What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-02-22 compared with 2022-02-23 · 272 added, 298 removed, 462 unchanged (55% of the section changed)

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Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar.

Financial Highlights

Our financial highlights for 2021 include the following:

combined and Outback Steakhouse comparable restaurant sales of 30.5% and 24.2%, respectively, relative to 2020 and 4.5% and 3.2%, respectively, relative to 2019;

• An increase in Total revenues of 30.0%, as compared to 2020, and a decrease in Total revenues of 0.4%, as compared to 2019;

• Restaurant-level operating margin of 16.5% for 2021, as compared to 9.9% and 14.9% for 2020 and 2019, respectively;

• Decrease in General and administrative expense of $8.7 million and $29.6 million, as compared to 2020 and 2019, respectively;

• Income from operations of $309.0 million in 2021, as compared to Loss from operations of $(175.0) million in 2020 and Income from operations of $191.1 million in 2019;

• Diluted earnings (loss) per share attributable to common stockholders of $2.00 in 2021 as compared to $(1.85) and $1.45 in 2020 and 2019, respectively.

Business Strategies

In 2022, our key business strategies include:

Financial Highlights - Our financial highlights for 2022 include the following:

combined and Outback Steakhouse comparable restaurant sales of 4.0% and 2.8%, respectively;

• Increase in Total revenues of 7.1%, as compared to 2021;

• Operating income and restaurant-level operating margins of 7.5% and 15.6%, respectively, as compared to 7.5% and 16.5%, respectively for 2021;

• Operating income of $330.4 million as compared to $309.0 million in 2021;

• Diluted earnings per share of $1.03 as compared to $2.00 in 2021.

Business Strategies - In 2023, our key business strategies include:

• Enhance the 360-Degree Customer Experience to Drive Sustainable Healthy Sales Growth.

We plan to continue to make investments to enhance our core guest experience, increase off-premises dining occasions, remodel and relocate restaurants, invest in digital marketing and data personalization and utilize the Dine Rewards loyalty program and multimedia marketing campaigns to drive sales.

We plan to continue to make investments to enhance our core guest experience, upgrade kitchen equipment and technology, increase off-premises dining occasions, remodel and relocate restaurants, invest in digital marketing and data personalization and utilize the Dine Rewards loyalty program and multimedia marketing campaigns to drive sales.

• Drive Long-Term Shareholder Value.

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and internationally through existing geography fill-in and market expansion.

We will continue to pursue U.S.

fill-in opportunities in key states such as Florida and Texas with Outback Steakhouse, and California and Florida with Fleming’s Prime Steakhouse & Wine Bar.

We will also focus on geographic regions in South America, with strategic expansion in Brazil, and pursue global franchise opportunities.

We intend to fund our business strategies, drive revenue growth and margin improvement, in part by reinvesting savings generated by cost savings and productivity initiatives across our businesses.

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

continue to pursue U.S.

fill-in opportunities in key states such as Florida and Texas with Outback, and California and Florida with Fleming’s.

We will also focus on geographic regions in South America, with strategic expansion in Brazil, and pursue global franchise opportunities.

We intend to fund our business strategies, drive revenue growth and margin improvement, in part by reinvesting savings generated by cost savings and productivity initiatives across our businesses.

Key Financial Performance Indicators

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

• Average restaurant unit volumes —average sales (excluding gift card breakage) per restaurant to measure changes in customer traffic, pricing and development of the brand;

• Comparable restaurant sales —year-over-year comparison of the change in sales volumes (excluding gift card breakage) for Company-owned restaurants that are open 18 months or more in order to remove the impact of new restaurant openings in comparing the operations of existing restaurants;

Macroeconomic Conditions - The combination of macroeconomic and other factors have put considerable pressure on the casual dining industry.

The ongoing impacts of inflation, rising interest rates, reduced disposable consumer income, access to credit, other national, regional and local regulatory and economic conditions and consumer confidence have had a negative effect on discretionary consumer spending.

Should the macroeconomic and other conditions persist, we will continue to face increased pressure with respect to our pricing, traffic levels and commodity costs.

We believe that in this environment, we need to maintain our focus on value and innovation as well as refreshing our restaurant base to continue to drive sales.

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

• Average restaurant unit volumes —average sales (excluding gift card breakage and the benefit of value added tax exemptions in Brazil) per restaurant to measure changes in customer traffic, pricing and development of the brand;

• Comparable restaurant sales —year-over-year comparison of the change in sales volumes (excluding gift card breakage and the benefit of value added tax exemptions in Brazil) for Company-owned restaurants that are open 18 months or more in order to remove the impact of new restaurant openings in comparing the operations of existing restaurants;

• 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 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.

Restaurant-level operating margin is a non-GAAP financial measure 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).

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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 operating margin may not be comparable to similarly titled measures used by other companies in our industry;

In addition, our presentation of

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

• 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, which definitions, usefulness and reconciliations are described in more detail in the “Non-GAAP Financial Measures” section below.

Selected Operating Data

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

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 from operations, Adjusted net income and Adjusted diluted earnings per share —non-GAAP financial measures utilized to evaluate our operating performance, which definitions, usefulness and reconciliations are described in more detail in the “ Non-GAAP Financial Measures ” section below.

Selected Operating Data - 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):

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(1) Restaurant counts as of December 27, 2020 have been adjusted to exclude off-premises only locations included in the table below.

(2) The restaurant counts for Brazil are reported as of November 30, 2021 and 2020, respectively, to correspond with the balance sheet dates of this subsidiary.

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

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

(1) The restaurant counts for Brazil, including Abbraccio and Aussie Grill restaurants within International Company-owned Other, are reported as of November 30, 2022 and 2021, respectively, to correspond with the balance sheet dates of this subsidiary.

(2) International Company-owned Other included four and two Aussie Grill locations as of December 25, 2022 and December 26, 2021, respectively.

International Franchised Other included four and three Aussie Grill locations as of December 25, 2022 and December 26, 2021, respectively.

BLOOMIN’ BRANDS, INC.

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Total costs and expenses 92.5 92.5

Income (loss) from operations 7.5 (5.5)

Income from operations 7.5 7.5

Loss on extinguishment and modification of debt (2.5) (0.1)

Other income, net * *

Loss on fair value adjustment of derivatives, net (0.4) —

Other (expense) income, net (*) *

Interest expense, net (1.2) (1.4)

Income (loss) before provision (benefit) for income taxes 6.0 (7.6)

Provision (benefit) for income taxes 0.6 (2.6)

Net income (loss) 5.4 (5.0)

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

Net income (loss) attributable to Bloomin’ Brands

5.2 % (5.0) %

Income before provision for income taxes 3.4 6.0

Provision for income taxes 0.9 0.6

Net income 2.5 5.4

net income attributable to noncontrolling interests 0.2 0.2

Net income attributable to Bloomin ’ Brands

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Restaurant openings (1) 65.7

Restaurant closures (35.3)

Effect of foreign currency translation 11.6

Restaurant closures (1) (31.0)

For fiscal year 2022 $ 4,352.7

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(1) Summation of quarterly changes for restaurant openings and comparable restaurant sales will not total to annual amounts as the restaurants that meet the definition of a comparable restaurant will differ each period based on when the restaurant opened.

