Bloomin’ Brands to Acquire 61 Outback Restaurants After Bankruptcy

By Daniel Okafor

Bloomin’ Brands has reached a $26.3 million agreement for 61 Outback Steakhouse restaurants and related assets from the chain’s largest U.S. franchisee, a deal that could transfer direct control of more than half of Outback’s roughly 115 remaining franchised locations to the parent company.

Out West Restaurant Group, also known as Cerca Trova Restaurant Group, filed for Chapter 11 bankruptcy Monday after years of declining sales and rising costs. Its financial troubles date to 2018, when falling restaurant traffic began cutting into revenue. The pandemic deepened the losses: revenue plunged 35% in 2020, according to court filings.

The filing puts 61 restaurants in the western United States up for sale. Bloomin’ Brands’ $26.3 million agreement serves as a “stalking horse” bid, establishing a minimum starting price that other potential buyers can attempt to beat during the bankruptcy process. The bid sets the floor for the sale; the final ownership outcome still depends on the court-supervised process.

Bloomin’ Brands will provide up to $5.5 million to keep the restaurants open during bankruptcy. The company said it expected no immediate changes for customers or employees. That funding is intended to maintain stability while Bloomin’ works with the franchisee, lenders and other stakeholders through the court process.

Outback has around 115 franchised restaurants in the United States, along with about 544 company-owned locations. If Bloomin’ completes the acquisition, it would take direct control of more than half of Outback’s remaining U.S. franchised restaurants. The transaction would shift 61 locations from franchisee control to direct parent-company oversight.

What does the sale change for Bloomin’ and the restaurants?

Operationally, Bloomin’ would gain direct oversight of 61 restaurants at once. The company says ownership will give it direct operational insight, let it invest through development initiatives and mitigate disruption to guests and employees. For guests, the immediate promise is simple: continued operation, with no immediate customer or employee changes expected while bankruptcy proceedings continue.

“We are working closely with Out West, its lenders, and other stakeholders throughout the Bankruptcy Court-supervised process as it focuses on maintaining stability in Out West’s restaurant operations, supporting Team Members and continuing to serve guests,” Bloomin’ said.

The company also said the purchase “gives [Bloomin’] direct operational insight, allows it to invest in the units through its development initiatives, and to mitigate disruption to guests and employees.”

Out West’s restaurants cluster in the Southwest, with locations in Arizona, Nevada, New Mexico and Colorado. The franchisee also has significant creditors in California, according to bankruptcy filings.

The bankruptcy filing comes as Outback revamps its menu and kitchen practices to improve food quality and win back diners. The changes put menu engineering and kitchen execution at the center:

• Adding a New York strip to the regular menu for the first time.
• Introducing a thick-cut ribeye called the “Down Under Delmonico.”
• Revising cut specifications, hand-trimming techniques and seasoning methods for existing favorites, including center-cut sirloin, Rockhampton ribeye and Victoria’s barrel-cut filet mignon.

Bloomin’ Brands also owns Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. If completed, the Outback transaction gives the parent a larger operating base as it works to improve the brand’s menu and restaurant execution.

If Bloomin’ ultimately buys all 61 restaurants, it will control most of Outback’s remaining franchise units while gaining more direct control over menu execution, kitchen practices and investment decisions. The immediate test is whether up to $5.5 million in interim funding keeps every location open while competing bids and the bankruptcy court determine the final owner.