Hard Rock Profits Down but New Units Still Planned

The Sept. 11 terrorist attacks in New York and Washington, DC bit into the themed restaurant's bottom line. Operating profit before taxes was $54.5 million, down 18% from $66.5 million in 2000. Sales of $356 million are down 4.5% from $373 million.

Restaurants open at least a year at the 57 company-owned locations showed a sales drop of 6.7%. Most of the revenue decrease was logged at United States restaurants.

Rank itself posted a profit of $182 million compared to a loss of $461 million in 2000, even though cash flow of $383.6 million was down from $515 million the previous year. Still, says Mike Smith, the company's chief executive, in a prepared statement, "2001 was a good year for Rank."

Rank owns Orlando-based Hard Rock International restaurants and one new hotel; Deluxe Inc., a film and video company; Mecca Bingo in Great Britain and Spain; and Grosvenor Casinos in Great Britain and Belgium.

Customer demand at Hard Rock International restaurants are improving, Smith says. "We believe the reinvigorated Hard Rock business model has proved itself to be robust despite the difficulties since Sept. 11 and we will continue to expand in 2002," he says.

"The prospect for licensing the (Hard Rock) brand within hotels and casinos also remains strong," the Rank executive says. In its first operating year in Orlando, the Hard Rock Hotel generated $3.25 million to Rank's total revenue of $1.96 billion.

"Given the success of the Hard Rock Hotel in Orlando, we are actively seeking more branded hotel opportunities," Smith says. A resort hotel in Pattaya, Thailand opened last November. The new Chicago hotel is scheduled to open in 2003.

Rank also plans to open 10 cafes in the United Kingdom and Europe this year but will focus on local customer trade with less reliance on tourists. The company has found sites in Nottingham, Lisbon and Cologne and continues to search for additional overseas locations.

In Florida, Rank is also waiting to see what the Seminole Indian Nation will do in its current campaign to raise $590 million in municipal bonds that will fund the construction of two Hard Rock Hotels with casinos in 2004.