What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-03 compared with 2021-11-03 · 234 added, 397 removed, 294 unchanged (68% of the section changed)

15 unchanged sentences

(iii) Minimum wage increases, additional mandated employee benefits and fluctuations in the cost and availability of employees;

(iv) Fluctuations in the price and availability of commodities;

(iv) Fluctuations in the price and availability of commodities, including supplier freight charges and restaurant distribution expenses;

(v) Our ability to compete in the highly competitive restaurant industry with many well-established competitors and new market entrants;

(vi) Economic conditions and their effects on consumer confidence and discretionary spending, consumer traffic, the cost and availability of credit and interest rates;

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

(vi) Economic conditions and their effects on consumer confidence and discretionary spending, consumer traffic, the cost and availability of credit and interest rates;

(vii) Our ability to recruit and retain high-quality leadership, restaurant-level management and team members;

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(ix) Our ability to protect our information technology systems from interruption or security breach, including cyber security threats, and to protect consumer data and personal employee information;

(x) Dependence on a limited number of suppliers and distributors to meet our beef and other major product supply needs;

(x) Dependence on a limited number of suppliers and distributors to meet our beef, chicken and other major product supply needs;

(xi) The effects of international economic, political and social conditions and legal systems on our foreign operations and on foreign currency exchange rates;

(xii) Our ability to comply with governmental laws and regulations, the costs of compliance with such laws and regulations and the effects of changes to applicable laws and regulations, including tax laws and unanticipated liabilities, and the impact of litigation;

(xiii) Our ability to effectively respond to changes in patterns of consumer traffic, consumer tastes and dietary habits, including by maintaining relationships with third party delivery apps and services;

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(xv) Seasonal and periodic fluctuations in our results and the effects of significant adverse weather conditions and other disasters or unforeseen events;

(xvi) The effects of our substantial leverage and restrictive covenants in our various credit facilities on our ability to raise additional capital to fund our operations, to make capital expenditures to invest in new or renovate restaurants and to react to changes in the economy or our industry, and our exposure to interest rate risk in connection with our variable-rate debt;

(xvi) The effects of our leverage and restrictive covenants in our various credit facilities on our ability to raise additional capital to fund our operations, to make capital expenditures to invest in new or renovate restaurants and to react to changes in the economy or our industry;

(xvii) Any impairment in the carrying value of our goodwill or other intangible or long-lived assets and its effect on our financial condition and results of operations;

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Risk Factors of our Annual Report on Form 10-K for the year ended December 26, 2021.

In light of these risks and uncertainties, we caution you not to place undue reliance on these forward-looking statements.

Given these risks and uncertainties, we caution you not to place undue reliance on these forward-looking statements.

Any forward-looking statement that we make in this Report speaks only as of the date of such statement, and we undertake no obligation to update any forward-looking statement or to publicly announce the results of any revision to any of those statements to reflect future events or developments.

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We are one of the largest casual dining restaurant companies in the world with a portfolio of leading, differentiated restaurant concepts.

As of September 26, 2021, we owned and operated 1,159 restaurants and franchised 325 restaurants across 47 states, Guam and 19 countries.

As of March 27, 2022, we owned and operated 1,166 full-service restaurants and off-premises only kitchens and franchised 333 full-service restaurants and off-premises only kitchens across 47 states, Guam and 15 countries.

We have four founder-inspired concepts:

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Financial Highlights

Our financial highlights for the thirteen weeks ended September 26, 2021 (“third quarter of 2021”) include the following:

combined and Outback Steakhouse comparable restaurant sales of 25.5% and 18.3%, respectively, relative to the third quarter of 2020, and 9.5% and 6.0%, respectively, relative to the third quarter of 2019;

• Increase in Total revenues of 31.0%, as compared to the third quarter of 2020, and 4.5%, as compared to the third quarter of 2019;

• A $61.9 million charge to Other restaurant operating expense in connection with the Carrabba’s Italian Grill Royalty Termination Agreement, an impact of 6.2% on restaurant-level operating margin;

• Restaurant-level operating margin of 10.3%, as compared to 10.7% and 12.9% for the third quarters of 2020 and 2019, respectively;

• Income (loss) from operations of $14.8 million, as compared to $(14.3) million and $22.0 million in the third quarters of 2020 and 2019, respectively;

• Diluted earnings (loss) per share attributable to common stockholders of $0.03, as compared to $(0.20) and $0.11 in the third quarters of 2020 and 2019, respectively.

Key Performance Indicators

Our financial highlights for the thirteen weeks ended March 27, 2022 (“first quarter of 2022”) include the following:

combined and Outback Steakhouse comparable restaurant sales of 14.0% and 9.2%, respectively;

• Increase in Total revenues of 15.5%, as compared to the first quarter of 2021;

• Restaurant-level operating and operating income margins of 17.1% and 9.4%, respectively, as compared to 18.8% and 9.2%, respectively, for the first quarter of 2021;

• Income from operations of $107.3 million, as compared to $91.0 million in the first quarter of 2021;

• Diluted earnings per share of $0.73, as compared to $0.63 for the first quarter of 2021.

Key Financial Performance Indicators

Key measures that we use in evaluating our restaurants and assessing our business include the following:

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• System-wide sales — total restaurant sales volume for all Company-owned and franchise restaurants, regardless of ownership, to interpret the overall health of our brands;

• Restaurant-level operating margin, Income (loss) from operations, Net income (loss) and Diluted earnings (loss) per share — financial measures utilized to evaluate our operating performance.

• Restaurant-level operating margin, Income from operations, Net income and Diluted earnings per share — financial measures utilized to evaluate our operating performance.

Restaurant-level operating margin is widely regarded in the industry as a useful metric to evaluate restaurant-level operating efficiency and performance of ongoing restaurant-level operations, and we use it for these purposes, overall and particularly within our two segments.

Our restaurant-level operating margin is expressed as the percentage of our Restaurant sales that Food and beverage costs, Labor and other related expenses and Other restaurant operating expenses (including advertising expenses) represent, in each case as such items are reflected in our Consolidated Statements of Operations and Comprehensive Income (Loss).

The following categories of our revenue and operating expenses are not included in restaurant-level

The following categories of our revenue and operating expenses are not included in restaurant-level operating margin because we do not consider them reflective of operating performance at the restaurant-level within a period:

(i) Franchise and other revenues which are earned primarily from franchise royalties and other non-food and beverage revenue streams, such as rental and sublease income;

(ii) Depreciation and amortization which, although substantially all of which is related to restaurant-level assets, represent historical sunk costs rather than cash outlays for the restaurants;

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

operating margin because we do not consider them reflective of operating performance at the restaurant-level within a period:

(i) Franchise and other revenues which are earned primarily from franchise royalties and other non-food and beverage revenue streams, such as rental and sublease income.

(ii) Depreciation and amortization which, although substantially all of which is related to restaurant-level assets, represent historical sunk costs rather than cash outlays for the restaurants.

(iii) General and administrative expense which includes primarily non-restaurant-level costs associated with support of the restaurants and other activities at our corporate offices;

(iv) Asset impairment charges and restaurant closing costs which are not reflective of ongoing restaurant performance in a period.

Restaurant-level operating margin excludes various expenses, as discussed above, that are essential to support the operations of our restaurants and may materially impact our Consolidated Statements of Operations.

As a result, restaurant-level operating margin is not indicative of our consolidated results of operations and is presented exclusively as a supplement to, and not a substitute for, Net income (loss) or Income (loss) from operations.

In addition, our presentation of restaurant-level operating margin may not be comparable to similarly titled measures used by other companies in our industry;

• Adjusted restaurant-level operating margin, Adjusted income (loss) from operations, Adjusted net income (loss) and Adjusted diluted earnings (loss) per share — non-GAAP financial measures utilized to evaluate our operating performance.

• Adjusted restaurant-level operating margin, Adjusted income from operations, Adjusted net income and Adjusted diluted earnings per share — non-GAAP financial measures utilized to evaluate our operating performance.

We believe that our use of non-GAAP financial measures permits investors to assess the operating performance of our business relative to our performance based on U.S.

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However, our inclusion of these adjusted measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items or that the items for which we have made adjustments are unusual or infrequent or will not recur.

We believe that the disclosure of these non-GAAP measures is useful to investors as they form part of the basis for how our management team and Board of Directors evaluate our operating performance, allocate resources and administer employee incentive plans;

• Customer satisfaction scores — measurement of our customers’ experiences in a variety of key areas.

