Planet Hollywood International, Inc.

views updated Jun 08 2018

Planet Hollywood International, Inc.

8669 Commodity Circle
Orlando, Florida 32819
U.S.A.
Telephone: (407)363-7827
Fax: (407)363-4862
Web site: http://www.planethollywood.com

Public Company
Incorporated: 1991
Employees: 3,970
Sales: $281 million (1999)
Stock Exchanges: New York
Ticker Symbol: PHWD
NAIC: 72211 Full-Service Restaurants; 45299 All Other General Merchandise Stores; 53311 Lessors of Non-financial Intangible Assets (Except Copyrighted Works)

Planet Hollywood International, Inc.undergoing a major corporate restructuring in 2001operates as the controlling body for entertainment-based theme restaurants located throughout the world. The companys name reflects its most well-known venture, a chain of approximately 60 company-owned and franchised Planet Hollywood restaurants that offer patrons a chance to dine in the midst of various film and television props and memorabilia. Planet Hollywood International also runs five Official All Star Café restaurants, a chain that centers on professional sports and follows a sports-bar theme, and several Cool Planet Ice Cream shops. Under the reorganization plan, management is focusing on its core business of operating Planet Hollywood restaurants.

Origins

The first Planet Hollywood restaurant opened in New York City in 1991, but the events leading to its inception can be traced back almost 20 years before that date. In 1972, a young man named Robert Earl opened a dinner theater in London called The Beefeater, which offered customersmainly touristsa medieval-theme dining experience. Earl, who had graduated with a degree in hotel and restaurant management from the University of Surrey, possessed a talent for creating entertainment-based restaurant concepts that drew large numbers of customers. He soon developed The Beefeater into a popular local success, which prompted him to open other theme-restaurants nearby. In the late 1970s, he created Talk of London, Shakespeares Tavern, and The Cockney Club.

Although successful in London, Earl saw greater growth potential in the American market, and therefore came to the United States in the early 1980s to sell his concepts to the developers of a then-new Disney World attraction called EPCOT Center. The deal fell through, but Earl decided to stay in Florida anyway and try his luck in the Orlando restaurant business. He opened several theme-restaurants using medieval and Wild West ideas, nurturing his new restaurant group until he sold it to a larger holding company in the mid-1980s.

After changing hands again numerous times, his enterprise landed in the lap of Mecca Leisure, which had just purchased rights to Hard Rock Internationals eastern region. Hard Rock International was the controlling body for the Hard Rock Café chain of music industry-based theme restaurants. In 1989, Mecca appointed Earl as the new chief executive of their portion of the Hard Rock operation and put him in charge of expanding the chain in the eastern United States.

Within two years, Earl had helped the eastern-region Hard Rock Café chain grow from 7 units to 20. During that time, Earl met film producer Keith Barish, who soon became his business partner and the cofounder of Planet Hollywood International, Inc. Earl and Barish shared a belief that music, movies, and sports could transcend all barriers, language and otherwise, that separated the people of the world. The two men decided to capitalize on the worldwide appeal of the film and television entertainment industry by opening a restaurant based on that theme. Dubbing their creation Planet Hollywood, Earl and Barish opened the restaurant in New York City in late 1991.

Quick Success in the Early 1990s

Planet Hollywood was immediately successful, drawing crowds of people who often lined up outside the restaurant for hours to get tables. Part of the restaurants appeal lay in its museum-like quality; its decor consisted of a multitude of real film and television costumes, props, and memorabilia. The genius marketing strategy used by the restaurants founders accounted for the rest of the attraction. They asked celebrities such as Arnold Schwarzenegger, Sylvester Stallone, Bruce Willis, Demi Moore, and Whoopi Goldberg to act as the restaurants investor/owners. Every once in a while, these celebrities would stop by their restaurant to check in and mingle briefly with their fans. Although this did not occur all that often, customers still flocked to the restaurant in hopes that they would be one of the lucky few to dine with the stars.

A year after launching Planet Hollywood, Earl left behind his post at Hard Rock and also severed ties to his original theme-restaurant group in Orlando. He and Barish began planning the worldwide introduction of additional Planet Hollywood restaurants and started by recruiting more celebrity investors for the new locations. Climbing on board were film actors Don Johnson and his then wife Melanie Griffith, director John Hughes, comedienne Roseanne, and actors Tom Arnold, Wesley Snipes, and Danny Glover. By mid-1993, Planet Hollywood International had opened new restaurants in London and southern California and was completing the construction of a fourth unit in Chicago.

Earl and Barish hired the New York City architect David Rockwell to design the new units, each of which typically seated over 200 people and contained film props and floor layouts that were unique to their locations. Different items on display throughout the chain included Dorothys dress from The Wizard of Oz, the pottery wheel used by Demi Moore and Patrick Swayze in Ghost, a replica of the castle from Dracula, the Batmobile, the Flintstone buggy, and a plastic model of the meat slab that was pulverized by Stallone in the film Rocky. Customers were also treated to celebrity hand print walls and big-screen televisions, which played promotional clips for upcoming movies.

Meanwhile, a Hard Rock International executive, Peter Morton, filed suit against Earl and Planet Hollywood, alleging that Earl had engaged in the appropriation of trade secrets. Morton, a cofounder of Hard Rock International and the CEO of its western region, believed that Earls Planet Hollywood chain was a rip-off of the Hard Rock concept. Earl nonchalantly dismissed the charges, however, and the case against Planet Hollywood never amounted to much in court. Furthermore, Mortons complaint did little to deter Planet Hollywood from expanding further, nor did it curb the publics desire to patronize the new and rapidly blossoming chain. Soon Planet Hollywood was known as a worldwide leader in the theme restaurant business.

