Economic conditions taking a toll on OSI Restaurant Partners

In researching where my 9 ounce Outback Salmon went, I came across some news articles on Outback Steakhouse. Here's one describing the current conditions of the Restaurant chain from the Tampa Bay Business Journal...

http://www.bizjournals.com/tampabay/stories/2008/11/17/daily22.html

Here's an excerpt--be sure to check out the full article at the link above...

Disruptions in financial markets, including the subprime mortgage crisis and the bankruptcy and restructuring of key financial institutions, pose challenges to OSI Restaurant Partners LLC.

For the three months ended Sept. 20, the large Tampa-based company reported a loss of $46.63 million on revenue of 948.53 million, a steeper loss than the $16.68 million on revenue of $1.01 billion in Q3 2007.

Restaurant sales decreased by 3.2 percent or $99.97 million during the first nine months of 2008 as compared with the same period in 2007. This decrease was primarily attributed to decreases in sales volume at existing restaurants and was partially offset by additional revenues of about $65.17 million from the opening of 42 restaurants after Sept. 30, 2007.
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Declines in consumer confidence and diminished spending patterns are reducing revenues and cash flow from operations, OSI said. It is working to mitigate that impact with cost-saving efforts including food cost decreases via waste reduction and supply chain efficiency, labor efficiency initiatives, and reductions to general and administrative expenses.

“We have also developed new menu items to appeal to value-conscious consumers and have used marketing campaigns to promote these items,” the company said in its filing.

The restaurant industry “is highly competitive and fragmented and subject to changes in the economy, trends in lifestyles, seasonality and fluctuating costs,” OSI said. Operating margins for restaurants are susceptible to fluctuations in prices of commodities. They include beef, chicken, seafood, butter, cheese, produce and other necessities to operate OSI restaurants, such as natural gas or other energy supplies
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The company has begun to offer “off the menu” daily specials at Outback Steakhouses that reflect a range of entrées and price points.

“We believe they provide new reasons for customers to come back to Outback Steakhouse more often,” the company said in filings. OSI now has a multi-year plan to refresh and update its Outback Steakhouse restaurants.

“A new look delivers an experience that we believe reaches beyond the existing interpretation of Australia and the Outback in our restaurants, and it is expressed in updated fabrics, textures, art, lighting, props and murals,” the company’s filing with the SEC said. “Our marketing strategy of getting people to visit frequently and also recommending our restaurants to others complements what we believe are the fundamental elements of success: convenient sites, service-oriented employees and flawless execution in a well-managed restaurant,” the filing said.
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OSI “went private” last year.