We believe that the disclosure of these non-GAAP measures is useful to investors as they form part of the basis for how our management team and Board evaluate our operating performance, allocate resources and administer employee incentive plans.

BLOOMIN’ BRANDS, INC.

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Selected Operating Data

The table below presents the number of our restaurants in operation as of the periods indicated:

The table below presents the number of our full-service restaurants in operation as of the periods indicated:

Number of restaurants (at end of the period):

SEPTEMBER 26, 2021 SEPTEMBER 27, 2020

MARCH 27, 2022 MARCH 28, 2021

Outback Steakhouse

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System-wide total 1,450 1,447

System-wide total - Company-owned 1,163 1,156

System-wide total - Franchised 287 291

____________________

Other Company-owned included four and three fast-casual Aussie Grill locations as of September 26, 2021 and September 27, 2020, respectively.

International Franchised Other included three Aussie Grill locations as of September 26, 2021 and September 27, 2020.

International Company-owned Other included two and one Aussie Grill locations as of September 26, 2021 and September 27, 2020, respectively.

(2) The restaurant counts for Brazil are reported as of August 31, 2021 and 2020, respectively, to correspond with the balance sheet dates of this subsidiary.

(3) Franchised Outback Steakhouse - South Korea included 37 and 13 international dark kitchens that offer delivery only as of September 26, 2021 and September 27, 2020, respectively.

In addition, we had one international dark kitchen included within Company-owned Other as of both periods presented.

(1) Restaurant counts as of March 28, 2021 have been adjusted to exclude off-premises only locations included in the table below.

(2) The restaurant counts for Brazil are reported as of February 28, 2022 and 2021, respectively, to correspond with the balance sheet dates of this subsidiary.

(3) International Company-owned Other included two Aussie Grill locations as of March 27, 2022 and March 28, 2021.

International Franchised Other included three Aussie Grill locations as of March 27, 2022 and March 28, 2021.

The table below presents the number of our off-premises only kitchens in operation as of the periods indicated:

Number of kitchens (at end of the period) (1):

MARCH 27, 2022 MARCH 28, 2021

Company-owned 2 3

International:

Company-owned 1 1

Franchised - South Korea 46 25

System-wide total 49 29

____________________

(1) Excludes virtual concepts that operate out of existing restaurants and sports venue locations.

BLOOMIN’ BRANDS, INC.

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The following table sets forth the percentages of certain items in our Consolidated Statements of Operations in relation to Total revenues or Restaurant sales, for the periods indicated:

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 SEPTEMBER 26, 2021 SEPTEMBER 27, 2020

THIRTEEN WEEKS ENDED

MARCH 27, 2022 MARCH 28, 2021

Restaurant sales 98.5 % 99.2 %

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Total costs and expenses 90.6 90.8

Income (loss) from operations 1.5 (1.8) 7.5 (7.1)

Loss on extinguishment and modification of debt — — (0.1) (*)

Other income (expense), net * * * (*)

Income from operations 9.4 9.2

Other income, net — *

Interest expense, net (1.2) (1.5)

Income (loss) before (benefit) provision for income taxes 0.1 (4.2) 6.0 (9.1)

(Benefit) provision for income taxes (0.4) (1.9) 0.8 (3.0)

Net income (loss) 0.5 (2.3) 5.2 (6.1)

net income (loss) attributable to noncontrolling interests 0.2 (*) 0.2 (*)

Net income (loss) attributable to Bloomin’ Brands

0.3 % (2.3) % 5.0 % (6.1) %

Income before provision for income taxes 8.2 7.7

Provision for income taxes 1.4 0.6

Net income 6.8 7.1

net income attributable to noncontrolling interests 0.2 0.1

Net income attributable to Bloomin’ Brands

________________

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Restaurant sales

Following is a summary of the change in Restaurant sales for the periods indicated:

(dollars in millions) THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

For the periods ended September 27, 2020 $ 766.5 $ 2,339.0

Following is a summary of the change in Restaurant sales for the period indicated:

(dollars in millions) THIRTEEN WEEKS ENDED

For the period ended March 28, 2021 $ 979.5

Comparable restaurant sales 142.0

Restaurant openings 12.4

Effect of foreign currency translation 2.3 (15.6)

Restaurant closures (7.2)

For the periods ended September 26, 2021 $ 996.7 $ 3,031.4

The increase in Restaurant sales during the thirteen weeks ended September 26, 2021 was primarily due to:

(i) higher comparable restaurant sales from in-restaurant dining and strong retention of off-premises sales and (ii) the

Effect of foreign currency translation (3.1)

For the period ended March 27, 2022 $ 1,123.6

The increase in Restaurant sales during the thirteen weeks ended March 27, 2022 was primarily due to:

(i) higher comparable restaurant sales primarily attributable to increases in average check per person and (ii) the opening of 37

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

opening of 31 new restaurants not included in our comparable restaurant sales base.

The increase in Restaurant sales was partially offset by the closure of 15 restaurants since June 26, 2020.

The increase in Restaurant sales during the thirty-nine weeks ended September 26, 2021 was primarily due to:

(i) higher comparable restaurant sales from in-restaurant dining and strong retention of off-premises sales and (ii) the opening of 37 new restaurants not included in our comparable restaurant sales base.

The increase in Restaurant sales was partially offset by the closure of 45 restaurants since December 29, 2019 and the effect of foreign currency translation of the Brazilian Real relative to the U.S.

new restaurants not included in our comparable restaurant sales base.

The increase in Restaurant sales was partially offset by the closure of 17 restaurants since December 27, 2020.

Average Restaurant Unit Volumes and Operating Weeks

Following is a summary of the average restaurant unit volumes and operating weeks, for the periods indicated:

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 SEPTEMBER 26, 2021 SEPTEMBER 27, 2020

THIRTEEN WEEKS ENDED

MARCH 27, 2022 MARCH 28, 2021

Average restaurant unit volumes (weekly):

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____________________

(1) Translated at average exchange rates of 5.15 and 5.34 for the thirteen weeks ended September 26, 2021 and September 27, 2020, respectively, and 5.27 and 4.60 for the thirty-nine weeks ended September 26, 2021 and September 27, 2020, respectively.

(1) Translated at average exchange rates of 5.47 and 5.30 for the thirteen weeks ended March 27, 2022 and March 28, 2021, respectively.

BLOOMIN’ BRANDS, INC.

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Following is a summary of comparable restaurant sales, traffic and average check per person increases (decreases) for the periods indicated:

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 SEPTEMBER 26, 2021 SEPTEMBER 27, 2020

COMPARABLE TO 2019 (1) COMPARABLE TO 2020 COMPARABLE TO 2019 COMPARABLE TO 2019 (1) COMPARABLE TO 2020 COMPARABLE TO 2019

THIRTEEN WEEKS ENDED

MARCH 27, 2022 MARCH 28, 2021

Year over year percentage change:

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Combined U.S.

9.5 % 25.5 % (12.8) % 4.3 % 31.4 % (20.7) %

International

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Combined U.S.

2.9 % 19.3 % (13.6) % (0.1) % 21.9 % (17.9) %

International

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Combined U.S.

6.6 % 6.2 % 0.8 % 4.4 % 9.5 % (2.8) %

International

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____________________

(1) Represents comparable restaurant sales, traffic and average check per person increases (decreases) relative to fiscal year 2019 for improved comparability due to the impact of COVID-19 on fiscal year 2020 restaurant sales.

(1) Relocated restaurants closed more than 60 days are excluded from comparable restaurant sales until at least 18 months after reopening.

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(3) Average check per person includes the impact of menu pricing changes, product mix and discounts.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Franchise and other revenues

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 SEPTEMBER 26, 2021 SEPTEMBER 27, 2020

THIRTEEN WEEKS ENDED

(dollars in millions) MARCH 27, 2022 MARCH 28, 2021

Franchise revenues (1) $ 13.4 $ 6.8

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____________________

(1) Represents franchise royalties, advertising fees and initial franchise fees.

Franchise revenues increased during the thirteen and thirty-nine weeks ended September 26, 2021 primarily due to higher franchise sales as a result of the impact of COVID-19 on 2020 franchise sales.

(2) The thirteen and thirty-nine weeks ended September 26, 2021 include an adjustment of $(3.2) million to reduce our initial recorded estimate and net $3.1 million benefit from the recognition of recoverable PIS and COFINS taxes, respectively, within other revenues in connection with favorable court rulings in Brazil regarding the calculation methodology and taxable base for prior years.

