Will the hinterland leave Brazil? See what could happen to the restaurant chain

Outback is one of the most famous restaurant chains in Brazil. Recently, news has spread that the brand’s days are numbered in the country and it is supposed to close its doors soon.

In fact, the company that controls the chain, called Bloomin’ Brands, has announced that it is considering the possibility of selling control of the restaurants. The goal is to explore strategic alternatives for operations in Brazil, in order to maximize profits for shareholders.

The company is currently seeing a decline in sales in Brazil, with the loss of the head office in the first quarter of 2024.

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Can remote areas close in Brazil?

Despite the decision to hand over control of the restaurants, Bloomin’ Brands said that It does not mark the end of outback stores in Brazil. In a memo sent to the G1 website, the company reinforced its commitment to keeping its restaurants running and always providing a continuous and exceptional experience to its customers.

To understand the country’s brand power, Outback’s Brazilian operation is the second most important in the world, second only to the United States, where Bloomin’ Brands is headquartered. The results of the company’s operations show this.

In 2023, the network’s international revenue reached US$84 million, or R$432 million, at current prices. Brazil’s share of this profit alone is equivalent to 87% of revenues. Currently, Bloomin’ Brands has 159 Outback restaurants across the country, as well as two Aussie Grill units and 16 Abbraccio chain units.

What could happen to outlying area restaurants?

Even knowing the importance of Brazil’s hinterland, the company is analyzing selling control of restaurant operations as a way to overcome its current financial situation. Between January and March of this year, there was a 4% decline in global revenues, about US$1.2 billion, or R$6 billion at current prices.

So far nothing has been decided. The company stated that it is studying business possibilities and that there is no deadline for making a decision. But the hypothesis of removing the brand in the country was ruled out, considering that a large portion of the revenue comes from Brazilian territory.

Finally, if the decision is to sell control, there is still a need for other companies or funds to express an interest in taking over the business. In other words, stakeholders are needed to pass the baton.