Hard Rock Cafe’s Global Strategy Video Case
Hard Rock brings the concept of the “experience economy” to
its cafe operation. The strategy incorporates a unique “experience” into its operations. This innovation is somewhat akin to mass customization in manufacturing. At Hard Rock, the experience concept 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 else in the world. This strategy is succeeding. Other theme restaurants have come and gone while Hard Rock continues to grow. As Professor C. Markides of the
London Business School says, “The trick is not to play the game * Constantinos Markides, “Strategic Innovation,” MIT Sloan Management Review 38, no. 3: 9.
better than the competition, but to develop and play an altogether
different game.” * At Hard Rock, the different game is the experience game.
From the opening of its first cafe in London in 1971, during
the British rock music explosion, Hard Rock has been serving
food and rock music with equal enthusiasm. Hard Rock Cafe has
40 U.S. locations, about a dozen in Europe, and the remainder
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56 PART 1 | INTRODUCTION TO OPERATIONS MANAGEMENT
scattered throughout the world, from Bangkok and Beijing to
Beirut. New construction, leases, and investment in remodeling
are long term; so a global strategy means special consideration
of political risk, currency risk, and social norms in a context of
a brand fit. Although Hard Rock is one of the most recognized
brands in the world, this does not mean its cafe is a natural everywhere. Special consideration must be given to the supply chain
for the restaurant and its accompanying retail store. About 48%
of a typical cafe’s sales are from merchandise.
The Hard Rock Cafe business model is well defined, but
because of various risk factors and differences in business practices and employment law, Hard Rock elects to franchise about
half of its cafes. Social norms and preferences often suggest some
tweaking of menus for local taste. For instance, Hard Rock
focuses less on hamburgers and beef and more on fish and lobster
in its British cafes.
Because 70% of Hard Rock’s guests are tourists, recent years
have found it expanding to “destination” cities. While this has
been a winning strategy for decades, allowing the firm to grow
from one London cafe to 145 facilities in 60 countries, it has made
Hard Rock susceptible to economic fluctuations that hit the tourist business hardest. So Hard Rock is signing a long-term lease for
a new location in Nottingham, England, to join recently opened
cafes in Manchester and Birmingham—cities that are not standard
tourist destinations. At the same time, menus are being upgraded.
Hopefully, repeat business from locals in these cities will smooth
demand and make Hard Rock less dependent on tourists.
Discussion Questions *
1. Identify the strategy changes that have taken place at Hard
Rock Cafe since its founding in 1971.
2. As Hard Rock Cafe has changed its strategy, how has its
responses to some of the 10 decisions of OM changed?
3. Where does Hard Rock fit in the four international operations
strategies outlined in Figure 2.9 ? Explain your answer.