Hard Rock Café: Hard Times Analysis

Any company, no matter the size, the type, who runs it, or where it is located, needs to always be flexible and be able to meet consumers’ expectations. No matter what it takes”; at least that is the motto for many organizations. This phrase refers to the flexibility of many companies and organizations in regards to customer satisfaction. To a company, customer satisfaction is what will bring the customer back for more. Satisfaction is met with product quality, short amount of time to produce that product, and the overall ability to meet a consumers needs.

Just because companies strive for satisfaction, and more times than not are able to reach that approval mark by their customers, does not mean that it is an easy task. Satisfaction is usually met by companies producing the same goods and perfecting them. That is the old, traditional way of gaining the trust from patrons; the new, more modern means is quite the opposite.

Consumers want choice, after all, that’s what the open market is about. However, not just because a shopper has different options of products means that he/she is willing to travel the distance to gain those different products; especially with gas prices the way they are. The new, modern customer wants choice, but from the same location as their other options. Instead of one certain type of product from each company like in the past, that person now wants competitor’s products, opposite category of product (a car tire sold in the same place a goldfish is sold), and cheap, efficient products.

This new type of salesmanship is a little easier for a merchandise store, such as a Dick’s Sporting Goods representing all recreational activity, Home Depot selling any and all types of home improvement products, and Wal-Mart which sells all types of products in the same location, much like a mall. These types of changes seam to be an easy transition for any consumer-selling type store. But how do restaurants and hospitality companies, such as the Hard Rock Café, make the transition to become just as flexible in order to gain a customer’s satisfaction?

When making changes to any company, including product changes/additions, any type of financial issue, accounting, merchandising, and marketing, the owners and board of directors all the way down to the part time employees, need to realize that it will take time, commitment, and cooperation. These kinds of juristic changes will not occur overnight, not even over a year. The changes stated above began their transformation in the early 2000’s and are still in the continuation process of change to this very day. The

Hard Rock Café began by making changes in their financial department, starting with hiring a new chief financial officer (CFO). Aside from this modification, HARD ROCK CAFE also devoted its time and efforts into altering the monetary reporting and organization of information internally. This is when they decided to make some management changes to their accounting and financing departments.

The next step was to add in a food and beverage system to find out the usage and success of each product. This system was broken down into patterns of customers purchasing merchandise daily and seasonally, one menu’s monetary value versus another of similarity, an average of guest totals in each restaurant daily, and sales per item and profit margins surrounding those.

HARD ROCK CAFE then focused its accountants’ duties. They went from being accountable for profit and loss statements for a particular amount of cafes to being expected to being responsible for only one financial categorization for all of the company’s operations. The company also gave managers who have ties with the restaurant level and can make certain recommendations more available information by removing layers of management in the financial unit, accounting department, operations branch, merchandising department, and marketing division.

One of the most important changes that HARD ROCK CAFE must make is researching different products and finding out how they are profitable and can help the company financially. This is mainly due to the fact that the products can be attributed to a variety of different profits and consumer satisfaction. They need to know food products, which is the most expensive that customers will actually purchase as well as the cheaper food that those same customers still enjoy. This is so some food products do not go to waste versus the possibility of selling some too cheap and losing money. HARD ROCK CAFE also needs to know about merchandising products like their t-shirts, shot glasses, all the way up to their guitars. Some of these products will sell wonderfully, whereas some will be difficult to sale. The smaller items need to be researched to see how much they can sale for and the larger, more expensive items need to be researched to see how cheap they can sale them for without once again losing money (Hard Rock Corporate, 2005).

I believe that it was important that HARD ROCK CAFE made was able to make their financial changes without losing too many employees and change their overall financial goals and reporting without having to hire and train many new employees and losing too much money in the process. This was important because they had poor planning of distribution of food and products to each location. Some stores had too much, some had too little and had to make due. With their new financial reporting they will be able to buy the cheapest food at the best quality possible without losing money buying lower quality products. All in all, this change saved them the most money when it comes to planning out their distribution of products as well as buying of products to sell.

By “flattening” the financial structure in HARD ROCK CAFE, they are able to open up more communication lines up and down the chain of management. The orders of change or any type of decision that is made from management can be more easily passed along all the way down to the operational levels of management with greater efficiency. Opening up more lines to the financial department will allow management to relay messages to and from this department no matter what the command. This will allow for quicker response time and more efficiency when changing any type of process, price, or money figure. Overall, this will allow HARD ROCK CAFE to become greater balanced and overall a more profitable company with less mistakes due to lack of communication from one end of management to the financial department.

When it comes to inventory validation, HARD ROCK CAFE would most likely choose the FIFO form rather than the LIFO form of inventory. The FIFO (First-In, First, Out) form presumes that the first unit made a specific way and placed into inventory is the first sold. The advantage to the FIFO form would make the value of the inventory rise from its initial amount and would then make the replacement costs cheaper. The disadvantage to this method is that the product being sold is more represented as being the older, cheaper merchandise. This does not show the true value of the product and in turn decreases its market value to the consumer (Shaw, 2006). The LIFO (Last-In, Last-Out) form presumes that the last unit made a specific way and placed into inventory is the first sold. The older inventory is then left over until the end of the bookkeeping period (Investopedia Staff, 2008). The advantage of LIFO would be the extreme tax breaks on the inventory used with this method and more accurately represent the replacement costs. Whereas the disadvantage would be that the original merchandise would be devalued after not being used first (Shaw, 2006).

Since HARD ROCK CAFE is a restaurant as well as a merchandising store, they would most likely use a little of both types. They would use FIFO form for the food and beverage side of things (anything perishable) and then turn around and use the LIFO form for their merchandise section for those imperishable products. They should be able to utilize each type very well since they can implement them in numerous categories of customer relations.

In order to ensure the success of HARD ROCK CAFE for a long time to come, I would recommend that they stay on target. They have implemented their changes nearly ten years ago, along with this came a lot of time, money, and overall effort of the company and management. If they change anything juristically now, in any department, HARD ROCK CAFE may jeopardize any future goals as well as the last ten years of planning and changing. They will also need to continually change products (foods and merchandising) for their own good in order to keep their customers guessing and continue to satisfy those customers. After all, the customers keep the money flowing, the business booming, and the economy working.