By the end of 1993, Planet Hollywood had not only opened two new restaurants in Washington, D.C., and Cancun, Mexico, but it had also signed leases for five new units in Phoenix, Arizona; New Orleans, Louisiana; Aspen, Colorado; Maui, Hawaii; and Minneapoliss Mall of America (the largest shopping mall in the United States). Each opening was a gala event, drawing enormous crowds of people to catch a glimpse of the many media personalities who made appearances and celebrated the new successes. However, the true test of a new location occurred the day after the official opening, when a restaurant actually opened its doors to the general public. Without fail, each new Planet Hollywood passed these tests with ease, and in the first year of operation, most were generating revenues of almost $15 million per unit.

A strong asset of the Planet Hollywood concept was that each unit sold licensed Planet Hollywood merchandise as well as serving food and drinks. Items of all kinds were sold, from key rings and T-shirts, to sweatshirts, watches, and leather coats. Sales of this merchandise helped boost Planet Hollywoods profit margins considerably above those achieved at other restaurants that relied solely on food to bring in profits. Merchandise became so popular that within a few years, the company began to open separate retail stores called Planet Hollywood Superstores, a move that further increased yearly profits.

Expansion in the mid-1990s

In 1994, Planet Hollywood continued its aggressive expansion program, and units continued to open worldwide. The company also began developing additional theme-restaurant ideas, including the concept for the Official All Star Café. Acknowledging the success that Planet Hollywood had achieved from drawing upon the publics interest in celebrity life, Earl and Barish decided that the Official All Star Café would be the perfect sports-based equivalent. They began recruiting professional sports figures to invest in the concept, drawing in people such as hockey great Wayne Gretzky, football icon Joe Montana, and basketball superstar Shaquille ONeal. Plans for the new restaurants included a menu of stadium cuisine supplemented by home cooking and sales of professional sports merchandise and souvenirs.

Also in 1994, the company opened what would soon become its highest-grossing Planet Hollywood unit, in Las Vegas. Unlike most previous units, which seated approximately 250 people, the Las Vegas restaurant was designed to seat 500 and was planned by Rockwell so that there would be no bad seats. The units opening rivaled a sporting event or the Academy Awards in magnitude, in that it drew a crowd of more than 10,000 people who packed themselves into stadium-like bleachers nearby to witness the stars arrivals at the event. Even former President and First Lady George and Barbara Bush were on hand to celebrate. Later that year, the entrepreneurs opened another 500-seater in Orlandos Disney World, which made Earl and Barish owners of the two highest-grossing restaurants in the United States.

Company Perspectives:

Planet Hollywood International, Inc. strives to act as a creator and developer of consumer brands that capitalize on the universal appeal of movies, sports, and other entertainment-based themes.

At that point, Planet Hollywood was composed of 18 units around the world, and the company was projecting the addition of 17 more during 1995. The Planet Hollywood chain was expanding almost on its own, so Earl decided to begin focusing his attention and energy on other avenues of growth while the chain took care of itself. In August 1995, ground was broken in New York City near the original Planet Hollywood, and construction of the first Official All Star Café began. Meanwhile, plans were in the works to develop a theme-restaurant chain based on characters from the Marvel Comics series. Also, television game-show producer King World began working with Roseanne Barrs production company on a Planet Hollywood Squares television game show, which was to be a revival of the original Hollywood Squares from decades past with a new Planet Hollywood twist.

With Planet Hollywood quickly becoming a household name, the company decided to go public in 1996. Not only was stock offered to the public, but the company also convinced MBNA to issue Planet Hollywood VISA credit cards, which gave cardholders priority seating at the restaurants. A joint venture with ITT Corporation was also formed to develop Planet Hollywood casinos in Las Vegas and Atlantic City in the future. Furthermore, Marvel Entertainment Group, Inc. and Planet Hollywood International decided to move ahead with the comic book character-based restaurant concept, calling it Marvel Mania. Ideas for a new concept called Chefs of the World, which was to feature a star-studded culinary staff, also began to arise.

Some began to wonder whether Planet Hollywood was spreading its resources too thin, and speculations surfaced as to whether the company would be able to continue the growth trend that it had been experiencing for the past five years. Earl maintained ambitious goals to keep the company expanding by 30 to 40 percent each year, in both the number of restaurant locations and in annual revenues. Criticisms of that plan, however, focused on the idea that the more units that were opened, the less novel a customers experience in patronizing the restaurant chain, which could lead to a drop in sales. Furthermore, theme restaurants were popping up all over the country, providing Earl and Barish with intense competition. The Harley-Davidson Café was gaining popularity, as were other concepts such as Robert DeNiros Tribeca Grill, the Country Star chain (backed by Wynonna Judd, Vince Gill, and Reba McEntire), and the Thunder Roadhouse (backed by Dennis Hopper, Dwight Yoakam, and Peter Fonda).

However, Planet Hollywood and the Official All Star Café did possess one major advantage over their competition, which was the celebrity endorsement received through stars ownership and investment in the chains. Many customers thus viewed these restaurants as the originals. As for continued growth potential, Earl dismissed skepticism with easy confidence, given that in only five years the company had grown from one $3.5 million restaurant in New York to an almost $300 million operation with approximately 50 units throughout the world.

Financial Woes in the late 1990s

Nevertheless, stock price began to falter as scepticism about the future of the company increased. Despite a rise in profits and revenues in 1996, an aggressive growth strategy fueled speculation that Planet Hollywood would not be able to finance its rapid expansion. One year later, those doubts became certainties as the firm reported a $40 million loss in the fourth quarter. Managements narrow focus on diversification became apparent as the firms core businessthe Planet Hollywood restaurantsbegan to show signs of neglect; menu prices were high, food was mediocre, and service was below average.

