TABLE OF CONTENTS
Executive Summary ......................................................................................................................2
Introduction
History..................................................................................................................................3
Marketing Strategy........................................................................................................... 4-5
Problem Identification .........................................................................................................6
Analysis of the Industry
The Competition .............................................................................................................. 7-8
The Environment .................................................................................................................9
Canada...............................................................................................................................9
Germany............................................................................................................................9
Japan ........................................................................................................................... 9-10
Mexico ............................................................................................................................10
Korea ...............................................................................................................................10
The United Kingdom ......................................................................................................10
SWOT Analysis of the Firm
Strengths ............................................................................................................................11
Weaknesses ........................................................................................................................11
Opportunities................................................................................................................ 11-12
Threats................................................................................................................................12
Recommendations ................................................................................................................. 13-14
Appendix
Balance Sheet .....................................................................................................................15
Cash Flows .........................................................................................................................16
Income Statement......................................................................................................... 17-18
Ratios .................................................................................................................................19
References ..........................................................................................................................20
Current Locations Map and Table .....................................................................................21
EXECUTIVE SUMMARY
Outback Steakhouse is faced with the issue of expanding into international markets
because of U.S. market saturation. To facilitate the decision-making process for expanding
overseas, certain guidelines for going global have been developed.
The first guideline for Outback is to adapt accordingly to their international target
markets. Each market will be different and must be treated as such. Outback must keep its own
identity, while adapting to the cultural trends of each country. To do this, Outback should
incorporate local management into its restaurants. The local management will be able to advise
Outback on traditions, taste preferences, and even local etiquette. Outback may even find it
necessary to change some dishes offered on their menu.
The second guideline mentions Outback’s locations in foreign markets. Instead of the
usual “B-locations with A-demographics,” Outback might have to locate in bigger, more
trafficked areas. In international markets, these are the areas that typically attract the most
tourism – an important aspect to Outback’s movement overseas. They are also areas that include
a higher concentration of people who are more progressive and who have higher incomes.
The third guideline for going global focuses on Outback’s suppliers. With their current
suppliers, Outback is likely to incur high costs in transportation of supplies overseas. This will,
in turn, cause Outback’s menu prices to rise. Instead of this, Outback should use its local
management teams to identify new suppliers. The local management will, once again, be able to
guide Outback in determining which suppliers are likely to carry on their quality standards.
Supplier can then be found in either the host country or surrounding countries and new long-term
relationships can be formed.
2
INTRODUCTION
History
In 1988, four business partners, each who had previous restaurant experience, opened
Outback Steakhouse in Tampa, FL. They wanted to create an eating establishment that provided
its customers outstanding food at an excellent price in a casual Australian atmosphere. At the
time, the four entrepreneurs saw a reduction of in-home red meat consumption due to price and
health factors, but consumers were still going out to restaurants for great steaks. Therefore, they
saw an opportunity to open a restaurant that provided quality steaks at an affordable price. The
Australian theme, fun atmosphere, and quality food has made Outback one of the greatest
restaurant successes in America, where the failure rate of other restaurants is 75%.
The success of Outback is measured by its sales and profits, but they are the results of
putting their People- customers, purveyors, neighbors, and partners- first. The heart of Outback
is their solid foundation on core beliefs, purpose, principals, and goals. In creating Outback, the
founders used its principals and beliefs as a guide to everything that the company does. Outback
believes that if they take care of their People, then the institution of Outback will take care of
itself. Five principals support their guide to success- hospitality, sharing, quality, fun, and
courage. These principals require that Outback deliver the following commitments to its
Outbackers: clear direction, preparation, involvement, affecting one’s own destiny, a fair
hearing, sharing in the success of Outback, commitment, having a good time, and compassion.
Outback’s commitments to their principals and beliefs ensure that the institution will take care of
itself.
Now that Outback has almost reached market saturation in the United States, they plan to
develop new dining themes and expand into the international market. Some of the new dining
themes that the company has created are Carrabba’s Italian Grills, Flemming’s Prime Steakhouse
and Wine Grill, Roy’s, Zazarac, Lee Roy Selmon’s, and Bonefish Grills. Now their
concentration is on growing their international presence. In doing this, it is very important for
the company not to jeopardize their principals and beliefs. Therefore, how should Outback
expand into the international markets while holding true their principals and beliefs?
