Response Labs New Business Research

Delivered April 20th, 2019. Contributors: Barry, james O., Josh T., Shannon L., Varun N., Sarah D. and

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Blooming Brands, Company Overview & History

Bloomin' Brands, Inc. was founded in Tempa, Florida in 1988. Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, and Fleming's Prime Steakhouse & Wine Bar are brands under the Bloomin' Brands. Below is the detail of our findings.
Brand names under the Bloomin' Brands Umbrella Outback Steakhouse: This is an Australian-inspired restaurant. They offer variety steak cuts such as chicken, ribs, and seafood as well as crisp salads and freshly made soups and sides. They are positioned as a leading casual dining restaurant serving high-quality food and service in a casual atmosphere.

Carrabba's Italian Grill: They offer a "variety of fresh, handmade Italian dishes cooked to order in a lively exhibition kitchen". Their services are provided in a customized manner, under a warm, festive atmosphere.

Bonefish Grill: They specialize in providing a market-fresh grilled fish in an atmosphere similar to a "big city bar atmosphere serving regional craft beers and seasonal cocktails with hand-squeezed juices and fine herbs." 

Fleming's Prime Steakhouse & Wine Bar: They offer contemporary steakhouse services such as "cuts of beef, chops, fresh fish, seafood and poultry, salads and side dishes featuring USDA Prime corn-fed beef, both wet and dry-aged for flavor and texture, in a variety of sizes and cuts". They also offer an award-winning selection of 100 wines by the glass.
Bloomin' Brands LocationsThey have 1,516 outlets around the globe, which include 1,276 restaurants and 240 franchised restaurants, of which 1,164 restaurants and franchised 113 restaurants are located in the U.S. 
Bloomin' Brands RevenueA breakdown of their revenue for the past five years is as follows;
2018 — $4,126 million. 
2017 — $4,223 million.
2016 — $4,261 million.
2015 — $4,378 million.
2014 — $4,443 million.
Bloomin' Brands PositioningThey are one of the largest companies in the global casual dining industry, with about 93,000 team members in 48 states in the U.S., Puerto Rico, Guam, and 20 countries. They are listed on Forbes' 2019 list of America’s Best Employers for Diversity. However, judging by the decline in revenue from $4,443 million in 2014 to $4,126 million in 2018, we assume that their brand positioning over the last five years has been reduced. This is explained in their annual report, which hinted that they are "facing growing competition from the supermarket industry and home delivery services and applications." Furthermore, the report hinted that they "face increasing competition due to an increase in the number of casual dining restaurant options in the markets internationally."

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Outback Steakhouse, Company Overview & History

Our team found that Outback Steakhouse revenues declined from about $2.709 billion to $2.438 billion in 2018. We have presented further details about the company, including the number of locations, brand positioning, and industry first below.
NUMBER OF LOCATIONS
Outback Steakhouse US segment currently runs about 579 restaurants across 48 states while the international segment has roughly 92 restaurants in Brazil with the headquarters at Sao Paulo.
INDUSTRY FIRST
 Twenty-five years ago, Outback Steakhouse launched an industry first product, "a steak seasoning like no other. It is a signature blend of spices which creates the bold flavor you crave." The restaurant chain was also the first to introduce the Bloomin’ Onion, "an entire colossal onion, sliced, battered, and deep-fried," which The Daily Meal and Brand Eating advance as Outback Steakhouse’s legendary dish and trademark product, respectively. 
REVENUES
Below we have provided Outback's revenues for the past 5 years.