(1) Franchise revenues increased during the thirteen weeks ended March 27, 2022 as compared to the thirteen weeks ended March 28, 2021 primarily due to the impact of COVID-19-related capacity restrictions on 2021 franchise sales.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

COSTS AND EXPENSES

Food and beverage costs

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 CHANGE SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 CHANGE

THIRTEEN WEEKS ENDED

(dollars in millions) MARCH 27, 2022 MARCH 28, 2021 CHANGE

Food and beverage costs $ 359.4 $ 291.9

% of Restaurant sales 32.0 % 29.8 % 2.2 %

Food and beverage costs increased as a percentage of Restaurant sales during the thirteen weeks ended September 26, 2021 as compared to the thirteen weeks ended September 27, 2020 primarily due to 1.0% from commodity inflation partially offset by a decrease as a percentage of Restaurant sales of 0.5% from increases in average check per person including changes in product mix.

Food and beverage costs decreased as a percentage of Restaurant sales during the thirty-nine weeks ended September 26, 2021 as compared to the thirty-nine weeks ended September 27, 2020 primarily due to:

(i) 0.8% from increases in average check per person, primarily driven by reduced discounting, (ii) 0.4% from the impact of certain cost savings initiatives and (iii) 0.3% from inventory obsolescence and spoilage costs during 2020 associated with the COVID-19 pandemic.

These decreases were partially offset by an increase as a percentage of Restaurant sales of 0.2% from commodity inflation.

In 2022, we anticipate approximately 10% commodity inflation.

Food and beverage costs increased as a percentage of Restaurant sales during the thirteen weeks ended March 27, 2022 as compared to the thirteen weeks ended March 28, 2021 primarily due to 3.6% from commodity inflation, partially offset by a decrease as a percentage of Restaurant sales of 1.4% from increases in average check per person, primarily driven by an increase in menu pricing.

Labor and other related expenses

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 CHANGE SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 CHANGE

THIRTEEN WEEKS ENDED

(dollars in millions) MARCH 27, 2022 MARCH 28, 2021 CHANGE

Labor and other related $ 312.5 $ 274.6

% of Restaurant sales 27.8 % 28.0 % (0.2) %

Labor and other related expenses decreased as a percentage of Restaurant sales during the thirteen weeks ended September 26, 2021 as compared to the thirteen weeks ended September 27, 2020 primarily due to 4.3% from leveraging increased restaurant sales, partially offset by an increase as a percentage of Restaurant sales of 1.1% from wage rate increases.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Labor and other related expenses decreased as a percentage of Restaurant sales during the thirty-nine weeks ended September 26, 2021 as compared to the thirty-nine weeks ended September 27, 2020 primarily due to 4.4% from leveraging increased restaurant sales and 1.1% from the 2020 impact of net relief pay.

These decreases were partially offset by increases as a percentage of Restaurant sales of 0.6% from wage rate increases and 0.5% from higher management bonus.

In 2022, we anticipate mid-single digit labor cost inflation.

Labor and other related expenses decreased as a percentage of Restaurant sales during the thirteen weeks ended March 27, 2022 as compared to the thirteen weeks ended March 28, 2021 primarily due to 1.3% from increases in average check per person and the net benefit of lapping the impact of COVID-19.

This decrease was partially offset by an increase as a percentage of Restaurant sales of 1.2% from wage rate inflation.

Other restaurant operating expenses

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 CHANGE SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 CHANGE

THIRTEEN WEEKS ENDED

(dollars in millions) MARCH 27, 2022 MARCH 28, 2021 CHANGE

Other restaurant operating $ 259.1 $ 229.3

% of Restaurant sales 23.1 % 23.4 % (0.3) %

During the thirteen weeks ended September 26, 2021, we entered into the Royalty Termination Agreement with the Carrabba’s Founders for $61.9 million in cash.

See Note 19 - Commitments and Contingencies for additional details.

We recorded Carrabba’s Italian Grill royalty expense of $3.0 million during the thirty-nine weeks ended September 26, 2021, and $3.8 million and $6.6 million during fiscal years 2020 and 2019, respectively.

Other restaurant operating expenses increased as a percentage of Restaurant sales during the thirteen weeks ended September 26, 2021 as compared to the thirteen weeks ended September 27, 2020 primarily due to 6.2% from the Carrabba’s Italian Grill royalty termination and 1.2% from higher utilities, rent and operating expense.

These increases were partially offset by decreases as a percentage of Restaurant sales of:

(i) 3.5% from leveraging increased restaurant sales, (ii) 0.6% from lower advertising expense and (iii) 0.4% from a decrease in off-premises related costs.

Other restaurant operating expenses decreased as a percentage of Restaurant sales during the thirty-nine weeks ended September 26, 2021 as compared to the thirty-nine weeks ended September 27, 2020 primarily due to:

(i) 3.0% from leveraging increased restaurant sales, (ii) 1.3% from lower advertising expense and (iii) 0.3% from a decrease in off-premises related costs.

These decreases were partially offset by increases as a percentage of Restaurant sales of 2.0% from the Carrabba’s Italian Grill royalty termination and 0.6% from higher operating and utilities expense.

Depreciation and amortization

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 CHANGE SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 CHANGE

Depreciation and amortization $ 40.8 $ 43.4 $ (2.6) $ 122.6 $ 137.5 $ (14.9)

Depreciation and amortization expense decreased during the thirteen weeks ended September 26, 2021 as compared to the thirteen weeks ended September 27, 2020 primarily due to decreased capital expenditures.

Depreciation and amortization expense decreased during the thirty-nine weeks ended September 26, 2021 as compared to the thirty-nine weeks ended September 27, 2020 primarily due to decreased capital expenditures, impairment and the effect of foreign currency translation.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

General and administrative

General and administrative expense includes salaries and benefits, management incentive programs, related payroll tax and benefits, other employee-related costs and professional services.

Following is a summary of the change in General and administrative expense for the periods indicated:

(dollars in millions) THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

For the periods ended September 27, 2020 $ 57.4 $ 197.7

Employee stock-based compensation 2.9 9.1

Incentive compensation 1.8 5.7

Transformational costs (1.8) (9.4)

Travel and entertainment (1.1) (3.5)

Severance (1.0) (10.5)

Expected credit losses and contingent lease liabilities (0.1) (6.6)

Other 0.8 0.1

For the periods ended September 26, 2021 $ 58.9 $ 182.6

Provision for impaired assets and restaurant closings

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 CHANGE SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 CHANGE

Provision for impaired assets and restaurant closings $ 1.6 $ (0.1) $ 1.7 $ 9.0 $ 66.2 $ (57.2)

During the thirty-nine weeks ended September 27, 2020, we recognized asset impairment and closure charges of $56.4 million and $3.6 million within the U.S.

and international segments, respectively, primarily related to the COVID-19 pandemic.

Included in the amount for the thirty-nine weeks ended September 27, 2020 were pre-tax asset impairments and closure costs of $20.9 million in connection with the closure of 22 restaurants and from the update of certain cash flow assumptions, including lease renewal considerations.

We also recognized asset impairment charges related to transformational initiatives of $6.3 million during the thirty-nine weeks ended September 27, 2020, which were not allocated to our operating segments.

The remaining impairment and closure charges during the periods presented resulted primarily from locations identified for closure.

See Note 4 - Impairments and Exit Costs of the Notes to Consolidated Financial Statements for further information.

Income (loss) from operations

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 CHANGE SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 CHANGE

Income (loss) from operations $ 14.8 $ (14.3) $ 29.1 $ 230.5 $ (167.7) $ 398.2

Other restaurant operating expenses decreased as a percentage of Restaurant sales during the thirteen weeks ended March 27, 2022 as compared to the thirteen weeks ended March 28, 2021 primarily due to 2.3% from leveraging increased restaurant sales, partially offset by increases as a percentage of Restaurant sales of 1.3% from higher operating expenses including utilities and 0.5% from higher advertising expense.

Income from operations

THIRTEEN WEEKS ENDED

(dollars in millions) MARCH 27, 2022 MARCH 28, 2021 CHANGE

Income from operations $ 107.3 $ 91.0 $ 16.3

% of Total revenues 9.4 % 9.2 % 0.2 %

Income from operations generated during the thirteen weeks ended September 26, 2021 as compared to Loss from operations during the thirteen weeks ended September 27, 2020 was primarily due to higher comparable restaurant sales and lower advertising expense.

