Carrabba’s: Caught between casual and upscale
At present, Bloomin’ Brands’ Italian restaurant is struggling to maintain market share. In November, the company’s third-quarter earnings call revealed that Carrabba’s comp sales had fallen 0.6 percent for the second quarter in a row. That was, at the very least, a less dramatic decline from one year earlier when the figures had slid 2.8 percent.
Arguably, Bloomin’ Brands has given more of its attention—and resources—to higher-achieving sister concept Outback Steakhouse, thus putting Carrabba’s at a disadvantage—and opening the door to outside criticism.
In fact, an open letter from Barington Capital last August called for Bloomin’ Brands to divest Carrabba’s (along with Bonefish Grill and Fleming’s) so the C-suite could double down on Outback. “It is our belief that a more focused management team would perform substantially better and do a more effective job of enhancing the guest experience to improve customer loyalty and increase revenues,” the letter stated.
It was a bold move, especially considering Barington owns less than 1 percent of company shares.
Within the same day, CEO Liz Smith replied in kind with a statement championing the company’s progress and pointing to consecutive quarters of sales growth for Outback.
Nevertheless, it’s a long, uphill battle for Carrabba’s as the chain finds itself in a gray zone. The atmosphere skews casual, but the prices fall somewhere in between casual and upscale.
The inverse combination of fancier ambiance and lower costs is winning many consumer hearts—just look at the fast-casual boom. Smaller and nimbler concepts, particularly those with local clout and community ties may have a better chance pulling off steeper prices and casual dining than a national chain.