The business of themed restaurants is strewn with bankruptcies and closings, but at the Hard Rock Cafe, the music just keeps playing — and its newest location at the Mall of America shows why.
The new Hard Rock sports a two-story dining room with windows and a terrace on the periphery of the mall’s amusement park. It’s got a live music stage in a room where the tables can be emptied to suit a party for 1,200. There’s an interactive Rock Wall, a peer-through kitchen, video screens in every direction and enough memorabilia to please Minnesotans and tourists.
At the top of that list: a lavender lamé Prince Albert jacket worn by Prince, a Swarovski crystal bodysuit of Rihanna’s, a harmonica of Bob Dylan’s and a Jose Ramirez guitar that George Harrison used when Beatles recorded “Abbey Road.”
“It’s like going from a cottage to a mansion,” said Melania Ferradas, the restaurant’s operations manager and one of a handful of employees who worked at Hard Rock’s previous Twin Cities incarnation, which was in a smaller space in the Block E building in downtown Minneapolis from 2002 to 2011.
For the mall, Hard Rock is the third themed restaurant, along with Rainforest Cafe and Bubba Gump Shrimp Co., and the first new one after the closings of Planet Hollywood and Cafe Odyssey.
It’s a business that’s sometimes called “eatertainment” that had its heyday in the late ’80s and ’90s when there were dozens and dozens of them. Names like Dick Clark’s American Bandstand Grill, Dive (submarine adventure by Steven Spielberg), Denim & Diamonds country western, Jekyll & Hyde Club, Motown Cafe, Official All Star Cafe and Fashion Cafe lived only a few years, in most cases.
The trouble for any firm in the eatertainment business is sustainability. “Early on the attractiveness of the concept is high but after a couple of repeat visits, the value is diminished,” said Dennis Lombardi, food service strategist for WD Partners in Ohio. “They lose the repeat customer.”
The exorbitant upfront costs can easily put an organization in bankruptcy, said Darren Tristano, executive vice president at Technomic Inc., a food and restaurant industry research firm in Chicago. Typically, a restaurant may cost $2 million to $4 million to open, but theme restaurants can cost $5 to $10 million or more. “They’re very expensive and very risky,” Tristano said.
It’s a restaurant, not a museum
Part of the reason that Hard Rock failed in Minneapolis was the lack of a steady stream of tourists downtown. At Mall of America, Hard Rock estimates that about 40 percent of its business will come from tourists, said Calum MacPherson, vice president of cafe operations for Hard Rock Cafe in North America. “Tourism helps sell T-shirts,” MacPherson said.
Gift shops are an important source of revenue for most theme restaurants, usually about 10 percent for places such as Hard Rock and Rainforest Cafe, said Tristano. “Ten percent is really meaningful for a restaurant. They can charge a premium price for a low-cost item,” he said.
But T-shirts don’t bring people back. Food does.
“The critical thing to remember is that themed restaurants are restaurants with interesting artifacts, not museums with food service,” Lombardi said.
The quality and taste of the food has to be balanced with the ambience and the price. Steve Schussler of Schussler Creative in Golden Valley, a creative dynamo who launched the first Rainforest Cafe at Mall of America in 1994, said, “People go once for the wow, but come back for the food and the service.”
Part of the reason that food trumps shtick is that nearly all themed restaurants, no matter how touristy the location, depend on return visits from locals wanting a good meal. At Mall of America, Hard Rock is expecting 60 percent of its business to come from locals. “Locals won’t eat there unless the food is off the charts,” Schussler said. “Otherwise, they say ‘It’s a touristy place. I’m not going there.’ ”
MacPherson said that part of the reason for Hard Rock’s survival is the attention it pays to food. “Our concept was built on serving a great cheeseburger, and we work on that to this day,” he said. “We make sure everything we get is fresh, make most everything from scratch, and smoke all of our own chicken in-house.”
Indeed, at the heart of the menu is the “Legendary Cheeseburger” that takes its name from Hard Rock lore. The firm started in London in 1971 when two expats wanted a place to get a good cheeseburger.
Much of the rest of the menu is given over to barbecued ribs and chicken, though the restaurant also offers a number of salads. Guests walk past a big opening to see the kitchen staff at work — it’s just past the spot with the Hard Rock logo for photos — in a signal of confidence about its food.
Such attention to food is keeping Hard Rock stronger than most other themed restaurants. Last year, it had domestic restaurant sales of $282 million with 46 locations. Only Dave & Buster’s theme restaurants topped it at $309 million in food and beverage revenue with 65 locations, according to Technomic.
Globally, privately held Hard Rock has 143 cafes, 21 hotels and 10 casinos. Revenue last year was up about 3 percent, consistent with the rest of the restaurant industry, the Technomic data shows.
Despite the struggles of theme restaurants, new ideas are always emerging. “There’s no shortage of optimism in the restaurant industry,” Tristano said.
And the Mall of America hasn’t soured on them. “We’ve always loved themed restaurants,” said Maureen Bausch, executive vice president of business development for the mall. “Rainforest Cafe still does extremely well, and we love Bubba Gump.”
Schussler’s company has developed 17 other restaurant concepts beyond Rainforest Cafe, which is owned by Landry's Inc. of Houston. One of the most pricey: the $27.5 million, 30,000-square-foot, dinosaur-themed T-Rex Cafe in Orlando. “It’s difficult to raise that kind of money even in a great economy,” he said. He’d like to put one in the Mall of America but his preferred location is already leased to another popular destination — the American Girl store.
“It’s a funky, fickle business,” Schussler said. “You have to be on top of your game, but I still see themed restaurants going through the roof.”