Outback rethinks menu, marketing

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Facing declining sales and robust competition, Australian-themed Outback Steakhouse is throwing its marketing strategy on the barbie as fewer customers are walking through its doors.

New management of the casual dinnerhouse known for its steaks and Bloomin' Onions last week told analysts it's invited a handful of agencies to pitch ideas for its $60 million brand advertising at the same time it is re-evaluating its menu and pricing strategies to boost lethargic sales.

"It's time for us to evolve the marketing," said President-Chief Operating Officer Paul Avery, speaking with CEO Bill Allen to analysts last week. The marketer is interviewing several ad agencies, including "the one we continue to be using, but were looking at shaking that up a bit." Outback's current agency is independent David & Goliath, Los Angeles. New creative is targeted to start in September.

Fulton Smith-Sykes, VP-marketing and advertising, Outback, downplayed the brand advertising review as a private process the marketer does every few years. "We were already in the process of doing that, including David & Goliath. That's how they became an agency we used because they participated three years ago in that," she said. She wouldn't divulge the other agencies.

Ms. Smith-Sykes said the creative to air at the end of August or early September will be from its agency of record and not as a result of the review process. "The brand does not need to be fixed by any stretch of the imagination, but do we need to take things to a new level, absolutely," she said.

Customer satisfaction scores fell about two percentage points from 2003 to 2004, according to eight markets studied by Sandelman & Associates. "Corporate management had been focusing on developing other brands so what happened is maybe they took their eye off the ball a little bit," said Joe Pawlak, VP at Technomic.

$3.2 BILLION PORTFOLIO

What began as a single steak chain has grown into a $3.2 billion portfolio of eight brands, including Carrabba's Italian Grill; Bonefish Grill, Fleming's Prime Steakhouse & Wine Bar, Roy's, Cheeseburger in Paradise; Lee Roy Selmon's and Paul Lee's Chinese Kitchen. While Outback accounts for more than 69% of revenues, new brands such as Fleming's and Carrabba's have outpaced sales at the namesake chain.

Rivals have matched product offerings but at lower prices. "Everybody from a casual-dining standpoint is offering a high-quality steak product," Mr. Pawlak said.

John Ivankoe, restaurant analyst at J.P. Morgan sees pricing as the most critical of the chain's challenges.

Evolution

President-Chief Operating Officer Paul Avery told analysts several agencies were called in an effort to "shake up" marketing

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