Value Steakhouses Dethrone Outback as America’s Beef Kings

An unprecedented shift in America’s casual dining landscape has seen Texas Roadhouse and LongHorn Steakhouse surge past longtime leader Outback Steakhouse, fundamentally reshaping the industry’s competitive dynamics. Texas Roadhouse recently became the largest casual dining chain in the United States in 2024, overtaking Olive Garden, which had held the title since 2018, according to CNBC.

This dramatic reshuffling comes as American diners increasingly seek value-conscious options without sacrificing quality. While foot traffic for full-service restaurants declined by 0.2% in 2024, Texas Roadhouse and LongHorn Steakhouse defied industry trends with remarkable increases of 7.2% and 4.3% respectively.

The market has rewarded this performance, with Texas Roadhouse’s stock climbing approximately 15% over the past year and shares of LongHorn-owner Darden jumping around 25%. Meanwhile, Outback parent company Bloomin’ Brands has seen its stock plummet more than 70% to roughly $8 per share, reflecting the once-dominant chain’s dramatic fall from grace.

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From Crocodile Dundee to Longhorn Country

Outback Steakhouse, founded in 1988 with a concept inspired by the “Crocodile Dundee” movie, once defined casual steakhouse dining in America. Its faux-Australian theme, signature Bloomin’ Onion, and affordable steaks made it a nationwide sensation throughout the 1990s and 2000s. However, a series of strategic missteps created openings that competitors quickly exploited.

“Outback hiked prices too high, relied too heavily on promotions to draw diners, and cut costs too far,” according to ABC12. “Customers and analysts alike say food quality suffered, table service slowed and restaurants became dingy.”

Location strategy also proved problematic, as Outback concentrated many restaurants around shopping malls – areas that have experienced declining foot traffic for years. The company has closed dozens of these underperforming locations in recent years as it struggles to recapture its former prominence.

Value and Experience: The Winning Formula

Both Texas Roadhouse and LongHorn have capitalized on Outback’s weaknesses with distinct strategies that prioritize consistent value and memorable dining experiences. Texas Roadhouse, founded in 1993, distinguishes itself through lively, rodeo-themed restaurants featuring wood-paneled walls, free peanuts, honey butter rolls, and occasional line dancing by servers.

“Roadhouse is winning because they have a much better value proposition than anybody else,” said Peter Saleh, an analyst at BTIG. The chain’s check average of $23 sits significantly below Outback’s $29, a crucial difference as inflation-conscious consumers seek affordable dining options.

LongHorn Steakhouse, meanwhile, has pursued a different path since being acquired by Darden (Olive Garden’s parent company) in 2007. The chain has moved upmarket while maintaining competitive pricing, offering larger steaks and a more premium atmosphere that appeals to diners trading down from fine dining establishments.

The Steak Quality Showdown

Beyond pricing and atmosphere, steak quality remains the fundamental differentiator in this competitive segment. A head-to-head comparison by Chowhound found that while Texas Roadhouse offers more size options and slightly lower prices, LongHorn Steakhouse narrowly wins on overall quality.

“LongHorn Steakhouse steaks tend to be a few dollars more for the same size and cut, but the price differences are not astronomical,” Chowhound reported after sampling multiple cuts. “We liked the seasoning blends used on the LongHorn steaks better and were happy to pay a bit extra for so much flavor.”

Texas Roadhouse does maintain some unique advantages, including allowing customers to select their specific steak from a display case when entering the restaurant. The chain also offers prime rib, a popular cut not available at LongHorn.

Management Matters: The Local Connection

A critical but often overlooked factor in these chains’ success has been their investment in local management. “You can’t underestimate the investment that these chains make in their general managers at the store level. The store-level manager really is probably the most critical piece to any restaurant chain’s success,” said Technomic Senior Principal David Henkes.

This focus on empowering local leadership has allowed both chains to maintain consistent execution despite rapid growth, ensuring that the steak a customer orders in Phoenix tastes the same as one served in Philadelphia.

Can Outback Stage a Comeback?

Outback isn’t surrendering the steakhouse wars without a fight. New CEO Mike Spanos, formerly chief operating officer at Delta, has implemented a turnaround plan focused on simplification and value. The chain plans to cut 20% of its menu items and reduce limited-time promotions that created operational complexity while refocusing on consistent, everyday low prices.

“Outback is a great business. It is a great brand,” Spanos said recently. “It is a very fixable business.” The company also plans to slow new restaurant openings and direct investments toward remodeling existing locations to address deteriorating conditions.

Industry observers point to Chili’s recent remarkable comeback as evidence that such turnarounds remain possible. However, as Texas Roadhouse and LongHorn continue strengthening their positions, Outback faces an increasingly challenging path to reclaiming its former status as America’s steakhouse of choice.

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