In 1998, cofounder Barish resigned, leaving Earl chairman and CEO. William Baumhauer was then hired as president, and the management looked to his turnaround skills to have a positive impact on the companys finances. In August of that year, Planet Hollywood had to deal with yet another problem when a bomb exploded in one of its franchise restaurants in Cape Town, Africa. It seemed that a black cloud had settled over the firm as a loss of $244 million was recorded that year.

Bankruptcy and Restructuring in the New Millennium

In June 1999, Baumhauer resigned after having little effect on Planet Hollywoods bottom line. The companys once bright future was tarnished as it lay under $359 million in debt. Left with few options, the company declared Chapter 11 bankruptcy on October 12, 1999. The management placed blame on a loss in revenues, increasing costs, including those related to expansion, a decrease in customers, and an increase in competition.

Planet Hollywood set out to restructure itself. Its efforts included closing and selling poorly performing Planet Hollywood restaurants and Official All Star Cafes. The management also began to put into effect a strategy to focus on its core operation, its original restaurant theme. The company stopped operation of its Planet Movies by AMCcreated in July 1999and sold its Sound Republic units. It also cut costs, eliminated jobs, and halted any ventures not closely related to its core focus.

Key Dates:

1991:
Planet Hollywood is established.
1993:
Famous actors begin promoting and investing in the firm.
1994:
The company expands with 18 locations in operation.
1995:
The development begins on the Official All Star Café concept.
1996:
Planet Hollywood goes public.
1997:
The company begins to lose money and stock price falters.
1998:
Robert Earl takes over as chairman and CEO.
1999:
The firm files for Chapter 11 bankruptcy.
2000:
The company emerges from Chapter 11 under a new reorganization plan.

On May 9, 2000, Planet Hollywood emerged from Chapter 11 after receiving approval for its reorganization plan. The restructuring left the firm with a cash infusion, allowing it to rebuild itself without the burden of major debt. Improvements in the restaurants included new menus, updated décor, and new products. The firmss managers also set out to capture celebrity relationships, including those of Bruce Willis, Shaquille ONeal, and musical group NSnyc. The firm also launched its Web site, which featured live celebrity chats, coverage of celebrity events, entertainment news, and merchandise.

Planet Hollywood entered 2001 with an uncertain future. In a Securities and Exchange Commission filing, the company stated that it had substantial assets to keep it afloat for the year. Although management kept a positive outlook on the future of the company, it recognized the financial burdens and obstacles it would have to overcome in order to remain a player in the entertainment industry in the new millennium.

Principal Operating Units

Planet Hollywood Restaurants; Official All Star Café.

Principal Competitors

Dave & Busters, Inc.; Hard Rock Café International, Inc.; Rainforest Café, Inc.

Further Reading

Ball, Aimee Lee, Mr. Universe, New York, July 15, 1991, p. 38.

Can Planet Hollywood Survive its Own Disaster Flick as Rough Year Nears End, Nations Restaurant News, December 7, 1998, p. 29.

Greenberg, Herb, Earth to Planet Hollywood, Fortune, December 23, 1996.

Guttman, Monika, Why the Stars Orbit Planet Hollywood: With Meteoric Growth, the Eateries May Go Public, U.S. News & World Report, November 27, 1995, p. 60.

Hayes, Jack, Robert Earl: The King of Planet Hollywood Promises the Starsand He Delivers, Nations Restaurant News, October 9, 1995, p. 164.

Jackson, Jerry W., Planet Hollywood Eatery Chain Can Stay in Business Until Years End, Knight Ridder/Tribune Business News, February 15, 2001.

Kapner, Suzanne, Starry Vegas Night Shines on New Planet, Nations Restaurant News, August 8, 1994, p. 7.

Levine, Joshua, Hamburgers and Tennis Socks, Forbes, November 20, 1995, p. 184.

Martin, Richard, Hard Rock Hits Planet Hollywood with Copycat Suit, Nations Restaurant News, March 16, 1992, p. 3.

McClellan, Steve, King World Developing Planet Hollywood Squares, Broadcasting & Cable, September 25, 1995, p. 11.

Miracle, Barbara, Beyond Planet Hollywood, Florida Trend, December 1993, p. 10.

Planet Hollywood Launches New Web Site, Newsbytes, July 30, 2000.

ONeal Signs to Endorse Planet Hollywood Chain, Nations Restaurant News, July 17, 2000, p. 30.

Papiernik, Richard L., All Quiet on the Hollywood Front After Picture Perfect IPO, Nations Restaurant News, May 13,1996, p. 11.

Planet Hollywood, Marvel Comics Team for Themer, Nations Restaurant News, June 6, 1994, p. 2.

Planet Hollywood Successfully Emerges From Chapter 11 Reorganization, PR Newswire, May 9, 2000.

Planet Hwood, All-Star Units End AMC Venture, Nations Restaurant News, January 22, 2001, p. 50.

Prewitt, Milford, Planet Hollywood Eyes New Concepts, Profits Up 82% in 96, Nations Restaurant News, February 24, 1997, p. 11.

, Robert Earl: CEO Planet Hollywood Inc., Orlando, Florida, Nations Restaurant News, January 1995, p. 54.

Selinger, Iris Cohen, Lights! Camera! But Can We Get a Table? Advertising Age, April 17, 1995, p. 48.

St. Onge, Jeff, You Heard it Here First: DJ Planet Hollywood CEO Sees Co. Returning to Past Glory, Bankruptcy Newswire, January 25, 2000.

Thats Eatertainment: Baumhauer Out at Planet Hollywood, Nations Restaurant News, July 5, 1999, p. 3.

Walkup, Carolyn, Planet Hollywood Gears to Launch Unit in Chicago, Nations Restaurant News, July 15, 1993, p. 94.

