Outback Steakhouse Case
Synopsis of Case
In 1995, Outback Steakhouse was proclaimed as one of the most successful restaurant chains in the United States. The chain was started by Chris Sullivan, Bob Basham, and Tim Gannon during the 1980s. Prior to starting the Outback Steakhouse chain, Sullivan and Basham were successful franchisees of the Chili’s Restaurant chain. About the same time Gannon played a significant role in several New Orleans restaurant chains. Outback Steakhouse, formerly known as Multi-Venture Partners, was founded in 1987 after Sullivan and Basham sold their Chili’s franchise to fund their venture and they invited Gannon to join. In 1988 the trio opened their first two restaurants in Tampa, Florida.
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However, these suppliers currently do not operate internationally thus posing a supply-chain problem for possible expansion into international areas.
Other issues regarding international expansion into other countries also need to be considered including, access to supportive infrastructure, adapting to local culture and trade laws. Competitors within each of these regions will also pose a threat; a deeper analysis of competition within the food service industry utilizing Porter’s Five Forces model is located on the next page.
Industry Analysis
Analysis of Competition Utilizing Porter’s Five Forces:
• Risk of new entry by potential competitors: the risk is very high in the restaurant industry because of the low capital investments required to enter. Outback Steakhouse competes not only with the casual diners but as well as with fast food chains, and even supper markets. Many of the high-end grocery stores offer variety of complete meals. It costs the customer absolutely nothing to switch to a different restaurant; therefore companies in this industry cannot depend on locking in the customers. However, by establishing a brand loyalty customers will return. Established restaurants such as Outback Steakhouse have an advantage with the economies of scale in advertising and purchasing.
• Rivalry among established firms: the restaurant industry is fragmented. There are many companies
It’s hard to believe there are five problems with In-N-Out Burger because of how successful the company is and how delicious the burgers are. Well at least that what I heard, one of my friends that moved to California confessed to me that the reason he moved was because he loved In-N-Out Burger’s. But as I began to read I found more than five devastating problems that the Snyder family encountered as pioneers of the fast food business.
Outback Steakhouse was started in Tampa, FL in 1988 and falls under the company brand “Bloomin Brands”. The brand was built on hospitality, sharing, quality, being courageous and having fun (Outback.com, n.d.).
Ruth’s Chris is a steak house that has been franchised all over the world, with a consumer recognizable name that is widely popular for their brand and calling. Ruth’s Chris began in 1965 when Ruth Fertel mortgaged her home and bought a steakhouse that had 60 seats called Chris Steak House in New Orleans (Peter & Donnelly, 2013). Twelve years later, in 1976, the restaurant suffered a kitchen fire and was destroyed. Ruth had the drive not to let that destroy what she loved. She purchased another property shortly after and called it Ruth’s Chri. One of her regular customers convinced her to allow him to franchise the restaurant, and by the 1980’s Ruth’s Chris was a global brand.
About everyone at some age, at some point or another, and in some country has gotten a sample of American's symbol for fast food through the golden arches of McDonald's. This report will attempt to analyze the external and internal sectors that affect the company's success. The external analysis will provide opportunities and threats while the internal analysis will show indicators of strength and weakness. It will then follow up with critical issues, strategic alternatives, recommendations and implementation. The case studied is found in Appendix 2 of Mary Coulter's "Strategic Management in Action" book.
Although the restaurant industry is perceived to have high risk of failure, the risk of a restaurant failing is not too different from other small businesses. Parsa et al. quantified the risk of failure at 26% in the first year and 57% by year 3. He also described several factors that can influence the risk of failure. Those include physical location, firm size, speed of growth, differentiation from other restaurants in the market, adapting to external trends, and management experience. In terms of location and differentiation, Paul’s bar will be located in a new development designed to attract affluent customers and with very few competitors. Paul’s small firm size increases risk because of barriers to attract partners (i.e. suppliers and bankers are prejudiced against smaller firms) and growth that may be too rapid to manage. On the other hand, Robert already has experience in the restaurant business and should know how to run the bar and subsequent restaurant. Their choice of a piano bar may be in response to local trends that favor success.
Globalization strategies have been an issue for any organization that intends to increase its international presence. Free Range Foods has decided to grow operations in France, the United Kingdom, and other regions throughout the globe. The recommended strategies Free Range Foods should consider utilizing in order to strengthen its position in the international market are 1) Merger and Acquisition/ Takeover and 2) Strategic Alliances. Both strategies are effective in obtaining an entry into the
* The company has sufficient liquidity to finance ongoing operations without taking on additional debt.
In-N-Out’s business model is considered to be counter intuitive as it is opposite to the commonly found business model in the fast-food industry. Firstly, all the stores are privately owned by the promoter family only unlike other chains which use franchise based model to expand their business. Such conservative and slow expansion policy as adopted by In-N-Out is quite unique in its industry which usually focuses on rapidly expanding all across the country and abroad. This is why in spite of being in business since 1948; the numbers of stores of In-N-Out are far lesser than its peers like Burger King. McDonalds,
Saxonville sausage, a privately held company has been doing business for 70 years. In 2005, the company had revenues of approximately $1.5 billion from a variety of its fresh pork sausages. The company is producing three main types of products namely: bratwurst, breakfast sausage and an Italian sausage Vivio. The main source of revenue for the company is bratwurst (70%) followed by breakfast sausage (20%). But since 2004, the company is experiencing problems: bratwurst and breakfast sausage has been facing a stagnant growth; however Saxonville, due to poor performance with breakfast sausage had a double digit decline in revenues which resulted in being ranked 6 out of 8 in market share of the
Many companies today want to expand their business to the international business, which can bring cost down and profits up. Taking a business internationally means knowing the rules and regulations of the countries you are entering. There can be many issues with going global which include cultural barriers, diversity issues, multicultural issues, political issues, and economical issues. It is very important to know how important expansion is to the company and what implications will come from going global.
In addition to the aspects of the Austrian market that affect marketing and management there are other factors that must be examined. These factors affecting whether or not to conduct business in another country include: the physical forces that affect a country economically, various economic and socioeconomic forces, sociocultural forces, and competitive and distributive forces.
What major issues and conditions is the restaurant industry facing? 7) What recommendations would you makes to Outback Steakhouse to keep increasing sales and profit margins in his stores? 1) What are the standout business and economic
There are some important issues to consider when dealing with intermediaries on an exporting process: First of all the company would need to identify the appropriate commission structure for compensating intermediaries, which sometimes might lead
Outback Steakhouse was started in 1988 in Florida and falls under the Bloomin’ Brands umbrella. Outback Steakhouse was founded on hospitality, sharing, quality, being courageous and having fun.
Porter's fifth force that Porter describes is current rivalry among existing firms. In the specialty eateries industry,