Dive Brief:

• Outback Steakhouse will open its first domestic fast casual sandwich concept Aussie Grill by Outback in Tampa, Florida, in April, according to Restaurant Business.
• The company sees the concept as an avenue of growth for international markets, with two locations open outside the U.S. including one in Hong Kong. It has decided to test and tweak the concept close to its home office, but doesn't have plans to expand it within the U.S.
• The concept will have a smaller footprint, which can reduce operating costs for franchisees, according to Restaurant Business.

Dive Insight:

Recently casual chains have expanded into fast casual to diversify and test a new revenue stream as its segment of the restaurant industry continues to be plagued by sluggish sales and traffic declines compared to other concepts. The Cheesecake Factory, for example, opened Social Monk Asian Kitchen in February. Cracker Barrel also has a fast casual concept, but its spinoff has not been well received. The company is under pressure from an activist investor to divest the brand, calling it a poor use of capital and one that won't succeed.

For Outback, the move could be a good one as the company is already seeing positive momentum and development. Parent company Bloomin' Brands is in positive sales comps territory, with comps up 4% specifically for Outback in 2018. Bloomin' Brands CEO Liz Smith told investors during a February earnings call that marked the highest annual comp sales in six years. Outback is also modernizing its casual dining chains, as well as relocating restaurants as soon as quality sites are available, she said. Relocations typically have sales lifts of above 30%. 

The restaurant could capitalize on its growth by investing in a new concept, especially one within a segment primed for ongoing growth. Fast casual is a booming business and is popular among millennials. It has been the only segment to grow traffic by 6% and post a compound annual growth rate of 7% in the last five years, according to QSR Magazine

Alongside its smaller footprint, the Aussie Grill will offer general managers a four-day work week as described on a LinkedIn job posting. Both of these elements may make it easier for franchisees to operate these eateries compared to a more labor-intensive, full-service restaurant. Shake Shack is also testing a our-day work week for managers as many chains grapple with labor shortages.