Laura E. Whiteley
update: Christina M. Stansell

Planet Hollywood International, Inc.

views updated Jun 08 2018

Planet Hollywood International, Inc.

Suite 600
7380 Sand Lake Road
Orlando, Florida 32819
U.S.A.
(407) 363-7827
Fax: (407) 363-4862

Public Company
Incorporated:
1991
Employees: 6,500
Sales: $270.6 million (1995)
Stock Exchanges: NASDAQ
SICs: 5812 Eating Places; 5399 Miscellaneous Merchandise Stores; 6794 Patent Owners and Lessors

Planet Hollywood International, Inc. is the controlling body for a number of different entertainment-based theme restaurants located throughout the world. The companys name reflects its most well-known venture, a chain of approximately 50 Planet Hollywood restaurants that offer patrons a chance to dine in the midst of various film and television props and memorabilia. Another restaurant concept controlled by Planet Hollywood International is the more recent Official All Star Cafe chain, which centers on professional sports and follows a sports-bar theme. The company also runs the Marvel Mania and Chefs of the World restaurants. A unique aspect of most Planet Hollywood International ventures is that the investors and owners are typically celebrities, many of whom actually frequent the restaurants and mingle with the customers.

Theme Restaurant Concept Originates in 1972

The first Planet Hollywood restaurant opened in New York City in 1991, but the events leading up to its inception can be traced back almost 20 years earlier. In 1972, a young man by the name of Robert Earl opened a dinner-theater in London called The Beefeater, which offered customers (mainly tourists) a medieval-themed dining experience. Earl, who had graduated with a degree in hotel and restaurant management from the University of Surrey, possessed a talent for creating entertainment-based restaurant concepts that drew large numbers of customers. He soon developed The Beefeater into a popular local success, which prompted him to open other similar restaurant concepts nearby. In the late-1970s, he created Talk of London, Shakespeares Tavern, and The Cockney Club, all of which remain operational today.

Although successful in London, Earl saw greater growth potential in the American market, and therefore came to the U.S. in the early-1980s to sell his concepts to the developers of a then-new Disney World attraction called Epcot Center. The deal fell through, but Earl decided to stay in Florida anyway and try his luck in the Orlando restaurant business. He opened a number of theme-restaurants using medieval and Wild West ideas, nurturing his new restaurant group until it was sold to a larger holding company in the mid-1980s.

After changing hands again numerous times, his enterprise landed in the lap of Mecca Leisure, who had just purchased rights to Hard Rock Internationals eastern region. Hard Rock International was the controlling body for the Hard Rock Cafe chain of music-industry-based theme restaurants. In 1989, Mecca appointed Earl as the new chief executive of their portion of the Hard Rock operation, and put him in charge of expanding the chain in the eastern United States.

Within two years, Earl had helped the eastern-region Hard Rock Cafe chain grow from 7 units to 20. It was during that time that Earl met film producer Keith Barish, who would soon become his business partner and the cofounder of Planet Hollywood International, Inc. Earl and Barish shared a belief that music, movies, and sports were capable of transcending all barriers, language and otherwise, between the people of the world. The two men decided to capitalize on the worldwide appeal of the film and television entertainment industry by opening a restaurant based on that theme. Dubbing their creation Planet Hollywood, Earl and Barish opened the restaurant in New York City in late 1991.

Quick Success in the Early 1990s

Planet Hollywood was immediately successful, drawing crowds that often lined up outside the restaurant for hours in order to get tables. Part of the restaurants appeal lay in its museum-like quality; a multitude of real film and television costumes, props, and memorabilia made up its decor. The rest of the attraction was attributed to a genius marketing strategy used by the restaurants founders. They asked celebrities such as Arnold Schwarzenegger, Sylvester Stallone, Bruce Willis, Demi Moore, and Whoopi Goldberg to act as the restaurants investor/owners. Every once in a while, these celebrities would stop by their restaurant to check in and mingle briefly with their fans. Although this was a somewhat rare occurrence, customers still flocked to the restaurant in hopes that they would be one of the lucky few to dine with the stars.

A year after launching Planet Hollywood, Earl left behind his post at Hard Rock and also severed ties to his original theme-restaurant group in Orlando. He and Barish began planning the worldwide introduction of additional Planet Hollywood restaurants, and started by recruiting more celebrity investors for the new locations. Climbing on board were film actors Don Johnson and then-wife Melanie Griffith, director John Hughes, comedienne Roseanne, and actors Tom Arnold, Wesley Snipes, and Danny Glover. By mid-1993, Planet Hollywood International had opened new restaurants in London and southern California, and was completing the construction of a fourth unit in Chicago.

New York City architect David Rockwell was hired by Earl and Barish to design the new units, each of which typically seated over 200 people and contained film props and floor layouts that were unique to their locations. Different items on display throughout the chain included Dorothys dress from The Wizard of Oz, the pottery wheel used by Demi Moore and Patrick Swayze in Ghost, a replica of the castle from Dracula, the Batmobile, the Flintstone buggy, and a plastic model of the meat slab that was pulverized by Stallone in the film Rocky. Customers were also treated to celebrity hand print walls and big-screen televisions which played promotional clips for upcoming movies.

Meanwhile, a Hard Rock International executive by the name of Peter Morton filed suit against Earl and Planet Hollywood, alleging that Earl had engaged in the appropriation of trade secrets. Morton, a cofounder of Hard Rock International and the CEO of its western region, believed that Earls Planet Hollywood chain was a ripoff of the Hard Rock concept. Earl nonchalantly dismissed the charges, however, and the case against Planet Hollywood never amounted to much in court. Furthermore, Mortons complaint did little to deter Planet Hollywood from expanding further, nor did it curb the publics desire to patronize the new and rapidly blossoming chain. Soon Planet Hollywood was known as a worldwide leader in the theme restaurant business.

