Activist investor renews call for changes at Outback Steakhouse parent company

Barington Capital Group L.P. wants Tampa restaurant operator Bloomin’ Brands Inc. to spin off or sell three of its restaurant brands and leave Outback Steakhouse to operate independently.

Barington, an activist investment firm in New York, is concerned about what it says is a sustained period of underperformance at Bloomin’ Brands under Elizabeth Smith, chairman and CEO.

Elizabeth Smith, chairman and CEO, Bloomin’ Brands

Bloomin’ is making great progress in elevating the customer experience, and has posted increases in sales and market share over the last three quarters, Smith said in a news release.  The company has taken action to cut overhead and reinvest the savings to improve its digital and IT infrastructure, as well as enhance its growing off-premise business, she said.

Bloomin’ (NASDAQ: BLMN) is one of the largest casual dining companies in the world and the parent company of Bonefish Grill, Carrabba’s Italian Grill and Fleming’s Prime Steakhouse and Wine Bar, in addition to Outback Steakhouse. The company has about 5,000 employees in the Tampa Bay area, according to Tampa Bay Business Journal research.

The dispute between Barington and Bloomin’ first went public in February and reignited Monday, when Barington announced it sent a seven-page letter to Bloomin’, reiterating the investment firm’s call for a sale or spinoff of Bonefish, Carrabba’s and Fleming’s. The complexity of Bloomin’s structure makes it difficult for the four restaurant brands to compete with their nimbler competitors, Barington’s Oct. 22 letter said.

Bloomin’s stock has underperformed the market and similar restaurant companies over the last three-year and five-year periods, Barington said. One of the companies cited was Darden Restaurants (NYSE: DRI), the Orlando parent company of Olive Garden and other brands. Barington called on Darden in 2013 to make changes, including spinning off its real estate into a separate company, a move Darden made in 2015.

Barington wants the Bloomin’ board of directors to appoint an independent chairman, a move it said would improve oversight of management and the strategic direction of the company.

Repeated requests by Barington to talk to Smith have been declined, the investment firm said, although it said it has talked with others at Bloomin’, including David Deno, chief financial officer.

Since March 2017, Bloomin’ has had seven discussions with Barington to better understand the investment firms views and suggestions, Bloomin’s news release said.

“The Bloomin’ Brands board of directors is actively engaged in overseeing the strategy of the company. We fully support the management team and its successful ongoing efforts. The company welcomes shareholder dialogue and any constructive input that may advance our goal of delivering superior returns for investors,” Jim Craigie, lead independent director, said in the news release.

Bloomin’ faced a similar push from another activist investor, Jana Partners, in the past year. Bloomin’ and Jana struck an agreement earlier this year to add a restaurant industry veteran to its board of directors.