2018
The US segment- Outback Steakhouse: ~$2.09 billion
International- Outback Steakhouse: ~$348 million.
Total- ($2.09 billion + $348 million): ~$2.438 billion

2017
The US segment- Outback Steakhouse: ~$2.14 billion
International- Outback Steakhouse: ~$377 million.
Total- ($2.14 billion + $377 million): ~$2.517 billion

2016
The US segment- Outback Steakhouse: ~$2.18 billion
International- Outback Steakhouse: ~$302 million.
Total- ($2.18 billion + $302 million): ~$2.482 billion

2015
The US segment- Outback Steakhouse: ~$2.22 billion
International- Outback Steakhouse Brazil: ~$283 million.
International- Outback Steakhouse South Korea: ~$172 million.
Total- ($2.16 billion + $310 million + $239 million): ~$2.675 billion

2014
The US segment- Outback Steakhouse: ~$2.16 billion
International- Outback Steakhouse Brazil: ~$310 million.
International- Outback Steakhouse South Korea: ~$239 million.
Total- ($2.16 billion + $310 million + $239 million): ~$2.709 billion
BRAND POSITIONING
Outback Steakhouse has for the last five years positioned itself in the US market as an Australian-themed American dining chain, "Made with an Australian flair, born under the Tampa sun."

The restaurant chain also positions its products in the target consumer’s mind as follows, “Our steaks are all grain fed, USDA inspected, optimally aged and hand trimmed to deliver a steak that’s the star of our kitchen.” We speculate that this brand positioning statement hasn’t changed in the last 5 years since Outback Steakhouse has been at the forefront of "emphasizing consistently high-quality delicious food."

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Outback Competitive Landscape Part 1

Three of Outback Steakhouse's key competitors are Texas Roadhouse, Black Angus Steakhouse, and Longhorn Steakhouse. The requested information about those key competitors is included in the attached spreadsheet. Below is an explanation of our research methodology and a brief overview of our research findings of those competitor restaurants. 
METHODOLOGY
We consulted an article titled "America’s best chain steakhouses." We utilized that source as a means of identifying competitors to Outback because (1) Outback was listed as one of the five "best chain steakhouses," (2) Texas Roadhouse and Longhorn Steakhouse were also included in that list of five top chain steakhouses in the U.S., and both those restaurant chains (Texas Roadhouse and Longhorn Steakhouse) were expressly listed as competitors to Outback by another source, and (3) a short list of "America's [five] best chain steakhouses" reasonably infers that those restaurants are key competitors to each other. 
THREE OF OUTBACK STEAKHOUSE'S KEY COMPETITORS
1. TEXAS ROADHOUSE
One main way that Texas Roadhouse differentiates/positions itself from its competitors is through communicating that it's a restaurant well-suited for all ages. Texas Roadhouse's loyalty program is called Mobile App Rewards. 
2. BLACK ANGUS STEAKHOUSE
One main way that Black Angus Steakhouse differentiates/positions itself from its competitors is through its long-standing history, reputation, and industry experience as a steakhouse. Black Angus Steakhouse's loyalty program is called Prime Club. 
3. LONGHORN STEAKHOUSE
One main way that Longhorn Steakhouse differentiates/positions itself from its competitors is through the prominent quality of its food. Longhorn Steakhouse's loyalty program is called LongHorn eClub. 

To recap, the requested information about the above-mentioned key competitors to Outback Steakhouse is included in the attached spreadsheet. 

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Outback Competitive Landscape Part 2

Three of Outback Steakhouse's key competitors are Logan’s Roadhouse, Saltgrass Steak House, and Hoss’s Family Steak & Sea. The requested information about those key competitors is included in the attached spreadsheet. Below is an explanation of our logic. 
METHODOLOGYThe Daily Meal is an industry leader providing authoritative research on the American chain steakhouses, both casual and upscale, as well as all the latest food news. We utilized their ranking of the "Best Casual Steakhouse Chains in America" to locate three additional competitors to Outback Steakhouse, which ranks number 10 on the list; Black Angus Steakhouse (#4), Texas Roadhouse (#2), and LongHorn Steakhouse (#1), identified in the previous request, also appear. To compile the list, the Daily Meal examined "casual steakhouses across the country with more than 15 locations and ranked them according to the variety of steaks on the menu, the quality of the meat used, the overall dining experience and atmosphere, the quality and variety of side dishes." The ranking reasonably infers that these restaurants are key competitors to each other. Therefore, with Black Angus Steakhouse (#4) Texas Roadhouse (#2), and LongHorn Steakhouse (#1) already on the spreadsheet, Outback Steakhouses’ next key competitors are Logan’s Roadhouse (#3), Saltgrass Steak House (#5), and Hoss’s Family Steak & Sea (#6).

