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Operations Management Of The Hard Rock Cafe

3015 words (12 pages) Essay in Marketing

5/12/16 Marketing Reference this

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Hard Rock Cafe is one of the world’s leading and well-known brands in restaurant industry. Hard Rock cafe is a chain of casual dining restaurant. First Hard Rock was opened in London, 1971. It was found by Isaac Tigrett and Peter Morton. The mission of Hard Rock is to provide their customers with unique experience and attract new clients. In the 1980s, Hard Rock Cafe was the most popular when some people engaged in the hobby of visiting as many locations as possible and collecting a Hard Rock t-shirt bearing the Cafe logo and the location name. The chain began global expansion in 1982 when Isaac Tigrett and Peter Morton agreed to develop their own cafes across the world. At current date, it has 169 venues in 51 countries worldwide (Hard Rock, 2010). And it continues to grow with several more in the works. The question being raised here is how has a small Hard Rock restaurant that originated in London, England become one of the most well-known brands over the world?

Differentiation Strategy

“The trick is not to play the game better than the competition, but to develop and play an altogether different game.”

-Professor C. Markides of the London Business School

And, yes, Hard Rock has played a different game – the experience game!

Hard Rock Cafe is using differentiation strategy to achieve competitive advantage on the market. It is considered a smart strategy. They find the ways to differentiate that create value for customers and that are not easily matched or cheaply copied by competitors. Hard Rock sells meals and sells hotel rooms. Many others also do that. Even there are other music related restaurants. But what make the Hard Rock different from others is that it sells a full Rock & Roll experience.

There is an insatiable appetite for music as a reminder of the moments in one’s life and music can generally bring peace in mind and happiness to people. A 20-year-old can come in there and see memorabilia from Godsmack or a 60-year-old can come in and see something from Buddy Holly or Elvis Presley. Music is the tie that binds, regardless of your age. It is also about creating a soundtrack to the brand that people recognise. When the customers go inside, it feels familiar and that is not just because of how it looks, it is the sound. Hard Rock is built on that concept. That is how a brand becomes multidimensional. And they are successful! Hard Rock products are highly valued by customers. Customers develop loyalty to brand and it helps to beat competitors in the marketplace.

10 Operations Management decision making

Strategy is the direction and scope of an organisation over the long-term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholders’ expectations. The main target of any firm is to create competitive advantage over competitors. To create this advantage, firm has to find a right strategy. Hard Rock’s strategy is to provide not only a custom meal from the menu, but the whole experience with a unique visual and sound experience. The customers can find this experience at nowhere else in the world but Hard Rock. And it can be achieved when managers make effective decisions in 10 Areas of Operations Management. They are collectively known as operations decisions.

Goods & services design:

Hard Rock Café provides a unique experience with their goods and services offered at the restaurants. Hard Rock gives many amenities from cafes, to hotels to casinos, to live music and to huge Rock fest concerts. Furthermore, when Hard Rock expanded to global, it specified its menu for local taste due to the social norms. For example, when they expanded their chains to the Unites Stated, they modified their menu with Classic American foods such as hamburgers, chicken wings, and include higher-end items such as stuffed veal chops and lobster tails. And as for the menu of Hard Rock Cafés in British, they focuses more on fish and lobster and less on hamburgers and beef (Heizer & Render, p.83). Hard Rock also keeps continuing upgrade their menu to meet the customers’ requirement.

One of the special things about Hard Rock is its music memorabilia collection. Throughout the years, Hard Rock has collected a collection of items which are part of the Rock history. They not only solicit donations of music memorabilia, but they also go around the world and purchase a number of items at auctions. Nowadays, Hard Rock becomes the world’s largest collection of such items.

Another key that contribute to the success of Hard Rock Café is the inclusion of its own brand merchandise. About 48% annual revenue of Hard Rock comes from merchandise sales (Heizer & Render, p.83). The classic Hard Rock t-shirt was created when the original café sponsored a local football team. The shirts became a popular item and lead to the creation of the line of merchandise that is an important part of Hard Rock’s business today. Besides the classic tee, there are many different styles of shirts, hats, jackets, glassware, shot glasses, etc.

Many of these items are considered to be collectibles and the customers can generally purchase at Hard Rock’s café, hotel, and casino specific or from its website.

Quality:

Hard Rock Café defines quality within their properties by conducting numerous surveys to get an honest evaluation from its customers. They pride themselves on quality from the music, food and atmosphere. Their survey is on a scale from 1-7, and anything less than a 7 is considered a failure (Heizer & Render, p.56). It means that they want to reach to the customers’ highest satisfaction. Base on customer surveys and feedback, their menu will be changed with the times to fulfill customer recommendations accordingly.

