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Theme restaurants have taken their share of hits in recent years, with industry observers carping about everything from disappointing food and stale exhibits to unwise real-estate decisions and too-fast growth. Those concerns, coupled with often-underwhelmed customers and fidgety investors, led to front-page financial troubles for chains such as Planet Hollywood and Rainforest Cafe, two of the mega-size eater-tainment pioneers.

The theme segment, however, is far from dead. Many of the early high rollers are making significant operational changes as they fight to survive, including closing locations, refurbishing units, and revamping menus. Other longtime players like Dave & Buster's and Dick Clark Restaurants say they're doing just fine, thank you, and have been unfairly painted by the broad brush of critics. Meanwhile, a host of newer concepts—including NASCAR Cafe, ESPN Zone, NBA City, WWF New York, and Baywatch Restaurants, Cafes and Nightclubs—say they've learned from others' mistakes.

Strip away all the bells and whistles of a theme-related concept, of course, and you've still got a restaurant. Eater-tainment stakeholders, some chastened by past missteps, appear to have reached consensus: success starts with good food.

"Food and the dining experience are becoming a more integral part of the business plan for many theme restaurants," says June Alpert, a food and beverage consultant with PricewaterhouseCoopers LLC in New York City.

Orlando, FL-based Planet Hollywood International, once a poster child of the segment's ills, emerged from Chapter 11 protection last year and launched a revitalization program that includes a new systemwide menu. "You have to keep moving with the consumer's preference for higher-quality food and bolder flavors," says president Christopher Thomas, a Sizzler veteran who joined the movie-themed public company in May 2000 as part of the bankruptcy reorganization. "Maybe in the past, Planet had been a little bit slow on that evolution—like a lot of other chains."

The overhaul, launched in New York at the company's 30,000-sq.-ft. flagship location at 45th and Broadway, meant assessing every item on the menu to weed out anything that was "inconsistent with the concept," Thomas says. Out are appetizers such as Chinese Won Ton; in are newcomers like Rock Shrimp Stew. In addition, portion sizes were increased for many items, and quality was upped across the board. Planet Hollywood also bolstered its entrees with more fish, pasta, and steak.

The new menu, ranging from appetizers starting at $7.95 to entrees priced to $19.95, has boosted the check average by as much as $3—a rise Thomas says stems from higher price points that reflect "a demonstrably better" product. He estimates that annual sales at the New York location, which seats 700 in main dining areas, will top $20 million.

Planet Hollywood's makeover also included a new layout and color scheme for its restaurants and more-stylish merchandise. Moreover, in response to whispers that exhibits were often dated, four motion-picture studios are rotating memorabilia from recent movies.

Hard Rock Cafe, the 30-year-old, 106-unit chain that's considered the godfather of theme restaurants, is enhancing its menu as well. Slated to be available worldwide by the end of May, the new menu puts more emphasis on entrees, especially pastas. "We really wanted to over-deliver on guests' expectations," says Peter J. Beaudrault, a nine-year Hard Rock veteran who in February was named president and CEO of the Orlando, FL-based company.

Price points for the 65 items range from $5.99-$18.99, with an average check of $14.50. Jambalaya Penne Pasta and Honey Bourbon New York Strip are among the entrees, but the best seller remains the Pig Sandwich, featuring hickory-smoked pork.



ther well-established theme restaurants, however, say they've focused on food from the beginning—and are still trying to shuck the eater-tainment tag.

"Our emphasis on food is more fanatical today than it ever has been," says Dave Corriveau, president and co-CEO of Dallas, TX-based Dave & Buster's, a restaurant-and-games concept geared toward adults aged 21-45. "We never wanted to be associated with 'eater-tainment,' but were always put in that box."

Corriveau points out that the cost of doing business is "heavily weighted" on the food side. "The amusement business is great for us," he says, "but it would not stand upright if it didn't have the food business to help support it."

Dave & Buster's, founded in 1982 and a public company since 1995, averages store volume of $12 million, more than half derived from F&B. The menu is revised once or twice a year, with mainstays such as burgers and Blackened Chicken Pasta. The average check is $8.95 for lunch and $15-$18 for dinner.

Newer theme chains also say they entered the market with food as a priority. Knoxville, TN-based NASCAR Cafe, a four-year-old concept that taps into the popularity of NASCAR racing, is led by "people who come from a restaurant background, not an entertainment background," says Kym Lightholder, senior VP. "Our games and our retail store are great, but the No. 1 comment we get is about the food," Lightholder adds.