The increase in Income from operations generated during the thirteen weeks ended March 27, 2022 as compared to the thirteen weeks ended March 28, 2021 was primarily due to increases in average check per person and the net benefit of lapping the impact of COVID-19, as well as higher franchise revenues.

These increases were partially offset by:

(i) the Carrabba’s Italian Grill royalty termination, (ii) higher labor costs and commodity inflation and (iii) higher utilities, rent and operating expense.

(i) commodity and wage rate inflation, (ii) higher operating expenses including utilities and (iii) higher advertising expense.

BLOOMIN’ BRANDS, INC.

1 unchanged sentence

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Income from operations generated during the thirty-nine weeks ended September 26, 2021 as compared to Loss from operations during the thirty-nine weeks ended September 27, 2020 was primarily due to:

(i) higher comparable restaurant sales, (ii) COVID-19 pandemic related charges during 2020, (iii) lower advertising expense, (iv) the impact of restructuring and transformational initiatives during 2020, (v) the 2020 impact of net relief pay and (vi) the impact of certain cost savings initiatives.

These increases were partially offset by:

(i) the Carrabba’s Italian Grill royalty termination, (ii) higher labor costs and commodity inflation, (iii) an increase in incentive compensation, (iv) higher operating and utilities expense and (v) higher management bonus.

Interest expense, net

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 CHANGE SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 CHANGE

Interest expense, net $ 14.2 $ 18.3 $ (4.1) $ 43.9 $ 46.6 $ (2.7)

The decrease in Interest expense, net for the thirteen weeks ended September 26, 2021 as compared to the thirteen weeks ended September 27, 2020 was primarily due to lower revolver and term loan borrowings and the discontinuance of debt discount amortization related to our 2025 Notes resulting from the adoption of ASU No.

These decreases were partially offset by an increase in interest expense from our 2029 Notes issued in April 2021.

The decrease in Interest expense, net for the thirty-nine weeks ended September 26, 2021 as compared to the thirty-nine weeks ended September 27, 2020 was primarily due to:

(i) lower revolver and term loan borrowings, (ii) the discontinuance of debt discount amortization related to our 2025 Notes resulting from the adoption of ASU No.

2020-06 and (iii) lower interest rates on our unhedged variable rate debt.

These decreases were partially offset by increases in interest expense from our 2025 Notes issued in May 2020 and our 2029 Notes issued in April 2021.

(Benefit) provision for income taxes

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 CHANGE SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 CHANGE

Effective income tax rate (NM) 45.4 % (NM) 13.5 % 32.7 % (19.2) %

________________

NM Not meaningful.

For the thirteen weeks ended September 26, 2021, the benefit for income taxes includes the impact of changes to the estimate of the forecasted full-year effective tax rate relative to prior quarters in 2021.

The benefit of FICA tax credits on certain employees’ tips reduced the effective tax rate as a result of forecasted pre-tax income.

For the thirteen weeks ended September 27, 2020, the benefit of FICA tax credits on certain employees’ tips increased the effective tax rate as a result of forecasted pre-tax book loss.

The effective income tax rate for the thirty-nine weeks ended September 26, 2021 decreased by 19.2 percentage points as compared to the thirty-nine weeks ended September 27, 2020.

The decrease was primarily due to the benefit of FICA tax credits on certain employees’ tips reducing the effective tax rate in 2021 as a result of forecasted pre-tax book income as compared to increasing the effective tax rate in 2020 as a result of forecasted pre-tax book loss.

Provision for income taxes

THIRTEEN WEEKS ENDED

MARCH 27, 2022 MARCH 28, 2021 CHANGE

Effective income tax rate 17.0 % 8.6 % 8.4 %

The effective income tax rate for the thirteen weeks ended March 27, 2022 increased by 8.4 percentage points as compared to the thirteen weeks ended March 28, 2021.

The increase was primarily due to the change in the amount and mix of forecasted pre-tax book income across our U.S.

and international subsidiaries.

SEGMENT PERFORMANCE

We consider our restaurant concepts and international markets as operating segments, which reflects how we manage our business, review operating performance and allocate resources.

Resources are allocated and

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

performance is assessed by our CEO, whom we have determined to be our CODM.

Resources are allocated and performance is assessed by our CEO, whom we have determined to be our CODM.

We aggregate our operating segments into two reportable segments, U.S.

14 unchanged sentences

Revenues for both segments include only transactions with customers and exclude intersegment revenues.

Excluded from Income (loss) from operations for U.S.

Excluded from Income from operations for U.S.

and international are certain legal and corporate costs not directly related to the performance of the segments, most stock-based compensation expenses and certain bonus expenses.

During the thirteen and thirty-nine weeks ended September 27, 2020, we recorded $4.2 million and $28.8 million, respectively, of pre-tax charges as a part of transformational initiatives.

These costs were primarily recorded within General and administrative expense and Provision for impaired assets and restaurant closings and were not allocated to our segments since our CODM does not consider the impact of transformational initiatives when assessing segment performance.

Refer to Note 20 - Segment Reporting of the Notes to Consolidated Financial Statements for reconciliations of segment income (loss) from operations to the consolidated operating results.

Refer to Note 15 - Segment Reporting of the Notes to Consolidated Financial Statements for reconciliations of segment income from operations to the consolidated operating results.

See the Overview-Key Performance Indicators and Non-GAAP Financial Measures sections of Management’s Discussion and Analysis for additional details regarding the calculation of restaurant-level operating margin.

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in thousands) SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 SEPTEMBER 26, 2021 SEPTEMBER 27, 2020

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

THIRTEEN WEEKS ENDED

(dollars in thousands) MARCH 27, 2022 MARCH 28, 2021

Restaurant sales $ 1,023,635 $ 900,059

2 unchanged sentences

Restaurant-level operating margin 17.4 % 19.2 %

Income (loss) from operations $ 47,294 $ 29,574 $ 334,326 $ (21,968)

Operating income (loss) margin 5.2 % 4.1 % 11.9 % (1.0) %

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Income from operations $ 132,226 $ 121,735

Operating income margin 12.8 % 13.5 %

Restaurant sales

Following is a summary of the change in U.S.

segment Restaurant sales for the periods indicated:

(dollars in millions) THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

For the periods ended September 27, 2020 $ 719.4 $ 2,141.1

segment Restaurant sales for the period indicated:

(dollars in millions) THIRTEEN WEEKS ENDED

For the period ended March 28, 2021 $ 900.1

Comparable restaurant sales 123.8

1 unchanged sentence

Restaurant closures (7.2)

For the periods ended September 26, 2021 $ 898.8 $ 2,789.1

The increase in U.S.

Restaurant sales during the thirteen weeks ended September 26, 2021 was primarily due to:

(i) higher comparable restaurant sales from in-restaurant dining and strong retention of off-premises sales and (ii) the opening of 11 new restaurants not included in our comparable restaurant sales base.

The increase in U.S.

Restaurant sales was partially offset by the closure of 15 restaurants since June 26, 2020.

For the period ended March 27, 2022 $ 1,023.7

The increase in U.S.

Restaurant sales during the thirty-nine weeks ended September 26, 2021 was primarily due to:

(i) higher comparable restaurant sales from in-restaurant dining and strong retention of off-premises sales and (ii) the opening of 13 new restaurants not included in our comparable restaurant sales base.

Restaurant sales during the thirteen weeks ended March 27, 2022 was primarily due to:

(i) higher comparable restaurant sales primarily attributable to increases in average check per person and (ii) the opening of 13 new restaurants not included in our comparable restaurant sales base.

The increase in U.S.

Restaurant sales was partially offset by the closure of 17 restaurants since December 27, 2020.

Income (loss) from operations

Income from operations

The increase in U.S.

Income from operations generated during the thirteen weeks ended September 26, 2021 as compared to the thirteen weeks ended September 27, 2020 was primarily due to an increase in comparable restaurant sales and lower advertising expense.

These increases were partially offset by:

(i) the Carrabba’s Italian Grill royalty termination, (ii) higher labor costs and commodity inflation and (iii) higher operating and utilities expense.

Income from operations generated during the thirty-nine weeks ended September 26, 2021 as compared to Loss from operations during the thirty-nine weeks ended September 27, 2020 was primarily due to:

(i) an increase in comparable restaurant sales, (ii) COVID-19 pandemic related charges during 2020, (iii) lower advertising expense, (iv) the 2020 impact of net relief pay and (v) the impact of certain cost savings initiatives.

