Outback Steakhouse, the popular casual dining restaurant chain known for its bloomin’ onion appetizer and steak items, announced plans to permanently close 43 underperforming locations in 2020 due to declines caused by the COVID-19 pandemic. While the brand struggled due to pandemic restrictions like other sit-down restaurants, the closures represent only a small percentage of Outback’s total locations.
The pandemic has presented immense challenges for restaurants nationwide as dining rooms were forced to close and consumers stayed home. For Outback Steakhouse, the temporary closures led management to look more closely at underperforming locations before the pandemic began. According to a spokesperson, the company decided the 43 closures were necessary to focus resources on higher-performing locations better positioned for long-term growth.
Before the announced closures, Outback Steakhouse had over 1,200 locations across the United States and 21 other countries. The company did not publicly disclose the specific locations that were closing. Employees at impacted restaurants were notified about the closures and offered positions at different places where possible. For some employees, severance packages were provided as well. While inconvenient for employees and customers of the closing restaurants, the moves were intended to keep the majority of Outback Steakhouse locations open long-term.
Assessing Prior Performance and Future Outlook
When deciding which restaurants to close, Outback Steakhouse executives likely evaluated factors like:
- Sales trends before the pandemic: Locations already struggling before 2020 were prime targets for closure.
- Profitability: Underperforming restaurants drain resources that could benefit stronger locations. Unprofitable sites made financial sense to shut down.
- Market saturation: Some areas may have had too many Outback Steakhouse locations competing for the same customers. Closures reduce excess capacity.
- Lease terms: Expiring leases on struggling restaurants were not renewed, avoiding long-term costs.
- Drive-thru potential: Drive-thru and takeout focus meant non-drive-thru sites needed pandemic resilience.
- Urban locations: High-density areas dependent on office workers saw less foot traffic during remote work.
While the closures impacted certain communities, the moves reflected a commitment to right-size Outback Steakhouse’s physical footprint based on the new market realities of significantly reduced on-premise dining during the pandemic. By closing underperforming units, the company aimed to bolster the health of remaining locations for years ahead. outback steakhouse closing restaurants
The Impact of Pandemic Dining Restrictions
With indoor dining rooms shut down in many states during the early months of the 2020 pandemic, casual dining chains like Outback Steakhouse were forced to focus squarely on takeout and delivery. However, menu items like the signature bloomin’ onion do not easily translate to a takeout format. Additionally, some overhead costs remained fixed whether the restaurant was open or closed temporarily.
The pandemic also led to significant changes in consumer behavior, especially during quarantine periods. Many people ate more meals at home instead of going out. In addition, office closures depleted the usual lunchtime crowds at suburban chain restaurants. The lack of business travel kept airport and highway-adjacent locations nearly empty. All these factors challenged Outback Steakhouse’s business model, which was built around in-restaurant dining.
While outdoor seating helped when allowed and takeout grew substantially, the off-premise sales needed to compensate for many steakhouses’ loss of dine-in customers. Limited hours, reduced seating capacity under social distancing rules, and cautious consumers affected casual dining chains even after restrictions eased somewhat. These challenges drove the difficult decision to close certain Outback Steakhouse locations that relied too heavily on full-capacity indoor dining.
What Steps is Outback Steakhouse Taking?
To adapt to the new casual dining landscape, Outback Steakhouse has taken several steps:
- Drive-Thru Focus: Adding drive-thru lanes and optimizing menus and service for pick-up has been a priority at select Outback Steakhouse locations to capitalize on the popularity of drive-thru and pick-up during the pandemic.
- Off-Premise Growth: Delivery, contactless curbside pick-up and family-style take-home meals helped boost off-premise sales when many consumers avoided dining in. Family bundles kept menu options appealing for takeout.
- Reduced Costs: Closure of underperforming restaurants cut expenses, as did workforce reductions, menu simplification and supply chain efficiencies. Savings helped remaining stores optimize profitability in tough times.
- Outdoor Seating: More outdoor dining areas with heaters, enclosing and additional patio seating expanded capacity where climate and regulations allowed. Alfresco spaces helped improve the experience.