By the end of 1993, Planet Hollywood had not only opened two new restaurants in Washington, D.C., and Cancun, Mexico, but it had also signed leases for 5 new units in Phoenix, New Orleans, Aspen, Maui, and Minneapoliss Mall of America (the largest shopping mall in the United States). Each opening was a gala event, drawing enormous crowds of people to catch a glimpse of the many media personalities who made appearances and celebrated the new successes. But the true test of a new location occurred the day after the official opening, at which time a restaurant actually opened its doors to the general public. Without fail, each new Planet Hollywood passed these tests with ease, and in the first year of operation most were generating revenues of almost $15 million per unit.

A strong asset of the Planet Hollywood concept was that each unit sold licensed Planet Hollywood merchandise in addition to serving food and drinks. Items of all kinds were sold, from key rings and T-shirts, to sweatshirts, watches, and leather coats. Sales of this merchandise helped boost Planet Hollywoods profit margins considerably above those achieved at other restaurants that relied solely on food items to bring in profits. Merchandise became so popular that within a few years, the company began to open separate retail stores called Planet Hollywood Superstores, a move which even further increased yearly profits.

The End of the Century and Beyond

In 1994, Planet Hollywood continued its aggressive expansion program, and units continued to open worldwide. The company also began developing additional theme-restaurant ideas, including the concept for the Official All Star Cafe. Acknowledging the success that Planet Hollywood had achieved from drawing upon the publics interest in celebrity life, Earl and Barish decided that the Official All Star Cafe would be the perfect sports-based equivalent. They began recruiting professional sports figures to invest in the concept, drawing in people such as hockey great Wayne Gretzky, football icon Joe Montana, and basketball superstar Shaquille ONeal. Plans for the new restaurants included a menu of stadium cuisine supplemented by home cooking, and sales of professional sports merchandise and souvenirs.

Also in 1994, the company opened what would soon become its highest-grossing Planet Hollywood unit, in Las Vegas. Unlike most previous units, which seated approximately 250 people, the Las Vegas restaurant was designed to seat 500 and was planned by Rockwell so that there would be no bad seats. The units opening rivaled a sporting event or the Academy Awards in magnitude, in that it drew a crowd of over ten thousand people who packed themselves into stadium-like bleachers nearby to witness the stars arrivals at the event. Even former President and First Lady George and Barbara Bush were on hand to celebrate. Later that year another 500-seater was opened in Orlandos Disney World, which gave Earl and Barish ownership of the two highest-grossing restaurants in the United States.

At that point, Planet Hollywood was composed of 18 units around the world, and the company was projecting the addition of 17 more during 1995. The Planet Hollywood chain was expanding almost on its own, so Earl decided to begin focusing his attention and energy on other avenues of growth while the chain took care of itself. In August 1995, ground was broken in New York City nearby the original Planet Hollywood, and construction of the first Official All Star Cafe began. Meanwhile, plans were in the works to develop a theme-restaurant chain based on characters from the Marvel Comics series. Also, television game-show producer King World began working with Roseanne Barrs production company on a Planet Hollywood Squares television game show, which was to be a revival of the original Hollywood Squares from decades past with a new Planet Hollywood twist.

With Planet Hollywood quickly becoming a household name, the company decided to go public in 1996. Not only was stock offered to the public, but the company also convinced MBNA to issue Planet Hollywood VISA credit cards, which gave cardholders priority seating at the restaurants. A joint venture with ITT Corporation was also formed to develop Planet Hollywood casinos in Las Vegas and Atlantic City in the future. Furthermore, Marvel Entertainment Group, Inc. and Planet Hollywood International decided to move ahead with the comic book character-based restaurant concept, calling it Marvel Mania. Ideas for a new concept called Chefs of the World, which was to feature a star-studded culinary staff, also began to arise.

Some began to wonder whether Planet Hollywood was spreading its resources too thin, and speculations surfaced as to whether the company would be able to continue the growth trend that it had been experiencing for the past five years. Earl maintained ambitious goals to keep the company expanding by 30 to 40 percent each year, in both the number of restaurant locations and in annual revenues. Criticisms of that plan, however, centered on the idea that the more units that were opened, the less unique a customers experience in patronizing the restaurant chain, which could lead to a drop in sales. Furthermore, theme restaurants were popping up all over the country, providing Earl and Barish with intense competition. The Harley-Davidson Cafe was gaining popularity, as were other concepts such as Robert DeNiros Tribeca Grill, the Country Star chain (backed by Wynonna Judd, Vince Gill, and Reba McEntire), and the Thunder Roadhouse (backed by Dennis Hopper, Dwight Yoakam, and Peter Fonda).

But Planet Hollywood and the Official All Star Cafe did possess one major advantage over their competition, which was the celebrity endorsement received through stars ownership and investment in the chains. Many customers thus viewed these restaurants as the originals. As for continued growth potential, Earl dismissed skepticism with easy confidence. Given that in only 5 years the company had grown from one $3.5 million restaurant in New York to an almost $300 million operation with approximately 50 units spread throughout the world, it seemed to be a safe bet that Planet Hollywood possessed the ability to continue the trend of success into the coming century.

Principal Operating Units

Planet Hollywood Restaurants; Official All Star Cafe; Marvel Mania; Chefs of the World.

Further Reading

Ball, Aimee Lee, Mr. Universe, New York, July 15, 1991, p. 38.

Greenberg, Herb, Earth to Planet Hollywood, Fortune, December 23, 1996.

Guttman, Monika, Why the Stars Orbit Planet Hollywood: With Meteoric Growth, the Eateries May Go Public, U.S. News & World Report, November 27, 1995, p. 60.

