Finance, Growth

Hard Rock Cafe set for Australian expansion drive

Michelle Hammond /

Hard Rock Australia has outlined franchise expansion plans for Australian cities but an industry expert warns that the revived chain will struggle to resonate with cost conscious consumers.

 

Hard Rock Cafe, a US-based chain founded in 1971 by Peter Morton and Isaac Tigrett, has 150 Hard Rock restaurants throughout the world that are famous for rock’n’roll memorabilia.

 

At the end of 2006 an American Indian tribe purchased the chain and closed a number of sites in various countries.

 

Sydney’s Hard Rock Café closed in 2007 and recently reopened as a franchise in Darling Harbour, with more sites expected to follow.

 

Lennie Huntly, managing director of Hard Rock Australia, says the company plans to open sites across the country.

 

“In 2008 my partner and I bought the franchise to Hard Rock Australia so that gives us the rights to open in Sydney, Melbourne, Cairns and Perth,” Huntly says.

 

“As a separate sales agreement we purchased Surfers Paradise Hard Rock Cafe from Hard Rock America.”

 

The Sydney and Surfers Paradise sites are the only Hard Rock franchises operating in Australia and Huntly says new restaurants will open during the next four or five years.

 

In addition to a large range of rock’n’roll memorabilia the restaurants offer guests an all-American menu together with an elaborate list of cocktails and other drinks.

 

“We plan to grow but we’re owner-operators so we won’t franchise them out to others. We will open Melbourne, Cairns and Perth, and there are a couple of other sites that are of interest to us,” Huntly says.

 

“The reason Hard Rock America now chooses to franchise out these cafes more than they did before is because they thought local operators could work with local trends and maximise opportunities in the local market more than they could by running them from overseas.”

 

Simon McNamara, a founding shareholder in burger chain Grill’d and co-founder of franchise investment fund Inkuberra, says it’s hard to comment without knowing how Hard Rock Australia plans to position the business.

 

“The first time around Hard Rock Cafe was regarded as a special outing – not an everyday outing – partly due its higher pricing,” McNamara says.

 

“So it will depend on what they do this time with regard to price, format, service, etc.”

 

McNamara says while the food retail sector is holding up quite well there are certain categories that are performing better than others, namely the fast casual dining segment, which falls between the two extremes of fast food and fine dining.

 

“No matter what the market you have to be able to provide something that’s different but also great value for money,” he says.

 

“Hard Rock Cafe will have to do something different given that they’re a foreign chain … you only need to look at Starbucks to see that that – the Starbucks model was not appropriate for Australia.”

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