Strategy Case Analysis: Outback Steakhouse

Case Analysis
We have previously reviewed some of the fundamental tenets highlighted in the literature for each of these strategy theories. We now move to applying these theories to Outback Steakhouse.
Question Number 1 - Has Outback Steakhouse employed aspects of their strategy as rational thought, to include strategic planning and decision-making? Should they?
There was little evidence that Outback had employed strategy as rational thought in their decision-making. Their founding principle of ownership at the individual store level was not based on a review of economic theory or various tradeoff analyses that might support a variety of opportunity cost assessments associated with this strategic approach. Moreover, their notion that Outback’s

Should they?
No, Outback has not employed aspects of their strategy as disruptive innovation. Outback has been committed to sustaining innovations such as efficient and convenient take-out services and call-ahead seating priority (Thompson, Strickland, & Gamble, 2005), which many other competitors have duplicated ("Applebees Website", 2006). Innovations not duplicated by others within this industry segment are dinner-only service (a key factor resulting in the lowest employee turnover in the industry), high employee pay, and managing-partner ownership (Thompson et al, 2005).
There may be difficult times ahead for the industry. Some analysts ("Analyst interview: casual dining restaurants: h davis - suntrust robinson humphrey", 2005) believed that food commoditization in the casual dining segment was probably just five years away. If this commoditization occurs, higher service quality and ambience at the same price will become critical. Other analysts ("Roundtable forum: restaurants", 2005) believed that overall there would be slower growth for the restaurant industry, but the casual dining segment would remain strong. One of the biggest emergent challenges was the cost of real estate. Moreover, these analysts commented specifically that the Outback brand was facing commoditization pressures, and would experience a significant challenge in overall sales. Clearly Outback may

The founders clearly exercised all three aspects of strategic intent (Hamel & Prahalad, 1994). They began with a strong notion of a future that included what they wanted in their new company – specifically, manager ownership (Thompson, Strickland, & Gamble, 2005). Second, they retained their sense of creation as they spent much of the 1990s developing what came to be called the Principles and Beliefs (P&B) policy formulating the Outback culture. Third, they displayed an unambiguous sense of mission with their abiding focus on employees as the best method for insuring the company’s sustained