Hard Rock Cafe is a success story in operation management . From its very first London pub in 1971 , after 39 years of existence Hard Rock cafe continued expanding and succeeding in many different countries. This paper will discuss how the 10 decisions of the Operation management were made on Hard Rock Cafe as well as operation management challenges and opportunities confronting Hard Rock Cafe when considering an expansion of its business in Hanoi.
Critical evaluation of the operation management strategy of Hard Rock Cafe as described in the case materials.
With the mission “to spread out the spirit of rock ‘n roll by delivering creating authentic experiences that rock”, Hard Rock cafe has won continued success since it was founded in June 14, 1971 when the rock music was explosive in England. Hard Rock Cafe has uniqueness and more importantly it has launched an excellent strategy in operation management. Hard Rock cafe strategy is “to provide not only a custom meal from the menu, but a dining event that includes a unique visual and sound experience not duplicated anywhere in the world.” (1) That strategy has helped Hard rock cafe grow from its first Cafe to 129 world wide locations. Bellow is the discussion on some out of 10 decisions of opreration management run on Hard Rock Cafe.
Taking the success of the Hard Rock Cafe into consideration means considering its service quality and product design. The Cafe offers a range of services from cafes, live music, Rock concerts to hotels and casinos. They serve customer by “modifying the menu from classic American – burgers and chicken wings- to include higher-end items such as stuff veal chops and lobster tail” ( P.56). And of course, its quality must be the top charts. They always usually change their menu based on the frequent customer survey and localized food taste. “Surveys are done on a regular basis to evaluate quality of food and service at the cafe. Scores are rated on a 1 to 7 scale. And if the score is not a 7, the food or service is a failure” (Jay & Barry, n.d,P.56). Hard Rock not simply offers meals and drink, it provides a unique different experience in each location.” Experiences are not exclusive about entertainment; company stage an experience whenever they engage customers in a personal and memorable way. (Harvard Business Review, Welcome to the experience economy, B,Joseph Pine II& Jame H. Gilmore, 1998) Surely, the key has driven Hard Rock Cafe to success is to build a standard of quality and keep its product and service meet the standard.
One factor that brings success to Hard Rock Cafe is Human resource strategy.
Based on their specific services, from the recruitment Hard Rock Cafe looks for people who are passionate with music, like to serve people and have ability to tell story. “Hard Rock builds on a hiring criterion of bright, positive attitude, self-motivated individuals with an employee bill of rights and substantial employee power”. These people will surely inspire customer and make them happy. Hard Rock Cafe also created a great working environment with people who have the same interest but different personality. Besides, training plan is also a very good strategy at Hard Rock. “The company’s training is very specific, with job-oriented interactive CDs covering kitchen, retail, and front – of – the house service.” Through the training, employees improve themselves both personally and professionally. Staffs are highly motivated because they can see their opportunities in Hard Rock even they are from a low level as 60% of the managers here are promoted from part time staff. Such strategies have reveaved that the Cafe really cares about their employees and their employees do not only come for money but also to obtain job satisfaction.
“Because location is such a significant cost and revenue driver, location often has the power to make (or break) a company’s business strategy” (Jay & Barry, n.d, P.364) therefore, Hard Rock Cafe has been spending much time and great efforts to analyze location whenever they want to open a new Cafe. Focusing on tourists and people who love music therefore demographics, visitor market, transportation, restaurants/night clubs and political risk are emphasized factors for researching to make sure that Hard Rock Cafe is located in a convenient place for their potential customers. The analysis also helps them have a long term investment in each Hard Rock cafe. Every opened cafe is a result of an extremely careful decision after investigating the target markets, the proper places and considering the future success in a long period of time. Therefore, location contributes a crucial role in expanding Hard Rock Cafe popularity to world-wide nowadays.
The layout is also another important decision that management has to make. The kitchen is set up to be not just only a normal kitchen but also a comfortable working space for all the staff. The kitchen flows are designed in order to make sure that the chief, waiters and waitresses have enough space to do their work. The bar and restaurant are designed to bring the highest income for Hard Rock Cafe. The installation of lighting, sound, screens, music and circulation paths is in order to praise memorabilia and as a result, customers are convinced to buy souvenirs naturally. In fact, the retail shops produce about half the company’s profit and they are always displayed at eye-catching areas such as within the restaurant space, flow and work stations.