Hayes, Jack, Robert Earl: The King of Planet Hollywood Promises the Starsand He Delivers, Nations Restaurant News, October 9, 1995, p. 164.

Kapner, Suzanne, Starry Vegas Night Shines on New Planet, Nations Restaurant News, August 8, 1994, p. 7.

Levine, Joshua, Hamburgers and Tennis Socks, Forbes, November 20, 1995, p. 184.

Martin, Richard, Hard Rock Hits Planet Hollywood with Copycat Suit, Nations Restaurant News, March 16, 1992, p. 3.

McClellan, Steve, King World Developing Planet Hollywood Squares, Broadcasting & Cable, September 25, 1995, p. 11.

Miracle, Barbara, Beyond Planet Hollywood, Florida Trend, December 1993, p. 10.

Papiernik, Richard L., All Quiet on the Hollywood Front After Picture Perfect IPO, Nations Restaurant News, May 13, 1996, p. 11.

Planet Hollywood, Marvel Comics Team for Themer, Nations Restaurant News, June 6, 1994, p. 2.

Prewitt, Milford, Robert Earl: CEO Planet Hollywood Inc., Orlando, Florida, Nations Restaurant News, January 1995, p. 54.

Selinger, Iris Cohen, Lights! Camera! But Can We Get a Table? Advertising Age, April 17, 1995, p. 48.

Walkup, Carolyn, Planet Hollywood Gears to Launch Unit in Chicago, Nations Restaurant News, July 15, 1993, p. 94.

Laura E. Whiteley

Planet Hollywood International, Inc.

views updated May 29 2018

Planet Hollywood International, Inc.

founded: 1991



Contact Information:

headquarters: 8669 commodity cir.

orlando, fl 32819 phone: (497)363-7827 fax: (407)363-4862 url: http://www.planethollywood.com

OVERVIEW

Planet Hollywood International, Inc. is in the "eater-tainment" business, mixing menus and memorabilia. Promoting these restaurants are such Hollywood Stars as Bruce Willis and Arnold Schwarzenegger, who have small interests in the company. With 80 restaurants worldwide Planet Hollywood caters to movie buffs, while sports fans are served by 9 Official All Star Cafes. These sports-themed restaurants are publicized by Tiger Woods, Shaquille O'Neal, and Monica Seles, all of whom are stockholders.

Merchandise makes up about one-third of the Planet Hollywood profit margin. Each restaurant has its own gift shop, tailored to its market, so diners can purchase a piece of the Planet. The company is expanding into other entertainment areas—such as music, movies, hotels, and casinos—and is marketing its trademark through various licensing agreements.




COMPANY FINANCES

Within four years of the 1991 opening of the first Planet Hollywood in Manhattan (a premiere that came with a $750,000 price tag), the chain grew to 28 restaurants in locations from Honolulu to Helsinki. Sales in that year totaled $3.5 million. Sales continued to rise every year reaching $20.4 million in 1992, $30.7 million in 1993, $25.9 million in 1994, and $270.6 million in 1995. Average annual income generated per restaurant is $10 to $15 million. At the close of 1997, there were 78 Planet Hollywood restaurants and 9 Official All-Star Cafes throughout the world. Due to a poor fourth-quarter closing in 1997, expansion plans for 1998 included only 3 new Planet Hollywood restaurants and 2 new Official All-Star Cafes.

Sales for 1997 totalled $475.1 million, a 27-percent increase over 1996's $373.4 million. The breakdown of 1997 revenues were as follows: food and beverage, 58 percent; merchandise, 37 percent; franchise fees, 3 percent; royalties, 2 percent.

The fourth-quarter 1997 loss caused the company's stock, which had been trading as high as $27.25 in July, to fall to $6.75 in January (although it did rebound). In March 1998 Prince Walid bin Talal increased his percentage of ownership from 1 to 4 percent of common stock. Through his Kingdom Holding Company, the Prince planned to develop 34 restaurants in 23 Middle Eastern and European countries.




ANALYSTS' OPINIONS

Customer opinion, obviously, is paramount. In a 1997 consumer survey conducted by National Family Opinion for the trade publication Restaurants & Institutions, it was found that "Hard Rock edged out Planet by a narrow margin of 3.57 to 3.47 in the overall satisfaction index, based on seven categories. But Planet was ranked No. 1 among all restaurant chains in atmosphere while Hard Rock was No. 2. Still, Hard Rock finished ahead of Planet in food quality, menu variety, service, value, and convenience. Planet topped Hard Rock in atmosphere and cleanliness ratings."

Profits in theme restaurants, including Planet Hollywood, seem to be leveling off. A 1998 Wall Street Journal article points to a 13-percent decrease in same-store sales blamed on a "been there, done that" attitude.




HISTORY

If Planet Hollywood bears a striking resemblance to the Hard Rock Cafe chain, it is—at least to Hard Rock founder Peter Morton—no coincidence. Morton has sued CEO Robert Earl on numerous allegations, including stealing trade secrets from Hard Rock Cafe.

The first Planet Hollywood opened in October 1991. In February 1992 Morton filed a $1.5-billion suit after seeing Planet Hollywood for himself. Fuel was added to the fire after an employee of Earl's, according to Rolling Stone, proclaimed Earl intended to place a Planet Hollywood in every location where Morton's Hard Rocks were located. That spring a Planet Hollywood opened in Newport Beach, California, where Morton was opening a Hard Rock Cafe. Morton filed another multimillion-dollar suit. Earl claimed he did nothing wrong and moved his restaurant to Santa Ana. The grand openings were mere weeks apart.