(1) Summation of quarterly changes for restaurant openings, closures and comparable restaurant sales will not total to annual amounts as the restaurants that meet the definition of each will differ each period based on when the restaurant opened or closed.

The increase in Restaurant sales in 2022 as compared to 2021 was primarily due to:

(i) higher comparable restaurant sales from recovery of in-restaurant dining from the significantly reduced levels in 2020 after the onset of the pandemic and strong retention of off-premises sales and (ii) the opening of 48 new restaurants not included in our comparable restaurant sales base.

The increase in Restaurant sales was partially offset by the closure of 46 restaurants since December 29, 2019 and the effect of foreign currency translation of the Brazilian Real relative to the U.S.

(i) higher comparable restaurant sales, (ii) the opening of 64 new restaurants not included in our comparable restaurant sales base and (iii) the effect of foreign currency translation of the Brazilian Real relative to the U.S.

The increase in Restaurant sales was partially offset by the closure of 25 restaurants since December 27, 2020.

Average Restaurant Unit Volumes and Operating Weeks

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(1) Translated at average exchange rates of 5.19 and 5.33 for 2022 and 2021, respectively.

Excludes the benefit of the Brazil tax legislation discussed in Note 21 - Income Taxes of the Notes to Consolidated Financial Statements.

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:

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

Year over year percentage change:

Comparable restaurant sales (stores open 18 months or more):

Comparable restaurant sales (restaurants open 18 months or more):

Outback Steakhouse 2.8 % 24.2 %

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Combined U.S.

4.5 % 30.5 % (19.9) %

International

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Combined U.S.

5.1 % 9.8 % (2.3) %

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.

(3) Excludes the effect of fluctuations in foreign currency rates.

(2) Includes trading day impact from calendar period reporting.

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

Excludes the effect of fluctuations in foreign currency rates and the benefit of the Brazil tax legislation discussed in Note 21 - Income Taxes of the Notes to Consolidated Financial Statements.

(3) Includes the impact of menu pricing changes, product mix and discounts.

BLOOMIN’ BRANDS, INC.

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

Franchise revenues increased during 2021 primarily due to higher franchise sales as a result of the impact of COVID-19 on 2020 franchise sales.

(2) Includes a $3.1 million benefit in 2021 from the recognition of recoverable Program of Social Integration (“PIS”) and Contribution for the Financing of Social Security (“COFINS”) taxes in connection with favorable court rulings in Brazil regarding the calculation methodology and taxable base.

The amount recognized as a result of the favorable court rulings primarily represents refundable PIS and COFINS taxes for prior years, including accrued interest, and will be recovered by offsetting future PIS and COFINS taxes due.

Franchisee Deferred Payment Agreement - On December 27, 2020, we entered into the Resolution Agreement with Out West, who currently franchises approximately 80 Outback Steakhouse restaurants in the western United States, primarily in California.

Under the terms of the Resolution Agreement, we agreed to permanently waive all past due royalties and advertising fees for the period of February 24, 2020 to July 26, 2020 and defer, among other items, all past due royalties and advertising fees for the period of July 27, 2020 to November 22, 2020 due to the significant impact of the COVID-19 pandemic on Out West’s business.

See Note 4 - Revenue Recognition of the Notes to Consolidated Financial Statements for further details regarding the Resolution Agreement.

During 2021, Out West franchise revenues recovered, approaching historical levels.

Following is a summary of franchise and other revenues and comparable restaurant sales for Out West franchised locations for the periods indicated:

(dollars in millions) 2021 2020

Franchise revenues $ 22.4 $ 4.4

Other revenues 5.3 1.0

Franchise and other revenues (1) $ 27.7 $ 5.4

Out West comparable restaurant sales (stores open 18 months or more) 50.7 % (32.9) %

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(1) Franchise and other revenues during 2020 were significantly impacted by the COVID-19 pandemic.

During 2021, we collected Out West monthly royalty and advertising fees, and $5.1 million of past due amounts deferred under the Resolution Agreement.

COSTS AND EXPENSES

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% of Restaurant sales 31.8 % 30.3 % 1.5 %

Food and beverage costs decreased as a percentage of Restaurant sales in 2021 as compared to 2020 primarily due to:

(i) 0.9% from increases in average check per person, primarily driven by reduced discounting and an increase in menu pricing, (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 0.6% from commodity inflation.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

In 2022, we anticipate approximately 11.0% to 13.0% commodity inflation, with approximately 70% of our estimated annual food purchases currently covered by fixed contracts and the remainder subject to floating market prices.

Food and beverage costs increased as a percentage of Restaurant sales in 2022 as compared to 2021 primarily due to 3.5% from commodity inflation, partially offset by a decrease as a percentage of Restaurant sales of 2.0% from increases in average check per person, primarily driven by increases in menu pricing.

In 2023, we anticipate mid single digits commodity inflation, with approximately 60% of our estimated annual food purchases currently covered by fixed contracts and the remainder subject to floating market prices.

Labor and other related expenses

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Labor and other related expenses include all direct and indirect labor costs incurred in operations, including distribution expense to Restaurant Managing Partners and other field incentive compensation expenses.

Labor and other related expenses decreased as a percentage of Restaurant sales in 2021 as compared to 2020 primarily due to 4.1% from leveraging increased restaurant sales and 0.8% from the 2020 impact of net relief pay.

These decreases were partially offset by increases as a percentage of Restaurant sales of 0.8% from wage rate increases and 0.4% from higher management bonus.

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

Labor and other related expenses decreased as a percentage of Restaurant sales in 2022 as compared to 2021 primarily due to:

(i) 1.9% from leveraging increased restaurant sales due to increases in average check per person and lapping the impact of COVID-19, primarily in Brazil and (ii) 0.4% from lower insurance costs.

These decreases were partially offset by an increase as a percentage of Restaurant sales of 2.0% from higher labor cost primarily due to wage rate inflation.

In 2023, we anticipate mid single digits labor cost inflation.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Other restaurant operating expenses

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In August 2021, we entered into the Royalty Termination Agreement with the Carrabba’s Founders for $61.9 million in cash.

See Note 22 - Commitments and Contingencies for additional details.

We recorded Carrabba’s Italian Grill royalty expense of $3.0 million and $3.8 million during fiscal years 2021 and 2020, respectively.