It’s obviously that scheduling is one of the most important decisions at Hard Rock Cafe. With Mr. Ken Hoffman, Hard Rock’s General manager takes scheduling very serious. There are some factors that affect sales that Ken Hoffman cares when he makes schedule. The number of occupied rooms in nearby hotels is important because not all guests will have dinner in the Hotels. They will look for dinning spots and of course Hard Rock cafe will be their destination because of it uniqueness and well-known. The next factor that they consider is how many events will occur in the area. The third one is they examine the sales at the same day of previous year. Another factor that Hard Rock Cafe takes into account is the entree sales data, each entree is present 1 customer. With the result of the forecast, Hard Rock Cafe estimates the number of guest will come and they can have an appropriate plan on staffing and menu.
There is a fact that inventory management is a different side of Hard Rock cafe. It is not too much when saying that the collection of rock and memorabilia is a trademark that makes Hard Rock cafe widespread everywhere around the world. Customers come to Hard Rock Cafe not only for the meals they serve there but also for the items of their favorite artists that they can find on the cafe walls. These items; including autographed guitars, outfits from world tours and rare photographs; are collected and taken care by a special group in Orlando. They manage every single item with every single history, know exactly which item is being exhibit in which cafe on which wall through an inventory system using advantaged technology. An life circle of the exhibition of an item is around 5 to 7 years. After these years, the item is brought back to Orlando and renovated while another item is being replace it on the wall
Hard Rock Cafe has lunched the first restaurant in Ho Chi Minh City through franchise license bought by Viet Thai International Company (VTI). This restaurant chain has been successful for since 1971 and in more than 166 worldwide locations. It seems that after a year launching, Hard Rock Cafe Vietnam (HRCVN) is on a right direction to the success. VIT (HRCFVN franchisee) has also a long term vision to expand the chain in Vietnam. Director of VIT announced on the launching day that his company will have at least two more Hard Rock Cafe in Vietnam in 2012, one in Hanoi and another one in Dang Nang city (“Rock Passion, 2010”. n.d.). In order to evaluate if HRCFVN will be a successful model in Hanoi, this writing will examine opportunities and challenges for HRCFVN based on its some key decisions of operation managements.
Goods & Services Design: As franchise, HRCFVN has been benefited from Hard Cafe international in providing the best quality of goods and services for its customers. Hard Rock Cafe Ho Chi Minh city can served more than 500 customers at the same time, as a result, if Hard Rock Cafe expand its business in Hanoi, this scale would be considered to apply. This would be a good point to served big events and parties meanwhile not many restaurants in Hanoi are large enough.
Based on menu of Hard Rock Cafe Ho Chi Minh, they are offering a very diversified and good menu from drinks to eats and even a special menu for kids. These is only one thing that would be a challenge for drinks and eats menu is that the Northern foods are quite deferent with the South. The restaurant needs to do researches to make food and drinks suitable for the Northern people’s taste.
Besides, a series of rock t-shirts and pins collections are also offering at Rock Shop. This is unique selling point which is no single restaurant in Hanoi can offer. This would offer Rock lovers opportunities to own a rock t-shirts. As Hard Rock cafe is changing its strategy to response to operation management, they believe that they don’t sell meals or drinks, Hard Rock Cafe offers an unique different experience (Hard Rock Cafe Mission). At HRCF Ho Chi Minh, they are offering Rock’ n Roll memorabilia with hundreds of pieces of guitar, dress of Rock ‘n Roll legends such as John Lennon, Jimi Hendrix, Pantera, Kiss, Van Halen, Motorhead, Pearl Jam, Eagles, Scorpions, Jon Bon Jovi, Steven Tyler, Chuck Berry, Elvis Presley. By offering these items in Hanoi, it would be another key point to ” pull” customers coming to the restaurant. Regarding service design, as Jey and Barry comment that designing services is challenging because they often have unique characteristics and in reality. Seeing service quality point only, there is a big gap if compare Ho Chi Minh City and Hanoi. Service quality in Ho Chi Minh city is always evaluated much better than Hanoi. It would be a challenged point for Hard Rock when they expand to this location.
However, Hard Rock Cafe is well know in flexibility with the product, design and so many other aspects of their restaurants based on the local market they enter into. It means that they try to present themselves customizing things to the likes of their local customers. They empower the local franchisee to create their own unique Hard Rock Cafe that delivers unique guest experience. There is no doubt that they would respect the tradition and culture of the locals and design your restaurant settings with that view in the mind. That would be a key to lead to the success when they do business in Hanoi.
Quality Management: As franchisee, HRCFVN will be provided, guided and trained international management standard which Hard Rock Cafe is applying worldwide with almost 40 year experience. The local owner VIT will have many opportunities to learn how to manage Hard Rock Cafe in Ho Chi Minh and then apply key learning for location in Hanoi. In addition, VIT is also a big name in food and beverage industry in Vietnam. They are owning and operating High Land Coffee brand which has more than 60 high class coffee chain nationwide with more than ten years experience. They also have a high qualified management team who would be a good source for the business expand.
