Creamy Outback Potato Soup (Just Like the Steakhouse)

This creamy Outback Potato Soup recipe brings the restaurant favorite right to your stovetop. It’s thick, smoky, and loaded with tender potatoes and crispy bacon.

The soup comes together in one pot in about 40 minutes, so it works on a busy weeknight or when you’re craving something cozy without waiting for a table.

Why This Potato Soup Works

I keep coming back to this version because it nails the balance of smoky bacon, sharp cheddar, and slightly chunky potatoes in a velvety broth. The soup has enough body from the potato starch that you don’t need a heavy cream overload, but it still feels rich.

The finishing touch is the same as the steakhouse version: a mound of crispy bacon, extra cheese, and a scatter of green onions that cuts through the richness. Every spoonful tastes like a loaded baked potato.

Ingredients

• 4 slices bacon, chopped : cooked until crisp, then set aside for topping
• 1 medium yellow onion, diced : builds the savory base
• 2 cloves garlic, minced : adds depth
• 3 tablespoons all-purpose flour : thickens the soup without heaviness
• 4 cups chicken stock : the savory liquid
• 2 cups whole milk : gives richness, room temperature works best
• 2 large russet potatoes (about 1 1/2 lbs), peeled and diced into 1/2-inch cubes : the main body
• 1 teaspoon kosher salt : plus more to taste
• 1/2 teaspoon black pepper : freshly ground
• 1/4 teaspoon smoked paprika : optional, for an extra smoky note
• 1 1/2 cups shredded sharp cheddar cheese, divided : 1 cup for the soup, 1/2 cup for topping
• 2 green onions, sliced : for a fresh finish

Variations / Substitutions

• Make it gluten-free : Swap the flour for 2 tablespoons cornstarch mixed with 2 tablespoons cold water. Stir it in after the soup simmers and cook 2 minutes.
• Use a different cheese : Smoked gouda or pepper jack add a nice twist, but sharp cheddar is the classic steakhouse choice.
• Add vegetables : Stir in a cup of steamed broccoli florets or cauliflower near the end for a loaded vegetable version.

If you like this, try my Slow Cooker Loaded Baked Potato Soup.

How to Make Outback Potato Soup

Step 1: Cook the Bacon

Place the 4 slices chopped bacon in a large Dutch oven or heavy-bottomed pot. Cook over medium heat, stirring occasionally, until the pieces are crisp and the fat renders, about 6 to 8 minutes. Use a slotted spoon to transfer the bacon to a paper towel-lined plate, leaving the drippings in the pot.

You should have about 2 tablespoons of fat left; if you’re short, add a little butter. The kitchen will smell smoky and rich, and the bacon should be crunchy enough to crumble.

Step 2: Sauté the Onion and Garlic

Add the diced onion to the bacon fat and cook over medium heat, stirring every so often, until the onion turns soft and translucent, about 5 minutes. Toss in the 2 cloves minced garlic and cook for 30 seconds, just until you smell it.

The onion will become glossy and sweet, and the garlic will mellow the sharpness. Watch the heat so the garlic doesn’t burn, or the soup will pick up a bitter note.

Step 3: Whisk in the Flour and Add the Liquid

Sprinkle the 3 tablespoons flour over the onion and garlic mixture. Whisk constantly for 1 minute to cook out the raw flour taste. Slowly pour in the 4 cups chicken stock, whisking to keep lumps from forming, then stir in the 2 cups whole milk and the diced potatoes.

The liquid will look thin and pale at first, but as it heats it’ll start to thicken. Scrape the bottom of the pot with your whisk to catch any flour that clings there.

Step 4: Simmer the Potatoes

Season the soup with 1 teaspoon salt, 1/2 teaspoon black pepper, and the 1/4 teaspoon smoked paprika if using. Bring the soup to a gentle boil over medium-high heat, then reduce the heat to low. Simmer, uncovered, for 15 to 20 minutes, or until the potatoes are fork-tender.

Stir every few minutes so the bottom doesn’t scorch. The potatoes will soften and release starch, giving the soup a thicker, creamier body. You’ll see the liquid turn from milky to a pale golden color.