See Note 22 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional details.

Other restaurant operating expenses include certain unit-level operating costs such as operating supplies, rent, repairs and maintenance, advertising expenses, utilities, pre-opening costs and other occupancy costs.

A substantial portion of these expenses is fixed or indirectly variable.

Other restaurant operating expenses decreased as a percentage of Restaurant sales in 2021 as compared to 2020 primarily due to:

(i) 3.2% from leveraging increased restaurant sales, (ii) 1.0% 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 1.5% from the Carrabba’s Italian Grill royalty termination payment and 0.8% from higher utilities, operating and rent expense.

Other restaurant operating expenses decreased as a percentage of Restaurant sales in 2022 as compared to 2021 primarily due to 1.5% from lapping the Carrabba’s Italian Grill royalty termination and 1.3% from leveraging increased restaurant sales due to increases in average check per person and lapping the impact of COVID-19, primarily in Brazil.

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

(i) 1.5% from higher operating expenses including utilities, primarily due to inflation, (ii) 0.7% from higher advertising expense and (iii) 0.4% from an increase in reserves for certain collective action wage and hour lawsuits.

Depreciation and amortization

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Depreciation and amortization $ 169.6 $ 163.4 $ 6.2

Depreciation and amortization decreased in 2021 as compared to 2020 primarily due to a decreased level of capital expenditures since 2018, as compared to historical levels, and asset impairments during 2020.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Depreciation and amortization increased in 2022 as compared to 2021 primarily due to additional depreciation expense related to technology projects, upgraded kitchen equipment and restaurant openings and relocations.

General and administrative

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For fiscal year 2021 $ 245.6

Transformational costs (12.7)

Incentive compensation (13.0)

Employee stock-based compensation (7.9)

Severance (4.7)

Expected credit losses and contingent lease liabilities (6.9)

Compensation, benefits and payroll tax 7.6

Travel and entertainment 5.1

Employee stock-based compensation 9.7

Incentive compensation 7.6

For fiscal year 2022 $ 234.8

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Provision for impaired assets and restaurant closings

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Provision for impaired assets and restaurant closings $ 6.0 $ 13.7 $ (7.7)

During 2020, we recognized asset impairment and closure charges of $66.5 million and $3.6 million within the U.S.

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

COVID-19-related pre-tax asset impairments and closure costs include $23.8 million in connection with the closure of 22 U.S.

restaurants and from the update of certain cash flow assumptions, including lease renewal considerations.

During 2020, we also recognized asset impairment charges related to transformational initiatives of $6.3 million, which were not allocated to our operating segments.

See Note 5 - Impairments, Exit Costs and Disposals of the Notes to Consolidated Financial Statements for further information.

The impairment and closure charges during 2021 resulted primarily from locations identified for closure or relocation.

Income (loss) from operations

Impairment and closure charges during the periods presented resulted primarily from locations identified for closure or relocation.

Income from operations

(dollars in millions) 2022 2021 CHANGE

Income (loss) from operations $ 309.0 $ (175.0)

Income from operations $ 330.4 $ 309.0 $ 21.4

% of Total revenues 7.5 % 7.5 % — %

Income from operations during 2021 as compared to Loss from operations during 2020 was primarily due to:

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

The increase in Income from operations generated during 2022 as compared to 2021 was primarily due to:

(i) increases in average check per person, (ii) lapping the Carrabba’s Italian Grill royalty termination, (iii) lapping the impact of COVID-19, primarily in Brazil and (iv) lower insurance costs.

These increases were partially offset by:

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

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

(i) commodity inflation, (ii) higher labor cost, primarily due to wage rate inflation, (iii) higher operating expenses including utilities, primarily due to inflation, and (iv) an increase in advertising costs.

In September 2022, our Brazilian subsidiary received a preliminary injunction authorizing it to benefit from the exemptions enacted by Law 14,148/2021 which provides for emergency and temporary actions that grant certain industries a 100% exemption from PIS and COFINS and income taxes for a five-year period.

Income from operations for 2022 was not materially impacted by this legislation.

During 2023, we expect a benefit to Income from operations of approximately $17 million in connection the PIS and COFINS tax exemptions under this legislation.

See Note 21 - Income Taxes of the Notes to Consolidated Financial Statements for further information.

Loss on extinguishment and modification of debt and Loss on fair value adjustment of derivatives, net

In connection with the repurchase of $125.0 million of the outstanding 2025 Notes (the “2025 Notes Partial Repurchase”), which is described in further detail within Note 14 - Convertible Senior Notes of the Notes to Consolidated Financial Statements, we recognized a loss on extinguishment of debt of $104.7 million and a loss on fair value adjustment of derivatives, net, of $17.7 million during 2022.

Interest expense, net

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Interest expense, net $ 53.2 $ 57.6 $ (4.4)

The decrease in Interest expense, net during 2021 as compared to 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 modified retrospective adoption of a new accounting standard during 2021 and (iii) lower interest rates on our unhedged variable rate debt.

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

Provision (benefit) for income taxes

The decrease in Interest expense, net during 2022 as compared to 2021 was primarily due to the repayment of Term Loan A in April 2022 and the 2025 Notes Partial Repurchase in May 2022.

These decreases were partially offset by increases in interest expense from:

(i) the issuance of the 2029 Notes in April 2021, (ii) higher balances on our revolving credit facility and (iii) higher interest rates on the unhedged portion of our variable rate debt.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Provision for income taxes

(dollars in millions) 2022 2021 CHANGE

Income (loss) before provision (benefit) for income taxes $ 249.3 $ (239.5) $ 488.8

Provision (benefit) for income taxes $ 26.4 $ (80.7) $ 107.1

Income before provision for income taxes $ 151.9 $ 249.3 $ (97.4)

Provision for income taxes $ 42.7 $ 26.4 $ 16.3

Effective income tax rate 28.1 % 10.6 % 17.5 %

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

The net increase in the effective income tax rate in 2022 as compared to 2021 was primarily due to the non-deductible losses associated with the 2025 Notes Partial Repurchase recorded during 2022.

We have a blended federal and state statutory rate of approximately 26%.

The effective income tax rate was lower in 2021 and higher in 2020 than the blended federal and state statutory rate primarily due to the benefit of tax credits for FICA taxes on certain employees’ tips.

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 performance is assessed by our Chief Executive Officer, whom we have determined to be our Chief Operating Decision Maker (“CODM”).

The effective income tax rate in 2022 was higher than the blended federal and state statutory rate primarily due to the non-deductible losses associated with the 2025 Notes Partial Repurchase recorded during 2022, partially offset by the benefit of FICA tax credits on certain employees’ tips.

