Rock Cafe Forecasting Hard Rock

¶ … Rock Cafe Forecasting

Hard Rock Cafe

Hard Rock Cafe is one of the most famous international brands. The numerous locations of the company require significant resources based on different types of analyses. The intense activity of Hard Rock Cafe and its success can be attributed to the well organized management strategies. In addition to this, the company must thoroughly monitor and control its sales volume. This objective is achieved through several forecasting methods.

Given the fact that Hard Rock Cafe is a service provider, the company uses different types of forecasts in accordance with different time horizons. Therefore, the company uses medium term and long-term forecasts. Medium term forecasts are used by Hard Rock Cafe in estimating the supplies, the products and services the company requires for its activity. Long-term forecasts are used by Hard Rock Cafe in negotiating contracts with business partners and in expansion and development plans.

In reaching these objectives, the company uses methods like regression analysis and weighted moving averages. The weighted moving average is helpful in making sales forecasts at unit level. The company's top management establishes the sales targets that each unit must achieve based on these forecasts. The performance evaluation is also established based on these sales forecasts (Devcic, 2011).

In this case, regression analysis is used in identifying customers' preferences, in order to establish what products and services the company should focus on providing. In other words, this forecasting method is used in menu planning. The company's managers use this method by increasing the price in certain items from the menu, in order to determine how the customers react to other products that the company provides. This way, the company can determine the impact on demand of these products (Value-Based Management, 2011).

However, the most important forecasting application that Hard Rock Cafe uses is represented by the point of sale system. Basically, the POS system stores and analyzes data on the behavior of the company's customers. The system is mostly used in analyzing information regarding sales, which is used in making purchase decisions or in determining the price level.

The role of the POS system is a complex one because of its wide range of applicability. The system counts all the individuals that visit the Hard Rock Cafe premises, regardless of their intention or activity there. In other words, the system identifies and stores data on what the customers do within the cafe, whether they are just looking, or actually purchasing something, and what they are purchasing.

Based on this information, the POS system generates various types of statistics. This helps Hard Rock Cafe to establish the profile of average customers. This is further used in determining a series of characteristics of these customers. Based on these characteristics, the company can develop its research and development strategy (McCarthy, 2011).

However, even if the POS system is extremely important in determining customer features, the information provided by this system does not suffice in making accurate sales forecasts. Therefore, the information from the POS system is combined with information provided by statistics that refer to production costs, prices introduced by suppliers, and macroeconomic forecasts.

There are numerous variables that can be used in estimating daily sales. Given the fact that the company's activity is focused on its customers, variables regarding them are the most used predictors of daily sales in the restaurant industry. Such variables that apply to customers are represented by the age, the gender, the lifestyle, the incomes, preferences regarding music, clothes, food, drinks, leisure time of customers. Some of this information can be gathered by the POS system, but other information mentioned above must be obtained from customers, if they approve with it. Therefore, the company can develop questionnaires or surveys administered through the Internet or at the Hard Rock locations.

This allows the company to determine the main customer segments it addresses. Based on the preferences of these customers, Hard Rock Cafe can establish its strategy, expand its range of products and services, or develop a price range that is suitable with these customer segments. The company must take into consideration the fact that the information provided by these variables can be quite different from one country to another.

There are also other variables that Hard Rock Cafe can use in its sales forecasting. For example, weather conditions have been observed to significantly influence the activity of restaurants and of other similar service providers, and most restaurants take them into consideration in their daily sales estimations. Entertainment events are also important in determining these sales, because they can increase the activity of restaurants, or can become indirect competitors, determining Hard Rock Cafe to adapt its strategy to such events. The same situation applies to holidays.