Tag: Hard Rock Cafe

Video Tip: Forecasting at Hard Rock Cafe

It’s hard to motivate students about how important forecasting is in OM with common examples like IBM’s stock price, Dell sales, or housing starts. So in Ch.4 we have two tools to help set the stage. The first is the Global Company Profile featuring Disney World.  Disney does detailed daily, weekly, monthly, annual, and 5-year forecasts of park attendance, with a staff of 35 analyzing a whole flock of interesting variables. The second tool is the 8-min. video case study we created on how Hard Rock Cafe uses forecasting.

Students like the Hard Rock video not only because the company is “cool”, but because the applications of moving averages and regression are clever and thoughtful. For example,  multiple regression is used to estimate the price elasticity of each menu item. Hard Rock is able to estimate the impact of a $1 price increase of cheeseburgers on sales of chicken sandwiches and margaritas.

The weighted moving average technique is used to set sales and bonus targets for store managers. The company also uses exponential smoothing and other models to forecast daily sales/food needs, purchasing needs, and borrowing needs. A good lead-in to the video is to ask students what they think Hard Rock needs to forecast with mathematical models.

Video Tip: Scheduling Employees at Hard Rock Cafe

One of my favorite videos is a short  (4.5 min.) study of how Hard Rock Cafe schedules its 160 servers at the giant 1,100 seat Hard Rock here in Orlando. I show it when I teach scheduling (Ch.15) and linear programming (Mod.B in the hard cover text). The  topic is one  many students relate to, especially if they have worked in retail or restaurants, where schedules are always a sensitive subject.

In Hard Rock’s case, the sales forecast is critical. Many factors are considered in deciding how many servers to call in, including historical sales, major conferences in town, season, etc. Each employee submits a weekly request form, and then an LP package takes over, with the objective of minimizing the number of employees per shift. It turns out that the system works quite well and employees are usually satisfied. Turnover, even during non-recession times, is 1/2 the industry average.

What we don’t mention in the video is that the managers never mastered the scheduling software, which is actually somewhat complex. But one, very enterprising, young server offered to handle the weekly task on his own. He collects all the forms, goes down into a basement office every Saturday, where it takes him about 6 hours to input the data and churn out the schedules. He does this for no additional pay! Why, you ask? Because  constraints and schedules are set by seniority, and he is allowed to assign himself the highest priority, a 9. It turns out that a great schedule, at the right work stations, can make the difference of $100’s a week in tips.

This topic is one that students with jobs are more than happy to discuss..

Video Tip: Hard Rock’s Human Resource Strategy

Filming the whole series of 7 Hard Rock videos was a really interesting experience. First, it is such an unusual company–the 8th most-recognized brand name in the world: with  food ostensibly as its product–but in reality it is an experience-based product of rock n’ roll, memorabilia, exciting/unusual staff, popular gifts, and finally the meal.

What was the biggest eye opener, though, was not seeing one employee–from CEO on down–ever dressed in coat and tie. And that is what makes this particular video fun to show in class (as part of Ch.10, or just to close out the semester). What other company (prior to the recession, of course) had minimal turnover, allowed employees to have pink hair, body piercings galore, and multiple tatoos? And who else offers every employee a Rolex watch to celebrate their 10 year anniversary? What a strange contrast to the so clean-cut image of our other major employer in Orlando, namely Disneyworld!

This video is very reassuring to undergrads who see themselves as non-conformist, and hope there is some place in the wide world of business in which they can make a home. It is easy to generate good classroom discussion with students who have had work experience in normal restaurants, sharing impressions of the differences.