The effective income tax rate in 2021 was lower than the blended federal and state statutory rate primarily due to the benefit of FICA tax credits on certain employees’ tips.

A restaurant company employer may claim a credit against its federal income taxes for FICA taxes paid on certain tipped wages (the “FICA tax credit”).

The level of FICA tax credits is primarily driven by U.S.

Restaurant sales and is not impacted by costs incurred that may reduce pre-tax income.

Provision for income taxes for 2022 was not materially impacted by the Brazilian tax legislation discussed above.

During 2023, we expect to generate an income tax benefit of approximately $6 million in connection with the tax exemptions under this legislation.

See Note 21 - Income Taxes of the Notes to Consolidated Financial Statements for further information.

We consider each of 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 performance is assessed by our Chief Executive Officer, whom we have determined to be our Chief Operating Decision Maker.

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

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

Excluded from Income (loss) 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 2020, we recorded $32.4 million 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.

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, certain insurance expenses and certain bonus expenses.

Refer to Note 23 - Segment Reporting of the Notes to Consolidated Financial Statements for reconciliations of segment income (loss) from operations to the consolidated operating results.

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Total revenues $ 3,911,870 $ 3,759,981

Income from operations $ 407,860 $ 443,887

Operating income margin 10.4 % 11.8 %

Restaurant-level operating income $ 595,997 $ 634,680

Restaurant-level operating margin 15.4 % 17.1 %

Income (loss) from operations $ 443,887 $ (1,630)

Operating income (loss) margin 11.8 % (0.1) %

Restaurant sales

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(1) Summation of quarterly changes will not total to annual amounts as the restaurants that meet the definition of each change category will differ each period based on when the restaurant opened or closed.

The increase in U.S.

Restaurant sales in 2021 as compared to 2020 was primarily due to:

(i) higher comparable restaurant sales from recovery of in-restaurant dining from the significantly reduced levels in 2020 after the onset of the pandemic and strong retention of off-premises sales and (ii) the opening of 15 new restaurants not included in our comparable restaurant sales base.

Restaurant sales in 2022 as compared to 2021 was primarily due to higher comparable restaurant sales and the opening of 21 new restaurants not included in our comparable restaurant sales base.

These increases were partially offset by the closure of 24 restaurants since December 27, 2020.

Income (loss) from operations

Income from operations generated during 2021 as compared to Loss from operations during 2020 was primarily due to:

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

These increases were partially offset by:

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

Income from operations

The decrease in U.S.

Income from operations generated during 2022 as compared to 2021 was primarily due to:

(i) commodity inflation, (ii) higher labor cost, primarily due to wage rate inflation, (iii) higher operating expenses including utilities and (iv) higher advertising expense.

These decreases were partially offset by higher comparable sales, primarily due to increases in average check per person, and lapping the Carrabba’s Italian Grill royalty termination.

BLOOMIN’ BRANDS, INC.

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Total revenues $ 504,638 $ 362,404

Income from operations $ 57,333 $ 16,657

Operating income margin 11.4 % 4.6 %

Restaurant-level operating income $ 90,663 $ 43,927

Restaurant-level operating margin 18.5 % 12.7 %

Income (loss) from operations $ 16,657 $ (13,479)

Operating income (loss) margin 4.6 % (4.7) %

Restaurant sales

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Effect of foreign currency translation 11.6

Restaurant closures (0.6)

For fiscal year 2022 $ 489.7

____________________

(1) Summation of quarterly changes for restaurant openings and comparable restaurant sales will not total to annual amounts as the restaurants that meet the definition of each will differ each period based on when the restaurant opened.

The increase in international Restaurant sales in 2022 as compared to 2021 was primarily due to:

(i) higher comparable restaurant sales principally attributable to the impact of the COVID-19 pandemic on fiscal year 2020 international Restaurant sales and (ii) the opening of 33 new restaurants not included in our comparable restaurant sales base.

These increases were partially offset by the effect of foreign currency translation of the Brazil Real relative to the U.S.

Income (loss) from operations

International Income from operations generated during 2021 as compared to Loss from operations during 2020 was primarily due to higher restaurant sales due to the reopening of restaurant dining rooms and increases in average check per person.

These increases were partially offset by:

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

(i) higher comparable restaurant sales in Brazil, (ii) the opening of 43 new restaurants not included in our comparable restaurant sales base and (iii) the effect of foreign currency translation of the Brazil Real relative to the U.S.

Income from operations

The increase in international Income from operations generated during 2022 as compared to 2021 was primarily due to the recovery of in-restaurant dining in Brazil and increases in average check per person.

These increases were partially offset by decreases primarily due to commodity and labor inflation.

Non-GAAP Financial Measures

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GAAP and include the following:

(i) system-wide sales, (ii) Adjusted restaurant-level operating margins, (iii) Adjusted income (loss) from operations and the corresponding margins, (iv) Adjusted net income (loss) and (v) Adjusted diluted earnings (loss) per share.

(i) Restaurant-level and adjusted restaurant-level operating income and the corresponding margins, (ii) Adjusted income from operations and the corresponding margins, (iii) Adjusted net income, (iv) Adjusted diluted earnings per share and (v) system-wide sales.

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.

GAAP results and relative to other companies within the restaurant industry by isolating the effects of certain items that may vary from period to period without correlation

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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.

GAAP results and relative to other companies within the restaurant industry by isolating the effects of certain items that may vary from period to period without correlation to core operating performance or that vary widely among similar companies.

to core operating performance or that vary widely among similar companies.

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.

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Refer to the reconciliations of non-GAAP measures for descriptions of the actual adjustments made in the current period and the corresponding prior 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 4 - 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.

(dollars in millions) 2021 2020

Outback Steakhouse $ 445 $ 327

Carrabba’s Italian Grill 44 32

Bonefish Grill 11 8

total 500 367

International

Outback Steakhouse - South Korea 305 253

International total 417 319

Total franchise sales (1) $ 917 $ 686

____________________

(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 and the corresponding margins for the periods indicated:

Consolidated restaurant-level operating income and adjusted restaurant-level operating income and corresponding margins non-GAAP reconciliations - Restaurant-level operating margin is calculated as Restaurant sales after deduction of the main restaurant-level operating costs, which includes Food and beverage costs, Labor and other related expenses and Other restaurant operating expenses.

Adjusted restaurant-level operating margin is Restaurant-level operating margin adjusted for certain items.

