Outback Steakhouse Goes International

The two first Outback Steakhouse stores were created by Chris Sullivan, Bob Basham and Tim Gannon in 1988 in Tampa. Within 7 years, the company became "the fastest growing US steakhouse chain with over 200 stores throughout the United States". In 1994, the company's stock increased from $22.63 to $32. Moreover, Outback Steakhouse seen as an example of a great success story was awarded many times.

In the context of this successful evolution of the company, the question of its internalisation and the conquest of other markets became obvious to the company. In 1994, Hugh Connerty was appointed president of Outback International and was in charge to lead to company abroad knowing that it would be a critical change.

This case study states the problem of the global expansion of a company and the strategic and operational anticipated changes it must take into account to make this internationalisation a success. Can the reasons of Outback Steakhouse's success within the United States also be applied to other markets? If not, what are the inputs the company needs to take into account before being global?

The potential international expansion of Outback Steakhouse can not be considered before explaining the reasons of the success of the company in United States through an environment and company analysis. Finally a few recommendations will be given to the company in order to help it to settle a suitable global strategy.

The reasons of Outback Steakhouse's success on the US market rely on its corporate strategy which stresses mainly on its strong corporate culture and leadership. In this area, Outback Steakhouse benefits from a core competitive advantage compared to its competitors. Indeed, the case states that the turnover for general managers and employees is the lowest in the US food industry. Managers are highly motivated by higher wages than in the rest of the industry ($100,000 per year instead of $60,000-$70,000 in the rest of the industry) and employees benefit from profit participation, trust relationship with the management and a deep commitment in the company's activity. They also enjoy from a relative autonomy, a week schedule that is less important than in the rest of the industry (from 50 to 55 hours instead of 70 hours in other restaurants) and health insurance. The culture of the company focuses on "long term well being" for all the "outbackers" who all share the same values: hospitality, sharing, fun and courage. It also focuses on quality and performance through a quality policy with its suppliers considered as long term partners ("We won't tolerate less than the best") and the best services they could give. Indeed, 40% of their total costs were dedicated to high quality products and ingredients so that quality can be considered as well as a core competitive advantage for the company.

Regarding the positioning of the company, Outback Steakhouse decided to provide "not only excellent food but also a cheerful, fun, comfortable experience" to customers and since the beginning, the company selected the places to settle restaurants where there are more people in the evening ("B-locations [with] A-demographics strategy"). They focused their activity on the statement that people are willing to consume meat, especially beef but can not always afford such a product at home. Their idea was then to serve "quality steak at an affordable price" and other diversified meals to stick to consumers' taste preferences.

To get more famous and known, Outback Steakhouse used only local advertising and word of mouth methods to communicate about its restaurants. But in 1994, when Nancy Schneid arrived in the company as Outback Steakhouse's vice president of marketing, a full scale national media program was settled to advertise on the restaurants. This communication policy coincided with the expansion opportunities Outback Steakhouse met by opening many other franchisees in the early 90's.

Considering Outback Steakhouse's successful development in United States and the fact that within few years the US market would have been saturated, the company started to think about capture other markets around the world. This raises many interrogations regarding Outback Steakhouse's strategy: how to increase expertise