3
Marketing Strategy
Outback’s commitments to concentrated service and serious food are the main driving
forces of their marketing strategy. Their strategy centers on the basic concept of providing a
quality product, excellent service, and generous portions at moderate prices in an atmosphere
that suggests the Australian Outback. Outback has positioned itself between expensive and
bargain steakhouses, thus increasing their target market. They seek to capture a target market
whose consumers prefer quality food in a fun atmosphere, but do not wish to pay the high prices
like those at expensive steakhouses. Since Outback does not heavily rely on advertising, they
market the company through PR events, such as sponsorships.
Since quality is one of the most important aspect of Outback, they buy only the best
ingredients and the best supplies. Forty percent of Outback’s total costs are attributed to their
high quality food. Although this is higher than the industry’s average, they feel that the best
competitive advantage to have in the restaurant industry is having the highest quality food. Their
commitment to serious food is also the number one reason why Outback opens up at 5:00 PM.
This allows time for a prep crew to come in during the morning and prepare everything fresh for
the evening. Everything from the salad dressings to the croutons are made fresh daily. The only
thing in the restaurant that is precooked are the ribs, which are prepared during the day. Right
before the restaurant opens, the manager performs a line check to ensure that all the food tastes
perfect. The manager also checks every plate of food before it goes out to the customer to ensure
that everything looks perfect.
The target market is also very important to Outback. Their primary market consists of
people who are between the ages of 20 to 40 who enjoy a fun atmosphere, quality food, full
flavor, concentrated service, and is often considered middle-class. Since they are very concerned
about their customers, they try to cater to their needs in order to attract them to the restaurant.
One way they do this is by their “No Rules, Just Right” motto. This means that any changes or
additions that a customer wants to any entrée are no problem. This also includes preparing
dishes that are not even on the menu.
Outback’s location is also important to their success. They try to avoid the high-traffic
lunch areas, and instead locate their restaurants in areas that are more suited for the dinner and
night crowds. The company describes its locations as being “B-locations with A-demographics”.
They also like to be one of the first restaurants in a growing and upcoming city so that in the
future they are considered to be well established and a community favorite.
In the past, Outback had not relied much on advertising, but instead they relied mostly on
word of mouth. As the company grew and developed, national ad campaigns were initiated that
focused on television commercials and billboards. Outback avoids coupons and print ads, and
these are usually only offered as part of a package being offered by a charity or sports event. In
fact, Outback is very focused on community involvement and charity events. Each restaurant is
involved in community participation and service. The corporate office is also involved in nonprofit activities such as the Outback Bowl. However, they are most involved with charity events.
Every time a new restaurant is opened in a community, they choose a charity in which all of the
first night’s profits are donated towards. Outback is constantly looking for community charities
and events to provide food for and to help raise money. People want to be associated with and
feel like a part of a restaurant and this is one way Outback advertises itself. The main reason
they do this is to give back to the community and show the community that they are concerned
about its well-being.
4
In order to achieve a fun and laid-back atmosphere, the founders chose an Australian
theme to set Outback apart from others. The Australian theme is part of everything - from the
décor on the walls and the color of the ceiling to the uniforms that the Outbackers wear. Instead
of calling their workers employees, they call them “Outbackers”, which creates a sense of pride
in the workforce. The Outbackers are valued and given more benefits than most of the
competitors in the industry, which enables the restaurants to have the best employees and the
best service. The Outbackers are important to the restaurant because they connect the restaurant
to the customers. In order to give the best possible service, the servers are limited to a threetable section. This allows for concentrated service, which also helps to distinct Outback from the
rest of its competitors.
5
Problem Identification
Given the fact that Outback Steakhouse Inc. is nearing market saturation, but wish to
continue their sales and revenue growth, the decision must be made as to if and how they should
expand internationally. Management believes that Outback can accommodate 550-600
steakhouses, but by growing at a rate of about 70 stores annually, U.S. market will hit saturation
within 4-5 years. Therefore, Outback must consider expanding worldwide like other U.S.
restaurants, and capitalizing on foreign markets. It is evident that given the company’s past
financial position, they must seek other markets to continue their growth. Graph 1 shows how
the company’s revenue continues to grow as they add more restaurants to the company. The
company has already explored opening new restaurant concepts within the U.S, but an
international expansion gives an even greater opportunity for the company to grow. This report
seeks to identify guidelines for Outback to use when considering each foreign market.
