Outback

1
Outback

• Strengths Value driven strategy, successful
  theme with high quality food (selling the
  experience), productive corporate culture (keeps
  costs low and reduces employee turnover,
  controlling culture through selection
  techniques), long term relationships with
  suppliers, financially sound company, good
  corporate citizen
• Weaknesses High food costs, lack of
  international experience
• Opportunities Expansion of Outback concept,
  diversifying into other segments (Italian grill)
  and into overseas markets, growing consumer
  preferences for restaurant fare
• Threats Real estate availability, strong
  competitors, health concerns over red meat
  consumption

2
Source Restaurant Hospitality 2001
3
Duplicating strategy overseas

• Need to transform menu local responsiveness
• Maintaining quality
• Creating and sustaining corporate culture
• Franchising issues

4
International expansion

• Yes potential markets, interested potential
  franchisees
• But need to consider
• Steep learning curve because of lack of
  experience
• Although financial risk will be borne by
  franchisees, Outback will have to invest in
  training
• Casual dining operation (quality is critical, can
  Outback replicate this overseas, creating an
  effective supply network lack of
  infrastructure)
• Price of meal will this generate consumers in
  countries with low per capita incomes?
• Implementation of strategy infusing franchisees
  with Outbacks culture and enthusiasm for
  hospitality

5
Overseas strategy

• Which strategy? Depends on positioning
• Food service industry local responsiveness
  pressures are high suggesting multidomestic
  strategy with menus configured to appeal to local
  tastes (franchising, joint venture as an entry
  mode)
• Could also attempt to leverage Australian theme
  and American brand name (tapping the expats)
  international strategy (franchising / joint
  venture still need local knowledge on permits,
  marketing, wholly owned subsidiary if serious
  concerns regarding quality control )

6
Countries

• Markets that are similar in purchasing power and
  infrastructure and lend themselves to leveraging
  Outback concept as is Canada, U.K.
• Germany and Japan possibly 2nd phase overcoming
  perceptions/competition in Germany, incurring
  high costs in Japan
• Mexico and S. Korea 3rd phase Mexico
  (recession, price sensitive economy, although
  physically proximate), S. Korea (distance
  physical and cultural will require local
  responsiveness, Standards and regulations in flux
  can pose challenges for Outbacks ability to
  maintain quality)

7
Outbacks International Strategy
Source Outback, website
8
Market development Takeout goes upscale
Source Outback website, Restaurant Hospitality,
Aug. 2000
9
Outback Steakhouse

• One of six public restaurant companies that
  outpaced the SP 500 Index, through the 90s.
• Outback brand (biggest revenue generator) had
  2.3 billion in sales for 2001(689 domestic
  Outbacks, 739 total) still continues to grow
  with an average of 50 restaurants p.a.
• Sluggish sales due to current economic recession
  (Outback average check 18), Offering lunch,
  providing lower priced entrees
• Attracting higher income customers plans to
  roll out items in higher price ranges, Exploring
  other niches Bonefish Grill, Flemings,
  Carabbas, Roys and Lee Roy Selmon

Source Nations Restaurant News,2001, 2000
10
Outback

• 775 Outback steakhouses
• 117 Carabbas
• 14 Flemings Prime Steakhouse and Wine Bars
• 14 Roys
• 1 Lee Roy Selmon
• 10 Bonefish Frill
• 1 Cheeseburger in Paradise

11
Problems for Outback

• Greater international and niche development
  (higher pre-opening costs)
• Increased operational complexity due to specialty
  and niche concepts (argument for focus) closing
  Zazarac
• Tough domestic environment (rise in beef prices)