Moody's Downgrades Bloomin' Brands to B1 on Persistent Margin Pressures

Moody's Ratings has downgraded the corporate family rating of Bloomin' Brands, Inc. (NASDAQ: BLMN) to B1 from Ba3, signaling concerns that the restaurant operator's credit profile will see limited improvement over the next 12 to 18 months.

Key Drivers of the Downgrade

The ratings action reflects Moody's expectation that Bloomin' Brands will continue to face significant profitability challenges. The agency projects the company's key credit metrics will remain weak, with Debt/EBITDA staying around 4.0x and EBITA/Interest coverage remaining below 2.0x over the medium term.

According to Moody's, these pressures stem from a combination of a "difficult consumer spending environment" and persistent cost inflation across commodities, labor, and other operational areas. As a result, the company's operating margins are expected to stay well below historical levels. The downgrade also affected other instruments:

• The probability of default rating was lowered to B1-PD from Ba3-PD.
• The senior secured revolving credit facility was cut to Ba3 from Ba2.
• The senior unsecured global notes were downgraded to B3 from B2.

Financial Health and Outlook

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As of March 2026, Bloomin' Brands' financial metrics were already strained, with Moody's-adjusted Debt/EBITDA at 4.1x and EBIT/interest coverage at approximately 1.6x. Despite these challenges, Moody's revised the company's outlook to stable from negative.

This revision acknowledges proactive steps taken by management, including repaying over $270 million of debt since late 2024 using proceeds from the sale of its Brazil operations and free cash flow. The company also discontinued its dividend in October 2025, a move that supports cash flow generation. The company's speculative grade liquidity rating remains unchanged at SGL-2.

Context and Constraints

The B1 rating is supported by the high brand awareness of Bloomin's portfolio, which includes Outback Steakhouse, and its large asset base of 1,452 restaurants. However, the rating remains constrained by operating margins that are below average compared to peers, weak interest coverage, and ongoing uncertainty around consumer spending on dining.

Moody's expects that the company's free cash flow, balance sheet cash, and available credit facility will be sufficient to cover seasonal needs over the next 12-18 months. Bloomin' Brands' revolving credit facility and unsecured notes both mature in 2029.