Graph 1
3,000
2,500
Sales are in
Millions.
2,000
Sales
# of Restaurants
1,500
1,000
500
0
1994 1995 1996 1997 1998 1999 2000 2001
Table 1
Years
Sales
Restaurants
1994
$577,000
224
1995
$827,000
320
1996
$1,077,000
421
1997
$1,368,000
519
1998
$1,668,000
604
1999
$1,992,000
686
2000
$2,329,000
756
2001
$2,621,000
870
6
ANALYSIS OF THE INDUSTRY
The Competition
In a broad sense, Outback is classified as a casual dining restaurant and is compared to
others such as Red Lobster, Olive Garden, and Macaroni Grill, just to name a few. However,
Outback’s true competitors are those who have a mid-price range and who serve the same types
of foods. These competitors include Applebee’s, Chili’s, TGI Friday’s, Bennigan’s, Hooters,
Ruby Tuesday, and other local steakhouses. If you consider the fact that Outback makes every
food item from scratch, the restaurant has no competitors. It is also the only restaurant that
focuses on such extreme service. In food quality and service, they have no competitors. Table 2
reports the top 10 casual dining restaurants in 2002:
Table 2
Ranking
1
2
3
4
5
6
7
8
9
10
Restaurant
Applebee’s
Red Lobster
Outback
Chili’s
Olive Garden
TGI Friday’s
Ruby Tuesdays
Bennigans
Macaroni Grill
Hooters
Applebee’s was founded in Atlanta, Georgia by Bill and T.J. Palmer. The Palmers
envisioned a restaurant that would provide full service, consistently good food, reasonable prices
and quality service in a neighborhood setting. In 1998, Applebee’s became the first casual dining
concept with 1,000 restaurants. Today, with more than 1,500 restaurants, Applebee’s is the
world’s largest casual dining concept. For each of the past 10 years (1993-2002), Applebee’s has
opened more than 100 new restaurants. The company estimates the development potential of the
Applebee’s concept in the United States to be at least 2,300 restaurants.
In 1968, the original Red Lobster was introduced to America in Lakeland, Florida.
Company founder Bill Darden had a vision that great service was fundamental to success. By the
late 1970s and early 1980s, Red Lobster had 350 restaurants. In 1995, Red Lobster (along with
the Olive Garden and, later, Bahama Breeze) was integrated into Darden Restaurants. The menu
changed and became broader and more upscale. To maintain their leadership position in a
changing environment, they paired their menu with a new, attractive atmosphere. Their
architecture took on the new life that people see today.
Brinker International is one of the largest restaurant corporations. They operate Chili’s,
Macaroni Grill, On The Border, Maggiano’s, and Cozymel’s. Founded in 1975, the company has
grown to over 1,200 restaurants worldwide with 90,000 employees and system-wide sales
exceeding $3 billion annually. The culture is driven by integrity, teamwork, passion, and a
7
commitment to make sure each guest has an enjoyable dining experience when they visit one of
the restaurants. Brinker International's mission is to be the very best in the business.
T.G.I. Friday’s is credited as being the first American casual dining chain and has
been a favorite pastime for millions of guests since 1965. It has become a leader in the
industry by creating a unique atmosphere with great food and beverage presentation as
well. T.G.I. Friday’s has popularized many items, including potato skins and frozen
drinks. Friday’s offers a wide selection of appetizers, entrees salads, pasta dishes and
innovative entrees in an attempt to stay on top of trends. Realizing that an important part
of a restaurant appeal is its atmosphere, T.G.I. Friday’s offers a comfortable, relaxing
environment.
Exhibit 1 displays the number of stores that some of the various restaurants have.
Restaurant
Outback
Applebee’s
Darden Restaurants1
Brinker International2
TGI Friday’s
Hooters
Domestic Stores
689
819
1,211
1,268
682
300
International Stores
50
9
US & Canada only
90
37
12
Exhibit 2 displays the number of countries in which the restaurants have stores in for 2000.