To recap, the requested information about the above-mentioned key competitors to Outback Steakhouse is included in the attached spreadsheet.

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Casual Dining Market Size & Market Shares Part 1

The U.S. market size of casual dining restaurants is approximately $221.9 billion. This represents about 98.6% of the full-service restaurant market and 25.7% of the overall restaurant market. 
MethodologyTo begin our research into the market size of casual dining restaurants in the United States, we believed that we could find a direct answer by searching through various market research reports from companies like IBISWorld, Technomic, Research and Markets, PwC, Dun & Bradstreet, and more. However, we quickly discovered that most research has been conducted on the fast casual and quick-service markets rather than on the casual dining market. We did locate a statistic in PwC's report entitled, "How the U.S. restaurant industry is negotiating a challenging environment," that indicated in 2017, casual dining chain restaurants represented 24% of the total chain restaurant market, but this is not encompassing of the entire restaurant market, which would include independent restaurants in addition to chains. 

We did find some research studies that appear to have a direct answer to the market size of casual dining such as a report from Wise Guy Reports and one from Euromonitor, but these are both behind paywalls, which means we do not have access to their full findings. However, these reports' abstracts and tables of contents led us to a clue that could help us triangulate the market size of casual dining. We discovered that casual dining is a segment of the full-service restaurant market. Upon further investigation, we learned that the only two segments of the full-service restaurant market are casual dining and fine dining. Fast casual and quick-serve restaurants are both limited-service restaurant types. Therefore, we concluded that the market size for full-service restaurants could provide a starting point for triangulation if necessary.

Before turning to triangulation, however, we attempted one more strategy to see if a direct answer for the market size of casual dining in the U.S. was available by searching through industry publications such as Restaurant.org, FranchiseHelp, Restaurant Business Online, and CHD Expert. Our idea here was that often, industry publications disclose market information they have gleaned from paywalled resources. We did find some helpful information such as the overall size of the restaurant market, but none of these sources detailed the market sizes or shares for the two segments that make up the full-service market. 

At this point, we decided we would need to attempt a triangulation since it became clear that the casual dining market is one of the least-studied segments of the overall restaurant market in the U.S. This is likely because, as we discovered, the casual dining market is generally declining due to the increased popularity of fast-casual restaurants and the overall domination of quick-serve restaurants. 

Having decided to triangulate, we returned to our initial sources, which were market studies, and found that Dun & Bradstreet's First Research report indicated that the full-service restaurant market size in the United States is currently $225 billion. However, there were no market shares reported in this study or others that would allow us to calculate the market size of casual dining restaurants. Therefore, we used the industry publications mentioned above to find the missing information. While we were unable to find the market share of casual dining establishments, an article from Foodservice Equipment and Supplies provided us with the U.S. market share of fine dining restaurants. Since there are only two segments of the full-service restaurant market, we were able to calculate the market share for fine dining restaurants and subtract that amount from the total market size to find the casual dining market size. The calculations and results are below.
Calculations and findings (All U.S. Numbers)Full-Service Restaurant Market Size: $225,000,000,000 

Fine Dining Market Share of Full-Service Restaurants: 1.4% 

Fine Dining Market Size: $3,150,000,000 ($225,000,000,000 x 0.014)

Casual Dining Market Size: $221,850,000,000 ($225,000,000,000 — $3,150,000,000)

Casual Dining Market Share of Full-Service Restaurants: 98.4% (100 - 1.4)

Therefore, the casual dining market size in the United States is approximately $221.9 billion.
Additional findings (all U.S. Numbers)Total Restaurant Market Size: $863,000,000,000 

