Outback Steakhouse
With their years of experience in the restaurant business, Robert Basham, Timothy Gannon
and Chris Sullivan, founders of Outback Steakhouse, were acutely aware of the hygiene
factors in the food-service industry. Outback is an Australian-themed restaurant founded in
the US that deliberately adopts an Australian theme, sells Australian menu items and is
decorated with Australian artefacts. While the average restaurant is designed to maximise
the number of customers at the expense of the food preparation area, Outback puts the
emphasis on providing the best possible spaces for servers and kitchen staff to do their jobs
effectively, even at peak business times. Outback’s dinner-only policy and maximum five-day
working week give managers and staff time for a life outside the restaurant, which cuts down
on employee turnover. Each server handles only three tables at a time, ensuring first-class
service to customers and higher tips for servers.
To motivate managers, Outback provides ownership. After making a US$25000 investment
and signing a five year contract, Outback managers receive 10 per cent of the earnings of
their restaurants each month. In 2012 this provided the average manager with a total of
about US$118600 per year, far above rest of the industry. In addition, managers receive
about 4000 shares that vest at the end of five years. Regular staff also participate in a share
ownership plan.
Managers are further motivated by the level of responsibility Outback bestows on them.
Restaurant managers have the authority to make their own decisions rather than merely
implement decisions dictated by headquarters.
Has Outback’s motivational approach worked? In December 1994, six years after its launch,
there were 210 Outbacks, with revenues estimated at US$544 million. As Timothy Gannon
put it, ‘We believe if you treat employees as if you were one of them and give them the right
environment, they will blow you away with their performance.’ (Finegan 1994). By 2004-
2005, Outback boasted 1105 restaurants and revenue of US$3.3 billion, with 82 875
employees! (Mauder, 2004).
Outback’s co-founders, who are all significant shareholders in the parent company OSI, have
innovated with kerbside takeaway, Internet booking and new brands, menu items and
formulas combining to keep them at the leading edge. The founders clearly believe and live
the idea that they succeed through their people, known as Outbackers’. By keeping their
employees motivated, and ‘having a good time’, Outback’s executives know that their
customer service will be good. By 2012, Outback’s successful approach to motivating its staff
has led to expansion to 21 countries with many hundreds of restaurants operating in
numerous brand names, with such growth signifying a company and group of mangers who
are clearly getting a lot of things, including staff motivation, right.
Source: Samson, D., Daft, R.L. 2012. Fundamentals of Management, 4th Asia Pacific ed, Cengage Learning
Australia, South Melbourne, Australia.
HEP: 4375/CRICOS Provider Code 00246M
MGT101A Ass 4 Case Study T3 2016.docx Page 3 of 7
Questions:
1. What theories of motivation underlie the way in which Outback’s leaders motivate
their managers and staff? (Reflect on the theories studied in Week 9 and motivate
your answer.)
2. Discuss how empowerment is employed in the Outback Steakhouses to meet higher
motivational needs and suggest practical ways in which other staff could also be
motivated through empowerment.
3. If you are given the task of communicating the recommendations made in question 2
to your employees, how would you go about it? (Go carefully through the content of
Week 10 [Communication in organisations] and try to apply as much as possible of
the theory to your answer.)
