Case Study Example: Hard Rock Cafe Forecasting

1. Question One

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Hard Rock cafe uses three different time frames of forecasting in their business. A long-term forecasting method has been used to estimate needed growth rate for each of their stores. Intermediate forecasting period of about eight months is applied in selecting the ordering period for materials to be used in manufacturing merchandise products like leather jackets. Stocking needs for food items like beef, pork, and chicken are also done in the intermediate time frame. In assessing labor needs and food requirements, short term forecasts are applied. Short term spans for periods of about one month (Pearson Learning Solutions).

The same forecasting time frames could also be applied to other areas of the organization. The long-term forecasts could be used to assess the visiting frequency of clients at the various periods of the day. From this prediction, the cafe would be able to determine how many people come in for dinner, lunch or breakfast. The same time frame forecast could also be used in analyzing the eating patterns of the customers across the four seasons of the year. The intermediate forecast could be applied in negotiating contracts for expenditure on periodic overhead items which are procured once a year. These periodic expenses include items like annual renovations and maintenance and service contracts. Short term forecasts would apply for other non-food items like the cutlery and crockery which are subject to constant breakages or pilferage.

2. Question Two

The POS is used to assess the number of people who walk through the door. In determining this figure, the cafe reviews the number of food orders that are placed on the POS. Through the POS, Hard Rock can tell how many people visited either the bar section or the hotel section. The management is also in a position to point out exactly what was ordered by a particular client while seated at the head office since the POS are connected to the headquarters servers. From the POS data, the company can draw conclusions on the average consumers. This data is then used for forecasting purposes. It is from this forecast that long-term decisions on menu changes or remodeling are made (Pearson Learning Solutions).

3. Question Three

Customers ages and sexes could also be a good predictor of sales in each cafe. Data on the age brackets could be tied to the population demographics to forecast future sales. If an outlet has old aged customers in an area that has a population of many young people, then it would mean that after some time there wont be many clients visiting the cafe.

Information on the number of competing outlets in the neighborhood is also a good indicator of future success of an outlet. Competing restaurants tend to replicate the success stories of Hard Rock cafe in their shop and thereby draw some customers to their restaurants. This outflow of customers would reduce the projected sales of a Hard Rock cafe outlet.

The general economic and financial status of the people living or visiting the surrounding location is of utmost importance. It helps the management in planning and forecasting the type of food and merchandise to sell. If the area is frequented by individuals from the high-end income range, then the management can focus their product offerings on the high quality and expensive items only.

References

Pearson Learning Solutions. "Operations Management: Hard Rock Cafe Forecasting". 2004, https://media.pearsoncmg.com/pls/il/devry/1269898760/page_09.html.