Income from operations generated during the thirteen weeks ended March 27, 2022 as compared to the thirteen weeks ended March 28, 2021 was primarily due to increases in average check per person and the net benefit of lapping the impact of COVID-19, as well as higher franchise revenues.

These increases were partially offset by:

(i) the Carrabba’s Italian Grill royalty termination, (ii) higher labor costs and commodity inflation, (iii) higher management bonus and (iv) higher operating and utilities expense.

(i) commodity and wage rate inflation, (ii) higher operating expenses including utilities and (iii) higher advertising expense.

International Segment

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in thousands) SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 SEPTEMBER 26, 2021 SEPTEMBER 27, 2020

THIRTEEN WEEKS ENDED

(dollars in thousands) MARCH 27, 2022 MARCH 28, 2021

Restaurant sales $ 99,940 $ 79,392

2 unchanged sentences

Restaurant-level operating margin 16.9 % 14.4 %

Income (loss) from operations $ 1,412 $ (7,926) $ 7,419 $ (18,209)

Operating income (loss) margin 1.4 % (16.0) % 2.9 % (8.9) %

Income from operations $ 8,884 $ 3,537

Operating income margin 8.5 % 4.3 %

BLOOMIN’ BRANDS, INC.

2 unchanged sentences

Restaurant sales

Following is a summary of the change in international segment Restaurant sales for the periods indicated:

(dollars in millions) THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

For the periods ended September 27, 2020 $ 47.1 $ 197.9

Following is a summary of the change in international segment Restaurant sales for the period indicated:

(dollars in millions) THIRTEEN WEEKS ENDED

For the period ended March 28, 2021 $ 79.4

Comparable restaurant sales 18.2

1 unchanged sentence

Effect of foreign currency translation (3.1)

Restaurant closures — (0.6)

For the periods ended September 26, 2021 $ 97.9 $ 242.3

The increase in international Restaurant sales during the thirteen weeks ended September 26, 2021 was primarily due to higher comparable restaurant sales principally attributable to the impact of the COVID-19 pandemic on fiscal year 2020 international Restaurant sales and the opening of 20 new restaurants not included in our comparable restaurant sales base.

The increase in international Restaurant sales during the thirty-nine weeks ended September 26, 2021 was primarily due to higher comparable restaurant sales principally attributable to the impact of the COVID-19 pandemic on fiscal year 2020 international Restaurant sales and the opening of 24 new restaurants not included in our comparable restaurant sales base, partially offset by the effect of foreign currency translation of the Brazilian Real relative to the U.S.

Income (loss) from operations

International Income from operations generated during the thirteen weeks ended September 26, 2021 as compared to Loss from operations during the thirteen weeks ended September 27, 2020 was primarily due to:

(i) higher restaurant sales due to the reopening of restaurant dining rooms and increases in average check per person and (ii) a decrease in off-premises related costs.

These increases were partially offset by:

(i) higher labor costs, (ii) additional rent, utilities and operating expense, and (iii) commodity inflation.

International Income from operations generated during the thirty-nine weeks ended September 26, 2021 as compared to Loss from operations during the thirty-nine weeks ended September 27, 2020 was primarily due to:

(i) higher restaurant sales due to the reopening of restaurant dining rooms and increases in average check per person and (ii) lower labor costs.

These increases were partially offset by:

(i) commodity inflation, (ii) additional utilities, operating and rent expense and (iii) incremental off-premises related costs.

For the period ended March 27, 2022 $ 99.9

The increase in international Restaurant sales during the thirteen weeks ended March 27, 2022 was primarily due to higher comparable restaurant sales and the opening of 24 new restaurants not included in our comparable restaurant sales base.

Income from operations

The increase in international Income from operations generated during the thirteen weeks ended March 27, 2022 as compared to the thirteen weeks ended March 28, 2021 was primarily due to an increase in restaurant operating margin, which includes the recovery of in-restaurant dining from the impact of the COVID-19 pandemic during 2021 and increases in average check per person, partially offset by commodity inflation.

BLOOMIN’ BRANDS, INC.

2 unchanged sentences

Non-GAAP Financial Measures

System-Wide Sales - System-wide sales is a non-GAAP financial measure that includes sales of all restaurants operating under our brand names, whether we own them or not.

Management uses this information to make decisions about future plans for the development of additional restaurants and new concepts, as well as evaluation of current operations.

System-wide sales comprise sales of Company-owned and franchised restaurants.

For a summary of sales of Company-owned restaurants, refer to Note 3 - Revenue Recognition of the Notes to Consolidated Financial Statements.

The following table provides a summary of sales of franchised restaurants for the periods indicated, which are not included in our consolidated financial results.

Franchise sales within this table do not represent our sales and are presented only as an indicator of changes in the restaurant system, which management believes is important information regarding the health of our restaurant concepts and in determining our royalties and/or service fees.

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 SEPTEMBER 26, 2021 SEPTEMBER 27, 2020

Outback Steakhouse $ 118 $ 76 $ 329 $ 250

Carrabba’s Italian Grill 10 8 32 25

Bonefish Grill 3 2 8 6

total 131 86 369 281

International

Outback Steakhouse-South Korea 73 64 219 174

Other 26 19 77 45

International total 99 83 296 219

Total franchise sales (1) $ 230 $ 169 $ 665 $ 500

_____________________

(1) Franchise sales are not included in Total revenues in the Consolidated Statements of Operations and Comprehensive Income (Loss).

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Restaurant-level operating margin - The following tables reconcile consolidated and segment Income (loss) from operations and the corresponding margins to Restaurant-level operating income (loss) and the corresponding margins for the periods indicated:

Consolidated THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in thousands) SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 SEPTEMBER 26, 2021 SEPTEMBER 27, 2020

Income (loss) from operations $ 14,837 $ (14,255) $ 230,472 $ (167,735)

Operating income (loss) margin 1.5 % (1.8) % 7.5 % (7.1) %

Restaurant-level operating margin - The following tables reconcile consolidated and segment Income from operations and the corresponding margins to Restaurant-level operating income and the corresponding margins for the periods indicated:

Consolidated THIRTEEN WEEKS ENDED

(dollars in thousands) MARCH 27, 2022 MARCH 28, 2021

Income from operations $ 107,256 $ 90,998

Operating income margin 9.4 % 9.2 %

Franchise and other revenues 16,960 8,022

4 unchanged sentences

Restaurant-level operating margin 17.1 % 18.8 %

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in thousands) SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 SEPTEMBER 26, 2021 SEPTEMBER 27, 2020

Income (loss) from operations $ 47,294 $ 29,574 $ 334,326 $ (21,968)

Operating income (loss) margin 5.2 % 4.1 % 11.9 % (1.0) %

THIRTEEN WEEKS ENDED

(dollars in thousands) MARCH 27, 2022 MARCH 28, 2021

Income from operations $ 132,226 $ 121,735

Operating income margin 12.8 % 13.5 %

Franchise and other revenues 12,772 4,859

4 unchanged sentences

Restaurant-level operating margin 17.4 % 19.2 %

International THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in thousands) SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 SEPTEMBER 26, 2021 SEPTEMBER 27, 2020

Income (loss) from operations $ 1,412 $ (7,926) $ 7,419 $ (18,209)

Operating income (loss) margin 1.4 % (16.0) % 2.9 % (8.9) %

International THIRTEEN WEEKS ENDED

(dollars in thousands) MARCH 27, 2022 MARCH 28, 2021

Income from operations $ 8,884 $ 3,537

Operating income margin 8.5 % 4.3 %

Franchise and other revenues 4,188 3,163

2 unchanged sentences

Provision for impaired assets and restaurant closings 1,775 707

Restaurant-level operating income (loss) $ 12,541 $ (684) $ 26,016 $ 11,340

Restaurant-level operating income $ 16,935 $ 11,406

Restaurant-level operating margin 16.9 % 14.4 %

2 unchanged sentences

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Adjusted restaurant-level operating margin - The following tables present the percentages of certain operating cost financial statement line items in relation to Restaurant sales for the periods indicated:

The following table presents the percentages of certain operating cost financial statement line items in relation to Restaurant sales for the periods indicated:

