The Real Reason Outback Steakhouse Is Struggling

Outback Steakhouse built their entire reputation on an "authentic" Australian vibe, but it opened about as far from the real Outback as you could imagine. The first location was in a strip mall in South Tampa, Florida, and when they opened their doors in 1988, they were pretty revolutionary. Rich Menendez, one of the first location's original employees, told the Tampa Bay Times that Outback was one of the area's first casual dining restaurants.

That was a big deal, and according to founder Trudy Cooper, a ton of work went into remodeling a run-down old bar into their dream restaurant. Soon, everyone from NFL players to Willie Nelson was popping in for a bite and a beer.

Fast forward a bit, and Outback's parent company Bloomin' Brands has found themselves in a bit of a dismal state. Restaurants are closing, says Business Insider, customers aren't walking in the door, and things look dire. Why? Let's find out.

A big part of Outback's problems are shared by other causal dining giants, like Applebee's. Even though there are a ton of options out there for a casual dining experience — think TGI Fridays, Chili's, and Outback — more and more people are gravitating away from this particular kind of eating experience. In a segment of the market that's already flooded, that's a huge deal.

Business Insider says dining trends are shifting toward fast casual — places like Panera, Five Guys and Chipotle — and as food trucks, meal delivery services, and order-from-your-phone takeout becomes more widely available, fewer people are choosing to opt for a sit-down meal that's going to eat up at least a couple hours out of an already busy day. Millennials in particular are driving the change, and it's putting a serious amount of hurt on Outback and other casual dining chains. It's a trend that likely to continue, too. The fast-casual market is only expected to keep growing, and that's not going to help Outback keep their doors open.

The Bloomin' Onion is Outback's signature dish, such a staple that anyone who even hears mention of the chain thinks of this plate of deep-fried goodness first. And that's a problem, especially at a time when people are increasingly more conscious of the food — and calories — they're eating.

FitDay says the regular Bloomin' Onion clocks in at a whopping 1,959 calories, and 1,450 of those are from fat. Use that dipping sauce, and you're looking at a dish with more than 170 grams of fat.

As if that's not bad enough, Outback hasn't made it healthier and they've introduced less healthy versions at various times of the year. For March Madness 2017, they offered up the 3 Point Bloomin' Onion, which was covered in fries, cheese, bacon, and meat cubes. All that added up to 3,080 calories, and that's not what most people are looking for in a casual dinner out.

Everyone knows it's called Outback Steakhouse for a reason, and author Josh Ozersky says (via Time) that's a huge problem not just for Outback, but for any restaurant that stakes their reputation on, well, steak.

Ozersky says that at one time, the steakhouse was one of the biggest, most quintessentially American places to go for a good meal. But they've been left behind as the culinary landscape has changed, and he makes some good points. Steak served in such bulk quantities is rarely high-end stuff, the sides are almost always the bland same-old, and they're typically made using additives, MSG, and other sorts of tenderizers. At a time when people are more likely than ever before to cook their own food, they're also more likely to take the time to get a really nice piece of meat from the grocery store or the butcher. Steakhouses, he says, "... are closer in spirit to strip clubs or spas, places to which people repair for rites of costly self-indulgence." Doesn't really sound like fun, does it?

When is the last time you went to an Outback, got the bill, and thought you could do better at home for a fraction of the price?

You absolutely could, and Jane Dornbrusch from The Boston Globe set out to prove it. She ordered a meal at Outback — a rib-eye steak dinner, soup, salad, and asparagus — then headed to the grocery store to see how much the same meal would cost her to make at home, and the end costs were definitely scaled in favor of eating at home. She spent $23.84 per person at Outback, and $11.84 per person for her home-cooked meal. Even the time investment wasn't significantly different, as it took her an hour's worth of driving to get to and from Outback, and an hour and a half to shop and cook her own meal.

When the Tampa Bay Times looked at the increasing price Outback customers have been paying in recent years, they also noted that for the price, diners expected a step up in quality and portion sizes — a step they weren't getting.

Outback opened in 1988, and it was a different time then. It was acceptable to label Bloomin' Onions, well-done steaks, and Foster's beer as the highlight of Australian cuisine. In the 21st century, though, it's an idea that hasn't aged well because there's absolutely nothing Australian about most of Outback's offerings.

LA Weekly calls the Bloomin' Onion "a triumph of Americana," and it's true. It's deep-fried, sweet, and covered in grease and salt. After all, they say, Outback's founders were inspired by Crocodile Dundee when it came to their theme. What's more authentic than that?

BuzzFeed asked actual Australians to try food from Outback, and it went about as well as you might expect, while James Beard award-winning writer Besha Rodell wanted to clear some things up. "Shrimp on the barbie" isn't a thing. Neither are those Bloomin' Onions. And most of us know that today, and that's a problem for Outback. We've grown a bit since the 1980s, and if we go out for Australian cuisine, it better be real Australian cuisine.

