Bloomin' Brands to Buy Its Largest Outback Franchisee Out of Bankruptcy

Outback Steakhouse's largest franchisee, Out West Restaurant Group, filed for Chapter 11 bankruptcy Monday in Delaware — and its franchisor, Bloomin' Brands, is already positioned to buy it.

The San Diego-based operator runs 61 Outback Steakhouse restaurants across five Western states. It reported assets and liabilities of between $10 million and $50 million each, according to the court filing. The restaurants will stay open during the proceedings.

Bloomin' Brands said it expects to be named the stalking-horse bidder (the opening bid that sets the floor for competing offers) in the case. It has also put $5.5 million in debtor-in-possession financing (a loan that funds operations through bankruptcy) on the table.

What does the deal cost?

Bloomin' has bid $26.3 million for Out West's assets, with stipulations. The price falls dollar-for-dollar by whatever Out West owes on the DIP facility at closing.

It can also move the other way. If certain vendor liabilities come in under $6.1 million, the purchase price rises by the shortfall. At $6.1 million or above, the price stays flat. Bloomin' would additionally assume lease obligations and unredeemed gift cards.

Out West's largest unsecured creditors are foodservice distributor Performance Food Group, owed more than $4 million, and employment law firm Matern Law Group, owed more than $1.6 million. The initial filing gave no explanation of what drove the bankruptcy.

Who is Out West?

The company has deep roots in Outback's history. Founded in 1992 as T-Bird Restaurant Group, it became Bloomin' Brands' first franchisee and carried the Florida-based casual-dining chain to the West Coast.

Private equity entered the picture in 2015, when H.I.G. Capital acquired T-Bird. In 2017, the group bought 45 corporate Outback locations in Arizona, Nevada, Colorado and New Mexico and rebranded as Cerca Trova Restaurant Concepts. It took the Out West name in 2018.

The group once ran as many as 100 Outback locations. Franchising is a small slice of the Outback system overall: just 116 of the brand's more than 1,000 global restaurants were franchised as of last year, according to Technomic. A Bloomin' acquisition of Out West would shrink that count sharply and convert the brand's largest franchisee into company-operated real estate.

Is Outback in trouble?

Bloomin' insists not. In a statement, the company called the bankruptcy an "isolated incident" that will not affect corporate operations or financing. NRN has reached out to H.I.G. and an attorney for Out West for comment.

The brand has, in fact, been showing signs of a turnaround after several years of sales and traffic declines. Bloomin' has invested $75 million in improving Outback's food quality, marketing and service.

The numbers are modest but real. Same-store sales rose 1.4% in the quarter ended June 28 — the best mark since the first quarter of 2023 — though traffic was still down 2.8%. Those figures cover company-owned restaurants only, which makes the economics of the deal straightforward for Bloomin': it is buying back restaurants it already knows how to run, while a franchisee's balance sheet absorbs the loss.

If the bankruptcy court approves the stalking-horse bid and no higher offer emerges, Outback's Western footprint will largely return to corporate hands — and Outback's franchisee count will drop by one, permanently.