The music memorabilia-themed burger restaurant chain Hard Rock Cafe could be sold off by Rank as the group continues to shed famous brands in order to focus on gaming businesses.
Rank, the owner of the Mecca Bingo halls and Grosvenor Casinos, said yesterday on Tuesday it was reviewing whether to keep the 35-year-old Hard Rock brand, a favorite on tourist T-shirts the world over.
The Hard Rock chain began with just one London restaurant in 1971. It was founded by the music-loving Americans Isaac Tigrett and Peter Morton and now includes 121 cafes in more than 40 countries. It brings in annual profits of more than US$55million and is thought to be worth almost US$1billion.
Between them the rock 'n roll diners, which carry the motto "Love All, Serve All", own the world's most comprehensive collection of rock memorabilia. The collection has grown from Pete Townshend's and Eric Clapton's guitars, which were donated during the 1970s, to include the doors of the Beatles' Abbey Road recording studio and one of Madonna's trademark bustiers.
London-based leisure group Rank owns 68 of the cafes and the other 53 are franchised. The group also runs Rock Shops and has expanded into casinos and hotels, including one resort run by a native American tribe in Florida.
But the end of Rank's 16-year relationship with Hard Rock could be near as it considers parting with the brand. Rank has already sold its Butlins holiday camps, Pinewood film studios, Odeon Cinemas and Tom Cobleigh pubs. Hard Rock accounted for almost a third of Rank's US$1.5 billion revenues last year. Yesterday the company said the brand, which was continuing "to trade strongly" was "entering a new phase of its development."
The group reported like-for-like revenues rising 8 percent in Hard Rock's company-operated cafes in the half-year to June 25, with revenues from franchise royalties on the other restaurants improving.
Analysts said a disposal could attract strong interest and estimated that the Hard Rock business was worth between US$830 million and US$995 million.
Matthew Gerard, at Investec, said there was a chance Rank could float Hard Rock in the US, where the brand was better regarded than in the UK. He described a disposal of Hard Rock as "a sensible strategic shift" that would raise funds for investment in betting ahead of gambling de-regulation over the next two years.
Shares in Rank closed up 2.9 percent at £2.03 (US$3.70) on Tuesday. Rank said in the trading update that profits in its gaming division were under pressure from rising costs. The World Cup has also not been such a winner for Rank, with admissions slipping at its casino division as the soocer and warm weather lured punters away. And the new smoking ban in Scotland had dented revenues in its bingo halls there.
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