Casual Dining Market Share of Total Restaurants: 25.7% ($221,850,000,000 / $863,000,000,000)

Total Chain Restaurant Market Size: $307,100,000,000 

Chain Casual Dining Market Share of Total Chain Restaurants: 24% 

Chain Casual Dining Market Size: $73,704,000,000 ($307,100,000,000 x 0.24)

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Casual Dining Market Size & Market Shares Part 2

Of the six competitors of Outback Steakhouse listed on the attached spreadsheet, Texas Roadhouse has the largest share of the casual dining market at 1.1%. This is about the same market share as that of Outback Steakhouse, which has a 1.2% market share. Longhorn Steakhouse's share is 0.77%, Logan's Roadhouse's share is 0.20%, Saltgrass Steak House's share is 0.11%, Black Angus Steakhouse's share is 0.07%, and Hoss's Steak and Sea House's share is 0.05%. Our methodology, findings and calculations are below.
MethodologySince the market share in the first request was triangulated, it followed that we would need to triangulate the market shares for each competitor listed on the attached spreadsheet as well. As such, we did not search for direct market shares of the casual dining market for any competitor, as it would likely be less accurate than calculating them based on the calculated market size determined in the first response. Therefore, we began our search by looking for the most recent revenues for Texas Roadhouse, Black Angus Steakhouse, Longhorn Steakhouse, Logan's Roadhouse, Saltgrass Steak House, and Hoss's Steak & Sea House. Since Texas Roadhouse is a public company and Longhorn Steakhouse is owned by Darden Restaurants, also a public company, we were able to locate the most recent annual reports that provided the actual revenues for these two companies.

The remaining four companies are all private, or owned by private companies. Therefore, despite our search of each company's and parent company's websites, there were no financial filings or reports available. As such, we turned to industry publications, such as Restaurant Business Online, Upserve, National Restaurant News, and Restaurant Magazine, since these types of sources often provide accurate estimates of revenues. Unfortunately, we were only able to find 2016 revenues for Black Angus Steakhouse and Salt Grass Steak House, but they were reported in the 2019 version of Restaurant Business Online's list of Top 500 Chains. Therefore, we assumed this publication provided the most recent revenues reported for these two companies. To confirm this, we conducted a tertiary search through business listing sites like Hoover's, Owler, Manta, BuzzFile, and IncFact, but all revenues listed on these platforms for both Black Angus and Salt Grass were for years prior to 2016. So, we elected to use the revenues from 2016 to calculate approximate market share for these two companies.

Then, we turned our attention to the remaining two companies: Logan's Roadhouse and Hoss's Steak & Sea House. In another industry publication, National Restaurant News, we discovered that following a bankruptcy filing in late 2016, Logan's Roadhouse was acquired by CraftWorks Restaurants & Breweries. In the article announcing the purchase, Logan's Roadhouse's 2017 annual revenue was given as $434.5 million. We subsequently searched for an annual report for CraftWorks Restaurants & Breweries on its website, but discovered it is private and does not disclose its financials. Again, we turned to the above-mentioned business listing platforms in an effort to find a more recent revenue, but as with Black Angus and Salt Grass, all reported revenues on these sites were for years prior to 2017. Therefore, we decided to use the 2017 revenue reported in the National Restaurant News article to calculate the approximate market size for Logan's Roadhouse.

Finally, we focused on Hoss's Steak and Sea House's revenue. There was no mention of this restaurant in industry publications with regard to revenue or market share. In fact, none of the industry publications we searched mentioned this restaurant at all. Therefore, we expanded our search to media mentions, where we found announcements of restaurant closings and openings, fundraisers, and relocations, but nothing that discussed revenues. Therefore, as a last resort, we turned to the above-mentioned business listing services, where we found an estimated 2017 revenue for Hoss's Steak and Sea House on Hoover's database. Due to the lack of other available estimates, this is the amount we used to calculate Hoss's share of the casual dining market.