The following table reconciles consolidated Income from operations and the corresponding margin to restaurant-level operating income and adjusted restaurant-level operating income and the corresponding margins for the periods indicated:

Consolidated FISCAL YEAR

(dollars in thousands) 2022 2021

Income (loss) from operations $ 308,958 $ (174,973)

Operating income (loss) margin 7.5 % (5.5) %

Income from operations $ 330,421 $ 308,958

Operating income margin 7.5 % 7.5 %

Franchise and other revenues 63,813 61,292

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Restaurant-level operating margin 15.6 % 16.5 %

Royalty termination expense (1) — 61,880

Legal and other matters (2) 5,900 2,761

Total restaurant-level operating income adjustments 5,900 64,641

Adjusted restaurant-level operating income $ 682,841 $ 735,051

Adjusted restaurant-level operating margin 15.7 % 18.1 %

_________________

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

See Note 22 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional details regarding the Royalty Termination Agreement.

(2) For 2022, includes an increase in reserves for certain collective action wage and hour lawsuits during the fourth quarter.

See Note 22 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional details relating to the lawsuits.

For 2021, includes an accrual 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, as a result of an unfavorable Brazilian Supreme Court ruling.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Segment restaurant-level and adjusted restaurant-level operating margin non-GAAP reconciliations - The following tables reconcile segment Income from operations and the corresponding margin to segment restaurant-level operating income and adjusted restaurant-level operating income and the corresponding margins for the periods indicated:

(dollars in thousands) 2022 2021

Income (loss) from operations $ 443,887 $ (1,630)

Operating income (loss) margin 11.8 % (0.1) %

Income from operations $ 407,860 $ 443,887

Operating income margin 10.4 % 11.8 %

Franchise and other revenues 48,854 45,133

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Restaurant-level operating margin 15.4 % 17.1 %

Royalty termination expense (1) — 61,880

Total restaurant-level operating income adjustments — 61,880

Adjusted restaurant-level operating income $ 595,997 $ 696,560

Adjusted restaurant-level operating margin 15.4 % 18.8 %

_________________

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

International FISCAL YEAR

(dollars in thousands) 2022 2021

Income (loss) from operations $ 16,657 $ (13,479)

Operating income (loss) margin 4.6 % (4.7) %

Income from operations $ 57,333 $ 16,657

Operating income margin 11.4 % 4.6 %

Franchise and other revenues 14,959 16,159

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Restaurant-level operating margin 18.5 % 12.7 %

Legal and other matters (1) — 2,761

Total restaurant-level operating income adjustments — 2,761

Adjusted restaurant-level operating income $ 90,663 $ 46,688

Adjusted restaurant-level operating margin 18.5 % 13.5 %

_________________

(1) Includes an accrual for ISS, a Brazilian municipal service tax, in connection with royalties from our Brazilian subsidiary over the past five years, including related penalties and interest, as a result of an unfavorable Brazilian Supreme Court ruling.

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Adjusted restaurant-level operating margin - Restaurant-level operating margin is calculated as Restaurant sales after deduction of the main restaurant-level operating costs, which includes Food and beverage costs, Labor and other related and Other restaurant operating expense.

Adjusted restaurant-level operating margin is Restaurant-level operating margin adjusted for certain items, as noted below.

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

GAAP ADJUSTED (1) U.S.

GAAP ADJUSTED (1)

Adjusted restaurant-level operating margin non-GAAP reconciliations (continued) - The following table presents the percentages of certain operating cost financial statement line items in relation to Restaurant sales for the periods indicated:

REPORTED ADJUSTED (1) REPORTED ADJUSTED (1)

Restaurant sales 100.0 % 100.0 % 100.0 % 100.0 %

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_________________

(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:

(dollars in millions) 2021 2020

Royalty termination expense $ (61.9) $ —

(1) See the Consolidated restaurant-level operating income and adjusted restaurant-level operating income and corresponding margins non-GAAP reconciliations table above for details regarding the restaurant-level operating margin adjustments.

All restaurant-level operating margin adjustments for the periods presented were recorded within Other restaurant operating expense.

Adjusted income from operations non-GAAP reconciliations - The following table reconciles Income from operations and the corresponding margin to adjusted income from operations and the corresponding margin for the periods indicated:

(dollars in thousands) 2022 2021

Income from operations $ 330,421 $ 308,958

Operating income margin 7.5 % 7.5 %

Total restaurant-level operating margin adjustments (1) 5,900 64,641

Severance and other transformational costs (2) — 2,764

Legal and other matters (3) — (3,133)

COVID-19-related costs (i) — (14.3)

Asset impairments and closing costs — 2.7

$ (64.6) $ (11.6)

Total income from operations adjustments 5,900 64,272

Adjusted income from operations $ 336,321 $ 373,230

Adjusted operating income margin 7.6 % 9.1 %

_________________

(i) Includes $11.0 million of adjustments recorded in Food and beverage costs.

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

(3) Includes the recognition of recoverable PIS and COFINS taxes, including accrued interest within other revenues as a result of favorable court rulings in Brazil.

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Adjusted income (loss) from operations, Adjusted net income (loss) and Adjusted diluted earnings (loss) per share - The following table reconciles Adjusted income (loss) from operations and the corresponding margins, Adjusted net income (loss) and Adjusted diluted earnings (loss) per share to their respective most comparable U.S.

GAAP measures for the periods indicated:

Adjusted net income and Adjusted diluted earnings per share non-GAAP reconciliations - The following table reconciles Diluted net income attributable to common stockholders to adjusted net income and adjusted diluted earnings per share for the periods indicated:

(in thousands, except share and per share data) 2022 2021

Income (loss) from operations $ 308,958 $ (174,973)

Operating income (loss) margin 7.5 % (5.5) %

Royalty termination expense (1) 61,880 —

Severance and other transformational costs (2) 2,764 32,404

Legal and other matters (3) (372) 178

COVID-19-related costs (4) — 93,811

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

Total income (loss) from operations adjustments 64,272 124,188

Adjusted income (loss) from operations $ 373,230 $ (50,785)

Adjusted operating income (loss) margin 9.1 % (1.6) %

Diluted net income (loss) attributable to common stockholders $ 215,900 $ (162,211)

Diluted net income attributable to common stockholders $ 101,907 $ 215,900

Convertible senior notes if-converted method interest adjustment, net of tax (1) — 345

Net income (loss) attributable to common stockholders 215,555 (162,211)

Income (loss) from operations adjustments 64,272 124,188

Net income attributable to Bloomin’ Brands 101,907 215,555

Income from operations adjustments (2) 5,900 64,272

Loss on extinguishment and modification of debt (3) 107,630 2,073

Amortization of debt discount (7) — 6,275

Loss on fair value adjustment of derivatives, net (3) 17,685 —

Total adjustments, before income taxes 131,215 66,345

Adjustment to provision for income taxes (4) (263) (21,222)

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

Net adjustments 130,952 45,123

Adjusted net income (loss) $ 260,678 $ (60,778)

Diluted earnings (loss) per share attributable to common stockholders (10) $ 2.00 $ (1.85)

Adjusted diluted earnings (loss) per share (11) $ 2.70 $ (0.69)

Adjusted net income $ 232,859 $ 260,678

Diluted earnings per share $ 1.03 $ 2.00

Adjusted diluted earnings per share (5) $ 2.52 $ 2.70

Diluted weighted average common shares outstanding 98,512 107,803

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_________________

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

See Note 22 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional details regarding the Royalty Termination Agreement.