Restaurant
TGI Friday’s
Chili’s
Outback
Applebee’s
Red Lobster
Number of Countries
53
20
13
10
0
Exhibit 3 displays the sales from various casual dining restaurants in 2001.
Restaurant
Darden Restaurants1
Brinker International2
Outback Steakhouse Incorporated3
Applebee’s
1
Sales in 2001
$4,368,701
$3,040,377
$2,621,000
$744,344
Darden Restaurants includes all restaurants owned by the company including Red Lobster, Olive Garden, and
2
Bahama Breeze. Brinker International includes Chili’s, Macaroni Grill, On The Border, Maggiano’s, and
3
Cozymel’s. Outback Steakhouse Incorporated includes all restaurants owned by OSI, including Carrabba’s Italian
Grill, Fleming’s Prime Steakhouse and Wine Bar, Roy’s, Zazarac, Lee Roy Selmon’s, and Bonefish Grills.
8
The Environment*
Even though Outback’s consideration is for a venture abroad, it is important that the
environment of the U.S. is looked at as well. A strong domestic foundation is necessary for the
success of an international expansion. For the past two years, the US has been experiencing a
recession, resulting in more unemployment. Because of this unemployment, rising gas prices,
and the threat of war, the U.S. population is more reluctant to spend money. As people start to
cut back on their spending, dining out could be one of the first things taken out of their budgets especially dining out at a restaurant with prices like those of Outback. The threat of war has a
great impact on the economy of the United States and creates a large amount of economic
uncertainty. It is hard to know when, if at all, this economic downturn will change its direction.
Many countries abroad may develop a negative perception of the U.S. if it decides to go to war
with Iraq. As a result, a large part of the international market might not be supportive of a
restaurant based out of the United States.
Canada
Canada serves as a somewhat hopeful prospective location for Outback. In the past, U.S.
goods and services have been well received in their stable market. It is important to note,
however, that there are significant cultural and language differences between the US and Canada,
as well as between certain regions of Canada itself. Conflict often arises between the Englishspeaking and French-speaking areas and has even gone as far as possibly separating Canada into
two separate countries. This threat has made foreign investors hesitant to move into the country
in the past.
Germany
A unique feature of Germany is the unusually even distribution of industry and
population. This can serve as a challenge to a firm because there is not much opportunity for
regional concentration around a heavily populated area. On a positive note, Germans do
appreciate high quality food products, such as those of Outback, and will reject less expensive
items if they do not possess a sufficient amount of quality. Consequently, Germans also have the
philosophy that German products are “simply the best”, which might make them reluctant to
even try an American-based restaurant.
Japan
It has been well known that Japan’s market is not as open as the United States’. While
the US government has made efforts to help U.S. business people “open doors”, most of the
responsibility has remained in the hands of the individual firm. Entering the Japanese market is
expensive and generally requires four things: financial and management capabilities and a
Japanese-speaking staff within the country, modification of products to suit Japanese consumers,
a long term approach to maximizing market share and achieving reasonable profit levels, and
careful monitoring of Japanese demand, distribution, competitors, and government. Even though
all of these challenges to market entry exist, Japan has ranked as the second largest importer of
U.S. goods and services in the past. Japanese consumers have previously been characterized as
conservative and brand conscious but have recently become more individualistic. This is largely
due to the 18 to 21 year olds who have a large amount of disposable income. Japanese
consumers are willing to pay high prices for quality goods, but their standards of quality are very
high. U.S. firms whose products and services possess this level of quality, along with a
competitive edge, must still be willing to take on the high cost of initial market entry. For those
9
that are willing to pay the price, Japan can offer a respectable market share and promising profit
levels.
Mexico
Mexico has experienced some economic struggle due to a large devaluation of the peso.
Despite the government’s efforts to stabilize the peso, the country has been experiencing a
serious recession, seeing inflation as high as 50%. With U.S. financial assistance, Mexico has
been restoring stability to its financial markets. Although the PRI party was in power for 60
years, Mexico is slowly evolving into a multi-party democracy. Even though Mexico has not
had a great amount of economic success over the years, it has remained the third largest trading
partner of the United States.
