Planet Hollywood International Inc. is looking to its movie-themed restaurant in Baltimore as it launches a makeover of the troubled chain, the Orlando, Fla.-based company said yesterday.
Hoping to boost sales and profitability at a time of waning popularity of theme restaurants, the company said it will overhaul its menu, restaurant design and merchandise by April. Becoming profitable by 2000 will also entail cutting costs, in part, by franchising some restaurants outside the United States and possibly selling others, the chain said.
While all 73 Planet Hollywood and 10 Official All Star Cafe eateries will get fresh menus and more fashion-oriented merchandise, about half will be remodeled using elements of the Planet Hollywood that opened June 6 in Harborplace -- one of the chain's better performers, said William H. Baumhauer, Planet Hollywood's president and chief operating officer. He would not disclose sales for the Harborplace location.
Chainwide, sales tumbled about 18 percent last year, the company reported. Planet Hollywood expects to report a loss for the fourth quarter, which analysts estimated at 7 cents per share. It would mark the fourth consecutive quarterly loss.
With the explosive growth of theme restaurants, "Competition has been difficult," Baumhauer said. "But I'm confident that with the powerful brand we have, we have the ability to refresh the concept to right some of the wrongs and be successful."
In remodeling restaurants at an average cost of $300,000 each, the chain plans to use its Inner Harbor location as a model, with elements such as more windows and glass, a more predominant bar, lighter woods and earth-tone colors and a more contemporary atmosphere.
Patrons will find fewer items for sale with the restaurant's logo and more emphasizing Hollywood or local icons. And menus at all the restaurants will be revised and simplified to appeal to a broader customer base, Baumhauer said.
"With fewer items to focus on, we can execute them better to ensure quality," he said.
Reducing what many customers have found to be oversized portions will also reduce prices, in some cases by about 30 percent, he said.
The business plan makes sense, and represents a strategy that more theme restaurants are using to turn themselves around or remain viable, said Michael D. Beyard, vice president of strategic development for the Washington-based Urban Land Institute, which has studied theme restaurants. Yesterday, Planet Hollywood stock closed up 50 cents, at $3.13 per share.
"The problem with theme restaurants in general is that they forgot that food has to be the primary element in a restaurant," Beyard said. "Many theme restaurants disregarded that and thought entertainment was their first priority -- this fun, crazy environment that has memorabilia. Theme restaurants require repeat visits to be successful. If they rely on just the memorabilia, people will say, 'I've seen it.' "
He estimated the number of restaurant themes at 150, and said many chains have expanded too quickly.
"Many of the customers that would have come no longer do because they can find one in their own hometown," he said.
Restaurants such as Television City and the Fashion Cafe in Rockefeller Center in New York are closing, while the better-known Hard Rock Cafe and Rainforest Cafe have seen sales plummet.
But the idea that began with the first Hard Rock Cafe in 1971 is not necessarily dead, Beyard explained. Rather, it's facing a midlife crisis of sorts, he said, adding, "If they are serious about correcting the deficiencies that are now apparent, there is a long-term role for them to play."
Pub Date: 1/15/99