Lunch prices are $4.95-$10.95, with dinner from $6.95-$17.95. Among the favorites is the $7.99 Pit Pig Sandwich, hickory-smoked pork on a bun with a sliced onion and barbecue sauce.

At ESPN Zone, a subsidiary of Burbank, CA-based Disney Regional Entertainment, nearly 60% of sales stem from repeat customers, making food all the more important, says Randall Baumberger, senior VP of the six-unit sports-and-games concept.

"We expect people to come on Tuesday night to watch a Laker game, come back Wednesday night to watch the Dodgers, and come back with their kids on Saturday to play games," Baumberger says. "But you don't get that unless you have fantastic food."



o the food in theme restaurants is important. But so are other aspects of the eater-tainment business, including nightclubs, live music, games, and sports.

WWF New York, a concept from World Wrestling Federation Entertainment, is a 48,000-sq.-ft. complex at 43rd and Broadway in the heart of Times Square. The high-tech site, which converts to a nightclub on Saturday evenings, features a retail store, a TV-production studio, a Broadway-size stage, and, oh yeah, a restaurant, bar, and private-function room. "With five businesses under one roof, we aren't solely reliant on the restaurant," says Kenton Jenkins, VP and group general manager.

But foodservice is far from an afterthought: The restaurant alone generates about $6 million in sales annually, translating to about 1.2 million meals a year. The average check for lunch is $16.25, with dinner about $22.

Customers are "pleasantly surprised" by the caliber of the food, Jenkins says, with fare ranging from burgers, ribs, and salads to higher-ticket items like Four-Pepper Rubbed Roast Sirloin and Wild Mushroom Risotto.

The bulk of food sales stems from hard-core wrestling fans who come to watch the three premier WWF events—Raw, Smackdown, and Heat (Monday, Thursday, and Sunday nights, respectively)—on the 30-ft. viewing screen or one of the 110 TV monitors. "On a Monday, which for most restaurants is the slowest night of the week, we'll average anywhere between 800–1,000 covers," Jenkins says.

WWF New York is on pace for $25 million in combined sales among its various components, with a three-year-goal of $30 million annually. "It speaks to the power of our brand," he says. "Some people may not like it, but there is absolutely a market for it."

The WWF isn't the only concept that is linked with scantily clad performers. Baywatch Restaurants, Cafes and Nightclubs is being developed by a team that includes Michael Berk, co-creator and executive producer of the TV series.

The first Baywatch unit opened in April on the Caribbean island of St. Maarten, after several years of stops and starts in various markets. "We became a victim of the themed restaurant backlash after Planet Hollywood and others," Berk says. Indeed, the Baywatch concept was originally backed by World Entertainment Ltd., a group led by former Hard Rock and Planet Hollywood executive John Thall. Berk, however, says that "World Entertainment was unable to get the job done," and that the revamped team includes Pearson International—a U.K.-based entertainment company—along with Berk and business partner James Comito. Berk notes that former Baywatch star David Hasselhoff "is still a supporter and involved" with the project.

Despite the slow start, Baywatch St. Maarten is "exactly what we were trying to do," Berk says. "It's not overly themed, but it [promotes the] Baywatch lifestyle: healthy, attractive people in a fun atmosphere." The 60,000-sq.-ft. complex is surrounded on three sides by water and features an 80-seat Polynesian-style restaurant, a pool and beach area, several bars, a 30-ft. climbing wall, and a merchandise boutique.

Berk, of course, says the food is key. Menu items include "Sexy Starters" like Pepper Seared Tuna and Tempura Cali Roll ($10), "Baywatch Buns" like Caramelized Onion and Pork Po' Boy ($9.50), and entrees such as Chardonnay Braised Chilean Sea Bass ($24). An array of desserts and tropical drinks is available.

The Baywatch team is looking at similar property in Aruba, Puerto Rico, and even Bombay, India. "The show is very popular in India." Berk explains, "and one of our investors is from there." Baywatch is also looking to open along Miami's South Beach and is in "serious conversations" in Las Vegas, Berk says, with a goal of 40-60 units by 2005, most outside the U.S.