THIRTEEN WEEKS ENDED

SEPTEMBER 26, 2021 SEPTEMBER 27, 2020

REPORTED ADJUSTED (1) REPORTED ADJUSTED

Restaurant sales 100.0 % 100.0 % 100.0 % 100.0 %

Food and beverage costs 30.5 % 30.5 % 30.1 % 30.1 %

Labor and other related 29.1 % 29.1 % 32.2 % 32.2 %

Other restaurant operating 30.1 % 23.6 % 27.0 % 27.0 %

Restaurant-level operating margin 10.3 % 16.8 % 10.7 % 10.7 %

THIRTY-NINE WEEKS ENDED

SEPTEMBER 26, 2021 SEPTEMBER 27, 2020

REPORTED ADJUSTED (1) REPORTED ADJUSTED (1)

MARCH 27, 2022 MARCH 28, 2021

Restaurant sales 100.0 % 100.0 %

3 unchanged sentences

Restaurant-level operating margin 17.1 % 18.8 %

_________________

(1) Includes (favorable) unfavorable adjustments recorded in Other restaurant operating expense (unless otherwise noted below) for the following activities, as described in the Adjusted income (loss) from operations, Adjusted net income (loss) and Adjusted diluted earnings (loss) per share table below for the periods indicated:

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 26, 2021 SEPTEMBER 26, 2021 SEPTEMBER 27, 2020

Royalty termination expense $ (61.9) $ (61.9) $ —

Legal and other matters (2.7) (2.7) —

COVID-19 related costs (i) — — (9.9)

Asset impairments and closing costs — — 2.7

$ (64.6) $ (64.6) $ (7.2)

_________________

(i) Includes $7.3 million of adjustments recorded in Food and beverage costs.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Adjusted income (loss) from operations, Adjusted net income (loss) and Adjusted diluted earnings (loss) per share

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(in thousands, except per share data) SEPTEMBER 26, 2021 SEPTEMBER 27, 2020 SEPTEMBER 26, 2021 SEPTEMBER 27, 2020

Income (loss) from operations $ 14,837 $ (14,255) $ 230,472 $ (167,735)

Operating income (loss) margin 1.5 % (1.8) % 7.5 % (7.1) %

Royalty termination expense (1) 61,880 — 61,880 —

Legal and other matters (2) 5,965 — (372) 178

COVID-19-related costs (3) — — — 79,218

Severance and other transformational costs (4) — 4,200 — 28,847

Asset impairments and closure costs (5) — — — (2,205)

Total income (loss) from operations adjustments 67,845 4,200 61,508 106,038

Adjusted income (loss) from operations $ 82,682 $ (10,055) $ 291,980 $ (61,697)

Adjusted operating income (loss) margin 8.2 % (1.3) % 9.5 % (2.6) %

Diluted net income (loss) attributable to common stockholders $ 3,449 $ (17,637) $ 155,316 $ (148,000)

Adjusted net income and Adjusted diluted earnings per share

THIRTEEN WEEKS ENDED

(in thousands, except per share data) MARCH 27, 2022 MARCH 28, 2021

Diluted net income attributable to Bloomin’ Brands $ 75,511 $ 70,243

Convertible senior notes if-converted method interest adjustment, net of tax (1) — 1,381

Net income (loss) attributable to common stockholders 3,449 (17,637) 154,856 (148,000)

Income (loss) from operations adjustments 67,845 4,200 61,508 106,038

Loss on extinguishment and modification of debt — — 2,073 —

Amortization of debt discount (7) — 2,407 — 3,786

Total adjustments, before income taxes 67,845 6,607 63,581 109,824

Adjustment to provision for income taxes (8) (15,878) 440 (14,635) (28,029)

Redemption of preferred stock in excess of carrying value (9) — — — 3,496

Net adjustments 51,967 7,047 48,946 85,291

Adjusted net income (loss) $ 55,416 $ (10,590) $ 203,802 $ (62,709)

Diluted earnings (loss) per share attributable to common stockholders (10) $ 0.03 $ (0.20) $ 1.42 $ (1.69)

Adjusted diluted earnings (loss) per share (11) $ 0.57 $ (0.12) $ 2.10 $ (0.72)

Net income attributable to Bloomin’ Brands

$ 75,511 $ 68,862

Diluted earnings per share $ 0.73 $ 0.63

Adjusted diluted earnings per share (2) $ 0.80 $ 0.72

Diluted weighted average common shares outstanding 103,454 110,641

1 unchanged sentence

_________________

(1) Payment made to the Carrabba’s Founders in connection with the Royalty Termination Agreement.

See Note 19 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional details regarding the Royalty Termination Agreement.

(2) The thirteen and thirty-nine weeks ended September 26, 2021 includes:

(i) an adjustment of $(3.2) million to reduce our initial recorded estimate and net $3.1 million benefit from the recognition of recoverable PIS and COFINS taxes, including accrued interest, respectively, within other revenues as a result of favorable court rulings and (ii) an accrual of $2.7 million for Imposto sobre Serviços (“ISS”), a Brazilian municipal service tax, in connection with royalties from our Brazilian subsidiary over the past five years, including related penalties and interest, recorded within Other restaurant operating expense as a result of an unfavorable Brazilian Supreme Court ruling.

(3) Costs incurred in connection with the COVID-19 pandemic, primarily consisting of fixed asset and right-of-use asset impairments, restructuring charges, inventory obsolescence and spoilage, contingent lease liabilities and current expected credit losses.

See Note 2 - COVID-19 Charges of the Notes to Consolidated Financial Statements for additional details regarding the impact of certain COVID-19 pandemic related charges on our financial results.

(4) Severance, professional fees and other costs incurred as a result of transformational and restructuring activities.

(1) Adjustment for interest expense related to the 2025 Notes weighted for the portion of the period prior to our election under the 2025 Notes indenture to settle the principal portion of the 2025 Notes in cash.

(2) For the thirteen weeks ended March 27, 2022 and March 28, 2021, adjusted diluted weighted average common shares outstanding was calculated excluding the dilutive effect of 8,732 and 9,653 shares, respectively, to be issued upon conversion of the 2025 Notes to satisfy the amount in excess of the principal since our convertible note hedge offsets the dilutive impact of the shares underlying the 2025 Notes.

For the thirteen weeks ended March 28, 2021, adjusted diluted weighted average common shares outstanding was also calculated assuming our February 2021 election to settle the principal portion of the 2025 Notes in cash was in effect for the entire period.

System-Wide Sales - System-wide sales is a non-GAAP financial measure that includes sales of all restaurants operating under our brand names, whether we own them or not.

Management uses this information to make decisions about future plans for the development of additional restaurants and new concepts, as well as evaluation of current operations.

System-wide sales comprise sales of Company-owned and franchised restaurants.

For a summary of sales of Company-owned restaurants, refer to Note 2 - Revenue Recognition of the Notes to Consolidated Financial Statements.

BLOOMIN’ BRANDS, INC.

1 unchanged sentence

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

(5) Primarily includes a lease termination gain of $2.8 million.

(6) Adjustment for interest expense related to the 2025 Notes weighted for the portion of the period prior to our election under the 2025 Notes indenture to settle the principal portion of our 2025 Notes in cash.

The calculation of adjusted diluted earnings per share excludes 2025 Notes interest adjustment.

(7) Amortization of debt discount related to the issuance of the 2025 Notes.

See Note 11 - Convertible Senior Notes of the Notes to Consolidated Financial Statements for details.

(8) Income tax effect of the adjustments for the periods presented.

(9) Consideration paid in excess of the carrying value for the redemption of preferred stock of our Abbraccio concept.

(10) Due to the GAAP net loss, the effect of dilutive securities was excluded from the calculation of GAAP diluted loss per share for the thirteen and thirty-nine weeks ended September 27, 2020.

(11) For the thirty-nine weeks ended September 26, 2021, adjusted diluted weighted average common shares outstanding was calculated assuming our February 2021 election to settle the principal portion of the 2025 Notes in cash was in effect for the entire period.

For the thirteen and thirty-nine weeks ended September 26, 2021, adjusted diluted weighted average common shares outstanding was calculated excluding the dilutive effect of 10,476 and 10,453 shares, respectively, to be issued upon conversion of the 2025 Notes to satisfy the amount in excess of the principal since the Convertible Note Hedge Transactions offset the dilutive impact of the shares underlying the 2025 Notes.

The following table provides a summary of sales of franchised restaurants for the periods indicated, which are not included in our consolidated financial results.