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

(3) For 2021, includes:

(i) a $3.1 million benefit from the recognition of recoverable PIS and COFINS taxes, including accrued interest, 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.

(4) 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 3 - 2020 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.

(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) See the Adjusted income from operations non-GAAP reconciliations table above for details regarding Income from operations adjustments.

(3) For 2022, includes losses in connection with the 2025 Notes Partial Repurchase and Amended Credit Agreement.

See Note 14 - Convertible Senior Notes and Note 13 - Long-term Debt, Net , respectively, of the Notes to Consolidated Financial Statements for additional details.

(4) The tax effect of non-GAAP adjustments was determined based on the nature of the underlying non-GAAP adjustments and their relevant jurisdictional tax rates.

For 2022, the primary difference between GAAP and adjusted effective income tax rates relates to certain non-deductible losses and other tax costs associated with the 2025 Notes Partial Repurchase.

Also includes a $4.2 million adjustment during 2021 for the reduction of certain unrecognized tax benefits related to tax positions taken during a prior period.

(5) Adjusted diluted weighted average common shares outstanding was calculated excluding the dilutive effect of 6,089 and 9,992 shares for 2022 and 2021, 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 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 4 - Revenue Recognition of the Notes to Consolidated Financial Statements.

BLOOMIN’ BRANDS, INC.

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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 14 - Convertible Senior Notes of the Notes to Consolidated Financial Statements for details.

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

Also includes a $4.2 million adjustment during 2021 for the reduction of certain unrecognized tax benefits related to tax positions taken during a prior period.

(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 2020.

(11) For fiscal year 2021, adjusted diluted weighted average common shares outstanding was calculated:

(i) assuming our February 2021 election to settle the principal portion of the 2025 Notes in cash was in effect for the entire fiscal year and (ii) excluding the dilutive effect of 9,992 shares to be issued upon conversion of the 2025 Notes to satisfy the amount in excess of the principal since our convertible notes hedge offsets 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.

(dollars in millions) 2022 2021

Outback Steakhouse $ 494 $ 445

Carrabba’s Italian Grill 49 44

Bonefish Grill 11 11

total 554 500

International

Outback Steakhouse - South Korea 296 305

Other (1) 114 112

International total 410 417

Total franchise sales (2) $ 964 $ 917

____________________

(1) Includes franchise sales for off-premises only kitchens in South Korea.

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

Liquidity and Capital Resources

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

As of December 26, 2021, we had aggregate accumulated foreign earnings of approximately $28.8 million.

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

under the 2017 Tax Cuts and Jobs Act and post-2017 foreign earnings, which we may repatriate to the U.S.

As of December 25, 2022, we had aggregate undistributed foreign earnings of approximately $23.2 million.

These earnings may be repatriated to the U.S.

without additional material U.S.

federal income tax.

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

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

See Note 21 - Income Taxes of the Notes to Consolidated Financial Statements for further information regarding our indefinite reinvestment assertion.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Borrowing Capacity and Debt Service

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Interest rates, as of December 25, 2022 (2) 5.79 % 5.00 % 5.13 %

Principal maturity date April 2026 April 2026 May 2025 April 2029

Principal maturity date April 2026 May 2025 April 2029

____________________

(1) Subsequent to December 26, 2021, we repaid the remaining $80.0 million balance on our revolving credit facility.

(2) 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.

(1) Subsequent to December 25, 2022, we repaid $80.0 million on our revolving credit facility.

(2) Interest rate for the revolving credit facility represents the weighted average interest rate as of December 25, 2022.

As of December 25, 2022, we had $550.0 million in available unused borrowing capacity under our revolving credit facility, net of letters of credit of $20.0 million.

Credit Agreement - On April 16, 2021, we and OSI, as co-borrowers, entered into the Second Amended and Restated Credit Agreement (the “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”).

The Senior Secured Credit Facility matures on April 16, 2026 and replaced our prior senior secured financing of up to $1.5 billion (the “Former Credit Facility”).

On April 26, 2022, we and OSI entered into the First Amendment to the Second Amended and Restated Credit Agreement and Incremental Amendment (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 the one-month London Inter-Bank Offered Rate (“LIBOR”) rate to the Secured Overnight Financing Rate (“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.

Our Amended 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 of the notes to Consolidated Financial Statements for additional details regarding the Amended Credit Agreement.

As of December 25, 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 and beyond.

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

As of December 26, 2021, we had $699.3 million in available unused borrowing capacity under our revolving credit facility, net of letters of credit of $20.7 million.

2025 Notes Partial Repurchase - On May 25, 2022, we and certain holders (the “Noteholders”) entered into exchange agreements in which the Noteholders agreed to exchange $125.0 million in aggregate principal amount of our outstanding 2025 Notes for $196.9 million in cash, plus accrued interest, and approximately 2.3 million shares of our common stock.

In connection with the 2025 Notes Partial Repurchase, we entered into partial unwind agreements with certain financial institutions relating to a portion of the convertible note hedge transactions (the “Note Hedge Early Termination Agreements”) and a portion of the Warrant Transactions (the “Warrant Early Termination Agreements”) that were previously entered into by the Company in connection with the issuance of the 2025 Notes.

Upon settlement, we received $131.9 million for the Note Hedge Early Termination Agreements and paid $114.8 million for the Warrant Early Termination Agreements.

See Note 14 - Convertible Senior Notes of the Notes to Consolidated Financial Statements for additional details regarding the 2025 Notes Partial Repurchase and related Note Hedge Early Termination Agreements and Warrant Early Termination Agreements.

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

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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.

Credit Agreement - On April 16, 2021, we and OSI, as co-borrowers, entered into the 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”).

The Senior Secured Credit Facility matures on April 16, 2026 and replaced our prior senior secured financing of up to $1.5 billion (the “Former Credit Facility”).

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 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 Consolidated Senior Secured Net Leverage Ratio 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 December 25, 2022.

See Note 13 - Long-term Debt, Net for additional details regarding the 2029 Notes and Credit Agreement.

As of December 26, 2021 and December 27, 2020, 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.

Cash Flow Hedges of Interest Rate Risk - In October 2018, we entered into variable-to-fixed interest rate swap agreements with 12 counterparties to hedge a portion of the cash flows of our variable rate debt.

The swap agreements have an aggregate notional amount of $550.0 million and mature on November 30, 2022.

