outback steakhouse: going international

OUTBACK STEAKHOUSE: GOING INTERNATIONAL

Mehak Kohli Praful Anchaliya Rohit Jain Sheetal Vishnoi

Outback Steakhouse Inc. (OSI) Background

• Started in 1988• One of the largest casual dining operators• Over 1500 restaurants in 20 countries worldwide• Includes 7 brands

Challenge 1:

Target Countries?

Coefficient Canada Germany Japan Mexico SouthKorea

UK

Infrastructure 30% = .30 3 2 3 1 2 3

Demographics 40% = .40 3 3 2 2 2 3

Income 20% = .20 3 3 3 1 1 3

Trade Laws 10% = .10 3 2 1 3 1 2

Total 100% 3.0 2.6 2.4 1.6 1.7 2.9

Decision Grid

Income

Infrastructure

DemographicsTrade laws

Markets to Enter•Similar in purchasing power and infrastructure to U.K

P1: Canada

•Lend themselves to leveraging Outback concept “as is”

P1: United Kingdom

•Overcoming perceptions and competition in Germany

P2: Germany

•Mexico (recession, price sensitive economy, physically proximate)

P3: Mexico

•S. Korea (Standards and regulations in flux can pose challenges

P3: South Korea

•Recent launch in Kingdom of Saudi Arabia•Hints Success in UAE

•Diverse immigrants•Tourist Destination•Sea food imports

•Incurring high costs in Japan

SWOT Analysis

Strength •Excellent Human Resources •Differentiation strategy

Weakness•Narrow product line- Restricting main product to beef•Lack of innovation•Hours of operation•Serving only dinners

Opportunity•Diversify menu offerings•Vertically integrated backwards•Expand business internationally

Threat•Economic downturn•New entrants will be coming up with new innovations•Relaxed structure might not work well in nations that respect hierarchy•Health concerns over red meat consumption

Porter’s Five Force Model

Challenge 2:

How the Outback Concept be adapted to overseas market?

Overseas Strategy

Food Service

Industry

•Local responsiveness pressures are high •Multi-domestic strategy with menus configured to appeal to local tastes

Leverage Australian theme

and American brand name

•International Strategy (franchising / joint venture )•Need local knowledge on permits, marketing & wholly owned subsidiary

Challenge 3:

Whether to franchise, directly manage, or joint venture?

Outback should pursue Business Format Franchising

Involves a complete

business format

Capture more of the entire market

Low Cost compared to

pure company expansion

Portfolio Risk reduced by

diversifying into new consumer

markets

Way to learn to handle a business

internationally

Franchising

Challenge 4:

What pace of expansion to target?

Action Reason - Logic Timing

FRANCHISING Secure Market Leadership position in short term, buy back later

Immediate

Increase Profit

Increase Shareholder Wealth

TAKE OUT/ DRIVE THROUGH

Related Diversification Test

Increase Sales Volume/Profit


MENU ENGINEERING Diversify Menu Regionally Immediate

Strengthen Market Position


Action Reason - Logic Timing

SITE SELECTION Decrease Market Saturation Immediate

Strengthen Long-term Market Position



RELATED DIVERSIFICATION

Reduce Financial Risk Immediate



THANK YOU