Hard Rock rolls out plans to get over the hard times New stores, TV show, record label in works

February 10, 1997|By THE ORLANDO SENTINEL

It's 4 p.m. on a Monday and Orlando's Hard Rock Cafe is jammin'.

The rock 'n' roll-theme restaurant serves some of the priciest food in town. But even at this off-hour, there's a line to buy $9 hamburgers and $2 soft drinks -- not to mention T-shirts, key chains and baseball caps with the gold Hard Rock logo.

For Jim Berk, 37, the company's president and chief executive officer, all this is "very cool," and something he hopes to see often in the future.

It has been a tough few years for Hard Rock, the quiet giant that dozed off while competitors, such as the brash Planet Hollywood chain, chewed away at its business. Both chains have been mentioned as possible new attractions for downtown Baltimore.

Now, with Berk at the helm and a half-billion dollars of new investment, the 25-year-old chain is working to regain its edge. In recent weeks, the company has announced plans for a television show, record label and other businesses designed to complement its restaurants.

It also is stepping up the opening of new outlets, while plowing money into existing stores, where sales in the past year were as flat as an old 45.

"This is the awakening of Hard Rock," said Berk, a former music teacher who joined the Orlando, Fla., company in April. "We're taking it to the next level, but we want to keep it fresh, cool and hip."

The company took another significant step in December. It paid $61 million to buy back the Hard Rock franchise in Canada, adding 11 restaurants to its stable of 64. That followed a $410 million repurchase of Hard Rock restaurants in the western United States.

Those deals let the company regain control of most worldwide rights to the Hard Rock name, which was sold in bits and pieces over the years.

Now the company can launch future businesses without fear of territorial disputes. In the wings are plans for a new restaurant concept, which insiders say would be based on "monster" characters from the Universal Studios archives. Resort casinos are planned, too, although another operator will continue to hold some casino rights in the West.

The company also is replacing the Hard Rock at Universal Studios Florida with a larger outlet next year. The project will include a 2,200-seat amphitheater, giving the company a venue for live concerts.

"The hardest thing to do is to make sure we don't move too fast," Berk said. "Our goal has been to focus on the core business and the logical extensions. Otherwise, you grow too fast."

The reinvention of Hard Rock occurs not a moment too soon, say many observers.

Hard Rock was the place to be and be seen in the '70s and '80s, begun by two Americans in London who were homesick for hamburgers and rock 'n' roll. Founders Peter Morton and Issac Tigrett packed stores with music-industry memorabilia, giving customers the chance to leave with their own mementos such as T-shirts, caps or mugs.

But that glow dimmed during the past several years. The growth of new stores slowed, and the company ignored competitors entering the so-called "entertainment" industry. Chief among them was Planet Hollywood, the movie-memorabilia restaurant chain begun in 1991 by Robert Earl, Hard Rock's former president.

The two concepts are identical, save for one stresses music, the other movies. At both, merchandise sales are key, sometimes accounting for half or more of business. In tit-for-tat fashion, both have announced plans to go into virtually the same new businesses, with Planet Hollywood even planning to delve into a new music-restaurant venture later this year. Each also is looking for a site to build a new Orlando headquarters, possibly this year.

Planet Hollywood boasts the lead on sheer speed of growth. In four years, the chain has ballooned to 51 stores compared with Hard Rock's 75, and earned $23.5 million in the first nine months of last year. Average store sales are $11 million to $12 million a unit, exceeding Hard Rock's average of $8 million to $9 million, according to industry reports.

"Management's eye wasn't as much on the ball as it should have been," said Christopher Page, who follows Hard Rock for Goldman Sachs in London. "I think there is no doubt that it seems a bit tired and needs to be revitalized."

Last year was miserable for the restaurant industry in general because of competition and tight consumer spending. There was a particular glut in theme dining, with entries such as Harley Davidson Cafe and Country Star.

Berk said the sales erosion has been minimal, though analysts suggest revenue was not only flat but down at many stores. Berk said sales are still the envy of the industry: The Orlando Hard Rock, one of the highest-grossing restaurants in the world, does more than $45 million a year.

Still, Berk is spending about $5 million to change menus, uniforms and chairs, install new video and audio equipment and add a computerized system to track sales.

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