Outback Steakhouse Outlasts the Down Under Fad
Celebrating its 25th anniversary, Outback knows when to go new—introducing updated designs, healthy menu options, and new flavor profiles—and when to stay true to its concept, culture, and proven leadership.
In the 1980s, easy-going adventurer Crocodile Dundee was America’s hero and a visit to his homeland Australia was on just about everyone’s bucket list. Inspired by the laid-back legacy of Dundee and his land Down Under, friends and restaurant veterans Chris Sullivan, Robert Basham, Tim Gannon, and Trudy Cooper opened the first Outback Steakhouse in Tampa in 1988.
“At that time, steakhouse meant either Sizzler or Ruth’s Chris; there were not a lot of choices in between,” says Outback president Jeff Smith, who has been with the company for 24 of its 25 year history. “The partners saw the opportunity to create a niche in the marketplace with a full-service steakhouse that offered very high quality chef-inspired food in a very casual atmosphere.”
Smith describes the original interior decoration as “almost aboriginal” with items such as spears on the walls. “They wanted to put the money on the plate, not in the visual décor,” he says.
With the recession came some serious soul searching. “It was a challenging time for the entire industry and we had to look hard in the mirror and think about the new normal and how we were going to survive and thrive,” Smith notes. In 2009, the partners retooled Outback’s menu to further their goal of making it an everyday rather than just a special-occasion destination.
“The original concept of Outback was value oriented and that really drove our sales, so our goal was to have entry-level price points in every category to make our brand more approachable,” he says.
When prices on some commodity items such as chicken deflated, the restaurant dropped its menu prices. The price of “Chicken on the Barbie,” for example, was reduced by two dollars. Attractively priced additions included roasted pork tenderloin for $10.99. As proof of the effectiveness of this strategy, Smith points to the fact that, as of mid-August, Outback had experienced its thirteenth consecutive quarter of same-store sales growth.
In addition to appealing to today’s consumer’s budget, Outback has tweaked its menu to accommodate diners who want to eat healthier diets. Early on, Smith says, consumers wanted very indulgent meals with the focus on large quantities of food. Now they still want their meals to feel indulgent, but it is more about flavor profiles than quantity.
Outback offers a number of options at or below 600 calories and these items are called out on the menu. The company’s website posts full nutritional information for all of its menu items and allows consumers to customize their entrée and side selections to suit their specific taste and nutritional needs.
Guests were given even a wider array of options when, in 2011, Outback introduced wood-fired grills into its new and renovated kitchens. Steaks can still be ordered seasoned with the chain’s signature 17-spice blend and seared in classic Outback style. In addition to giving consumers a choice as to how they would like their steaks to be cooked, the oak wood-fired grill “gives us a big platform to innovate new and exciting products” in other categories such as chicken and seafood, Smith says.
The company has also been working to give its restaurant interiors and exteriors a more contemporary look and feel. Inside, a more modern representation of Australia, with photos, sculptures, and other accents depicting the indigenous flora and fauna, geography, lifestyle, and leisure of the country, is taking the place of the early aboriginal décor. To date, the chain has renovated about 400 of its restaurants.
A new exterior, introduced in 2012, features enclosed patio areas wrapping the front and side elevations. These patio areas are accented with exposed heavy timber detailing and wood louvers and screens. The main entry has also been updated with a new tower design.
From the beginning, maintaining a consistent culture has been an integral part of the company’s growth plans and retaining store managers has been a major part of the equation. Store managers are considered to be “managing partners” who are offered an equity stake in the business. They also sign five-year contracts.
“Every operator wants to own his own restaurant,” Smith says. “The positive offer of ownership helps keep the managers engaged with running the restaurant much more effectively than having to worry about hitting the metrics so upper management won’t give them a hard time.”
At the end of the five-year contract, the managers may re-sign for another five. Smith notes that the retention rate is “very high” with some constantly re-signing for as many as 15 to 20 years. This consistency in store management also creates a stable environment for the hourly workers, a factor which contributes to the low turnover rate among these employees, according to Smith.
Outback has 979 locations around the globe, including Australia, Brazil, Canada, Hong Kong, Japan, and Korea. Of those, 769 are in the U.S., in every state except for Maine and North Dakota, and 106 of the domestic units are franchised.
Outback Steakhouse was first publicly traded in 1991. In 2007 it went private, then public again in 2012. It is part of the Bloomin’ Brands family of restaurants that also includesCarrabba's Italian Grill, Roy's Hawaiian Fusion, Bonefish Grill, and Fleming's Prime Steakhouse. In the second quarter of the current fiscal year, which ended June 30, comparable store sales at Outback Steakhouse’s domestic locations were up 2.8 percent over second quarter 2012.
By Marilyn Odesser-Torpey