Competition Among Themed Restaurants Is Starting To Heat Up Industry Veterans Face Challenge From Growing List Of Newcomers

Even as Planet Hollywood and Rainforest Cafe struggle to resuscitate stalled revenue and share prices, the roster of entertaining eateries continues to grow.

Game plans at the National Basketball Association and the National Football League now include chains where patrons can pass, kick, dribble and dunk along with eating meals and buying memorabilia. Gibson Music Corp. plans a chain of museum-cafes styled after a prototype near its Nashville, Tenn., headquarters.

The new attractions are designed to sate growing consumer demand for entertaining ways to spend time and money. But there’s another powerful force behind the wave of attractions that blend eating, retailing and entertainment.

‘What’s driving it are the developers and entrepreneurial retailers who all want to incorporate these different forms of entertainment into their developments,” said Michael Rubin, a Philadelphia-based consultant working with the NFL on the design of its chain.

As competition increases, there’s growing evidence that expensive concepts that play well in glitzy tourist centers such as Las Vegas and Orlando, Fla., will have trouble turning profits in secondary markets.

“The speculation in the industry is that, yes, these concepts can be scaled down for smaller, less mediaintensive markets,” said Michael D. Beyard, co-author of a new book about entertainment centers. “But the centers aren’t open yet so there’s no proof that they will translate well.”

Jaded consumers also are demanding that old favorites keep their offerings fresh. “When you introduce the 101st Planet Hollywood into some place like Kansas City, there’s a real question of whether consumers are going to view it as something authentic or exciting,” Rubin said.

Themed eateries promise something for everyone.

Club Kokomo is a Beach Boysbacked venture that takes its name from one of the group’s hit singles. Los Angeles-based Country Star Restaurants Inc. boasts strong ties to country entertainers. Tinseltown Studios, a dinner theater proposed by Ogden Entertainment, combines dining with interactive live entertainment and film clips.

But the new eateries aren’t cheap to build. Rainforest Cafe spent more than $6 million on its restaurants, and Ogden is budgeting $15 million to create the illusion that its customers are Hollywood stars.

And, industry experts say, costs will continue to be driven up by the rapid influx of virtual reality technology. At the same time, traditional retail stores are scrambling to incorporate entertainment into their stores - during an Urban Land Institute seminar this week in New York, Woolworth Corp. will report on plans to make its store aisles more entertaining.

But as the competition for consumers’ dollars escalates, some chains are faltering. Late in January, Planet Hollywood blamed newcomers for contributing to a fourth-quarter loss that knocked the company’s stock to a yearly low of $6.75.

Planet Hollywood’s unexpected loss underscores a common problem in the industry. Restaurants typically depend heavily on repeat business, but themed entertainment relies on onetime visits by tourists.

“Novelty is OK for one visit, but these places have to offer something to keep people coming back,” Beyard said.

Rainforest Cafe, which also is struggling to bolster repeat business, was recently sued by disgruntled shareholders who complained that the company didn’t tell investors that “the life cycle of its restaurants was such that sales would decline significantly after a restaurant’s grand opening.”

The chains maintain that they’re working hard on building repeat business. Planet Hollywood is revising its menu, accepting reservations and emphasizing group sales - all tactics designed to bring customers back.

In addition to opening more eateries, operators of themed restaurants and attractions are trying to broaden their revenue base by leveraging their popular brand names or finding new ways to use their operations expertise.

Many chains are expanding overseas. During an Urban Land Institute seminar in Zurich, Switzerland, in late January, an overflow crowd heard from executives at Universal Studios, Sony, IMAX and others.

Planet Hollywood is experimenting with Planet Movies, a joint venture with AMC Entertainment Inc., the Kansas City, Mo.-based movie theater operator. Planet Hollywood also is retooling its four-unit Official All-Star Cafe chain, which features sports-related entertainment and dining.

Hard Rock Cafe last year opened a luxury hotel in Las Vegas that Chief Executive Jim Berk described as part of a broader plan to leverage the chain’s now-familiar logo.

What all the operators seem to be chasing is what consultant Rubin describes as “an engaging social experience.”

“There’s never been a replacement for the old-fashioned bowling alley,” he said. “Pump up the entertainment and technology too high and you’ve got a passive event, not a communal experience. And, for most people, that’s going to translate into a one-time visit.”