Below is the first case study I wrote in graduate school (MBA). Though it is general and lacks sufficient support, the case study does provide an idea of how to approach a case study or business problem.

Introduction

Outback Steakhouse is a casual dining restaurant with a rustic Australian decor that was started in Florida in 1997, to provide great food at reasonable prices. Since its inception, Outback Steakhouse has grown through company-owned and franchised restaurants. Further, Outback Steakhouse has diversified its portfolio by adding a differentiated assortment of restaurants which include Carrabba’s Italian Grill, Roy’s Restaurant, Bonefish Grill, Fleming’s Prime Steakhouse & Wine Bar, Lee Roy Selmon’s Cheesburger in Paradise, and Blue Coral Seafood & Spirits. A few Outback Steakhouse restaurants off an early-dinner; however, most of the restaurants are dinner only.

Outback Steakhouse growth depends on its ability to open or franchise new restaurants. As a result, growth is a slow, tedious process that is draining Outback Steakhouse’s potential. In 2006, Outback Steakhouse suffered a 4.7 % decrease in sales. This drop was preceded by a disappointing revenue growth of 12.5% in 2005, which represents a decline in earnings from 2004. In addition, Outback Steakhouse has suffered typical legal problems from wrongful termination to drunk driver injuries. Coupling the declining revenues and legal issues, Outback Steakhouse could face dire growth constraints in the future. In order to combat possible constraints, Outback Steakhouse must consider adjusting its strategy to incorporate alternative revenue streams.

Analysis

Though there are a few exceptions, Outback Steakhouse restaurants serve dinner only. As a result, Outback Steakhouse only earns revenue for part of the day. In addition, dinner-only hours mean more liquor sales, which open Outback Steakhouse to increased litigation. Outback Steakhouse has the opportunity to open its doors earlier, enabling it to operate a broader window of generating revenue. Specifically, Outback Steakhouse’s opportunity lies in successfully entering the fast-casual dining segment of the restaurant industry.

The fast-casual dining segment is the fastest growing segment of the restaurant industry. While the Outback Steakhouse is suffering a decrease in sales, the fast-casual dining segment is growing between 10.8% AND 12.5% per year through 2009. As a result, any company actively pursuing fast-casual dining can expect to grow revenues in the restaurant industry at an above average rate that that of the restaurant industry as a whole.

Outback Steakhouse is uniquely positioned to take advantage of the fast-casual dining segment’s growth. The unique position is based on two key factors—brand identification and geographic penetration. The Outback Steakhouse brand and the brands of its subsidiaries are synonymous with great food, great service, and an eclectic menu. As a result, Outback Steakhouse is able to attract families and business people that are seeking a high-quality, differentiated food choice. Outback Steakhouse’s superiority to fast food is furthered by its great service. From the hostess to the waitress, Outback Steakhouse’s well-trained and exuberant workforce make the dining experience pleasant and personal, unlike the “next number in line” feeling one experiences in the mass production culture of fast food. Finally, Outback Steakhouse’s brand is identified with great atmosphere. The clean, rustic decor provides an enjoyable environment for family meals and casual business meals, unlike the dirty, greasy feel of most fast food restaurants. All aspects of Outback Steakhouse’s brand strength are key success factors for the fast-casual dining segment.

In addition to strong brand identification, Outback Steakhouse has considerable geographic penetration. With over 1300 locations, Outback Steakhouse has a foothold in the restaurant industry. Outback steakhouse’s foothold continues to increase as it opens more locations; however, growth from new stores is a slow process and relative increases in revenue from current locations are approaching maturity. As a result, Outback Steakhouse will spend more money opening new locations to balance the maturing growth of older locations. The current growth option is tedious.

To successfully enter the fast-casual dining industry, a company must consider target market, operational costs, and menu. Ideally, a company would target families and business people; however, any people desiring quality are always welcomed. Targeting families opens the door to weekend family excursions and family fun-days. Business people will enjoy the quality food and quality service as accompaniment to a quick business lunch.

