Outback Steakhouses Lose Crown as America's Favorite Steak Destination

Americans no longer crave Outback's Aussie-themed steaks. Now, they're longing for Texas-style cuts instead. Texas Roadhouse and LongHorn’s tender filets.

Last year, both Texas Roadhouse and LongHorn’s outperformed Outback in terms of sales. Over the past twelve months, Texas Roadhouse's stock price rose approximately 15%, whereas shares of LongHorn’s owner, Darden, surged about 25%. Conversely, Bloomin' Brands, which owns Outback, saw its stock plummet more than 70%, now trading at around $8 per share.

With rising inflation eroding consumer purchasing power, people in America are opting out of casual dining establishments like Outback because these places aren't seen as providing sufficient value for money. TGI Fridays Instead, they are moving to Roadhouse, LongHorn, Chili’s And other establishments they believe provide them a more advantageous option when dining out.

This represents a significant decline for Outback, which pioneered the casual dining steakhouse concept in the U.S. Established in 1988, patrons flocked to Outback for their affordable, succulent sirloin steaks and battered onion blooms throughout the 1990s and 2000s.

However, Outback's errors along with their rivals' inventive tactics have altered the balance of power in the competitive landscape of the restaurant steak industry. Outback raised its prices excessively, depended overly on promotional activities to attract customers, and reduced expenses drastically. Both patrons and experts concur that this led to diminished food quality, slower table service, and an overall shabby appearance of the establishments. Additionally, Outback has become pricier: Last year, the chain's average bill amounted to $29—$6 higher than Roadhouse and $2.50 more than LongHorn.

This enabled Roadhouse to attract Outback's cost-sensitive clientele, whereas LongHorn lured patrons by enlarging the portions of its steaks. Additionally, both establishments raised their prices more gradually compared to Outback and put resources into training their employees and updating their dining spaces.

According to RJ Hottovy, an analyst from Placer.ai, these elements coupled with improved menu quality have contributed to the success of these brands. Both Roadhouse and Longhorn excel in the American Customer Satisfaction Index, which serves as a gauge for public opinion regarding dining establishments and quick-service restaurants.

Richard Mathis loved Outback during his high school years, even marking his graduation there. However, he now describes Outback as "inconsistently satisfying" nowadays.

When I visit an Outback nowadays, it seems too clean and unwelcoming," Mathis commented. "It doesn’t feel enjoyable anymore. All I want is to eat quickly and depart. There’s nothing drawing me to stay.

Now, he favors dining at Texas Roadhouse when accompanying his spouse or buddies. He finds the steaks superior, the employees more welcoming, and appreciates the atmosphere which is "lively, vibrant, and filled with tunes." It reminds him of visiting a countryside saloon, as per his statement.

Reduced costs with larger cuts of meat

Even though these three establishments are all categorized as casual steakhouse restaurants, significant distinctions account for their varying success levels.

The restaurant concept of Outback, inspired by the film "Crocodile Dundee," expanded nationwide throughout the 1990s and 2000s. Despite having American owners who weren’t from Australia, their menu featured mock-Australian dishes such as "Ribs on the Barbie" and "Walkabout Soup." They served an array of casual meals that went beyond just steaks, with standout offerings including the famous "Bloomin' Onion" and "Alice Springs Chicken." However, this extensive selection proved challenging for employees to manage efficiently. Additionally, they introduced periodic special offers in hopes of attracting more patrons through the doors.

Location played a crucial role too. For many years, Outback expanded its restaurants near shopping centers, but this strategy proved ineffective as pedestrian traffic to these malls decreased. Outback has closed dozens Of its more established eateries in recent times.

As Outback faced difficulties, rival companies moved forward.

Compared to Outback’s sporadic promotional deals, Texas Roadhouse maintained lower prices on most menu items. They attracted patrons not only through their affordable pricing but also via their energetic, rodeo-themed dining spaces adorned with wooden paneling, murals, and catchy country music. To set itself apart, the restaurant offered complimentary peanuts along with sweet honey-cinnamon roll sticks and sometimes even had staff perform impromptu line dances for entertainment.

"Roadhouse is succeeding due to their superior value proposition compared to anyone else," stated Peter Saleh, an analyst from BTIG.

LongHorn has distinguished itself with its upscale dining atmosphere and larger steaks at comparable prices to those of Outback.

In the early 1980s, LongHorn began as an affordable roadside eatery. However, it later abandoned this approach to shift towards upscale dining aimed at attracting more affluent customers. By 2007, LongHorn had been acquired by Darden Restaurants, which also owns establishments such as Olive Garden, Capital Grille, and Cheddar’s Scratch Kitchen.

"Over the years, LongHorn has invested heavily in enhancing quality, which continues to yield benefits," stated Rick Cardenas, CEO of Darden, last year. He pointed out that LongHorn was drawing in guests who were shifting from upscale dining establishments.

But Outback says it can return to its past glory.

“A consumer study indicates a positive sentiment towards [Outback],” stated a representative from Bloomin' Brands to GudangMovies21. "Given the enhancements we're implementing to boost our operational efficiency and offer a superior customer experience, we are optimistic about the promising prospects ahead for our company."

Outback’s new plan

Even though it has faced recent challenges, Outback thinks it can revitalize its operations with a fresh approach and new leadership.

Last year, Mike Spanos, who previously served as the chief operating officer at Delta, took over as the CEO of Bloomin’, which owns Outback. Additionally, Outback welcomed a new president, Pat Hafner, who has spent 29 years with the company.

Outback is an excellent company with a strong brand," Spanos stated last month. "It’s definitely a business that can be improved.

Outback intends to eliminate 20% of its menu items and decrease the number of limited-time promotions to streamline processes for restaurant employees. These deals have negatively impacted Outback’s profitability and caused workflow issues for staff members. As an alternative, Outback will focus on maintaining consistently lower price points instead.

"We offered products during brief promotion windows that added complications for our staff, and we didn't succeed in enhancing the appeal of our main dishes," Spanos stated.

The Outback plans to reduce the pace of opening new restaurants and instead focus its investment on refurbishing existing sites.

“He stated that we should concentrate on perfecting the guest experience before we deserve the opportunity to expand.”

Chili's recent resurgence provides optimism for Outback and a blueprint it could adopt.

Chili's managed an unexpected resurgence due to improved recipes for its french fries and chicken tenders, affordable fast-food pricing, and viral TikTok clips showing customers tearing into its melty mozzarella sticks.

The sales at Chili's restaurants that have been open for at least a year surged by an impressive 31% in the previous quarter. This marks Chili's third consecutive quarter featuring double-digit sales growth.

Long-time patrons of Old Outback, such as Richard Mathis, are hoping for a resurgence similar to what Chili’s has experienced.

I'm fond of the brand and hope it returns to how it used to be," he stated. "I would like to visit Outback.

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