Korea
Although the Korean War left South Korea in ruins, the country has experienced
tremendous growth and has been identified by the U.S. Department of Commerce as a “Big
Emerging Market”, led by export development and entrepreneurship. Over the years, North
Korea has often been seen in the media as a politically disrupt country through stories of student
demonstrations, nuclear problems, and trade disputes. However, the political environment of
South Korea has been stable enough over the last few years to support a great amount of
economic expansion. South Korea is a “modern, cosmopolitan, fast-paced, and dynamic
country” that has a vast amount of opportunities for American businesses. Even though South
Korea has ranked as high as the United States’ sixth largest export market, US firms still face
obstacles when entering its market, such as customs clearance procedures and regulations for
labeling, sanitary standards, and quarantine.
United Kingdom
Common language, legal heritage, and business practices have built a strong business
relationship between the United Kingdom and the United States. The UK has been the U.S.’s
fourth largest trading partner and the largest market for U.S. exports in Europe. The UK has
recently become more efficient by making changes to their taxation, regulation, and privatization
policies. The country also possesses a high degree of labor flexibility. Thanks to a shared
cultural heritage and a warm relationship with the U.S., the United Kingdom sees U.S. goods and
services as attractive purchases. British policy emphasizes free enterprise and open competition,
making the UK the target of 40% of all U.S. investments in the European Union. Due to their
successful relationship, the United Kingdom now serves the United States as a gateway to the
rest of Europe. The close relationship between the U.S. and UK is expected to continue with the
help of excellent physical and communications infrastructure and a friendly business and
political environment.
*The environment mentioned in our report is current as of 2003. The analysis of each individual
country is current as of the publication of our reference (see Appendix: References: Country
Summaries).
10
SWOT ANALYSIS OF THE FIRM
Internal Strengths
Outback Steakhouse possesses many internal strengths. In 1994 and early 1995, it was
regarded as one of the biggest success stories in corporate America and was the fastest growing
U.S. steakhouse chain. Outback’s restaurants generate $2.10 for every $1 invested in the facility
- an amount is well over the $1.20 to $1 that is considered strong for the industry. One of their
many strengths lies in their connection to their suppliers. The company views their suppliers as
“partners” in their success and is committed to working with their suppliers to develop and
maintain long-term relationships. As a result, Outback has never changed suppliers. Outback is
committed to purchasing only the highest quality ingredients and supplies for its restaurants.
Outback also has a phenomenal relationship with its employees. The company uses
aptitude tests, psychological profiles, and interviews as part of its employee selection process
and requires every applicant to interview with two managers. Its wait staff enjoys higher income
from tips than in restaurants that serve lunch and dinner, thanks to its dinner-only concept. This
concept has also led to effective utilization of systems, staff, and management. Additionally,
their wait staff also reports feeling less worn out than other restaurant employees because each
waiter or waitress handles no more than three tables at a time. This allows their employees to
offer customers more individualized attention and provides for better tip opportunities.
Restaurant management staff works only 50-55 hours per week, compared to the average of 70
hours found in the industry. Store managers also earn an annual salary and bonus of over
$100,000, compared to an industry average of about $60,000-$70,000. What’s more, Outback’s
management turnover is only 5.4 percent as opposed to the industry average of 30-40 percent.
Internal Weaknesses
Outback’s biggest internal weakness is its food costs, which make up about 40% of its
total costs. Because of the company’s dedication to providing the highest quality ingredients, it
does maintain one of the highest food costs of the industry. Along with this, Outback limits
itself to only a few suppliers in order to maintain long-term relationships. These relationships
may prove to be too costly once Outback expands into the international market. The costs of
using their current suppliers internationally could then raise the food prices of their international
locations and limit the size of the market that can afford their food.
External Opportunities
Several opportunities are available to Outback as they consider going abroad. So far,
several other U.S. restaurants have found success overseas with substantial sources of revenue.
Some of this success is contributed to the popularity of U.S. food themes abroad and the driving
force of universal cultural trends, rising incomes, improved international transportation and
communication, rising educational levels, increased numbers of women entering the work force,
demographic concentrations of people in urban areas, and the willingness of younger generations
to try new products. Also, franchised restaurants generally performed better than freestanding
units overseas. Finally, the GATS, or General Agreement on Trade in Services, was designed to
liberalize trade in services. GATS seeks to “reduce or eliminate governmental measures that
11
prevent services from being freely provided across national borders or that discriminate against
firms with foreign ownership.”
