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Outback Steakhouse became really popular

in the 1990s. The first one opened in

Tampa, Florida in 1988, and by the year

2000, there were over 500 of them spread

throughout the United States in addition

to 40 more Outback Steakhouses in other

countries around the world. The company

had so much promise that in the early

2000s, Warren Buffett himself became a

significant investor when he bought 1.9

million shares of it. It went on to

become one of the largest casual dining

chains in the country and the largest

steakhouse. But over the past few years,

things have really taken a negative

turn. See, as of 2012, Outback has been

part of a larger publicly traded company

called Blumen Brands, named after the

famous appetizer the Blumen Onion over

at Outback. Currently, that company

includes some other popular chains like

Kuraba's Italian Grill, Bonefish Grill,

and the much more expensive Fleming's

Prime Steakhouse and Wine Bar. But, as

you might expect, Outback Steakhouse is

at the center of Blumen Brands,

accounting for more than half of the

business. Well, over the past couple of

years, Blumen Brands has lost most of

its value on the stock market. Since

March of 2024, it has fallen from $2.5

billion to 600 million, which is a

concerning drop. Over that time, there

have been some major leadership changes,

including a new CEO named Michael Spanos

taking over in 2024. He would later say,

"We are not pleased with our

performance." And acknowledge that we

need to change the trajectory of the

business. I do not think many people

would argue with that statement

considering Bloomman Brands is currently

at their lowest sales level since they

have become Blumen Brands with the

exception of 2020. And I should say that

Outback specifically has been slowly

closing locations throughout this time.

Just recently, it made headlines when

they abruptly closed eight restaurants

in six states, some of which were among

the chain's first 50 locations. My point

here is that Outback has been

struggling. They have fallen from their

previous highs, both statistically and

in the minds of many people. So, in this

video, I want to talk about the history

of the brand while identifying what I

believe to be six of the biggest reasons

behind its decline. Starting off with

its Australian theme. I know this reason

might be a little out there, but anyone

who has been to an Outback Steakhouse or

has even seen one of those commercials

should be aware that this is an

Australian themed restaurant. To try to

be extremely clear, the food there is

nothing like you would see in Australia.

The founders of the company initially

avoided even visiting Australia because

they were afraid that their experience

would influence the menu. The original

idea for it came from the movie

Crocodile Dundee, where a man from the

Australian outback travels to New York

City. It was the second highest grossing

movie of 1986, and the sequel was set to

be released in a few months, so they

figured that could be a promising theme

for a restaurant. Their intention was to

have American food and Australian fun.

Aside from the decorations, a lot of

that theme comes from the naming of the

menu items. Considering it has always

been envisioned as a themed restaurant,

I would almost put it in the same

category as other themed restaurants

that became popular in the 1990s, like

Rainforest Cafe or Planet Hollywood that

have also experienced major declines.

And I would go so far as to argue that

the theme itself has become less

attractive. In the 1990s and early

2000s, Australia was making an impact on

American pop culture. I know that one of

my favorite shows back then was Rocco's

Modern Life, right? It's about a walabe

from Australia, not to mention the

crocodile hunter and then the wiggles. I

can continue talking about more

examples, but I think this helps explain

how an Australian themed restaurant

would be more attractive to an American

customer back then compared to today.

Next up on my list is competition.

coming from so many different

directions. Fast casual concepts like

Chipotle started gaining traction in the

1990s and have since become a threat to

almost every casual dining restaurants.

I mean, some of the biggest chains in

the category like Red Lobster and TJI

Fridays have filed for bankruptcy over

the past couple of years. And I

recommend checking out the videos I made

about them if you want to hear more

about the issues facing casual dining.

In fact, I would argue that the largest

and most successful casual dining

restaurant over the past few years has

been Texas Roadhouse, a direct

competitor to Outback, considering they

specialize in selling steaks and even

offer an appetizer that is extremely

similar to the Bloomman onion that they

call the Cactus Blossom. As of 2024,

they are estimated to be twice as big in

terms of sales with Outback falling into

the number three position behind

Longhorn Steakhouse as well. both of

which feature a Texas or western theme,

potentially providing further evidence

that an Australian theme is not quite as

attractive as it used to be. So, even

the customers that have been sticking

with casual dining steakous have been

gravitating toward the other options.

Leading me into the next reason Outback

Steakhouse might be providing a [music]

