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Forecasting at Hard Rock Cafe

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Case Study: Forecasting at Hard Rock Café
1. Describe three different forecasting applications at Hard Rock. Name three other areas in which you think Hard Rock could use forecasting models.
Hard Rock uses long-range forecasting in sitting capacity plan, intermediate-term forecasting for locking in contracts for leather goods (used in jackets) and for such food items as beef, chicken and pork, and short-term sales forecasts are conducted each month, by cafe, and then aggregated for a headquarters view. Hard Rock could use forecasting for menu items according to season (types of food people generally eat depending on time of year), forecast developing areas where new cafes could be build, and forecast changes in retail as fashion changes.
2. What is the role of the POS system in forecasting at Hard Rock?
Point of Sale (POS) system is the heart of the sales forecasting system. POS system captures transaction data on nearly every person who walks through a café’s door. Sale of each entrée represents a customer and everyday those sales are transmitted to the headquarters in Orlando where the financial team begins to forecast monthly guest counts, retail sales, banquet sales, and concert sales in each café. General Managers of each café can also tap into that same information in order to prepare for the daily forecast of their individual cafe.
3. Justify the use of the weighting system used for evaluating managers for annual bonuses.
Hard Rock doesn't limit its use of forecasting tools to sales. To evaluate managers and set bonuses, a 3 year weighted moving average is applied to cafe sales. If cafe general managers exceed their targets, a bonus is computed. Corporate headquarters, applies weights of 40% to the most recent year's sales, 40% to the year before, and 20% to sales 2 years ago in reaching his moving average. With the 3 year weighted moving average...

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