THIRTEEN WEEKS ENDED

(dollars in millions) MARCH 27, 2022 MARCH 28, 2021

Outback Steakhouse $ 129 $ 92

Carrabba’s Italian Grill 12 10

Bonefish Grill 3 2

total 144 104

International

Outback Steakhouse - South Korea 78 74

International total 112 98

Total franchise sales (1) $ 256 $ 202

_____________________

(1) Franchise sales are not included in Total revenues in the Consolidated Statements of Operations and Comprehensive Income.

Liquidity and Capital Resources

Cash flows generated from operating activities and availability under our revolving credit facility are our principal sources of liquidity, which we use for operating expenses, debt payments, development of new restaurants, remodeling or relocating older restaurants and investment in technology.

Cash and Cash Equivalents - As of September 26, 2021, we had $76.3 million in cash and cash equivalents, of which $28.8 million was held by foreign affiliates.

Cash and Cash Equivalents

As of March 27, 2022, we had $97.8 million in cash and cash equivalents, of which $30.1 million was held by foreign affiliates.

The international jurisdictions in which we have significant cash do not have any known restrictions that would prohibit repatriation.

As of September 26, 2021, we had aggregate accumulated foreign earnings of approximately $34.7 million.

As of March 27, 2022, we had aggregate accumulated foreign earnings of approximately $30.5 million.

This amount consisted primarily of historical earnings from 2017 and prior that were previously taxed in the U.S.

2 unchanged sentences

federal income tax.

These amounts are no longer considered indefinitely reinvested in our foreign subsidiaries.

Capital Expenditures - We estimate that our capital expenditures will total approxim a tely $140 million to $150 million in 2021.

The amount of actual capital expenditures may be affected by general economic, financial, competitive, legislative and regulatory factors, among other things, including raw material constraints and restrictions imposed by our borrowing arrangements.

Under the Second Amended and Restated Credit Agreement, we are limited to $200.0 million of aggregate capital expenditures during the year ended December 26, 2021.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

These amounts are not considered indefinitely reinvested in our foreign subsidiaries.

Borrowing Capacity and Debt Service

Credit Facilities - Following is a summary of our outstanding credit facilities as of the dates indicated and principal payments and debt issuance during the period indicated:

SENIOR SECURED CREDIT FACILITY FORMER CREDIT FACILITY TOTAL CREDIT FACILITIES

(dollars in thousands) TERM LOAN A REVOLVING FACILITY TERM LOAN A REVOLVING FACILITY 2025 NOTES 2029 NOTES

SENIOR SECURED CREDIT FACILITY TOTAL CREDIT FACILITIES

(dollars in thousands) TERM LOAN A REVOLVING FACILITY 2025 NOTES 2029 NOTES

Balance as of December 26, 2021 $ 195,000 $ 80,000 $ 230,000 $ 300,000 $ 805,000

1 unchanged sentence

2022 payments (2,500) (160,000) — — (162,500)

Balance as of September 26, 2021 $ 197,500 $ 124,000 $ — $ — $ 230,000 $ 300,000 $ 851,500

Weighted-average interest rate, as of September 26, 2021 2.58 % 2.69 % 5.00 % 5.13 %

Balance as of March 27, 2022 $ 192,500 $ 10,000 $ 230,000 $ 300,000 $ 732,500

Interest rates, as of March 27, 2022 (1) 1.76 % 4.00 % 5.00 % 5.13 %

Principal maturity date April 2026 April 2026 May 2025 April 2029

As of September 26, 2021, we had $655.3 million in available unused borrowing capacity under our revolving credit facility, net of letters of credit of $20.7 million.

During the thirteen weeks ended September 26, 2021, we made a cash payment of $61.9 million to the Carrabba’s Founders in connection with the Royalty Termination Agreement detailed in Note 19 - Commitments and Contingencies.

This cash payment was primarily funded by borrowings on our revolving credit facility.

2029 Notes - On April 16, 2021, we issued $300.0 million aggregate principal amount of senior unsecured notes due 2029.

The 2029 Notes mature on April 15, 2029, unless earlier redeemed or purchased by us.

The 2029 Notes bear cash interest at an annual rate of 5.125% payable semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2021.

The net proceeds from the 2029 Notes were approximately $294.5 million, after deducting the initial purchaser’s discount and our offering expenses.

The net proceeds were used to repay a portion of our outstanding Term loan A and revolving credit facility in conjunction with the refinancing of our Former Credit Facility.

Second Amended and Restated Credit Agreement - On April 16, 2021, we and OSI, as co-borrowers, entered into the Second Amended and Restated Credit Agreement which provides for senior secured financing of up to $1.0 billion consisting of a $200.0 million Term loan A and an $800.0 million revolving credit facility.

The Senior Secured Credit Facility matures on April 16, 2026 and replaced our Former Credit Facility financing of up to $1.5 billion.

The Second Amended and Restated Credit Agreement limits, subject to certain exceptions, our ability and the ability of our subsidiaries to:

incur additional indebtedness;

make significant payments;

pay dividends and other restricted payments;

make certain investments;

acquire certain assets;

effect mergers and similar transactions;

and effect certain other transactions with affiliates.

The Second Amended and Restated Credit Agreement also prohibited us from paying certain dividends and making certain restricted payments and acquisitions until we were in compliance with our TNLR covenant for the period ended September 26, 2021.

Our Senior Secured Credit Facility contains mandatory prepayment requirements for Term loan A, including the requirement that we prepay outstanding amounts under these loans with 50% of our annual excess cash flow, as defined in the Second Amended and Restated Credit Agreement, commencing with the fiscal year ending December 25, 2022.

The amount of outstanding loans required to be prepaid in accordance with the debt covenants may vary based on our CSSNLR and year end results.

Other than the annual required minimum amortization premiums of $10.0 million, we do not anticipate any other payments will be required through September 25, 2022.

____________________

(1) Interest rate for Term loan A represents the weighted average interest rate.

Interest rate for the revolving credit facility represents the base rate option elected in anticipation of impending repayment.

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

See Note 10 - Long-term Debt, Net for additional details regarding the 2029 Notes and Second Amended and Restated Credit Agreement.

As of September 26, 2021 and December 27, 2020, we were in compliance with our debt covenants.

As of March 27, 2022, we had $769.3 million in available unused borrowing capacity under our revolving credit facility, net of letters of credit of $20.7 million.

Our Credit Agreement contains various financial and non-financial covenants.

A violation of these covenants could negatively impact our liquidity by restricting our ability to borrow under the revolving credit facility and cause an acceleration of the amounts due under the credit facilities.

See Note 13 - Long-term Debt, Net in our Annual Report on Form 10-K for the year ended December 26, 2021 for further information.

As of March 27, 2022 and December 26, 2021, we were in compliance with our debt covenants.

We believe that we will remain in compliance with our debt covenants during the next 12 months.

SUMMARY OF CASH FLOWS

The following table presents a summary of our cash flows provided by (used in) operating, investing and financing activities for the periods indicated:

THIRTY-NINE WEEKS ENDED

(dollars in thousands) SEPTEMBER 26, 2021 SEPTEMBER 27, 2020

Net cash provided by operating activities $ 304,246 $ 54,971

Net cash used in investing activities (69,085) (56,162)

Net cash (used in) provided by financing activities (265,192) 99,853

Effect of exchange rate changes on cash and cash equivalents 207 (3,293)

Net (decrease) increase in cash, cash equivalents and restricted cash $ (29,824) $ 95,369

Operating activities - The increase in net cash provided by operating activities during the thirty-nine weeks ended September 26, 2021 as compared to the thirty-nine weeks ended September 27, 2020 was primarily due to an increase in restaurant-level operating margin.

This increase was partially offset by:

(i) cash paid in connection with the Carrabba’s Italian Grill royalty termination, (ii) deferral of payroll tax payments in 2020 as a result of the CARES Act, (iii) higher inventory purchases, (iv) timing of collections of gift card receivables, (v) cash paid to terminate interest rate swap agreements and (vi) timing of operational payments and receipts.

Investing activities - The increase in net cash used in investing activities during the thirty-nine weeks ended September 26, 2021 as compared to the thirty-nine weeks ended September 27, 2020 was primarily due to higher capital expenditures, partially offset by higher proceeds from the disposal of property, fixtures and equipment.

