Wednesday, February 22, 2012

Outback Steak House Management Case Study

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In the case study we defined five main problems Outback Steak House is facing at the present time. From these 5 problems we will choose one to look at more in depth and give an analysis and a solution to solving that problem. One of the main problems that we found in the case was the fact there is very stiff competition not only in the casual dining business, but specifically the steakhouse business. Competition comes from many places; restaurants themselves are the obvious choice, places like Lone Star Steakhouse and Saloon, Sizzlers, and other restaurants. Also many traditional restaurants have upgraded their steak choices in order to compete with Outback. Along the same lines as direct competition is the fact that the restaurant industry is close to saturation. Analysts have said, “Casual dining operators such as Outback were close to saturation and questioned whether the firm could withstand the intense competitive pressures characteristic of the industry” (W-80). One way to solve this problem is to differentiate themselves from other restaurants even more than they already do. Also they need to show the consumer that they need to eat at Outback, this can be accomplished through marketing and promotion.

Another problem that we found was that Outback Steakhouse has been traditionally seen as a dinner destination and has played this role by only being open seven hours a day from 40pm to 110pm. This was stated as a strength in the case, but we feel that Outback is missing out on the lunch crowd and could dramatically increase business by adjusting their traditional hours of operation, they are busy during the dinner hours, why not try lunch?

Recently, personal health has become a large issue in American culture and this shift in ideals has created new problems for restaurants. The trend to cut back on the intake of red meat has created a problem for restaurants like Outback, which traditionally serve high quality red meat. If the current trend continues and Americans continue to watch how much red meat they eat, Outback will have to find a way to combat these ideals in order to stay successful. Possible alternatives are serving more chicken and fish and possibly adding to their menu for the more health-conscious consumer. Outback will never be known as a health food restaurant, but by giving the health conscious consumer more options they have a chance to tap into that market.

After reading the case and personally eating at an Outback, we have found that they are currently unable to meet customer demand. People have been known to wait up to three hours to eat at their restaurants. We feel that they are missing out on the people who don’t have the time to wait to eat their steaks. By increasing the size of their restaurants we feel that they will better be able to serve their customer base. Along with expansion, they should also look into expanding the size of their waiting area, so that the customers that do choose to wait are entertained and have an overall great experience at the restaurant. The customer should leave not only with a full stomach but also a smile from an all-around good dining experience.

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The final problem that we feel Outback is facing is the fact that they are lacking productive management structure. Currently headquarters in Tampa employ about 80 people, this can currently be seen as a great strength for Outback, it shows that they are very efficient, and get a lot done with few resources. In the future we feel that Outback will be faced with problems due to their increased size and complexity (adding another restaurant chain). The way that we see to alleviate this problem is for them to look at their current structure and possibly consider a restructuring of their management process. This will be a great task, but in order to avoid problems in the future we feel it is necessary.

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