Business diversity is equally important for ESPN Zone, which has a three-prong approach: a casual-dining restaurant; a sports-viewing area complete with a sports ticker and a 16-ft. viewing screen; and a 10,000-sq.-ft. arena jammed with interactive, sports-focused games. "The business is divided up in a way that allows us to service very different clientele of all age groups," Baumberger says.

Founded in 1998, ESPN Zone has units ranging from 33,000-41,000 sq. ft. in Baltimore, Chicago, New York City, Atlanta, Washington, D.C., and Anaheim, CA. The company will open a unit in Las Vegas this summer and in Denver, CO, this fall.

ESPN Zone, of course, isn't the only game in town. Dave & Buster's offers on-site entertainment that ranges from shuffleboard and billiards to virtual-reality games and the Million Dollar Midway, a smorgasbord of carnival games and other amusements.

Dave & Buster's, which has never closed a unit, ended fiscal-year 2000 with $332.3 million in revenue—up 34.5% from $247.1 million in 1999. The chain rebounded from a 2.5% drop in comparable-store sales a year ago to a 3.6% increase in 2000.

The key, Corriveau says, is steady growth, typically four new stores a year. Dave & Buster's opened a unit in Miami in March and this summer is set to launch in Frisco, TX, followed by Honolulu in October and Cleveland, OH, in November. "These are 50,000-sq.-ft. stores that cost upwards of $10 million each to get up and running," Corriveau says. "So we're very careful."

Games, sports, or nightclubs aren't the only eater-tainment components on the rise: Hotels and casinos—or both—are coming on big time. Hotel-casinos "are a significant part of our five-year strategy," says Hard Rock's Beaudrault.

A Hard Rock Hotel and Casino already operates in Las Vegas, and the company has two Hard Rock Hotels and Casinos under development in Florida as part of an agreement with the Seminole Tribe. (The status of those projects, in Hollywood and Tampa, remained unclear at press time. Various Florida newspapers have reported that the Tribal Council voted to suspend the $410 million plan pending the outcome of an audit of the tribe's finances.)

Hard Rock plans to open its first international hotel-casino in Manchester, England, and is considering London and Atlantic City as well, Beaudrault says. The company also has hotels—sans casinos—in Orlando and in Bali, with another one being readied in Thailand. A hotel is on track for Chicago in 2002.

"We're also negotiating to open four hotels in Japan," Beaudrault says. "So this hotel-casino business is going to be huge. If you can hit fast forward 10 years out, that's going to represent about 40-45% of our portfolio."

The WWF is betting on gaming, too: In fiscal 2003, it plans to open a hotel-casino in Las Vegas that includes five restaurants, a convention center, and nightclub. "It will be a much larger facility than in New York," Jenkins says, "but in much the same spirit."

hough plenty of theme restaurants still have grand notions in tourist areas such as Orlando, New York, and Las Vegas, several concepts are reducing the size of their footprint to enter smaller markets.

NASCAR Cafe, which has four units—including a 70,000-sq.-ft. behemoth in Las Vegas—is scaling back with a 10,000-sq.-ft. prototype. "There are only so many markets you can go into as a 50,000-sq.-ft. concept," Lightholder says.

Initially, the smaller units are all bound for North Carolina: Greensboro is set to open by the end of this year, followed by Winston-Salem and Concord in 2002. The company, with annual sales averages ranging from $8 million at its Smoky Mountains site in Tennessee to $20 million in Las Vegas, also has stores in Orlando and in Myrtle Beach.

Burbank, CA-based Dick Clark Restaurants, a subsidiary of the production company founded by ageless TV legend Dick Clark, is also going small. The company, with 11 music-themed units overall—the largest of which is 12,000 sq. ft—is focusing on 1,400-2,000-sq.-ft. airport outlets in partnership with travel-concessions operator HMSHost Corp. Two units (branded Dick Clark's Bandstand—Food, Sprits & Fun) are already running in Indianapolis and in Newark, NJ. A third airport store (Dick Clark's AB Grill) is in Salt Lake City, with another one set to launch in Phoenix by early next year. "Both concepts have a limited menu and a strong bar component," says Marc Carter, chief administrative officer.

Sales averages range from $1 million for the smallest locations up to $5 million for the larger restaurants, some of which have attached dance clubs.

Hard Rock, meanwhile—despite betting heavily on hotel-casinos—also sees potential in a smaller, bar-focused prototype that incorporates a stage for live music. The 7,000-8,000-sq.-ft. units create a "real tight, real funky type of environment," says Beaudrault.