That and other legal battles with Morton aside, Planet Hollywood has expanded into Planet Hollywood International, Inc., setting up franchises in South America, Europe, the Middle East, and Asia. Capitalizing on the theme concept, the company launched its Official All-Star Cafes, which are sports-based restaurants resembling arenas and touting memorabilia of past and present superstar athletes.

The company has continued to expand over the years, growing to 78 Planet Hollywood restaurants and 9 Official All-Star Cafes by the end of 1997. Other themes were conceptualized, such as a Chefs of the World chain and a comic book chain in partnership with Marvel Comics. However, the theme restaurant business seemed to level out during 1997, so the Chefs idea was dropped. When Marvel Comics declared bankruptcy, the comic-themed concept died as well. Only 3 new Planet Hollywood restaurants and 2 Official All-Star Cafes were scheduled to open in 1998; however, the company was looking to diversify into the music, entertainment, and hotel/gaming industry.

A 1997 company reorganization created five divisions: Consumer Products, Food & Beverage, Lodging & Gaming, Retail & Merchandise, and Theaters & Entertainment. According to CEO and President Robert Earl, "The company's new divisional structure more closely aligns operating expertise and activities, which should create greater synergies for all of our brands. It also enables each operating division to be viewed as a stand-alone operation, which should help to make each of the company's business initiatives easier to understand while following their progress and future growth. We will also benefit from a clearer picture of the businesses that are now emerging and are becoming an increasing contributor to the company's future profitability and earnings growth."

STRATEGY

Capitalizing on the draw of celebrity, Planet Hollywood Inc. actively seeks out up-and-coming stars in the movie and sports arenas to become stockholders. These celebrity stockholders subsequently help the company promote its various brands. Gala affairs with celebrities in tow are used to draw customers to both new and existing restaurants.

Two of the company's primary goals are brand recognition and diversification. In an effort to diversify, Planet Hollywood is venturing into movie theaters, lodging, gaming, and consumer products. The company has partnered with AMC to launch multiplex cinema centers; with Aladdin Gaming LLC to construct a hotel/gaming casino complex; with EMI to produce a new record label; with MTV to work with their new music-themed restaurants, and with Dreyer's Grand Ice Cream Inc. to produce ice cream. The ice cream will be sold at supermarkets as well at a new chain of ice-cream parlors. Large-scale campaigns, such as a $4.5 million MARS Candy sweepstakes, help keep the Planet Hollywood name in the limelight.

To support its various ventures, Planet Hollywood Inc. reorganized into five divisions: Consumer Products, Food & Beverage, Lodging & Gaming, Retail & Merchandise, and Theaters & Entertainment. Each division functions as a separate company and plays its own role in publicizing the Planet Hollywood name.

Planet Hollywood hopes to encourage customers to visit more than one location, so each restaurant offers a unique combination of props and memorabilia at each restaurant. Merchandise changes regularly and is tailored to the tastes of each location's population. The Planet Hollywood logo, accompanied by the location name, enhances the collectibility of the merchandise.

The Official All-Star Cafes' new marketing strategy entails tieing special events at key restaurants to high-profile sporting events. This effort, which the company launched during Super Bowl XXXII, is aimed at bolstering the All-Star Cafe's image versus its competitors'.

FAST FACTS: About Planet Hollywood International, Inc.


Ownership: Planet Hollywood International, Inc. is a publicly owned company traded on the New York Stock Exchange.

Ticker symbol: PHL

Officers: Robert Earl, CEO & Pres., 45, $500,000; Thomas Avallone, Exec. VP & CFO, 38, $240,000; Keith Barish, Chmn., 52, $500,000

Employees: 9,100

Chief Competitors: Planet Hollywood's primary business is "eatertainment," or theme restaurants. Some primary competitors include: Ark Restaurants; Rain-forest Cafe; Rank; Country Star; dick clark productions; HOB Entertainment; Lettuce Entertain You; and Restaurant Associates.




INFLUENCES

Relatively flat sales are predicted for 1998, and fewer Planet Hollywood and Official All-Star Cafes will be opened. To broaden market appeal, Planet Hollywood Inc. is branching out into music-themed enterprises, movie theaters, and a Las Vegas hotel/gaming complex. As approximately one third of its income is from merchandise sales, Planet Hollywood Inc. plans to offer a greater variety of merchandise bearing its trademark, as well as celebrity-sponsored brands and seasonal wear.

CURRENT TRENDS

Planet Hollywood Inc. continues its themed-based enterprises not only by opening new Planet Hollywoods and Official All-Star Cafes, but also by adding music-themed restaurants and a number of ice cream parlors. The Planet Hollywood restaurants focus on movie memorabilia from classic and current films, including materials provided by their celebrity stockholders. Each Official All-Star Cafe resembles a sports arena and contains memorabilia from past and present sports greats, again including celebrity stock holders. The newest chain, tentatively titled Asylum, will build on the music concept. Each restaurant will feature an integrated stage as well as an attached club, thus providing two venues for live music entertainment. The first two restaurants, one in London and one in New York, are scheduled to open in 1998. The ice cream shops, earmarked for California and Florida, will be known as Cool Planets Cafes. Their featured product, Cool Planet brand ice cream, will also be available in supermarkets and other Planet Hollywood Inc. chains.

A new partner, Aladdin Gaming LLC, has been found to help Planet Hollywood Inc. step into the hotel/gaming industry. The $250 million complex will become part of Aladdin's existing site on Las Vegas Boulevard.

Expansion in the movie-theater industry comes about with a joint venture with AMC Entertainment. The megaplex theaters, called Planet Movies by AMC, will feature up to 30 screens as well as restaurants, snack bars, and gift stores. The first is slated to open in Columbus, Ohio, in 1999.