We pay a weighted average fixed rate of 3.04% on the notional amount and receive payments from the counterparties based on the one-month London Inter-Bank Offered Rate (“LIBOR”) rate.

See Note 17 - Derivative Instruments and Hedging Activities of the Notes to Consolidated Financial Statements for further information.

In connection with the refinancing of the Former Credit Facility, on April 16, 2021 we terminated our variable-to-fixed interest rate swap agreements with seven counterparties having an aggregate notional amount of $275.0 million for a payment of approximately $13.3 million, including accrued interest.

Following these terminations, $13.4 million of unrealized losses related to the terminated swap agreements included in Accumulated Other Comprehensive Loss (“AOCL”) will be amortized on a straight-line basis to Interest expense, net over the remaining original term of the terminated swaps.

As a result of our anticipated decrease in variable rate debt balances due to significant voluntary debt payments, on December 9, 2021 we terminated our variable-to-fixed interest rate swap agreements with three counterparties having an aggregate notional amount of $150.0 million for a payment of approximately $4.1 million, including accrued interest.

Following these terminations, $4.1 million of unrealized losses related to the terminated swap agreements included in AOCL will be amortized to Interest expense, net during 2022.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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.

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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.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Material Cash Requirements - The following table presents current and long-term material cash requirements as of December 25, 2022:

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(1) Amounts represent undiscounted future minimum rental commitments under non-cancelable operating leases.

Includes $1.0 billion related to lease renewal options that are reasonably certain of exercise.

Excludes $919.7 million related to operating lease renewal options that are reasonably certain of exercise.

(2) Includes Senior Secured Credit Facility, 2029 Notes, 2025 Notes and finance lease obligations.

Amount is not reduced by unamortized debt issuance costs and finance lease interest totaling $14.3 million.

(3) Projected future interest payments on long-term debt are based on interest rates in effect as of December 26, 2021 and assume only scheduled principal payments.

Estimated interest expense includes the impact of remaining variable-to-fixed interest rate swap agreements.

Amounts are not reduced by unamortized debt issuance costs and finance lease interest totaling $7.7 million.

(3) Projected future interest payments on long-term debt are based on interest rates in effect as of December 25, 2022.

(4) Purchase obligations include agreements to purchase goods or services that are enforceable, legally binding and specify all significant terms, including fixed or minimum quantities to be purchased;

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and the approximate timing of the transaction.

We have purchase obligations with various vendors that consist primarily of inventory, technology, restaurant-level service contracts and advertising.

We have purchase obligations with various vendors that consist primarily of inventory, kitchen equipment, technology, advertising and restaurant-level service contracts.

(5) Includes other long-term liabilities, primarily consisting of deferred compensation obligations, deposits and other accrued obligations.

Unrecognized tax benefits are excluded from this table since it is not possible to estimate when these future payments will occur.

Dividends and Share Repurchases - In April 2021, we entered into our Credit Agreement, the terms of which contained certain restrictions on cash dividends and share repurchases until after September 26, 2021 and we were compliant with our financial covenants.

We were compliant with our financial covenants as of December 26, 2021 and we believe that we will remain in compliance with our debt covenants during the next 12 months.

As such, absent unanticipated circumstances, we do not believe that compliance with our financial covenants will materially limit our ability to pay dividends in the near term and future dividend payments will depend on various other factors considered by our Board as noted below.

Dividends and Share Repurchases - During 2022, we declared and paid quarterly cash dividends of $0.14 per share.

We did not pay dividends during 2021 as a result of certain restrictions that were included within the Credit Agreement.

On February 7, 2023, our Board declared a quarterly cash dividend of $0.24 per share, payable on March 15, 2023.

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.

Following is a summary of our share repurchase program as of December 25, 2022 (dollars in thousands):

SHARE REPURCHASE PROGRAM BOARD APPROVAL DATE AUTHORIZED REPURCHASED CANCELLED OR EXPIRED REMAINING

2022 (1) February 8, 2022 $ 125,000 $ 109,999 $ — $ 15,001

________________

(1) Subsequent to December 25, 2022, we repurchased the remaining $15.0 million of our common stock authorized under the 2022 Share Repurchase Program under a Rule 10b5-1 plan.

On February 7, 2023, our Board approved a new $125.0 million authorization (the “2023 Share Repurchase Program”).

The 2023 Share Repurchase Program will expire on August 7, 2024.

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

During the first quarter of 2020, we declared and paid dividends of $0.20 per share.

We did not pay dividends during 2021.

In February 2022, our Board declared a quarterly cash dividend of $0.14 per share, payable on March 16, 2022 to shareholders of record at the close of business on March 2, 2022.

We did not repurchase any shares of our outstanding common stock during 2021.

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.

Following is a summary of our former share repurchase programs as of December 26, 2021 (dollars in thousands):

SHARE REPURCHASE PROGRAM BOARD APPROVAL DATE AUTHORIZED REPURCHASED CANCELLED OR EXPIRED REMAINING

2014 December 12, 2014 $ 100,000 $ 100,000 $ — $ —

2015 August 3, 2015 $ 100,000 69,999 $ 30,001 $ —

2016 February 12, 2016 $ 250,000 139,892 $ 110,108 $ —

July 2016 July 26, 2016 $ 300,000 247,731 $ 52,269 $ —

2017 April 21, 2017 $ 250,000 195,000 $ 55,000 $ —

2018 February 16, 2018 $ 150,000 113,967 $ 36,033 $ —

2019 February 12, 2019 $ 150,000 106,992 $ 43,008 $ —

Total share repurchase programs $ 973,581

The following table presents our dividends and share repurchases for the periods indicated:

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Fiscal year 2016 31,379 309,887 341,266

Fiscal year 2015 29,332 169,999 199,331

Total $ 227,961 $ 1,083,580 $ 1,311,541

Our ability to pay dividends and make share repurchases is dependent on our ability to obtain funds from our subsidiaries, continued compliance with the financial covenants in our debt agreements and the existence of surplus, as well as our earnings, financial condition, capital expenditure requirements and other factors that our Board deems relevant.

Lease Guarantees - We guarantee certain lease agreements primarily related to divested restaurant properties in circumstances where we have assigned our lease interest.

In the event of non-payment by the primary lessees, we may be required to satisfy these lease agreements with cash.

See Note 22 - Commitments and Contingencies for additional details regarding our lease guarantees.

Deferred Compensation Programs - Certain Restaurant Managing Partners and Chef Partners in the U.S.

Partners”) participate in deferred compensation programs that are subject to the rules of Section 409A of the Internal Revenue Code.

The deferred compensation obligations due under these plans was $15.5 million and $28.1 million as of December 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 U.S.

