The word "OUTBACK," written in red lipstick on the mirror, returned our stares. One of my co-founders, Bob Basham, along with our wives and myself were in a jazz club talking about a new restaurant idea and what to call it. Lacking pen and paper, Bob's wife reached into her purse. In an innovative maneuver that foreshadowed many to come in the business we were creating, she then turned to the mirror. One hour and one tube of lipstick later, the Outback Steakhouse brand was born.
It was 1987. Crocodile Dundee was a recent Hollywood splash, Australia's Bicentennial was getting lots of press in the United States, and the America's Cup was taking place Down Under. American's fascination with Australia had made it the number one desired destination for travelers here in Tampa, Florida. We guessed that was true in other parts of the U.S. as well.
Tampa had a void in the casual steakhouse market. The casual steakhouses that did exist here and around the country were nearly all western-theme restaurants whose brands were undifferentiated. We saw a "Down Under" concept as different, but consistent with people's expectations for a casual steakhouse. "Outback" had a casual, come-as-you-want feel, and "Outback Steakhouse" was both easily spoken and easily remembered.
Red meat consumption did begin to decline in the '80s. This decline, however, was taking place at home, affecting grocery stores more than restaurants. So, steakhouses had good growth prospects. Looking back now in 2001, we just didn't know how very good they were.
In March 1988, the words written in red lipstick only months earlier, lit up in red neon as the first Outback Steakhouse opened in Tampa. Thirteen years later, there are over 640 units around the United States, and over 70 Outbacks in nearly 30 other countries. Outback now has a strong lead in the casual steakhouse segment with annual sales of over two billion dollars worldwide.
The story of the Outback Steakhouse brand is one of positioning, menu innovation, advertising, and public relations. But it is a story that could never be told without the dedicated people who we have always put first. Their loyalty and commitment is what has propelled this organization over the past 14 years.
Perception Is Everything
From the beginning, we were very clear that while Australia was our theme, America was our biggest customer. So, when developing the Outback concept, our founders decided not to go to Australia! Americans were fascinated with their notions of "the land Down Under." We were concerned that too much authenticity might cause a disconnect between these perceptions and the real thing. Consequently, our menu creations are inspired by Australia, reminiscent of Australia, and bear Aussie names, but are not authentic recipes. We serve Australian beers and wines, and the restaurant decor and employee uniforms are inspired by the theme. On the other hand, many of our promotional efforts are uniquely American.
Our primary target is Baby Boomers and their families. They have always constituted the majority of our core customer base. But making our brand appealing to people of all ages is clearly important. Our Australian theme itself attracts a broad base of consumers, but we recognize that people's experiences in our restaurants are what drive our business.
Getting Outback up Front: Promoting the Brand
Outback Steakhouse spends 3.7 percent of sales on promotional efforts. Our broadest reach is through advertising, especially on television. Unit volumes averaged $2.6 million before we ran TV ads. Today we average $3.4 million.
But people live active lives and are too busy to pay close attention to TV ads. These spots generate a great deal of brand awareness for us; however, they are not as effective for creating a connection between Outback Steakhouse and the lifestyles of our customers. So, while our TV ads work, our message is incomplete without reinforcement with our other brand-building efforts.
The Outback Steakhouse brand and its Australian spirit, fun, and camaraderie, has a strong affinity with participation in sports. To find the best complimentary match for steakhouse-goers, we focus on specific sports. Nationally, we sponsor NASCAR, NFL, and college football. On a regional or local basis, sporting event sponsorships include golf and little league baseball. We manage all of these sponsorships through our Outback Sports program.
Outback spokespersons include football's John Madden and NASCAR racer Dale Jarrett. We also sponsor the Tampa Bay Outback Bowl, G'Day Camps for baseball little league players, and golf tournaments, including the Drive, Chip and Putt Jr. Golf Skills Competition in conjunction with The Golf Channel.
These sporting events present an opportunity to touch entire families in the communities that we serve. We associate the Outback Steakhouse brand with the spirit of sportsmanship and a sense of "coming together" for a good time. In the process, we become part of our customers' recreational lifestyles.
Our primary customers are adults, but seven percent of our patrons are kids. Family-oriented promotions include both sports related and community based events. They include little league opening days, PTA fundraisers, restaurant tours for school children, and other events as well. We certainly recognize the influence children have on the family's choice of a restaurant, and the value of brand awareness to the next generation of adults. However, these activities are also part of our commitment to support the communities we serve in a meaningful way.
Local Outback proprietors play a very active role in community activities, which are also important to our brand-building efforts. We see our proprietors as "mayors" in their local communities. At events in which they participate, proprietors, managers, and crew let people sample Bloomin' Onions and other Outback fare. People say, "Wow! This is great, and these folks are really nice." Sure, we get exposure and build brand awareness, but more importantly, we forge a relationship with our customers while helping the community in a positive way.
When a new restaurant opens, we work hard to find a charity or two with which to partner. We generate a lot of goodwill for Outback Steakhouse, and $5,000 to $15,000 for the charity. It is at these events that we meet other community groups with which we will partner on future events.
Advertising gets the word out to the masses. By reinforcing the sights and sounds of those ads through touching people's lives in the communities we serve, our people build the relationship with their customers and the Outback Steakhouse brand.
The success of the Outback brand helped us take the lead in the casual steakhouse segment. Today, we continue to innovate and grow.
The popularity of our restaurants results in wait times that can be inconvenient for families or others on a tight schedule. So, we added call-ahead seating, which allows customers to "get in line" before they leave home. The addition of our Take-Away curbside pick-up program has been so popular that we have spent about $50,000 per restaurant streamlining our kitchen operations and retrofitting the building and parking area to accommodate the new traffic pattern. Take-Away increases our per restaurant sales and attracts many new customers.
Our expansion plans are to add about 50 Outback Steakhouses annually in the United States. Internationally, we plan to add 20 to 30 restaurants annually, with a focus on the Far East - especially Japan and South Korea.
It has been a difficult time and economic climate to make money in 2001; however, the Outback Steakhouse brand is strong and has a lot of equity. To this day, we remain the only national, casual steakhouse chain that has successfully distinguished ourselves from the undifferentiated, western roadhouse concepts.
The uniqueness of our brand, supported by a strong organization and terrific people, is central to our success as a company. Outback is positioned to take advantage of what this country is all about, and we believe it is going to be positive for the rest of the decade.
Chris Sullivan Co-founder and CEO Outback Steakhouse, Inc.