In addition, Hard Rock Café not only focuses on the actual quality of food and merchandise, but also focuses on the visual and auditoria quality as the quality of the unique experience. The experience itself is their product. The employees at Hard Rock Café are responsible for giving the best quality of their services and products to its customers. The waiters, chefs and crews give their effort by means of their services through catering customers and providing them also the best food which meet their taste and preferences.

Process & capacity design:

The process and capacity design is what drives the decision of the locations of their facilities. Hard Rock Café creates products in an efficient manner, by analyzing them for cost effectiveness and by labor requirements.

Location selection:

Understand that location is a major long-time, and can make or break business strategy; Hard Rock has to choose the right location’s strategy to expand its cafe chains.

Because of Hard Rock’s customers are those who not only patronize the foods they offer, but also love music, Hard Rock Café chains need to choose places which is convenient to its valued customers. In addition, they also should be place in the areas that are fewer competitors as to their line of business. Another important that needed to be concerned is the location decision also needs to be concerned with some challenges such as: political risk, currency risk, and social norms.

Hard Rock Café has expanded to more than 157 locations throughout the world. And approximately a 70% of Hard Rock customers are tourists. This is good as far as the best tourist regions are traditionally good markets; however, this strategy also makes Hard Rock to depend on the tourism. For example, when the economy goes downturn, there would be less people who spend their money for travel, it will effect to the productive of Hard Rock. Seeing this disadvantage, Hard Rock develops another strategy is signing a long-term lease for cities that are not standard tourist destination such as Manchester and Birmingham. This is a good move for Hard Rock because it can make Hard Rock less dependent on the tourists (Heizer & Render, p.83).

Layout design:

Hard Rock café exist for 39 years and it expand its business to a global power managing 129 cafes, 12 hotels, casinos, live music venues and a huge Rockfest concert (Heizer & Render, p.56). Each cafe is a “museum in the environment of a bar-restaurant.” The company also added new layouts and memorabilia to its place in order to capture more customers. Lighting, sound, screens, contemporary music and circulation plans are designed to show memorabilia and expose merchandise to customers.

Human resource and job design:

“The layout, memorabilia, music, and videos are important elements in the Hard Rock ‘experience’ but it falls on the waiters and waitresses to make the experience come alive” (Heizer & Render, p.445).

Hard Rock’s philosophy is to hire only candidates who are best qualified. The human resource department supports the overall theme restaurant strategy by giving aggressive screening, including an evaluation of how the employee will contribute to the Hard Rock experience. Their hiring decision is not only on experiences and qualifications, but also on the candidate’s passionate about music, their ability to tell a story, and convey the experience to customers. These decision criteria ensure that their employees’ interests and right fit with the company. And that can avoid the hiring mistake, thus reduce the turnover.

They give great benefit package and effective indoctrination and training, empowerment. They also accept culture of diversity and focus on team world and even outside volunteer work. Hard Rock also creates a dynamic working environment so that employees want to be a part of a team. They know that as long as they can make the employees feel important and be a part of that team, the employees would want to stay with their employer. Using flexible schedules are also great strategy and could be the difference between employees staying and leaving the restaurant. The human resource department of Hard Rock recognizes that they responsible for a critical element in Hard Rock’s strategy. So they must recruit and retain the human capital that is necessary to fulfill that mission and strategy.

Supply-chain management:

Hard Rock work with qualified suppliers to ensure fresh, quality meals. Menu item selection depends on supplying right amount of ingredients from qualified suppliers on time

Inventory:

Their inventory consists of unique objects related to rock history, the memorabilia, special decorations and a special menu. The collection includes 1,000’s of pieces, worthed at $40 million valued memorabilia are catalogued, each piece is known where to be. Memorabilia of all cafes around the world are renewed each 5-6 years

Scheduling:

Understanding that scheduling plays an important role to the succesful of Hard Rock. A good scheduling can bring to the organization more effectively by serving customers promtly, and more efficiently by lowering cost (Heizer & Render, 647). To have an effective scheduling’s strategy, Hard Rock Cafe used the scheduling software, and sales forecast.

When forecasting sales in service industry, business must consider several factors related to their business. For Hard Rock Café, they need to take into these considerations: community events in the area, seasonality, holidays, time of day, day of week, sales trend in last couple weeks, and meals served is necessary for effective forecasting of sales. Events happening in the area, and using historical data for the year prior is also an effective way to the sales forecast. Hard Rock Café must understand these factors directly affect sales in the restaurant because by accurate forecasting and giving the customer what they want, they can achieve successful in their business

Considering seniority is important in staff scheduling. The employees who have worked for the company for a long time are more experience and more comfortable about the work. Thus, strategically scheduling each of them in each shift will distribute the experience and expertise. Also be noted that 70 % of their guests are tourists so this means that they have to have flexible schedules in their restaurants in order to provide services adapted to different cultures and demands.