Knowing the potential market is just a start. A company entering the fast-casual dining segment must consider both the operational costs and menu concurrently. First, the menu needs to reflect the food preferences of the target market, which is likely tasty, healthy food. Second, the company needs to ensure that the menu will have reasonable prices. If the company cannot execute the menu with reasonable prices, then there is no need to attempt entry into the fast-casual dining segment. If the company can execute the menu, then the company must look at operational costs. An ideal scenario would incorporate flex-time to alleviate unnecessary staff during slow hours.

The fast-casual dining segment represents a fantastic opportunity for revenue growth. The segment is growing rapidly and focused on quality. As such, Outback Steakhouse could leverage brand identification and geographic penetration to quickly and easily offer a lunch menu focused around fast-casual dining.

Recommendations

Outback Steakhouse should aggressively enter the fast-casual dining segment of the restaurant industry by using its brand strength and geographic penetration. The Outback Steakhouse brand’s synonymy with great food, great service, and great atmosphere serves a strong foundation and alleviates the risk of entering a new industry segment. The geographic penetration of current locations allows Outback Steakhouse to flood the new segment with ease and speed.

To successfully enter the fast-casual dining segment, Outback Steakhouse must execute three things. First, Outback Steakhouse must move from a “dinner only” mindset to a “lunch-dinner mindset.” The rationale behind a “dinner only” restaurant is to standardize menus, target night-time activity, and reduce operating cost. Though these reasons are valid for a new restaurant, they lose veracity when applied to a mature restaurant. A mature restaurant has achieved operational efficiency through time and has achieved its revenue growth from night-time activity. The only option to increase revenue is to expand physical size of locations or alter operating hours. Expanding physical size of locations is expensive, time consuming, and burdensome for customers. Therefore, the obvious choice is to alter operating hours.

Altering operating hours allows a current location to retain its size and night-time activity; however, it allows the location to generate new revenue from mid-day or “lunch time” activity. The immediate concern with altering operating hours is the increased operating costs. The increase in operating cost is subdued by slowly integrating mid-day hours and incorporating flex-time for employees. By slowly integrating mid-day hours, Outback Steakhouse would allow tis customers and employees time to adjust to the change. In addition, flex-time hours would allow Outback steakhouse to reduce wasted paid hours for its employees.

Second, Outback Steakhouse must develop a more cost-effective menu. Outback Steakhouse’s current menu is moderately priced for dinner meals; however, a twenty dollar lunch is a bit more than a family or business person should swallow. Therefore, Outback Steakhouse must develop a “lunch friendly” menu. There is no need to drastically differ from the dinner menu. In fact, a drastic change between menus would dramatically affect food costs and customer expectations. The solution is a lunch menu that targets adaptable foods, such as sandwiches, salads, wraps, and appetizers. Instead of getting the Queensland Chicken and Shrimp, you can get the Chicken and Shrimp wrap or the “Down Under” Burger. By maintaining a lunch menu similar to the dinner menu, Outback Steakhouse can lower food costs and meet customer expectations.

The final move Outback Steakhouse must make to move into the fast-casual dining segment involves geographic penetration. Once hours and menu are ready to go, Outback Steakhouse must asses which of its current locations will benefit the most readily from fast-casual dining. To assess readiness, Outback Steakhouse should look at geographic density of locations and geographic demographics. The geographic density should be sufficiently high to reasonably support a lunch crowd. The geographic demographics should have high concentrations in family and business people. Once key locations are identified, Outback Steakhouse should systematically integrate lunch menus across those locations. The slow, systematic integration of a the change will allow Outback Steakhouse to quickly tweak operations and gain institutional knowledge of the fast-casual dining segment as it integrates lunch into other locations.

Outback Steakhouse is able to enter the fast-casual dining segment relatively quickly and easily. It may enter the segment quickly because of its brand identification and geographic penetration. Outback Steakhouse may enter the segment quickly because of operational experience and geographic penetration. The fast-casual dining segment represents potential renewed growth, which is what Outback Steakhouse needs.