Financing activities - Net cash used in financing activities during the thirty-nine weeks ended September 26, 2021 as compared to net cash provided by financing activities during the thirty-nine weeks ended September 27, 2020 was primarily due to:

(i) higher net repayments on our revolving credit facility, (ii) proceeds from the issuance of the 2025 Notes and related warrants during 2020 and (iii) net repayment of our Term loan A in conjunction with the refinance of our Former Credit Facility.

These decreases were partially offset by:

(i) proceeds from the issuance of the 2029 Notes, (ii) premium payments for Convertible Note Hedge Transactions during 2020, (iii) payment of cash dividends on our common stock during 2020 and (iv) proceeds from the exercise of stock-based compensation during 2021 as compared to payment of taxes from the exercise of stock-based compensation during 2020.

FINANCIAL CONDITION

Following is a summary of our current assets, current liabilities and working capital (deficit) as of the periods indicated:

(dollars in thousands) SEPTEMBER 26, 2021 DECEMBER 27, 2020

Current assets $ 240,659 $ 323,854

Current liabilities 897,215 950,104

Working capital (deficit) $ (656,556) $ (626,250)

Working capital (deficit) includes:

(i) Unearned revenue primarily from unredeemed gift cards of $284.1 million and $381.6 million as of September 26, 2021 and December 27, 2020, respectively, and (ii) current operating lease

Credit Agreement Amendment - On April 26, 2022, we and OSI entered into the Amended Credit Agreement, which included an increase of our existing revolving credit facility from $800.0 million to $1.0 billion and a transition from LIBOR to SOFR as the benchmark rate for purposes of calculating interest under the Senior Secured Credit Facility.

At closing, an incremental $192.5 million was drawn on the revolving credit facility to fully repay the outstanding balance of Term loan A.

Our total indebtedness remained unchanged as a result of the Amended Credit Agreement.

The transition to SOFR did not materially impact the interest rate applied to our borrowings.

See Note 6 - Long-term Debt, Net for additional details regarding the Amended Credit Agreement.

Cash flows generated from operating activities and availability under our revolving credit facility are our principal sources of liquidity, which we use for operating expenses, debt payments, share repurchases and dividend payments, development of new restaurants, remodeling or relocating older restaurants and investment in technology.

We believe that our expected liquidity sources are adequate to fund debt service requirements, lease obligations, capital expenditures and working capital obligations during the 12 months following this filing.

However, our ability to continue to meet these requirements and obligations will depend on, among other things, our ability to achieve anticipated levels of revenue and cash flow and our ability to manage costs and working capital successfully.

Capital Expenditures - We estimate that our capital expenditures will total approxim a tely $225 million to $240 million in 2022.

The amount of actual capital expenditures may be affected by general economic, financial, competitive, legislative and regulatory factors, among other things, including raw material constraints.

Dividends and Share Repurchases - In April 2022, our Board declared a quarterly cash dividend of $0.14 per share, payable on May 25, 2022.

Future dividend payments are dependent on our earnings, financial condition, capital expenditure requirements, surplus and other factors that our Board considers relevant, as well as continued compliance with the financial covenants in our debt agreements.

On February 8, 2022, our Board approved the 2022 Share Repurchase Program under which we are authorized to repurchase up to $125.0 million of our outstanding common stock.

The 2022 Share Repurchase Program will expire on August 9, 2023.

As of March 27, 2022, we had $113.3 million remaining available for repurchase under the 2022 Share Repurchase Program.

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

liabilities of $178.6 million and $176.8 million as of September 26, 2021 and December 27, 2020, respectively, with the corresponding operating right-of-use assets recorded as non-current on our Consolidated Balance Sheets.

We have, and in the future may continue to have, negative working capital balances (as is common for many restaurant companies).

We operate successfully with negative working capital because cash collected on restaurant sales are typically received before payment is due on our current liabilities, and our inventory turnover rates require relatively low investment in inventories.

Additionally, ongoing cash flows from restaurant operations and gift card sales are typically used to service debt obligations and to make capital expenditures.

Deferred Compensation Programs - The deferred compensation obligation due to managing and chef partners was $18.4 million and $28.1 million as of September 26, 2021 and December 27, 2020, respectively.

We invest in various corporate-owned life insurance policies, which are held within an irrevocable grantor or rabbi trust account for settlement of our obligations under the deferred compensation plans.

The obligation for managing and chef partners’ deferred compensation was fully funded as of September 26, 2021.

DIVIDENDS AND SHARE REPURCHASES

We did not pay dividends or repurchase shares of our outstanding common stock during the thirteen weeks ended September 26, 2021.

The terms of our Second Amended and Restated Credit Agreement contained certain restrictions on cash dividends and share repurchases until after TNLR covenant compliance was met for the period ending September 26, 2021.

Following is a summary of dividends and share repurchases from fiscal year 2015 through September 26, 2021:

Following is a summary of dividends and share repurchases from fiscal year 2015 through March 27, 2022:

(dollars in thousands) DIVIDENDS PAID SHARE REPURCHASES TOTAL

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Fiscal year 2021 — — —

First fiscal quarter 2022 12,559 11,702 24,261

Total (1) $ 190,784 $ 985,283 $ 1,176,067

________________

(1) Subsequent to March 27, 2022, we repurchased $15.6 million of our common stock under a Rule 10b5-1 plan.

Deferred Compensation Programs - The deferred compensation obligation due to managing and chef partners was $11.0 million and $15.5 million as of March 27, 2022 and December 26, 2021, respectively.

The obligation for managing and chef partners’ deferred compensation was fully funded as of March 27, 2022.

Summary of Cash Flows and Financial Condition

Cash Flows - The following table presents a summary of our cash flows provided by (used in) operating, investing and financing activities for the periods indicated:

THIRTEEN WEEKS ENDED

(dollars in thousands) MARCH 27, 2022 MARCH 28, 2021

Net cash provided by operating activities $ 147,135 $ 141,026

Net cash used in investing activities (39,150) (16,618)

Net cash used in financing activities (101,111) (96,912)

Effect of exchange rate changes on cash and cash equivalents 1,965 (1,246)

Net increase in cash, cash equivalents and restricted cash $ 8,839 $ 26,250

Operating activities - The increase in net cash provided by operating activities during the thirteen weeks ended March 27, 2022 as compared to the thirteen weeks ended March 28, 2021 was primarily due to the timing of collections of gift card receivables and a decrease in cash paid for interest, partially offset by increased employee compensation payments.

Investing activities - The increase in net cash used in investing activities during the thirteen weeks ended March 27, 2022 as compared to the thirteen weeks ended March 28, 2021 was primarily due to higher capital expenditures.

Financing activities - The increase in net cash used in financing activities during the thirteen weeks ended March 27, 2022 as compared to the thirteen weeks ended March 28, 2021 was primarily due to payment of cash dividends on our common stock and the repurchase of common stock during 2022.

These increases were partially offset by lower net repayments on our revolving credit facility.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Financial Condition - Following is a summary of our current assets, current liabilities and working capital (deficit) as of the periods indicated:

(dollars in thousands) MARCH 27, 2022 DECEMBER 26, 2021

Current assets $ 271,287 $ 352,792

Current liabilities 935,648 984,625

Working capital (deficit) $ (664,361) $ (631,833)

Working capital (deficit) includes:

(i) Unearned revenue primarily from unredeemed gift cards of $325.3 million and $398.8 million as of March 27, 2022 and December 26, 2021, respectively, and (ii) current operating lease liabilities of $177.6 million and $177.0 million as of March 27, 2022 and December 26, 2021, respectively, with the corresponding operating right-of-use assets recorded as non-current on our Consolidated Balance Sheets.

We have, and in the future may continue to have, negative working capital balances (as is common for many restaurant companies).

Additionally, ongoing cash flows from restaurant operations and gift card sales are typically used to service debt obligations and to make capital expenditures.

Recently Issued Financial Accounting Standards

For a description of recently issued Financial Accounting Standards that we adopted during the thirty-nine weeks ended September 26, 2021 and, that are applicable to us and likely to have material effect on our consolidated financial statements, but have not yet been adopted, see Note 1 - Description of the Business and Basis of Presentation of the Notes to Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

For a description of recently issued Financial Accounting Standards that we adopted during the thirteen weeks ended March 27, 2022 and, that are applicable to us and likely to have material effect on our consolidated financial statements, but have not yet been adopted, see Note 1 - Description of the Business and Basis of Presentation of the Notes to Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

BLOOMIN’ BRANDS, INC.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis