Outback’s first location on Henderson Boulevard in Tampa, FL wasn’t much to write home about. In fact, its opening week was the slowest business co-founder Bob Basham had ever experienced.

Things changed at Outback’s third unit in Sarasota, Florida, where sales quickly hit $50,000 per week. It was a level Basham thought would take years for the dinner-only concept to achieve.

Suddenly, the founders’ initial plan to build five locations in the Tampa area and then spend their time golfing was tossed aside. Outback had greater potential, and word soon got out of a new concept posting incredible sales. Naturally, other operators and investors wanted to be involved, including a good number of former colleagues from the co-founders’ days at Pillsbury’s S&A Restaurant Corp and Chili’s.

Thus began an expansion that would see the brand hit 100 locations in five years. And it was an expansion that cared less about geography and more about people. To put it simply, Outback’s growth was fueled by extraordinarily strong and experienced restaurant operators choosing to join the company.

 

“Our growth was based on people. It wasn’t based on, ‘hey, we need to be in the Chicago area tomorrow.’”

-Bob Basham, Innovation Leads to Imitation

Blaze Pizza pursued a similar strategy in the 2010s during its historically fast ride to several hundred locations, as detailed by Jim Mizes in one of our earlier episodes. Seemingly no region was off the table so long as the company had a good partner.
 

“Our philosophy was we would go where we found great franchisees. That we were not going in concentric circles; we were not going in contiguous geography. We were going where we had great people. And that’s how we ended up in so many places so, so quickly. Find a great franchisee in New Jersey? We’ll go there. Find a great franchisee in Louisville, Kentucky? We’ll go there.”

-Jim Mizes, Location, Location, Location

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For Outback, finding the right people was just the first step. Next, they needed a way to inspire operators, encourage them to innovate and reward them fairly when they succeeded. More specifically, Basham and his partner Chris Sullivan wanted to give their people something they both craved in their days at Pillsbury: a piece of the business. This philosophy eventually led to a unique managing partner program in which managers could invest in the business and financially share in the restaurant’s success.

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“At the unit level…how do you get the managers fired up about and to care about what they do in their restaurant? And if they own part of it and have a piece of it and invest in it, then they’re going to pay a lot more attention to it.”

-Bob Basham, Innovation Leads to Imitation

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Of course, franchising can provide similar benefits as franchisees are not just entrepreneurial but also have a lot on the line. And some of the most notable innovations in the restaurant industry can be traced back to franchisees trying to grow their business.

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McDonald’s Filet O Fish, for instance, was created by a franchisee trying to drive sales in a Roman Catholic community. The Big Mac was also founded by a franchisee, and the Egg McMuffin was similarly created by an owner/operator.

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Additionally, Subway’s $5 Footlong deal dates to 2004, when a franchisee wanted to spur weekend sales at locations inside a Miami hospital. The success of the deal caused it to spread to nearby locations in Florida, and eventually Subway took the value deal systemwide during the Great Recession.

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Chuck Winship, a guest in our episode Theory of Evolution, discussed some of the changes pushed for by franchisees during his time at Chili’s. One of these was the onion cutter used for Chili’s Awesome Blossom – its response to Outback’s Bloomin’ Onion. For both Chili’s and Outback, the appetizer was elaborate and difficult to prepare before specialized cutters emerged. Chili’s, in particular, was struggling to make the appetizer look appealing, but Winship found an onion cutter to use in his stores. Then, he passed word along to the corporate office, which eventually jumped on board to use the cutter in corporate stores.

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“We always kind of patted ourselves on the back because we did some things as franchisees that did help lead the system. In Florida, we were the first ones that used the onion cutter back when Outback came out with the colossal onion. We went ahead and got these little onion presses, spent a couple hundred bucks a unit, put them in place, and Brinker finally came around to put it in their stores after they saw the success we had with it.”

-Chuck Winship, Theory of Evolution

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But perhaps more noteworthy than the onion cutter was a thorough list of suggestions for Chili’s leadership, curated by a group of the brand’s largest franchisees and then presented to the corporate leadership.

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“We (franchisees) got together and spent a couple days in Tampa, and we came up with 22 pages of notes of ideas, everything from marketing programs, menu, facilities, service, uniforms, whatever. I mean we just went through the concept. Then we very carefully picked out and represented in our group to go present these findings to Brinker…Doug went off to Dallas and took our report. Brinker called a meeting 6 weeks later, invited all the franchisees and addressed everything we did."

-Chuck Winship, Theory of Evolution

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As for Outback, it was a managing partner who identified the opportunity with carside service. The corporate office wasn’t necessarily paying attention to such occasions, remaining more focused on dine-in business while also concerned about the quality of to-go orders. But waits for tables were long, and customers wanted to take Outback’s food home. Combine those factors with an entrepreneurial managing partner who wanted to grow his business and innovation was inevitable, even if it didn’t initially have the support of the home office.

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“He ended up doing this carside takeout and he was telling us about it…We were concerned about the quality, how does it travel, do people really like it, can you get the quality food delivered, so we said ‘no, let’s look at it, I don’t think it’s a good idea'. Well, he kept doing it. That’s why I thought he got a D in conduct but he got an A in results because all of a sudden he was up in sales and that was a kind of business that kept growing and then we realized, ‘well shoot, if its working there, we ought to maybe look at this.’”

-Bob Basham, Innovation Leads to Imitation (Preview)

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History shows that big ideas can come from anywhere in this industry, especially when operators are highly incentivized to drive new sales. Having a sense of ownership certainly helps, and if entrepreneurial employees can’t get that feeling of ownership or equity, they might leave.

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Outback cofounders Bob Basham and Chris Sullivan certainly did. And something tells me the story of S&A Restaurant Corp would have been a little different had those two been encouraged to stay.