Step 5: Finish with Cheese and Toppings

Take the pot off the heat and stir in 1 cup of the shredded cheddar cheese. Keep stirring until the cheese melts completely and the soup looks smooth. Taste and adjust salt and pepper if needed.

Ladle the soup into bowls and top with the reserved bacon, the remaining 1/2 cup cheddar, and sliced green onions. Serve right away while it’s steaming hot.

Tips for the Best Potato Soup

• Use freshly shredded cheese from a block. Pre-shredded bags have anti-caking agents that can make the soup grainy instead of silky.
• For a smoother texture, use an immersion blender to purée a cup or two of the soup before adding the cheese. This gives a velvety body while leaving plenty of potato chunks.
• Don’t let the soup boil after you add the cheese. High heat can cause the dairy to separate and turn gritty. Keep it at a gentle simmer or just below.
• Leftover baked potatoes work too. Dice them and add during the last 5 minutes of simmering so they don’t turn to mush.

Cooking times by potato size:

Storing Leftover Soup

• Refrigerate : Store in an airtight container for up to 4 days. The soup will thicken as it sits, so plan to add a splash of milk or stock when you reheat it.
• Reheating : Warm gently on the stovetop over low heat, stirring often. Do not let it boil, or the cheese may separate. You can microwave individual portions in 1-minute bursts, stirring in between.

What to Serve with Outback Potato Soup

A simple green salad with a tangy vinaigrette cuts through the richness of the soup perfectly. Crusty bread or a warm baguette is another great choice for dipping. If you want to sneak in more vegetables, a side of roasted broccoli or asparagus makes a complete meal.

Frequently Asked Questions

Can I make this soup in a slow cooker?

Yes, but cook the bacon and onion on the stove first. Then transfer everything except the milk and cheese to the slow cooker and cook on low for 6 to 7 hours or high for 3 to 4 hours. Stir in the milk and cheese in the last 20 minutes.

Can I use frozen diced potatoes?

You can, but they cook more quickly. Add them with the liquid and check for tenderness after 10 minutes of simmering.

How can I make this dairy-free?

Swap the milk for unsweetened oat milk and use your favorite vegan cheddar. The soup will still be creamy, though the cheese melt may differ slightly.

Can I freeze potato soup?

Dairy-based potato soups don’t freeze perfectly because the potatoes can become grainy and the milk may separate. If you do freeze it, reheat slowly and whisk well. The taste is still good but the texture won’t be exactly the same.

Outback Potato Soup Recipe

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Prep Time 10 minutes mins

Cook Time 30 minutes mins

Total Time 40 minutes mins

Servings: 4 servings

Calories: 420

Ingredients Method Notes

Ingredients

  

• 4 slices bacon, chopped
• 1 medium yellow onion, diced
• 2 cloves garlic, minced
• 3 tablespoons all-purpose flour
• 4 cups chicken stock
• 2 cups whole milk
• 2 large russet potatoes (about 1 1/2 lbs), peeled and diced into 1/2-inch cubes
• 1 teaspoon kosher salt
• 1/2 teaspoon black pepper
• 1/4 teaspoon smoked paprika (optional)
• 1 1/2 cups shredded sharp cheddar cheese, divided
• 2 green onions, sliced

Method

 

1. Cook the bacon in a large pot over medium heat until crisp, 6 to 8 minutes. Transfer to a plate, leaving the drippings in the pot.
2. Sauté the onion in the drippings until softened, about 5 minutes, then add the garlic and cook 30 seconds.
3. Whisk in the flour and cook for 1 minute. Slowly pour in the chicken stock and milk, whisking constantly, then add the potatoes.
4. Season with salt, pepper, and smoked paprika. Bring to a boil, then simmer for 15 to 20 minutes until potatoes are fork-tender.
5. Remove from heat, stir in 1 cup cheddar until melted. Serve topped with reserved bacon, remaining cheddar, and green onions.

Notes

Use freshly shredded cheese from a block for the smoothest soup. The soup thickens as it cools, so add a splash of milk when reheating. For an extra smooth texture, blend a portion before adding cheese.