Prep the Potatoes and Onions: Peel and dice the russet potatoes into bite-sized pieces. Finely chop the yellow onion.
Sauté Onions: Set your Instant Pot to "Sauté" mode. Melt the unsalted butter in the Instant Pot and add the chopped onions. Sauté until they become soft and translucent.
Create the Roux: Sprinkle the all-purpose flour over the sautéed onions and stir continuously to form a roux. Cook the roux for about 2 minutes until it turns golden brown, ensuring a rich and velvety texture for the soup.
Combine Ingredients: Pour the vegetable or chicken broth into the Instant Pot, whisking it with the roux and onions to create a smooth base. Add the diced potatoes, garlic powder, onion powder, dried thyme, smoked paprika, salt, and black pepper. Stir well to combine all the flavors.
Pressure Cook: Secure the lid on the Instant Pot and make sure the vent is set to "Sealing." Select the "Pressure Cook" or "Manual" setting and set the timer for 8 minutes on high pressure.
Natural Release: Once the cooking time is complete, allow the Instant Pot to naturally release pressure for about 10 minutes. Then, carefully perform a quick release to release any remaining pressure.
Final Touches: Set the Instant Pot to "Sauté" mode again, and stir in the whole milk and heavy cream (if using) gently. Let the soup simmer for a few more minutes to allow the flavors to meld together.
Cheese Melting Magic: Turn off the Instant Pot, and stir in the shredded cheddar cheese until it melts and creates that irresistibly creamy consistency.
Serve and Garnish: Ladle the Instant Pot baked potato soup into bowls, and top each serving with a generous sprinkling of crispy bacon (or vegan bacon) and chopped green onions or chives for a burst of freshness.
With the Instant Pot's speed and efficiency, you'll have a steaming bowl of Outback Steakhouse baked potato soup in no time! Enjoy this comforting and flavorful meal with minimal effort.