Forecasting at Hard Rock Cafe

For the following case View the Video Case for Chapter 3 for OMMyLab Bulletize the following (so that the case can be understood fully from your bullets and not have to read the case) Clearly articulate the question(s) you are closureing before providing you answer Quantitative Issue The manager is trying to evaluate how a new advertising campaign affects guest counts. Using data for the past 10 months (see the table) bugger off a least squares regression relationship and then forecast the expected guest count when advertising is $65,000. Provide the answer to your boss and then countenance the model as backup) Qualitative Issues 1. Describe three different forecasting actions at sound Rock. Name three other areas in which you think unmatchablerous Rock could use forecasting models. (Justify your choices) 2. What is the role of the POS system in forecasting at Hard Rock? 3. Justify the use of the weighting system employ for evaluating managers for annual bonuses. 4. Name seve ral variables besides those menti onenessd in the case that could be used as good predictors of daily sales in severally cafe.Provide backup using appropriate technology (Provide the spreadsheets as spreadsheets). Forecasting at Hard Rock Cafe With the growth of Hard Rock Cafefrom one pub in London in 1971 to more than 129 restaurants in more than 40 countries todaycame a corporate wide demand for better forecasting. Hard Rock uses long-range forecasting in clubting a capacity plan and intermediate-term forecasting for locking in contracts for leather goods (used in jackets) and for such nutriment items as beef, chicken, and pork barrel.Its short-term sales forecasts are conducted each month, by cafe, and then aggregated for a headquarters view. The heart of the sales forecasting system is the point-of-sale system (FOS), which, in effect, captures transaction data on nearly every person who walks through a cafes door. The sale of each debut represents one customer the entree s ales data are transmitted daily to the Orlando corporate headquarters database. There, the financial team, headed by Todd Lindsey, begins the forecast process.Lindsey forecasts monthly guest counts, retail sales, banquet sales, and plan sales (if applicable) at each cafe. The general managers of individual cafes tap into the same database to prepare a daily forecast for their sites. A cafe manager pulls up prior years sales for that day, adding information from the local Chamber of Commerce or Tourist Board on upcoming events such as a major convention, sporting event, or concert in the city where the cafe is located. The daily forecast is further broken into hourly sales, which drives employee scheduling.An hourly forecast of $5,500 in sales translates into 19 workstations, which are further broken down into a specific number of wait staff, hosts, bartenders, and kitchen staff. Computerized scheduling software plugs in people based on their availability. Variances between forecas t and actual sales are then examined to see why errors occurred. Hard Rock doesnt 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.Todd Lindsey, at corporate headquarters, applies weights of 40% to the near recent years sales, 40% to the year before, and 20% to sales 2 years ago in reaching his moving average. An even more sophisticated application of statistics is found in Hard Rocks menu planning. Using multiple regression, managers can compute the impact on demand of other menu items if the price of one item is changed. For example, if the price of a cheeseburger increases from $7. 99 to $8. 99, Hard Rock can predict the effect this will have on sales of chicken sandwiches, pork sandwiches, and salads.Managers do the same analysis on menu placement, with the center section driving higher sales volumes. When an item such a s a burger is moved off the center to one of the side flaps, the corresponding effect on related items, say french fries, is determined. Hard Rocks capital of the Russian Federation Cafe Data Month 12345678910 Guest count 21 24 27 32 29 37 43 43 54 66 (in thousands) Advertising 14 17 25 25 35 35 45 50 60 60 (in $ thousand)