The music-and-bar footprint stemmed from Hard Rock's heavy reliance on business from tourists, estimated at 70%. "So our opportunity was, 'How do we create repeatability, once a tourist becomes a local back home,'" Beaudrault says. "And clearly the message they sent us is live music."

The new cafes, part of the company's plans to capture more of the "third daypart" after 9 p.m., have already launched in Houston, TX; Manchester, England; and Belfast, Ireland, with another slated for Austin, TX. The Manchester store already is paying off. "We're more than 50% alcohol sales there," Beaudrault says.

Moreover, Hard Rock remains on track for major redesigns of its larger flagship units in Los Angeles, New York, Dallas, and Atlanta. That effort got under way last year with a dramatic makeover in Chicago that incorporated the "Tower of Power," a montage of steel, glass, video monitors, and liquor bottles rising 17 ft. above the circular main bar. The tower is a signature element of Hard Rock's new restaurant-by-day, nightclub-by-night format.

With a sales mix of 48% retail and 52% food and beverage, Hard Rock topped $400 million in revenue for fiscal 2000, a rise of 8% in sales and 13% in profits over the prior year. "Our average volume is about $9-$9.5 million," Beaudrault says. "But that's dropped over the last several years because we added a lot of smaller markets to the portfolio that average $5-$6 million."

wo of the eater-tainment concepts that have defined the segment—Rainforest Cafe and Planet Hollywood—are on the financial equivalent of a roller coaster. But their fast climb and steep fall have been far from an amusement ride.

For Rainforest Cafe, a jungle-themed eatery, the future is cloudy. Last December, the public company was acquired by Houston, TX-based Landry's Seafood Restaurants, which has since closed four Rainforest units—and likely will close more.

Telephone calls to the office of Tilman J. Fertitta, Landry's president, chairman, and CEO, were not returned. But late last year, he told Restaurant Business that the root of Rainforest's financial troubles were cumbersome real-estate leases, high administrative costs, and a costly menu.

Landry's 10-Q financial filing with the U.S. Securities and Exchange Commission shows that as of March 31, there were 25 company-owned Rainforest units in the U.S. and 11 international franchised locations. The 10-Q form, dated May 15, acknowledges that "revenues for substantially all" Rainforest restaurants have experienced same-store sales declines "for an extended period of time," and that profitability has dropped accordingly.

"Management is implementing numerous changes to address the sales declines through improved menu development, a focused general manager incentive plan, additional investments in improved ambiance, additional marketing initiatives, and selective unit closures of restaurants that do not meet the company's minimum standards," the document states.

Landry's adds that it can give "no assurance" that management will successfully curtail Rainforest's same-store sales decline or improve operating margins. Still, Landry's first-quarter operating results, released May 2, reported better-than-expected performance of the Rainforest units and significant cost savings. In a news release, Fertitta said that a new menu, introduced at over half of the Rainforest stores, "has been well received with improved operating results."

Earlier this year, according to the release, Rainforest opened a restaurant in the Disney Downtown development in Anaheim, CA, and now operates at all domestic Disney amusement properties.

Planet Hollywood, meanwhile, has closed half of its 60 company-owned restaurants since 1998—the bulk of which were Planet Hollywoods and its sports-themed sibling, All Star Cafe. Twenty-four company-owned Planet Hollywoods remain, Thomas says, and an additional 27 franchise units operate internationally. The two remaining All Star Cafes are being phased out.

Earlier this year, PricewaterhouseCoopers, an independent auditor, expressed substantial doubt about Planet Hollywood's ability to survive.

"That opinion was not unexpected," Thomas says. "Remember, for the year 2000, to which that audit opinion applies, Planet Hollywood was in the midst of its bankruptcy. So what you're really seeing are just residual items from that process." Thomas notes that the company's operating loss of $79.7 million in fiscal 2000 is a vast improvement compared with the $194 million loss posted the previous year. "We're getting a positive response in domestic same-store sales," he says. "That's telling me that it's a viable concept and there are things you can do that will revitalize it."

Some industry observers, however, remain unimpressed. "That class of eater-tainment concepts faces the same challenge—and I suppose the same opportunity—that it faced before, which is how to deliver a combination of entertainment and a restaurant experience sufficient to compel consumers to come back," says Allan Hickok, a restaurant analyst with U.S. Bancorp Piper Jaffray. "And it's not clear that several of those names have figured that out." E