One reason Outback Steakhouse is struggling is true of nearly all casual dining chains: competition. But it's not just competition with other chains that's hurting their business. 

CEO Liz Smith noted in 2017 (via the Tampa Bay Times) that one of their major problems was that the industry was not only performing at super-low levels, but that it was also a highly competitive section of the market — and that competition comes from a number of places. 

In addition to other casual dining chains — like Texas Roadhouse — trying to lure in the same customers, there's also been a rise in independent restaurants trying to keep their doors open. These independent players also have an advantage over chains, in that they can offer guests more unique experiences and, oftentimes, that leads to better online reviews and more new diners stepping through the doors. Outback needs to complete with different restaurants and different levels, and that's a tough thing to do.

Barington Capital represents a group of major shareholders who are invested in Bloomin' Brands, and according to them (via TheStreet Real Money), one of their big problems is competition among their own brands.

Outback is just one of the chains owned by Bloomin' Brands, and investors say Outback, Fleming's, Carrabba's, and Bonefish Grill are all being hurt by a corporate structure that doesn't allow the company to focus on any one chain as much as is needed. Barington began pushing for Bloomin' Brands to separate the chains in order to better focus on what each individual restaurant needs in order to survive, but whether or not that will happen — and whether or not that will be enough — remains to be seen. It's definitely not an overnight process, either, so it's entirely possible a re-focus would be too little, too late. Seeking Alpha says Bloomin' Brands is already being crippled under the debt being amassed by all four chains, and that makes it next to impossible to grow any one particular segment of the business.

The 500-plus different groups of Aboriginal people living in Australia are descendants of the continent's original inhabitants. They've been there at least 45,000 years, although their own beliefs typically say they've been there since the beginning of the Earth. According to Survival International, all those years of living in harmony with nature came to an end with 18th century colonization, and that's caused some serious conflict.

And that's why it was an incredibly bad idea to try to market the Bloomin' Onion as an "Outback Ab-original." Social media didn't take lightly to the term, saying it wasn't just in bad taste to make fun of Australia's indigenous people, but it was approaching outright racism (via News.com.au).

Outback was quick to apologize, saying they were inspired by Australia's culture and history and never intended to cause any harm. They were slow to take it off their website, but stressed it never appeared on menus. Social media never forgets.

Gun control is a hot-button topic, but it was still a surprise that when a uniformed law enforcement officer was asked to leave an Outback because he was carrying his service weapon.

The incident happened in February 2018, and started when Tennessee Wildlife Resource Agency officer Andrew Ward was asked to put his service weapon in his vehicle while he ate. He refused, saying that since he was in uniform, he was required to have his gun on him as well. The manager said he was scaring another customer and he was told to leave, amidst claims Outback was a "gun-free zone."

Ward headed to social media, and his post was shared more than 200,000 times, says Fox News. Outback apologized publicly (and to Ward personally), saying it was their corporate policy to allow uniformed officers to carry and the manager had been wrong. Ward also publicly accepted the apology and said the incident was over, but that's not the sort of thing that sits well with the family, friends, and supporters of the country's law enforcement — and 200,000 is a lot of shares.

Outback has also had a ton of bad PR over a series of lawsuits and, more than that, they've paid out millions in order to settle them.

In 2009, Outback paid out $19 million after female employees went to the US Equal Employment Opportunity Commission with claims they had been denied advancement opportunities because of their gender. The suit — filed in 2006 — found female employees who wanted to advance in the company were stopped before getting appointed to profit-sharing or high level management positions. That's the very definition of bad PR.

Things only continued in 2013, when they paid $65,000 to settle another EEOC lawsuit brought by John Woods, a former server who had been fired after a change in his restaurant's management. Woods' termination allegedly came because he was disabled, one of the reasons you definitely cannot fire someone.

Then, in 2016, Outback found itself paying $3 million to settle a class action lawsuit (via Top Class Actions) brought over unpaid wages. The company had been asking employees to work a pre-shift period they called "Outback Time," for no pay — and no, that's not legal.

Social media can make or break a business, and when one Outback server took to Facebook to complain, it kicked off a chain reaction that didn't make Outback look good. It started when the server posted a complaint about a Florida church, who had a giant order costing $735. Since the server spent her entire shift packaging the order and carrying it out to the customer's car, she wasn't waiting tables or earning the tips she relied on to pay the bills. The church left no tip, and when she complained on Facebook, she was fired.

Outback handled it in the worst possible way, especially considering the church got in touch with them, apologized for their oversight, and wanted to get the server a tip. Inc. says they not only fired her, but they refunded the entire cost of the church's take-out order. Unsurprisingly, social media had a whole bunch of problems with the way the entire situation played out, and in the end, it doesn't matter who was right and who was wrong: it matters how it was handled, and Outback didn't look good.