poor value. Compared to those other two

chains, the average customer is paying

more money to eat at Outback. The

average check per guest is up to $29 per

person compared to $23 at Texas

Roadhouse. And I'll remind you that that

$23 also includes free peanuts along

with those delicious rolls with honey

cinnamon butter. Most of the Outback

restaurants have not been remodeled or

updated in a long time, giving them an

older, potentially more depressing

feeling compared to those others as

well. Actually, as part of their recent

turnaround efforts, Bloomman Brands has

allocated $40 million toward renovating

the restaurants. Another part of these

turnaround efforts is cutting out

limited time promotions in favor of

everyday values. They used to have all

these promotions that would last like 10

to 12 weeks. They would be effective in

attracting some customers, but then they

would be unlikely to return once that

promotion was over. In the words of

their CEO, we were featuring items in

short promotional periods that created

complexity for our operators and we

failed to drive value in our core menu

items. I think this is reflected in the

fact that comparable restaurant traffic

has been declining for most of the past

decade. I don't really know what else to

say here. Food Republic ranked it among

the worst steakhouse chains in the

country. There have been various polls

that have rated it poorly. Obviously,

this is a subjective reason. So, please

tell me in the comments whether or not

you feel like eating at Outback is worth

the price. But a lot of people seem to

share the opinion that it is simply too

expensive. My next reason behind the

decline is going to be complex

operations. Meaning in many ways,

Outback has become large and

inefficient. See, the four founders of

the restaurant all had backgrounds in

the industry and felt that it was

important to establish efficiency and a

decentralized structure, meaning the

restaurant managers were given a lot of

decision-making power. Well, in 2005,

Chris Sullivan, one of those

co-founders, stepped down from his CEO

position that he had held for the past

14 years and then resigned from the

board of directors in 2017. What I'm

trying to say here is that a lot of

those founders have had declining

influence over the company and at this

point I think a lot of their founding

principles have been abandoned.

Famously, Outback was closed during

lunch hours because they were seen as

being less profitable and the additional

hours were taxing on the employees.

Plus, as an added bonus, it allowed them

to open lower rent locations away from

workplaces because they were not

concerned with attracting the lunch

crowd. Well, as of 2015, they have been

serving lunch nationwide, likely as a

defensive move to try to remain

competitive. But then I imagine many of

those outback locations were not in

ideal lunch areas. So, it complicated

their operations with a questionable

benefit. Early on, they had a rule where

there was one server for every three

tables. Well, that crept up to one

server every six tables before it was

recently brought back down. They have

also added zios to the tables recently

so the customers could pay without the

help of the server. They're also in the

process of cutting 20% of their menu to

simplify things. Overall, it seems like

they have recognized that things have

gotten a little too complicated, so they

are making an effort to simplify things.

Another potential reason is their

involvement with other restaurants. In

1993, Outback acquired 50% control of a

two restaurant chain in Houston called

Kuraba's Italian Grill, named after its

co-founder Johnny Kuraba. 2 years later,

Outback bought the rights to open

Kurabas all around the country. And from

that point, the company's attention has

been split. The reasoning was that

Outback had already expanded into so

many different areas of the country that

they needed a growth plan for when the

market became saturated. The idea there

was that they could continue expanding

Kurabas and then other restaurants like

Bonefish Grill that they acquired in

2001 when it only had three locations.

Over the years, they've been repeatedly

criticized for investing in these other

restaurants instead of focusing on

Outback. I guess you could say it was

similar to their menu where they added a

bunch of new stuff into the mix that

complicated things and forced their

attention into too many different

directions. For my final reason behind

the decline of Outback Steakhouse, I'm

going to say controversies. To be clear

here, there's not been anything too

overshadowing, but a bunch of isolated

issues that have collectively harmed

their reputation. Just a few examples

would be in 2003, Outback was accused of

overserving a woman who allegedly had

way too many drinks before she drove

away, hit a man that was riding a

bicycle, and continued driving for 9

minutes before reporting the accident.

The man was severely injured, and his

family filed a lawsuit against Outback

that resulted in an undisclosed

settlement 2 years later. In 2009, the

US Equal Employment Opportunity

Commission filed a lawsuit against

Outback, claiming female workers were

denied favorable jobs, and that

prevented them from advancing to profit

sharing management positions. It

ultimately ended in a $19 million

settlement distributed among female

employees and the company agreeing to

hire a new human resources executive. In

2016, there was a class action lawsuit

alleging that employees were asked to

work extra hours before their shift

without getting paid that the company

called Outback Time. That one ended in a

$3 million settlement and just other

random issues that have given them

negative attention on social media. Like

in 2011, they accidentally served

alcohol to a 4-year-old. And then in

2024, it happened again with a

12year-old. In 2017, there was this

strange conspiracy theory going around

that Outback was involved in some kind

of satanic cult operation. I don't know.

In 2018, people got upset when a

uniformed officer was asked to leave one

of their restaurants for carrying his

weapon. These are just brief summaries

of the incidents. I recommend you look

further into them before forming any

sort of opinion, but I'm just trying to

convey here that there has been a lot of

negative attention that along with other

factors has helped form a negative

perception of Outback Steakhouse. Let me

know in the comments what do you think

about Outback Steakhouse. Is it a fun

dining experience with deliciously

unique menu items, or is it more of an

outdated gimmick that you would rather

just avoid? And I'm also curious, what

do you see for the future of the

restaurant? They have been making some

respectable efforts to turn things

around. So, do you think they will be

effective? And finally, do you agree

with my reasons behind their decline, or

do you think something should be added

or subtracted from the list? And any

other thoughts you have about Outback

Steakhouse, leave them in the comments.

I'd like to hear what you have to say.

Thank you for watching.