Location:. It is clear that Vietnam in general and Hanoi in particular are a safe place to invest with high stable political conditions. Furthermore Vietnam is the second fastest economy growth in Asia – Pacific with the 13rd largest population in the world. The capital of Vietnam is a good location to invest as the income of people is increasing quickly. As a result, customers would welcome a high end restaurant with deferent selling points as Hard Rock Cafe even they have to pay more. Besides, Vietnamese society is more open with Western life style, thus in term of social norm, it is not hard for customers to experience a new style in town.
There is an another key point that need to clarify that any restaurant must pay much consideration – location of restaurant. Location is sometime considered counting up to 80 percent of successful opportunity in restaurant business. In fact that Hanoi is now hard to find a good location to Hard Rock as good and convenient venues are been already occupying by other competitors. Thought the current owner of Hard Rock cafe Vietnam is very successful in finding perfect location for their High Land Coffee chain, but to open a Hard Roack cafe would be definitely harder because they need a much larger location than a coffee shop.
Supply Chain Management: It is not difficult to find a qualified suplier who can provide fresh, quality materials and products to the restaurant. Metro supermarket (a giant wholesales supermaket from Garmany) has at leat two distribution centers in Hanoi which are current main suppliers for five star hotels and retaurants in the city. In addition, there are ten of smaller supliers who can meet whatever Hard Cafe’s demands. The distant from Metro and other suppliers to the dowtown of Hanoi is around 15km, 40 minutes for trucks or vans reaching any place in the city to provide foods and drinks on time. There is a taugher task which would be a moving the memorabilia among locations to change the experience every time a guest visit. This is a key point in supply chain to create the best circulation items among its members.
Human Resources: It is a strengthen point if Hard Cafe expand its business to Hanoi. As one of the best high end coffee chain, VIT has a large number of qualified employees who are ready to start these project as key members. In reality, VIT has several other restaurant projects and they have successfully used their current human sources to solve one of the most difficult tasks in any business ventures – people question. Regarding recruitment of employees who are are passionate about music, love to serve and convey the experience to customers, it is not a big challenge as Hanoi labor force are young and well educated. The recuitment can target to hundred of thousand students who are learning at ten of colleages and universities in Hanoi. These targeted employees are passionate to Rock’nRoll lyfe style and would be the best front liners to spread the spirit of this concept to local customers.
As an international restaurant chains, Hard Rock will provide professional training courses for local employees with international standards which will be opportunity point for Hard Cafe in Hanoi to have better employee team with international standard.
Inventory Management: There is no big challenge for inventory of Hard Cafe as key supplier can be reached by in 40 minutes by vans and there are many alternative suppliers who ready provide and meet all demands. Thus, inventory should limit to minimize volume except special food and raw material which take time to import.
Memorabilia are more challenge for Hard Rock inventory as it 0000 pieces will be circulated among 160 locations around the worlds. However, it seem that this work has been well organized by Hard Rock Cafe International with $40 million valued memorabilia are catalogued, each piece is known where to be (Gusa and Inci, 2008)
Scheduling: Based on the current business model of Hard Rock Cafe in Ho Chi Minh city is offering full service event planning facility for all events. Catering, entertainment, and event merchandise can be customized to complement every event (“Hard Rock Cafe HoChi Minh,” n.d.). if this scale is applied to Hanoi location, this restaurant can be seen as a medium and large size in the city. All community event in the area will be targeted. With the unique and deferent point of sales, it is potential that Hard Rock Cafe would be a favorite venue for events related to young customers. However, there is only challenge can be seen that the restaurant will not be an attractive place for tourists, especially for those who come from Western countries. The reason can be explain that if you travel to The U.S, it would be good to explore Hard Rock Cafe’s Rock ‘n Roll experience right in the home land of this music. However, this purpose will less attractive when the restaurant is locating in an Oriental country likes Vietnam.
It is also a challenge point that Hard Rock Cafe will take longer time to reach ROI (Return on Investment) points than Hard Rock Cafe in Ho Chi Minh city because, outside dining culture is more popular in Ho Chi Minh city. People spend much more budget to eat outside any place in Vietnam, particularly during the weekend. Second, Hard Rock Cafe needs to invest a large of capital to reach premium standard as requested by Franchiser. However, to expand business in Hanoi is a right direction and it should take action as soon as possible as they as have set successfully a first step in the main market of Vietnam.