Case Study: Hard Rock Café’s Global Strategy

Discussion Questions:

1. Identify the strategy changes that have taken place at Hard Rock Café since its founding in
1971.

Hard Rock Café is one of the most recognized brands globally. Since its founding in 1971, Hard
Rock Café has continuously upgraded itself to bring the brand to where it is now - adapting to
the times and changing when change demands.

Hard Rock started as a London Café serving classic American food. It became a “theme” chain
selling memorabilia in tourist destinations. From there the company adopted many more
transformations including adding stores, upgrading its menu, moving to places that are not
typical tourist destination, and most effective of all, including live music and rock concerts into
the overall customer experience.

Hard Rock elevated dining to a whole new level by shifting to “experience” selling, a dining
event that includes a unique visual and sound experience not duplicated anywhere else in the
world”. To create this unique experience, Hard Rock invested millions in creating a visual and
acoustic scenario perfect for their guests. They also introduced into their ‘experience’ concept
their own merchandise, which is unique in each location and provides a huge income to the
company.

Hard Rock is known for its extensive and museum-worthy memorabilia and merchandise. Today,
its memorabilia collection is estimated to be worth $40 Million. Each restaurant rotates the
items to keep the experience new. Thus, tracking these memorabilia is also another important
consideration in their operations. On the other hand, its merchandise accounts 48% of its sales.
Hard Rock Café puts a high premium on experience as evident in their new construction, leases,
and remodeling investments.
2. As Hard Rock Café has changed its strategy, how has its responses to some of the 10 decisions of
OM changed?

a. Design of goods and services

Hard Rock Café opted to put more value on local taste which meant a whole new lot of
customized menus. “For instance, Hard Rock focuses less on hamburgers and beef and more
on fish and lobster in its British cafes.
Each meal goes through design, testing and evaluation just to deliver distinct Hard Rock
experiences. “As an average customer only visits Hard Rock Café once a year, the quality
must be exceptional every time.”
In addition, surveys are done on a regular basis” to enhance customer experience at the
café. This is Hard Rock Café’s commitment in making total experience as its edge over
competition.
b. Managing Quality
“Each item on Hard Rock’s menu must receive a seven out of seven on quality surveys
otherwise it is a failure.” This strict quality standard require them to completely review their
menus and conduct food research to guarantee its customers with the world class quality
the café is known for.
c. Location Strategy
“70% of the Café’s customers are tourists. Thus, decline in tourism has an adverse effect on
its business. This paved way for an opportunity for Hard Rock to develop non-standard
tourist destinations as growth drivers during economic uncertainties. “Repeat business from
locals will make them less dependent on tourists” and establish a new market segment
altogether.
d. Layout Strategy
Hard Rock Café maintains an attractive layout in the store; attuned to local taste. The
lighting, sound, and music among others, are also important considerations in its layout
decisions. Having no two similar cafes seals its experience differentiation strategy. Its
operations managers also efficiently layout their kitchen facilities to carry out its principle of
“serving hot food hot and cold food, cold. Additionally, the restaurant and bar layout are
customized to guide the circulation of customers to memorabilia and merchandise.” The
 objective is to persuade customers to buy a souvenir and the overall positive brand
experience will make them consider visiting Hard Rock again.
e. Human Resources and Job Design
The employees are the foundation of Hard Rock’s success. The Café prides itself in having
robust training for all its recruited employees. Its belief is to always keep employees
motivated and well-supported so that it won’t be hard for them to deliver service with a
smile. Its employees must also fit to Hard Rock’s core values which are passion for music and
service.
In order for employees to be the best in giving the experience to customers, Hard Rock’s
management also ensures the whole café environment is conducive to such. Its facility,
layout strategy, inventory management, and capacity plan among others all backs up to
make the working environment favorable for employees. This is all part of the Café’s
techniques in human resources and job design.
f. Inventory
The Hard Rock Café’s collection of memorabilia plays a very important role in delivering the
‘experience’ focus selling of the theme restaurant. They have an approximately 60,000 piece
collection contains Rock and Roll memorabilia, which enhances the experience for
customers. To maintain their $40 million inventory, the company must use an extensive and
detailed cataloging system.  Since the memorabilia within the restaurants is replaced and
refurbished every five to seven years, knowing what is contained and where it is located is
critical to preserving the collection.
g. Scheduling
Scheduling at the Hard Rock Cafe is also taken very seriously.  With 23 departments and
over 600 people on the payroll in the Orlando location, many factors have to be taken into
account.  Sales, community events, seasonality, and trends are tracked so a sales forecast
can be made to schedule efficiently and maximize revenue. 

3. Where does Hard Rock fit in the four international operations strategies outlined in Figure 2.9?
Explain your answer.

Hard Rock Café fits in the Multi-domestic operations strategy.

Using this strategy, Hard Rock tries to achieve maximum local responsiveness by customizing
 both their product offering and marketing strategy to match different national conditions.

Its signature burger may be tweaked according to the taste of the locale. Each restaurant is
dynamic and unique; its design and menu depend on the culture and preferences of its location.

Only 50% of Hard Rock’s cafes all over the world are franchised. This mitigate the risk factors
and differences in business practices and employment law. Local partners are however
encouraged to engage their customers in a unique experience, one that is distinct and not
duplicated anywhere else in the world. Hard Rock has sustained its brand over the years from
initially branching out with a global strategy and into adapting a multi-domestic strategy.

Reaction:

There are notes and key learnings from Hard Rock’s strategy, which may be applicable to other
companies, including those from industries that are different from that of Hard Rock’s:

a. Hard Rock’s multi-domestic strategy may have worked well for the company, but it does
not necessarily apply to all.

A multidomestic strategy can be costly, as each local subsidiary may need to build value
chain operations to meet local demands. Thus it is often economically difficult to apply
in industries that have intense cost pressures. In addition, decentralizing control of value
activities to local managers and franchisees can create powerful subsidiaries that
behave as autonomous units. This can cause confusion, misalignment, and overall
conflict.

Currently, Hard Rock Cafe has expanded globally in destination cities in Europe, Latin
America and Asia. Franchising, a key aspect of the multi-domestic strategy, helps the
company achieve a larger scale with a more recognizable brand name, offer franchisees
fewer supports but long-term contracts. Moreover, franchising is an effective way to
reduce cost, avoid political risk and cultural differences and connect local knowledge.

b. Hard Rock is known for being cool, fun, and creative. With this there is a need for the
company to always come up with something new and distinctive. There are more new
local and global competitors coming up—the company must always keep itself ahead so
it can continue reaching and inspiring its unique target audience.