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Unconventional Wisdom

Chris Sullivan, for his part, is pleased at how things are turning out. "We have at least four more years of growing Outback by 65 units a year. We hope that the Carrabba's concept will come in behind that. I'm sure there will be something else after that. And we haven't even touched on our international potential yet."

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OUTBACK VERSUS THE COMPETITION

A Company of Owners

Average restaurant manager's total annual compensation:

Outback: More than $118,000

Lone Star: Up to $75,500

Each Outback manager invests $25,000 in his or her restaurant and gets 10% of the unit's cash flow, paid monthly. The average manager's annual income from cash flow is $73,600. The base annual salary is $45,000. A Lone Star manager has a base annual salary of up to $50,000 and is eligible for a bonus of $13,000, plus, after the third year of employment, stock options worth $12,500.

Sources: Smith Barney, company reports.

Return on Investment*

Outback: 52%

Lone Star: 49%

Chili's: 33%

Ground Round: 27%

Grady's: 30%

Ruby Tuesday's: 31%

Average: 33%

*Pre-rent cash flow as a percentage of restaurant investment cost.

Source: Smith Barney Inc., July 1994.

Service

Outback: Dinner only

Food Costs

Outback: 39% of sales

Lone Star: 36% of sales

Source: 1993 figures from Smith Barney, company reports.

Decentralization

Outback: One layer of management between founders and restaurant managers

Industry: Four or five layers of management between founders and restaurant managers

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THE ORIGINS OF OUTBACK

Anatomy of a Partnership

The Operations Guy

Robert D. Basham, president
Age: 47

Education: B.S. in business, University of Maryland

Original career goal: FBI agent

* * *

The Real Estate Guy
Chris T. Sullivan, chairman, CEO
Age: 46

Education: B.S. in business and economics, University of Kentucky

Original career goal: banker

* * *

The Food Guy
J. Timothy Gannon, senior vice-president
Age: 46

Education: B.A. in art history, Florida State University

Original career goal: art-museum staffer

* * *

The Sixties
1966 Gannon majors in art history at Florida State because it has an extension program in Florence, Italy. Works in Florence as a tour guide.

1968 Sullivan works as a restaurant dishwasher, cook, and bartender. "I got into this business trying to make ends meet as a college student. I come from a large family -- six kids -- and my dad didn't make a lot of money."

* * *

The Seventies
1971 Basham: "After college I wanted to be an FBI agent. They suggested I get some business experience first. My brother owned a restaurant in Washington, D.C., so I went to work there. I found I really liked the business."

1971 Sullivan interviews for bank jobs paying $8,000 a year. Takes a $500-a-week waiter job. 1972 Joins Steak & Ale chain; soon managing a Steak & Ale unit in Rockville, Md., where Gannon is hired as a manager trainee (1973). Sullivan later is posted to Indianapolis, then Chicago.

1971 Gannon finds a job as a cook in Aspen, Colo. Moves to the Aspen Four Seasons; learns from a French chef how to prepare food from scratch. "My mother started dinner at 5:30 and served it at 6. It was full fIames, everything up high. I didn't learn anything about cooking from her."

1973 Basham joins Steak & Ale as a management trainee. Soon becomes general manager of a Steak & Ale restaurant. Later is named regional supervisor for Baltimore; Washington, D.C.; and Pennsylvania.