Production Process at Hard Rock Cafe

Introduction

The Hard Rock Cafe started off as a local business with one pub in London in 1971. Now, it has grown to have more than 129 restaurants in more than 40 countries. The mission and route of the Hard Rock Cafe’s success is the experience that they market. “Our brand plants the roots of its global soul in every place we live. Hard Rock founders, Isaac Tigrett and Peter Morton were two young Americans who brought together American food and rock ‘n’ roll in London, the heart of the world’s music scene in 1971. They wanted a cafe that embraced everyone, whatever their background, to unify a world where “bankers did not hang out with bakers.” (Hard Rock Cafe, 2019) The Hard Rock Cafe differentiates itself from competitors because it is not just going out for a meal at a regular restaurant its focus is to embrace and enhance the experience for the consumer through good music, quality food, casino games, and historic mementos.

Forecasts Applied

The Hard Rock Cafe uses long-range forecasting for locking contracts for leather goods and for food items like beef, poultry, and pork. The Hard Rock Cafe uses short-term forecasting which is conducted monthly by each location and reviewed by headquarters. The point-of-sale forecasting system helps Hard Rock Cafe gauge consumer data through each transaction made. Therefore the role of the POS system records data allows them to predict and plan for the future in functions like ordering, inventory, staff scheduling, and menu adjustments. “The heart of the sales forecasting system is the point-of-sale system (POS), which, in effect, captures transaction data on nearly every person who walks through a cafe’s door. The sale of each entrée represents one customer; the entrée sales data are transmitted daily to the Orlando corporate headquarters’ database. There, the financial team, headed by Todd Lindsey, begins the forecast process.” (Case Background)

Projecting trends is important in the service industry; this is because trends change frequently over time. The Hard Rock Cafe has to be aware of the environment because this aspect will attract and retain consumers. “This technique fits a trend line to a series of historical data points and then projects the line into the future for medium to long-term forecasts.” (Heizer, Render & Griffin, 2017) Therefore the Hard Rock Cafe uses the trends recorded to make the appropriate decisions on things like menu preferences, the most to least popular days of the week for consumers, and the popularity of the current trend in the market. This information all stems from the company’s POS system on their consumer data.

Furthermore, in projecting trends, The Hard Rock Cafe implemented a customer rewards program and this helps them find the interests of the market which are trends, this data relates to the POS system. Hard Rock describes its program as “a unified guest affinity program allowing customers to earn points redeemable for rewards when they stay and play at participating Cafes, Rock Shops, Hotels, and Casinos worldwide. The program is free to join and provides music-loving members around the world with exclusive privileges, offers, perks, and benefits – including the chance to win one-of-a-kind experiences that rock, such as an all-expense paid trip to London for Hard Rock’s legendary music festival, Hard Rock Calling.” (Hard Rock Cafe, 2013) Implementing this program enables them to get consumer feedback from their most loyal consumers so they can gauge where they are doing well and areas they can improve, this is important in the service industry because it is highly competitive and you want to stay competitive and marketable by staying with the trends. Also, another benefit of the rewards program is that it can aid in determining the timing of the logistics of its suppliers. It helps understand what your consumers are most interested in so Hard Rock can have enough inventories to fulfill all demands which are very important for Hard Rock being in the service industry.

The Hard Rock Cafe outsources its logistics which is cost-effective and beneficial. They will also be able to gain data through the POS system for this. “Hard Rock Café International, Inc. has selected Kuehne & Nagel’s wholly owned subsidiary, USCO Logistics, to implement a North American supply chain management solution supporting the distribution and replenishment of collectible and fashion merchandise sold in its cafes, hotels, and casinos.” (MH&L, 2003) Outsourcing is valuable because it is less costly and more efficient. “Over 2/3 of businesses choose to outsource at least a portion of their supply chain operations, mostly transportation and storage. The reasons behind outsourcing mostly include cost reduction, increased efficiency, and the convenience of entrusting important aspects of your work to more efficient and skilled professionals.” (A & A, 2016)

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Seasonal changes contribute to data and are also essential to focus on because much of its operations are aimed toward the tourism market. Being a rewards member, Hard Rock will send their promotions electronically through email. This is a great way of retrieving consumer data like consumer location and other areas along with attracting the consumer to return soon. If a member is close to a Hard Rock location that data from the member can help Hard Rock send that member promotion on current events, sales, and other offers. During the summer months when kids are out of school tourism peaks because many families go on vacation. Hard Rock can use the information it has collected from its membership program to help forecast capacity planning for restaurants, casinos, hotels, and other entertainment venues it operates. “The presence of seasonality makes adjustments in trend-line forecasts necessary” (Heizer, Render & Griffin, 2017). This data also helps target which market Hard Rock should expand on. So capitalizing on technology like email and a loyalty program that tracks members' data, Hard Rock is able to perform more accurate forecasting for its locations. Therefore the role of the POS system is essential because multiple areas can be forecasted from this system which is vital to Hard Rocks' success.

