By Islam El-Sakka
Outback Steakhouse's largest U.S. franchisee, Out West Restaurant Group (also known as Cerca Trova Restaurant Group), filed for Chapter 11 bankruptcy on Monday, putting 61 restaurants up for sale. The parent company, Bloomin' Brands, has agreed to purchase the locations for $26.3 million as a stalking horse bid.
Bankruptcy Filing and Stalking Horse Bid
The franchisee's financial troubles date back to 2018, with declining customer traffic and a 35% revenue drop in 2020 due to the pandemic. Rising food prices and labor costs added pressure. Bloomin' Brands will provide up to $5.5 million to keep restaurants operating during bankruptcy proceedings, with no immediate changes for customers or employees.
Expansion of Corporate Control
If the acquisition is completed, Bloomin' Brands would directly control more than half of Outback's remaining 115 franchised U.S. restaurants, alongside its 544 company-owned locations. The affected restaurants are primarily in Arizona, Nevada, New Mexico, and Colorado.
Menu Revamp Amid Restructuring
The bankruptcy news comes as Outback revamps its menu, adding a New York strip and a thick-cut ribeye called the "Down Under Delmonico," while updating cut specifications and seasoning methods for existing steaks. Bloomin' Brands also owns Carrabba's Italian Grill, Bonefish Grill, and Fleming's Prime Steakhouse & Wine Bar.
