Hard Rock Cafe Puts Renewed Focus on Artists Rather Than Memorabilia

It's nearly impossible to miss one of Hard Rock Cafe Chicago's most valuable items, Jimi Hendrix's guitar, displayed in the entrance. The guitar is an archetype of the brand's vast memorabilia collection -- one of 74,000 items -- Hard Rock International displays in 54 countries in its 170-plus cafés, hotels and casino properties. The company has expanded over the years well beyond the cafés and memorabilia, into the hotels, casinos and even parks. Now, however, the chain is going back to its rock roots by putting the focus back on music rather than memorabilia. In June 2012, it launched Hard Rock Records, which funds production of artists' albums, but allows them to keep ownership of the recordings and profits from the release. Albums are released via digital platforms and in physical form for sale on the road. LEGACY Hard Rock is also aiming to become a tastemaker to its customers with its "Video Artist of the Month" program that highlights artists who may not be known to the average Hard Rock Cafe customer. Each artist will have a video of their latest single play on in-café video systems -- amounting to 1,000 plays a day on 20,000 screens at 138 restaurants globally. James Buell, Hard Rock's director-music relations, said that while the rock-star trappings are a big part of the chain's legacy, "memorabilia maybe doesn't resonate as much as a video system" when it comes to connecting customers with music. The moves are an attempt to make the 42-year-old Hard Rock brand more contemporary. The company was started in London in 1971 by Isaac Tigrett and Peter Morton, two Americans living in the city who, as the story goes, tired of fish and chips and just wanted a good, old-fashioned American-style burger. Originally memorabilia was not part of the concept. But Eric Clapton became a regular, and in 1979 gave his guitar to the restaurant to hang near his favorite bar stool -- an effort to reserve his spot. The brand gradually grew. In 1974, Hard Rock sponsored a local soccer team and the team's shirt carried the Hard Rock logo. Leftover T-shirts were given to customers, marking the dawn of the chain's clothing business. Today, the company estimates that retail sales are 40% of the cafe's business. Hard Rock International was bought by the Seminole Tribe of Florida in 2007. It's difficult to get a read on the financial standing of the privately held company's hotel and casino business. But according to Technomic, the company's biggest business segment -- restaurants -- posted total sales of $900 million in 2012, up from $825 million the prior year, partly because of international openings. (Its 2012 restaurant sales are roughly flat with 2008 even though the number of locations and revenue declined in the U.S. and increased overseas.) Hard Rock Cafe's challenge with consumers is appealing to families, while still seeming cool to younger customers. CMO John Galloway said that in Orlando, for instance, the clientele is mainly families with kids. The Chicago location draws a lot of tourists, but he noted that locations in major cities is "an experience for younger adventurous travelers." Awareness is not a problem. The Hard Rock brand is known by most U.S. consumers -- 80%, according to Consumer Edge Insight's Restaurant Demand Tracker survey from July. But 35% of past visitors said that it was "too expensive." That could stem from young customers unimpressed by a chance to dine beside Stevie Ray Vaughn's guitar while washing down a meal with a "Dark Side of the Moon"-branded cabernet sauvingnon. "A 17-to-24-year-old may not be so apt to run into a Hard Rock," he said, noting that given the premium price point, "they have to have a little bit of money. We're not a fast-food restaurant, and our quality demands a little bit of a price." The hotel and casino business, which started in 1995 with the Hard Rock Hotel and Casino in Las Vegas, now includes all-inclusive hotels in vacation destinations like Mexico and counts families among its guests. It now has 18 hotels and casinos globally, though Mr. Galloway said that expanding the business -- including as a meeting destination for businesses -- is a goal. ZEPPELIN COASTER Hard Rock's had stumbles in trying to push the franchise too far. In early 2009, Hard Rock Park, a 140-acre theme park in Myrtle Beach, S.C., closed just nine months after opening. It was the brainchild of three Florida entertainment executives who licensed the name from Hard Rock. The park's attractions included Led Zeppelin the Ride roller coaster. But the park generated only $20 million in ticket sales before it shuttered. "I go back to a simple filter and say: "Are we able to deliver an authentic brand experience?'" said Mr. Galloway, who joined Hard Rock after the park shut down. "We get thousands of proposals and few of them make it to fruition. The theme park was seen as something that could do that, but my understanding was that the location in Myrtle Beach just didn't match up. In that environment at that time, the financial ask for the consumers was over what they were willing to pay." Hard Rock Records is what Mr. Galloway calls a "give-back" to the industry and is inherently less risky than a theme park. It's also an opportunity to appeal to hipper music fans than the average tourist.

Hard Rock Cafe Puts Renewed Focus on Artists Rather Than Memorabilia

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