Weighting System

“A Weighted Moving Average puts more weight on recent data and less on past data. This is done by multiplying each bar’s price by a weighting factor. Because of its unique calculation, WMA will follow prices more closely than a corresponding Simple Moving Average.” (Fidelity, 2019) “When a detectable trend or pattern is present, weights can be used to place more emphasis on recent values” (Heizer, Render & Griffin, 2017). Thus, using moving averages to help determine things like staffing levels, inventory, capacity, and expected revenues is a strong way to make decisions. Also, comparing historical data as to what is currently happening can also give a good idea as to what to expect in the future, since Hard Rock uses weighted averages to evaluate managers for annual bonuses. This is an efficient way to set annual bonuses and pay because it gives an easy visual representation of how well the business has sustained. The most important area for a location manager is to keep customers interested in returning. Thus if a business is showing improvement the manager and team have performed well. There are external factors though that cannot be predicted which is why the weighted average works well. “Forecasts are seldom perfect. This means that outside factors that we cannot predict, or control often impact the forecast. Companies need to allow for this reality” (Heizer, Render & Griffin, 2017). If a business is showing that it is sustainable and continuing to grow to attach a bonus to the weighted average method is reasonable. When Hard Rock starts to see a trend of slowing sales, decisions must be made in order to keep operations profitable.

Variables

There are many variables that Hard Rock can use to predict daily sales in each location. Some of these variables are location, season, trends, and spending habits. These types of variables can have an impact on daily operations and forecasting for the steady and slow seasons is important. Historical data is a good benchmarking tool that Hard Rock can use to get a good idea of how busy its operations are. Multiple regression can help determine the sales of one menu item should the price of another change. Variables such as daily customer counts, and which items are being purchased most often, can be used in short-term forecasting. This helps to evaluate things such as staffing levels and inventory.

Mid-term forecasting is used to determine volume levels for seasonal variations. Data can be taken from the monthly guest count and grouped into different seasons. Monthly data combined with data on popular purchases can be used to make decisions such as when to hire specific bands to perform. This data is also used to determine what and how much Hard Rock inventory to stock. During slow periods Hard Rock could hire a popular band in an effort to increase sales levels during this time by using an event for attraction. “Events centered on VIPs, special guests, and celebrities are like magnets if you want to attract an audience. Creating a members-only event, a celebrity meet-up for your customers and prospects will get your brand instant attention. Brand launches featuring VIPs and celebrities are known to generate a bigger audience than those without them.” (Global Event Management, 2015)

Data used to forecast the company's long-term goals such as company expansion comes from information such as annual guest count and overall revenues. Hard Rock uses variable data to realize more profits which creates growth.

Conclusion

In conclusion, The Hard Rock Cafe is able to obtain in-depth information on its operational demands through its POS system, loyalty program, and overall company performance. Variable data is used to make the decisions necessary to ensure a profitable business. Forecasting measures such as weighted averaging and a regression analysis help to predict what the future service levels for Hard Rock can be. Using the weighted system to evaluate managers’ salaries and bonuses is useful because it encourages performance and reward. The least squares regression method helps to predict what a future level may be dependent on the variables used. During peak and slow periods, it is important for the company to forecast what is going to be expected for cash flow, revenues, and growth. The more accurate a company can forecast its potential the more accurate the goals can be and the road to success smooth. Efficient forecasting measures provide strong data which also helps in reducing overall operating costs for Hard Rock. Forecasting techniques such as seasonal variations, moving averages, and qualitative and quantitative information help to give Hard Rock the information it needs to make accurate business decisions.

References

1. A&A. (2016, November 2). Strategies for Reducing Logistics Costs and Supply Chain Costs. Retrieved from https://aacb.com/reducing-logistics-costs-supply-chain-costs/
2. Fidelity. (2019). What Is The Weighted Moving Average? Retrieved from https://www.fidelity.com/learning-center/trading-investing/technical-analysis/technical-indicator-guide/wma.
3. Global Event Management. (2015, August 10). 5 event ideas that are guaranteed to attract customers. Retrieved from https://www.geventm.com/5-event-ideas-that-are-guaranteed-to-attract-customers/.
4. Hard Rock Cafe. (2019). SERVING PEOPLE AND OUR PLANET Living our Mottos. Retrieved from https://www.hardrock.com/corporate/livingourmottos.
5. Hard Rock. (2013, January 1). Hard Rock International Pays Tribute To Loyal Fans Around The World With Launch Of Hard Rock Rewards™. Retrieved from http://www.hardrock.com/news/hard-rock-international-pays-tribute-to-loyal-fans-around-the-world-with-launch-of-hard-rock-rewards/.
6. Heizer, J., Render, B., & Griffin, P. (2017). Operations Management. (2nd Canadian ed.). Don Mills, Canada: Pearson Education Canada.
7. MH&L. (2003, December 1). Hard Rock Cafe Selects Warehouse Management Solution. Retrieved from https://www.mhlnews.com/archive/hard-rock-cafe-selects-warehouse-management-solution.