To further its mark on the music industry, Planet Hollywood Inc. has joined forces with EMI-Capitol Entertainment to start a new label in 1998. The label, which will be called either Planet Hollywood Music or Planet Music, will include movie-inspired compilations and film sound tracks. Product sales will be through Planet Hollywood Inc.'s various restaurants and music retailers.

Planet Hollywood Inc. launched a web page in 1998 to encourage public access to the company. Planet Hollywood Online offers live chat with fans and stars alike; animated series updated weekly like the cliff hangers of old; film reviews, previews, and promos; celebrity profiles; an events calendar; an arcade with games and contests; and, of course, an online store selling official Planet Hollywood merchandise.




PRODUCTS

CEO Robert Earl stated in U.S. News & World Report, "We're not in the restaurant business. . . . We're in the lifestyle and trademark business." With this in mind, Planet Hollywood Inc. continues to market its trademark. In addition to the above-mentioned venures, a "Planet Hollywood—The Game" boardgame, a Planet Hollywood Barbie doll, and a Planet Hollywood Visa card are in the works. A Planet Hollywood "entertainment minute update" is coming soon to radio stations nationwide.




GLOBAL PRESENCE

International expansion has been enhanced by a number of licensing agreements. Planet Hollywood (Asia) Pte Ltd., which Planet Hollywood Inc. owns equally with a Singapore company, currently holds the rights to Asia. South America is under ECE, a publicly traded Mexican Company of which Planet Hollywood Inc. is a 20-percent stockholder. Restaurants already exist in Cancun, Buenos Aires, Los Cabos, Puerto Vallarta, Nassau, Cozumel, Acapulco, and Sao Paolo, and rights have been granted for an additional seven restaurants in Mexico through the year 2000. Additional sites can be added in Mexico, and rights have also been granted for Rio de Janiero, Brazil, and Santiago, Chile. HRH Prince Walid Bin Talal Abdulaziz Al Saud of Saudi Arabia has purchased the rights for up to 15 restaurants, as well as the right of first refusal for an additional 19 throughout the Middle East and Europe.

CHRONOLOGY: Key Dates for Planet Hollywood International, Inc.


1991:

First restaurant opens in Manhattan

1992:

Hard Rock Cafe founder Peter Morton sues Planet Hollywood CEO Robert Earl

1996:

Works with MNBA Corp. to issue Planet Hollywood Visa cards

1997:

Divides the company into five divisions focusing on the different aspects of their business

1998:

Starts new record label with EMI-Capitol Entertainment




Merchandise has become an important component of the company mix. Sales of Planet Hollywood trademarked products account for approximately one third of total revenues. With this in mind, Planet Hollywood has licensed products from Barbie dolls to ice cream, while

A DIFFERENT WORLD

See Hollywood superstars sitting right next to you, ready to be your new friend! Buy T-shirts, caps, and leather jackets! Listen to pop tunes blasting from every corner of the room! Watch video screens with previews of Hollywood's latest coming attractions! Sit underneath a naked replica of Sylvester Stallone! Ogle at the ice-pick from Basic Instinct, Dorothy's dress from The Wizard of Oz, and Arnold Schwarzenegger's costume from The Terminator! (Is it the actual one? You bet it is! And every Planet Hollywood has one!) It's a multisensory extravaganza, it's a hoot, it's the beginning and end of the world, and it's a completely cool, multipurpose restaurant! Oh, yeah. They serve food too.



introducing new merchandise twice each year. A new web site, Planet Hollywood Online, offers more opportunities to promote and sell the Planet Hollywood name.


SOURCES OF INFORMATION

Bibliography

Bernstein, Charles. "Hard Rock and Planet Hollywood: Head to Head." Restaurants & Institutions, 1 April 1997.

Binkley, Christina, and Richard Gibson. "Planet Hollywood, Aladdin Gaming to Build Casino." Wall Street Journal, 3 November 1997.

Cagle, Jess. "Between a Planet and a Hard Rock." Entertainment Weekly, 30 April 1993.

Canedy, Dana. "Saudi in Alliance to Develop Planet Hollywood Restaurants." New York Times, April 1997.

Coeyman, Marjorie. "Stomach Over Stars? Planet Hollywood Revamps its 'Okay' Menu." Restaurant Business, 1 August 1997.

"EMI Plans Planet Hollywood Label." Advertising Age, 15 December 1997.

Gibson, Richard. "Planet Hollywood Reels As 'Eatertainment' Fades." Wall Street Journal, 23 January 1998, B1.

Greenberg, Herb. "Earth to Planet Hollywood." Fortune, 23 December 1996.

Guttman, Monika. "Why the Stars Orbit Planet Hollywood: With Meteoric Growth, the Eateries May Go Public." U.S. News & World Report, 27 November 1995.

"Investors Say 'Hasta la Vista' after Planet Cites Falling Numbers." Nation's Restaurant News, 2 February 1998.

Jensen, Jeff. "All-Star Cafe Puts Events at Heart of its Strategy." Advertising Age, 26 January 1998.

"MTV links up with Planet Hollywood UK." Sunday Times, 5 October 1997.

"Planet Hollywood Announces Divisional Structure For Its Brands." PR Newswire, 24 October 1997.

"Planet Hollywood to Open Ice Cream Shops in 1998." Orlando Sentinel, 19 September 1997.

"Promotions: Mars Links with Planet Hollywood For $4.5M Milky Way Sweeps." Brandweek, 10 November 1997.

"Some Theme Restaurant Chains Slowing Down Expansion Plans." Miami Herald, 22 March 1998.


For an annual report:

telephone: (407)363-7827


For additional industry research:

Investigate companies by their Standard Industrial Classification Codes, also known as SICs. Planet Hollywood Inc.'s primary SIC is:

5812 Eating Places