To provide a comparison with Outback Steakhouse, the primary company for which the competitive landscape was created, we also wanted to calculate this company's market share of the casual dining industry in the U.S. Outback Steakhouse is owned by Bloomin' Brands, which is public and has published an annual report for 2018. However, the report did not break down revenues by restaurant. Fortunately, the report did provide the average annual revenue per unit for Outback Steakhouse restaurants and the number of restaurant locations. Therefore, we were able to calculate the estimated annual revenue for Outback as follows.

Average Annual Revenue Per Outback Steakhouse Location: $3,580,000 
Number of U.S. Outback Steakhouse Locations: 733 
Total Estimated Annual Revenue for Outback Steakhouse: $2,624,140,000 ($3,580,000 x 733)
Findings and CalculationsAs determined on a previous request, the market size for casual dining restaurants in the United States is $221,850,000,000. This amount has been used for all calculations of market share in this request. 

Texas Roadhouse
Revenue: $2,437,115,000 (2018)
Market Share of U.S. Casual Dining Market: 1.1% ($2,437,115,000 / $221,850,000,000)

Black Angus Steakhouse
Revenue: $154,100,000 (2016)
Market Share: 0.07% ($154,100,000 / $221,850,000,000)

Longhorn Steakhouse
Revenue: $1,703,200,000 (2018)
Market Share of U.S. Casual Dining Market: 0.77% ($1,703,200,000 / $221,850,000,000)

Logan's Roadhouse
Revenue: $434,500,000 (2017)
Market Share of U.S. Casual Dining Market: 0.20% ($434,500,000 / $221,850,000,000)

Saltgrass Steak House
Revenue: $249,100,000 (2016)
Market Share of U.S. Casual Dining Market: 0.11% ($249,100,000 / $221,850,000,000)

Hoss's Steak and Sea House
Revenue: $120,740,000 (2017)
Market Share of U.S. Casual Dining Market: 0.05% ($120,740,000 / $221,850,000,000)

Outback Steakhouse
Revenue: $2,624,140,000
Market Share of U.S. Casual Dining Market: 1.2% ($2,624,140,000 / $221,850,000,000)

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Casual Dining Market Size & Market Shares Part 3

The market size of the casual dining industry in the South, West, Midwest, and Northeast regions of the US is $84.04 billion, $56.30 billion, $41.35 billion, and $40.21 billion, respectively.
METHODOLOGY
In order to fulfill this request, we began by searching for research reports that provide market sizes specific to regions/states in the US. We came across reports by agencies like PWC, Dun and Bradstreet, Daedal Research, HVS, and Mintel but they did not contain any region-specific information. Even in the case of paywalled sources like Daedal Research, the table of contents do not indicate the coverage of any US-specific regions. While Dun & Bradstreet does provide state profiles separately, it does not cover casual dining restaurants in the state profiles; most of the information in the state reports were economy related.

Next, we searched industry portals like Restaurant.org, Franchise Help, Entrepreneur, and Restaurant Business Online as they sometimes contain information from paywalled research reports. These portals do not provide region-specific market sizes for casual dining. However, on Restaurant.org, we were able to find state-specific market sizes for the restaurant industry as a whole. Following this, we looked through company websites and annual reports like Chili’s, Olive Garden and Applebee’s to get some sort of related to the share of business in specific regions or statistical data related to expansion in specific regions. However, we did not find any useful data points in the sources we searched.

Give the above limitations, we used the state-specific market size figures to triangulate the casual dining market size in the Northeast, Midwest, West, and South regions of the US. We made an assumption that region-specific market sizes for casual dining will be in the same proportion (of the US market) as the region-specific market sizes of the restaurant industry. The share of the Midwest region is 18.64% of the total market; Northeast makes up 18.12%; the South contributes 37.87%, and the West comprises 25.37% of the total market. Calculations for market share have been shown in the attached spreadsheet. The "State Market Sizes" sheet lists the size of the restaurant business in each state/federal district and the "Percentage Share" tab lists the region-specific share.