Maintenance:

Hard Rock Cafe is redesigning its restaurant to accommodate the changing its tastes. Kitchen, bar, retail shop layout and equipment maintenance and maintenance of memorabilia. The menu review and surveys are also need to be maintenanced to meet the customers’ requirement.

Expansion into Hanoi

As we critically above, by using effectively operations management strategy, The Hard Rock Cafe has become such a successful business. Since the first Hard Rock Cafe opened in 1971, and its name has continued to expand and succeed. Nowadays, The Hard Rock Cafe has become a well-known brand in the world. Considering an expansion of its business into Hanoi, Vietnam – there are operations management opportunities and challenges for Hard Rock to be considered.

Vietnam is a developing country with a land of opportunities. It is a new emerging market, and is a potential investment destination. The potential for franchise in Vietnam is huge. According to global franchisers, Vietnam is a not place for franchises: a young consumer market, high economic growth and stable politics. The rise of the middle class in Vietnam also presents a growing market opportunity.

Opportunities:

Products and services design and quality:

Vietnamese economy is among the most rapidly growing in Southeast Asia. The economy has been growing steadily at 7-8 percent in recent years. Growing economy point to accelerating poverty reduction, and is seeing living standards rise as disposable income increase. Moreover, Vietnam has a population of more than 80 million, and about two-thirds of Vietnamese aged below 30 years, who are brand-conscious, trendy and adore the Western lifestyle (Vietnam News, 2010). Particularly in the urban areas, consumers demand is surging for higher quality products and services. And the local production cannot satisfy them. Thus, franchising businesses that introduce high-end products and services with a Western lifestyle could help meet that growing demand.

Therefore, as for products and services design and quality, Hard Rock is doing extremely well if they expand their business in Hanoi. Hard Rock brand name is well received by local customers who associate them with superior quality, excellent customer’s service, and a Western life style.

Location:

Vietnam is definitely a safe place to enter because of the politically stable. Understanding that franchises can create jobs for locals, and that they can help drive its economy, Vietnamese Government boost economic development and stimulus package in the Vietnamese market by using flexible policies, and welcomes foreign investment. In addition, Hanoi is a capital of Vietnam and is also a destination of tourism from many countries. And that is a good fix for Hard Rock because its main target customers are the tourists.

Human resource:

One of the advantage for Hard Rock open its café in Vietnam is the low cost of labor. Also, there are many young Vietnamese nowadays are really passionate about Rock & Roll music, and have the ability to convey the experience to the customer. So it’s totally not hard for the restaurant to find the right employees that fix to the image of Hard Rock Café.

Supply-chain management:

As for the supply-chain management, in Hanoi, Hard Rock can easily find the qualified suppliers to purchase raw materials with a cheap price but still ensure its fresh, quality meals to serve the customers.

Challenges:

Considering an expansion of its business into Hanoi, and to be successful in Vietnam, Hard Rock Café should take the following concerns into account:

Products & service design:

Hard Rock needs to aware of the cultural differences. They should take local culture, habits, and tastes into consideration and adjusts their market strategy accordingly to be successful in this market.

They also have to be sensitive to product pricing and franchising fees for expansion in Hanoi. Vietnamese are very price-conscious and local incomes are substantially lower than many other countries in the region. Moreover, local investors may not be familiar with and are reluctant to invest millions of dollars in a new business concept. This specific of the market will require a flexible approach.

Human resource:

Another challenge for Hard Rock’s human resource when it comes to decision expansion into Hanoi is picking the right master franchisees. This is the most difficult and time-consuming task of all in the global development of Hard Rock franchise. They need to take time to find, evaluate and conduct diligence on master-franchise candidates. They also need to consider the added cost of training and support across many times zones.

Conclusion

The strategy of Hard Rock has been led by the differentiation. The Hard Rock has made unique its products and its services. Hard Rock Café has brought the concept of the ‘experience economy’ to its cafe operation. At Hard Rock, the experience concept is not only to offer a custom meal from the menu, but also spread the spirit of rock’n roll to its customers. It is successful by using this experience strategy, and Hard Rock Café became a highly recognized brand throughout the world because of its operations management.

After carefully evaluated the operations management strategy of Hard Rock Café and considered all the opportunities and challenges for Hard Rock Café when considering an expansion of its business into Hanoi, I strongly believe that the business will be going successful on this market. With a large young consumers market, growing disposable income, stable politic, and also as the locals are becoming more receptive to international brands; Vietnam is definitely a good destination and a perfect time for Hard Rock Café to enter to the market and franchise its brand.

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