Partners’ deferred compensation was fully funded as of December 26, 2021.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Summary of Cash Flows and Financial Condition

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Effect of exchange rate changes on cash and cash equivalents 1,395 (1,642)

Net (decrease) increase in cash, cash equivalents and restricted cash $ (21,351) $ 43,263

Operating activities - Net cash provided by operating activities increased during 2021 as compared to 2020 primarily due to a significant improvement in revenues and operating results, partially offset by:

(i) cash paid in connection with the Carrabba’s Italian Grill royalty termination, (ii) timing of collections of gift card receivables, (iii) higher inventory purchases, (iv) payment of payroll taxes deferred in 2020 as a result of the Coronavirus, Aid, Relief and Economic Security Act, (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 2021 as compared to 2020 was primarily due to higher capital expenditures, partially offset by higher proceeds from the disposal of property, fixtures and equipment.

Financing activities - The increase in net cash used in financing activities during 2021 as compared to 2020 was primarily due to our capital restructuring and debt payments throughout the fiscal year that lowered bank debt and unsecured notes by an aggregate of $297.0 million.

Net decrease in cash, cash equivalents and restricted cash $ (4,322) $ (21,351)

Operating activities - The decrease in net cash provided by operating activities during 2022 as compared to 2021 was primarily due to increases and timing of operational payments net of receipts, partially offset by lapping cash paid in connection with the Carrabba’s Italian Grill royalty termination during 2021.

Investing and financing activities - The increase in net cash used in investing activities and the decrease in net cash used in financing activities during 2022 as compared to 2021 was primarily due to repurposing a portion of excess cash flow away from debt paydown and utilizing the cash flow to increase capital expenditures.

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

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Working capital (deficit) includes:

(i) Unearned revenue primarily from unredeemed gift cards of $398.8 million and $381.6 million as of December 26, 2021 and December 27, 2020, respectively, and (ii) current operating lease liabilities of $177.0 million and $176.8 million as of December 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.

(i) Unearned revenue primarily from unredeemed gift cards of $394.2 million and $398.8 million as of December 25, 2022 and December 26, 2021, respectively, and (ii) current operating lease liabilities of $183.5 million and $177.0 million as of December 25, 2022 and December 26, 2021, respectively, with

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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 is 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.

Critical Accounting Policies and Estimates

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We may elect to perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired.

In considering the qualitative approach, we evaluate factors including, but not limited to, macro-economic conditions, market and industry conditions, commodity cost fluctuations, competitive environment, share price performance, results of prior impairment tests, operational stability and the overall financial performance of the reporting units.

In considering the qualitative approach, we evaluate factors including, but not limited to, macroeconomic conditions, market and industry conditions, commodity cost fluctuations, competitive environment, share price performance, results of prior impairment tests, operational stability and the overall financial performance of the reporting units.

If the qualitative assessment is not performed or if we determine that it is not more likely than not that the fair value of the reporting unit exceeds the carrying value, the fair value of the reporting unit is calculated.

Fair value of a reporting unit is the price a willing buyer would pay for the reporting unit and is estimated by utilizing a weighted average of the income approach, using a discounted cash flow model, and, when appropriate, the market approach including the guideline public company method and guideline transaction method.

The key estimates and assumptions used in these models are future cash flow estimates, which are heavily influenced by revenue growth rates, operating margins and capital expenditures.

These estimates are subjective, and our ability to achieve the forecasted cash flows used in our fair value calculations is affected by factors such as the success of strategic initiatives, changes in economic conditions, changes in our operating performance and changes in our business strategies.

The fair value of the trade names is determined through a relief from royalty method.

The key estimates and

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

The carrying value of the reporting unit or trade name is compared to its estimated fair value, with any excess of carrying value over fair value deemed to be an indicator of impairment.

assumptions used in these models are future cash flow estimates, which are heavily influenced by revenue growth rates, operating margins and capital expenditures.

These estimates are subjective, and our ability to achieve the forecasted cash flows used in our fair value calculations is affected by factors such as the success of strategic initiatives, changes in economic conditions and discount rates, changes in our operating performance and changes in our business strategies.

The fair value of the trade names is determined through a relief from royalty method.

The carrying value of the reporting unit or trade name is compared to its estimated fair value, with any excess of carrying value over fair value deemed to be an impairment.

The carrying value of goodwill as of December 25, 2022 was $273.0 million.

We performed our annual impairment test in the second quarter of 2021 by utilizing the qualitative approach and determined that there were no events or circumstances to indicate that it was more likely than not that the fair value of our reporting units was less than their carrying values.

We performed our annual impairment test in the second quarter of 2022 by utilizing the qualitative approach and determined that there were no events or circumstances to indicate that it was more likely than not that the fair value of any of our reporting units was less than their carrying values.

Sales declines at our restaurants, unplanned increases in commodity or labor costs, deterioration in overall economic conditions and challenges in the restaurant industry may result in future impairment charges.

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We determined the present value of the lease liabilities by using a country specific IBR and applying a single rate to the respective portfolio of leases based on term, regardless of the underlying asset type.

The reasonably certain lease term used in the evaluation of existing leases at transition and new leases after adoption of the new lease standard includes renewal option periods only in instances in which the exercise of the renewal option is reasonably certain because failure to exercise such an option would result in an economic penalty.

The reasonably certain lease term used in the evaluation of new leases includes renewal option periods only in instances in which the exercise of the renewal option is reasonably certain because failure to exercise such an option would result in an economic penalty.

Such an economic penalty would typically result from having to abandon a building or equipment with remaining economic value upon vacating a property.

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For some programs, we maintain stop-loss coverage to limit the exposure relating to certain risks.

We record a liability for all unresolved claims and for an estimate of incurred but not reported claims at the anticipated cost that falls below our specified retention levels or per-claim deductible amounts.

We record a liability for all unresolved and incurred but not reported claims at the anticipated cost that falls below our specified retention levels or per-claim deductible amounts.

Our liability for insurance claims was $49.1 million and $53.5 million as of December 25, 2022 and December 26, 2021, respectively.

In establishing our reserves, we consider certain actuarial assumptions and judgments regarding economic conditions, and the frequency and severity of claims.

The establishment of the reserves utilizing such estimates and assumptions is in part based on the premise that historical claims experience is indicative of current or future expected activity, which could differ significantly.

Reserves recorded for workers’ compensation and general or liquor liability claims are discounted using the average of the one-year and five-year risk-free rate of monetary assets that have comparable maturities.

The establishment of the reserves utilizing such estimates and assumptions is in part based on the

BLOOMIN’ BRANDS, INC.

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

premise that historical claims experience is indicative of current or future expected activity, which could differ significantly.

If actual results are not consistent with our estimates or assumptions, we may be exposed to losses or gains that could be material.

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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-K

Item 7. Management’s Discussion and Analysis