External Threats
Outback must also consider the threats of entering an international market. For example,
while several U.S. restaurant chains have moved into the foreign market, casual dining operators
are slower about entering these markets than fast-food operators. Franchising abroad is also an
issue with two sides to it. While franchiser-franchisee relationships often bring in favorable
sales and profits, these relationships are also often difficult to maintain. International franchisers
frequently encounter problems finding supplies in sufficient quantity, of consistent quality, and
at stable prices compared to those in domestic markets. Related to this, there is the issue of
infrastructure. A weak infrastructure in international markets may cause problems in
transportation, communication, or even utilities such as electricity. This can then complicate the
process of sourcing supplies, overseeing operations, or providing quality management services to
franchisees. Additionally, there are the issues related to restrictive trade policies. While GATS
has made a positive step in this direction, not all countries openly accept it. Many countries have
not even made their feelings about franchises publicly known. Finally, Outback must take each
country’s market into account. Religion, age distribution, and educational level – including
literacy rates – influence the location, operations, and menu of restaurants in foreign countries.
12
RECOMMENDATIONS – GUIDELINES FOR GOING GLOBAL
1.
When going global, it is important that Outback determine its international target market,
whether it will be travelers or locals. Regardless of the market, Outback must examine the
foreign market that it plans to enter and adapt to its culture in a number of ways. Failure to adapt
to each market could lead to the failure of their restaurants overseas.
With the help of a local management team, the transition from America to a location
abroad should not be too difficult to handle. The company must examine the tastes of each
potential country and customize the menu to fit the needs and tastes of that market. In addition,
Outback should become familiar with cultural expressions, values, and common behaviors that
characterize the market that it is going to enter. Then, management will be able to train the
employees of that restaurant accordingly, making sure that customers are treated in a way to
which they are accustomed. While it is important that Outback molds its locations abroad to fit
the appropriate cultures, it is also important that the Australian theme and American feel are
maintained.
2.
Outback should locate in larger cities where there is a bigger market of travelers, higher
income levels, and areas that are fairly Americanized. In order for Outback to be able to survive,
they must be able to tap into a target market as suggested before. This target market will most
likely be located in the urban markets where there is more diversity and technology. This
recommendation will not follow the usual Outback strategy of “B-locations with Ademographics” because their usual strategy might limit their target market overseas.
Outback’s target market in the United States is the consumer who wants a great dinner
with good food at a quality price. However, the availability of food differs in other countries as
well as the tolerance for new food choices. Larger cities will have more people who have
different tastes and preferences. Outback would be offering products totally different than the
tradition in many foreign countries and the consumers in larger cities will be more progressive
and receptive to new concepts. Also, the larger urban areas will have more business and industry
as compared to the more agricultural and blue-collar nature of rural areas. The people with
higher incomes will be better able to afford Outback’s menu, which might be unaffordable to
people in other countries as compared with our own. One last important aspect of locating in
urban areas is that the restaurant would have more available suppliers and be closer to
transportation and communication channels.
In choosing locations in other countries, Outback should also consider the actual
placement of their restaurants in the cities. Outback needs to locate near business districts and
tourist areas. This is where there will be many travelers who are accustomed to Outback and will
feel comfortable with the quality and familiarity. Business people and tourists would also fit into
the international target market. Many countries are very receptive to American concepts and
Outback would be able to capitalize on this opportunity.
13
3.
The pricing of the menu will be a major concern because the incomes are not as high
overseas as they are in the United States. For instance, in China, McDonald’s is considered a
luxury to many people, and Outback is considerably higher priced than McDonald’s. If Outback
does not change its menu prices and supply options, it might limit its customer base. Supplies
will be more expensive if they continue to use their current suppliers so Outback will need to
find alternative supply options. This recommendation is important because Outback will have to
find a way to keep their food costs from getting out of hand in international locations. On the
other hand, this recommendation may not be consistent with the company’s current philosophy
since Outback has such a close relationship with its current suppliers. Despite this, it is still
something that will have to have careful consideration. Outback will severely limit themselves
by only using their current suppliers and incur high costs in the process.