As already established (in our previous report), the size of the casual dining industry in the US is $221.9 billion. Therefore, the region-specific market sizes are as follows:

Midwest: $41.35 billion (18.64%*$221.9B)
Northeast: $40.21 billion (18.12%*$221.9B)
South: $84.04 billion (37.87%*$221.9B)
West: $56.30 billion (25.37%*$221.9B)

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US Casual Dining and Steakhouse Key Trends

Our research team has provided five key trends in causal dining and/or casual steakhouses in America, which are off-premise delivery services, increased use of social media, automation, gluten-free options, and serving steaks from grass-fed cows. Our research team compared various lists published by online restaurant and hospitality magazines, steakhouses, and top consultancy firms. We have included trends that appeared in a minimum of three reputable sources. 
TREND #1 OFF-PREMISE DELIVERY SERVICES DRIVING SALESAccording to Restaurant Business Online, McKinsey, and National Restaurant News, off-premise delivery services are driving sales and helping improve the overall customer experience in casual dinning restaurants throughout the United States. Restaurants of a significant size reported "impressive sales gains from delivery, takeout, and catering- in the 20-30% range."  Moreover, Mckinsey reported that 56% of baby boomers and 74% of millennials expect table-service restaurants to offer off-premise delivery options. The red-hot third-market delivery market is anticipated to grow at an annual CAGR of 19.8% through 2022.
TREND #2 INCREASED USE OF INSTAGRAM AND SOCIAL MEDIA TO ADVERTISEAccording to Super Hospitality, R Magazine, and Small Biz Trends, social media platforms will continue to influence consumer choices in restaurants. Restaurants will continue to become Instagram-friendly, with Instagram influencing everything from the "way restaurateurs design their restaurant interior, to their menu layout and the presentation of food and beverages." Decisions will be focused on" increasing the instagrammability of their offerings" and "uplifting their restaurant’s digital profiles."  According to Social Media Monthly, 75% of consumers have used Facebook to select a restaurant and 94% of consumers have selected a restaurant based on online reviews, bolstering the idea that restaurants will increase their efforts to reach customers on these platforms.
TREND #3 AUTOMATION/ INCREASED TECHNOLOGYAccording to Super Hospitality, The Innovative Enterprise, and Mckinsey, automation is increasing the restaurant sector. Super Hospitality predicts that automation will be the largest disruptor in the restaurant industry," redirecting businesses to self-service models in the form of automated payment systems through mobile apps, self-service kiosks, and point-of-sale solutions."

The main driver of this trend is increased labor expenses, due to increasing minimum wages in the United States.  The price in robotics is decreasing, as the price for human labor is rising.  Automation can also reduce the chance of errors and ensure the correct portion size is served to customers, keeping waste minimal.  Mckinsey believes that over 50% of today's work activities may be automated in the next 35 years. 
TREND #4 GLUTEN-FREE OFFERINGSAccording to Food Busines News, Prime 13, and Nestle Professionals more restaurants are offering gluten free choices. Sixteen percent of consumers are seeking gluten-free choices and gluten-free options have grown on menus by an astounding 1,981% over the past decade.  This is one of the fastest growing trends in the restaurant sector of all time, positioning itself ahead of organic, all-natural and local sourcing. Gluten-free has transitioned from "niche to mainstream."  Twenty percent of restaurants today identify as having gluten-free options. Steak is naturally gluten-free so steakhouses are an excellent option for those who wish to enjoy a gluten-free dinner.
TREND #5 GRASS-FED CowsAccording to Prime 13 and QSR Magazine, one of the largest trends specific to steakhouses is using grass-fed cows for their steaks. The National Restaurant Association also projects that grass-fed beef will "outpace other beef on menus in just four years, with an expected 189 % growth rate." The key driver of this trend is the health conscious consumer.  Beef from grass-fed cows is a healthier option, since it has a lower fat content. 