- Reservations System: Online reservations rather than walk-ins allowed for contactless dining and guaranteed social distancing compliance by spacing tables farther apart than pre-pandemic.
- Catering Services: A focus on catering family-style meals and smaller gatherings substituted for declined business from large office lunch crowds and events. Catering provided an alternative revenue stream.
- Technology Updates: Enhanced digital ordering, payments, self-checkout kiosks and delivery through the Outback Steakhouse website and mobile app simplified the off-premise experience.
This multipronged strategy aimed to sustain Outback Steakhouse into the post-pandemic economy while prioritizing health and safety. Whether these adjustments can thrive in the long term remains to be seen as consumer behavior continues evolving with the pandemic’s progression. But with nearly 1,200 Outback Steakhouse locations still open, the focus shifts to optimizing performance at higher-potential sites.
Were Job Losses Significant?
While not disclosing specific employee headcounts impacted by the 43 location closures, Outback Steakhouse did state the closures would, unfortunately, lead to some job losses. A spokesperson acknowledged the difficulty of closing restaurants and expressed gratitude for the service of affected employees. However, severance packages and career support were offered to help workers find new opportunities internally or elsewhere.
One of the largest casual dining brands in the world, with over 800,000 employees globally before the pandemic impacts, Outback Steakhouse still maintained the majority of its workforce even after announced closures and prior staffing adjustments. Outback Steakhouse executives aimed to preserve as many jobs as responsibly possible considering new market conditions by optimizing their portfolio through targeted closures of weaker restaurants rather than drastic widespread closures.
How Did Customers React?
Initial customer responses on Outback Steakhouse’s social media channels regarding the location closure announcement were mixed. While some expressed disappointment over losing their favorite local restaurant, most showed an understanding that difficult business decisions had to be made during unprecedented times. Customers thanked employees at their now-closed local Outback Steakhouse for the memories and service over the years. Some even shared photos recalling happy times spent there with family and friends.
At the same time, loyal fans reassured the brand they would continue supporting remaining Outback Steakhouse locations. Many noted outdoor patio areas and safety protocols, which gave them the confidence to dine out safely again on their next visit. Some regulars who now lived farther from their old go-to Outback location said they looked forward to finding a new local store to patronize instead. For dedicated customers, the emotional attachment to the Outback Steakhouse experience outweighed frustrations from specific restaurant closures.
Feedback from industry observers was also sympathetic towards Outback Steakhouse’s situation. Analysts acknowledged that chain restaurants like Outback faced immense pressure during the pandemic and that right-sizing operations through closures of struggling units makes financial sense long-term. Investors appeared to understand this as a necessity for Outback Steakhouse to emerge from the pandemic stronger by improving the health of core-performing locations capable of driving future growth once stability returns.
How is Outback Steakhouse Faring Now?
Recent financial reports indicate Outback Steakhouse has been exhibiting signs of ongoing recovery since the height of the pandemic disruption in 2020, though challenges linger. While Q4 2021 same-store sales were still down over 5% compared to pre-pandemic 2019 levels, this reflected steady monthly improvement from steep double-digit declines seen earlier in 2021. Off-premise sales growth remains a key revenue driver where pandemic trends favor delivery and takeout.
Outback Steakhouse also saw strong local community support through initiatives like family meal bundles. Outdoor patios proved their worth extending capacity amid indoor restrictions. Other benefits emerged, too: fewer marketing events freed funds to be redeployed into core operations. Digital ordering leaps bode well for ongoing technology investments, too. Management expressed 2022 outlook optimism as case counts fell, assuming no new variants derail reopening momentum.
Of course, labor shortages, inflationary pressures and shifts in consumer behaviors are factors Outback Steakhouse must continuously navigate. However, the brand’s resilience, loyal fanbase, and proactive adjustments suggest it can work through ongoing difficulties to reclaim lost sales in the long run. Closure of weaker locations redistributes resources where returns may manifest fastest as good times remain again for casual dining. With a commitment to value, hospitality and safety, Outback Steakhouse eyes revitalizing in-restaurant experiences central to its identity.