Outback should resolve this issue with the help of local management. The management
should be able to guide Outback and give recommendations as to the best suppliers in the
country or surrounding countries. This will cut down on shipping costs and allow Outback to
form personal relationships with those who are best suited to meet their needs in each
international market. Local management can also inform Outback of each country’s quality
standards. Standards vary from country to country and are very important in the food industry.
With help, Outback will be able to become updated on the standards of each country and choose
suppliers that help them deliver quality food. By taking all of this into consideration, Outback
will be able to provide quality food at the lowest possible cost to its public and create additional
long-term relationships.
14
APPENDIX
Selected Financial Statements
Balance Sheet: *all values in millions unless otherwise specified*
Assets
FY End
12/01
FY End
12/00
FY End
12/99
FY End
12/98
Current Assets
Cash & Equivalents
$136
$132
$93
$84
Accounts Receivable
$11
$11
$12
$9
Inventories
$39
$28
$26
$20
$206
$182
$143
$123
$1,100
$925
$786
$672
$94
$0
$0
$0
$1,238
$1,023
$852
$719
Total Current Assets
Gross Fixed Assets (PP&E)
Intangibles
Total Assets
Liabilities & Stockholders’ Equity
FY End
12/01
FY End
12/00
FY End
12/99
FY End
12/98
Liabilities
Accounts Payable
$47
$37
$34
$38
Short-Term Debt
$13
$5
$2
$2
$130
$126
$95
$78
$190
$168
$131
$118
$14
$12
$2
$39
$296
$215
$159
$170
Preferred Stock Equity
$0
$0
$0
$0
Common Stock Equity
$942
$808
$693
$548
$942
$808
$693
$548
$1,238
$1,023
$852
$719
Other Current Liabilities
Total Current Liabilities
Long-Term Debt
Total Liabilities
Stockholders’ Equity
Total Stockholders’ Equity
Total Liabilities & Stockholders’ Equity
Cash Flows: *all values in millions unless otherwise specified*
15
Cash Flow from Operating Activities
FY End
12/01
FY End
12/00
FY End
12/99
FY End
12/98
Net Cash from Continuing Operations
$229
$240
$192
$187
Net Cash from Operating Activities
$229
$240
$192
$187
Cash Flow from Investment Activities
FY End
12/01
Net Cash used for Investments
($234)
FY End
12/00
($146)
FY End
12/99
($127)
FY End
12/98
($109)
Cash Flow from Financing Activities
FY End
12/01
Net Cash from (used for) Financing Activities
FY End
12/00
FY End
12/99
FY End
12/98
($11)
($55)
($56)
($34)
Net Change in Cash & Equivalents
($16)
$39
$9
$44
Cash & Equivalents at Beginning of Period
$132
$93
$84
$40
Cash & Equivalents at End of Period
$116
$132
$93
$84
16
Income Statement: *all values in millions, except per share items*
Income Statement Summary
FY End
12/01
Revenue
FY End
12/00
FY End
12/99
FY End
12/98
$2,127
$1,906
$1,646
$1,403
$808
$715
$620
$544
$1,319
$1,191
$1,026
$859
$1,014
$882
$752
$638
$305
$308
$273
$220
Depreciation & Amortization
$69
$58
$51
$41
Operating Income after D & A
$236
$250
$223
$180
Other Income (net)
($33)
($36)
($33)
($24)
$2
$4
$1
($1)
Pre-Tax Income (EBT)
$206
$219
$191
$155
Net Income from Continuing Operations
$133
$141
$124
$101
Net Income from Discontinued Operations
N/A
N/A
N/A
N/A
Net Income from Total Operations
$133
$141
$124
$101
Normalized Income
$136
$141
$128
$101
Income from Extraordinary Gains/Losses
N/A
N/A
N/A
N/A
Total Net Income
$133
$141
$124
$96
Preferred Stock Dividends
N/A
N/A
N/A
N/A
Net Income available for Common Shareholders
$133
$141
$124
$96
$1.74
$1.82
$1.61
$1.27
N/A
N/A
N/A
N/A
Basic EPS from Total Operations
$1.74
$1.82
$1.61
$1.33
Basic EPS from Total Net Income
$1.74
$1.82
$1.61
$1.27
Basic Normalized Net Income/Share
$1.78
$1.82
$1.66
$1.33
Diluted EPS from Continuing Operations
$1.70
$1.78
$1.57
$1.24
N/A
N/A
N/A
N/A
Cost of Sales
Gross Profit
Operating Expenses
Selling, General & Administrative
Operating Profit Before Depreciation & Amortization
Interest Expense
Earnings per Share (in Dollars)
Basic EPS from Continuing Operations
Basic EPS from Discontinued Operations
Diluted EPS from Discontinued Operations
17
Diluted EPS from Total Operations
$1.70
$1.78
$1.57
$1.30
Diluted EPS from Total Net Income
$1.70
$1.78
$1.57
$1.24
Diluted Normalized Net Income/Share
$1.74
$1.78
$1.61
$1.30
Dividends Paid/Share
$0.00
$0.00
$0.00
$0.00
18
Ratios: All ratios based upon fiscal year end data, as indicated.
