Outback Steakhouse - Competitive Strategy

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Executive Summary

Outback Steakhouse has enjoyed a dominant position in the casual dining market since inception. They have exponentially increased the number of locations each year; however their growth has apparently reached a plateau and they could potentially loose market share. There is significant competitive pressure from rivals using marketing and advertising in attempts to lure away customers. Consumer loyalty is highly valuable and rivals will use whatever tactics necessary to gain that loyalty and establish a strong customer base. Competitive rivalry is relatively strong mainly due to the threat of new entrants and competitive pressure from rivals. A restaurants success depends largely on a few key attributes including brand identity, location, price and quality of food and service. Strong supply chain management and motivated, friendly staff are also valuable competitive resources. Outback has managed to acquire all of these resources, particularly their superior quality of service and strong employee culture. In order to maintain market leadership and grow, the following alternatives for implementation are considered: 1.Redesign the menu to include healthier alternatives

2.Open for lunch and develop a lunch menu
3.Launch an innovative new marketing campaign
Based my analysis, I recommend that Outback choose alternative 2 – to open for lunch and develop a lunch menu. Their primary interest is gaining market share, therefore it would be sensible to be open for longer hours and target a wider market. They will also be able to more effectively compete with other casual dining restaurants already open for lunch, and gain a competitive advantage over those who are not. This strategy will satisfy the primary decision criteria facing the restaurant industry, which includes gaining additional market share, profitability, and a strong employee culture.

NOTE: This report has been prepared to develop alternatives for Outback Steakhouse Restaurants only, and does not include analysis of other restaurants under the Outback umbrella.

1.0 Identification

1.1Company strategy and objectives
Outback Steakhouse has been employing a broad market differentiation strategy in which their restaurants provide high quality, moderately priced meals in a comfortable, casual environment with an Australian theme. They serve generous portions with upbeat friendly service, with a “no rules” philosophy in which customers could customize their order. The founders’ vision was to create a dining “experience” focused on good food cooked from scratch using bold spices and unique flavours. Before long, Outback decided to expand their restaurant portfolio of casual and upscale dining to include Italian, Chinese, steakhouse and seafood restaurants. As they grew, it was apparent that the upbeat, fun and caring culture they had strived for was in danger of being eroded due to their size. The four founders set out to solidify the company core values and beliefs and produced a document they called the Principles and Beliefs. This document outlined the company’s identity, values, goals and keys to success. Outback believed that their goals could be realized if the if the Principles and Beliefs were followed. The five goals were: For Outbackers (employees): A great place to work, have fun and make money; For Customers: A favourite place to eat, drink, relax and be with friends; For Purveyors: A great customer and source of comfort and pride; For Neighbors: A valued corporate citizen and neighbor; and For Partners: A superior financial and emotional investment opportunity.

1.2Problem statement
Outback had enjoyed rapid growth in the beginning, expanding to over 1,100 locations by 2004. However, due to rising costs and leadership changes, retention of market share was becoming a concern. As well, numerous locations were experiencing stagnant sales. It seemed as though they had reached their...
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