Healy transitioned from CFO to newly-created EVP of Strategy and Transformation role, leading Outback’s implementation with institutional knowledge from 16 years across operations, finance, and brand leadership. Jessica Mitory joined as Chief Human Resources Officer to strengthen retention, training, and workplace culture.​

Analysts Express Skepticism About Recovery Timeline

Price targets for Bloomin’ Brands cluster around $7.67-$8.90, suggesting limited upside from current $6.48 levels absent successful execution.

The valuation compression from a P/E ratio of approximately 15x in 2023 to 6x currently positions the company as either deep value opportunity or potential value trap. Industry forecasters note that turnarounds typically require 18-36 months to demonstrate results, creating vulnerability if macroeconomic conditions deteriorate.​

The Verdict: Narrow Path Forward Requires Flawless Execution

Outback Steakhouse faces existential competitive threats requiring simultaneous excellence across steak quality, service consistency, physical plant modernization, and marketing effectiveness.

The $75 million investment—approximately $112,000 per restaurant over three years—may prove insufficient to transform 670 locations to competitive standard. Success hinges on whether operational improvements can elevate customer satisfaction to justify premium pricing, or whether competitive disadvantages prove insurmountable, forcing additional restructuring similar to Red Lobster and TGI Fridays.​