Ratios
FY End
12/01
Valuation
Price to Earnings
15.0
Price to Revenue
1.12
Price to Book
2.48
Price to Cash Flow
11.8
Book Value per Share
$12.25
Efficiency
Return on Equity
15.2%
Return on Invested Capital
14.0%
Return on Assets
11.8%
Asset Turnover
1.9
Receivable Turnover
194.1
Inventory Turnover
24.2
Profitability
Gross Profit Margin
61.7%
Net Profit Margin
6.3%
Liquidity
Current Ratio
1.1
Quick Ratio
0.8
Debt to Equity Ratio
0.03
Leverage Ratio
1.3
Comparison to Industry
Sales (Revenue)
3.2%
Earnings
178.8%
Price to Book Ratio
6.5%
References
History:
19
“Outback Steakhouse Overview.” Taken from http://www.corporateir.net/ireye/ir_site.zhtml?ticker=osi&script=100&layout=11. © 2002 Outback
Steakhouse.
Problem Identification:
Graph 1 & Table 1. Take from http://www.outback.com. Financial Documents.
The Competition:
“Applebee’s International Company History.” Taken from
http://ir.applebees.com/ireye/ir_site.zhtml?ticker=APPB&script=1800&layout=-7. ©
2003 Applebee’s International, Inc.
“Red Lobster Seafood Restaurants – Our Company.” Taken from
http://www.redlobster.com/discover/our_company/index.asp. © Red Lobster.
“Diversity – Company Information – Brinker Family Restaurants.” Taken from
http://www.brinker.com/company/diversity.asp. © Brinker International. All rights
reserved.
“T.G.I. Fridays ® Worldwide.” Taken from http://www.tgifridays.com/News/fri_bg.htm. ©
2003 TGI Friday’s, Inc.
Table 2. “Top 10 Casual Dining Restaurants.” Taken from http://www.franchisinghelp.com.
Country Summaries:
Peter, J. Paul and Donnelly, James H. “Appendix B: Country Summaries.” Marketing
Management: Knowledge and Skills, 6th Edition. Pages 823-826. © 2001 by The
McGraw-Hill Companies, Inc. All rights reserved.
Financial Statements and Ratios:
Balance Sheet: http://www.corporateir.net/ireye/ir_site.zhtml?ticker=osi&script=950&layout=11&item_id='ps=1*pg=4'
Cash Flows: http://www.corporateir.net/ireye/ir_site.zhtml?ticker=osi&script=950&layout=11&item_id='ps=1*pg=6'
Income Statement: http://www.corporateir.net/ireye/ir_site.zhtml?ticker=osi&script=950&layout=11&item_id='ps=1*pg=8'
Ratios: http://www.corporateir.net/ireye/ir_site.zhtml?ticker=osi&script=950&layout=11&item_id='ps=1*pg=3'
20
Current International Locations Map
Taken from http://www.outback.com/locator/
Current International Locations
Country
Number of
Restaurants
21
19
8
6
6
6
4
3
3
3
2
1
1
1
1
1
1
1
1
Korea
Canada
Brazil
Hawaii
The Caribbean
Japan
Mexico
Philippines
Hong Kong
United Kingdom
China
Venezuela
Thailand
Singapore
Malaysia
Indonesia
Australia
Guam
Costa Rica
21