Forecasting at Hard Rock Café

Q-1) Describe three different forecasting applications at Hard Rock.

Ans: Long-term, intermediate-term, and short-term sales forecasting are all used by the Hard
Rock Cafe. Long-term forecasting is used to analyze future sales, set capacity plans, and manage
future demand and supply. Minor strategic choices, such as the usage of vendors for food,
chicken, and beef, are made using intermediate or medium-term forecasting. Short-term
forecasting, on the other hand, is utilized for immediate control of daily sales, production, and
stock availability, as well as the management of short-term cash.

Q-2) Name three other areas in which you think Hard Rock could use forecasting models.

Ans: Other areas where forecasting may be used are: the number of visitors in different time slots
(breakfast, lunch, or dinner), the desire for meals for a more select audience, such as vegetarians
(healthier meal), and the study of items for table service in the short term (napkins, cutlery, etc.)

Q-3) What is the role of the POS system in forecasting at Hard Rock?

Ans: The POS system is how they keep track of each client's transaction data. They collect this
data in each café and transmit it to the Orlando corporate headquarters' database on a daily
basis. There, the data is processed in order to provide a sales forecasting.

Q-4) Justify the use of the weighting system used for evaluating managers for annual bonuses.

Ans: The following criteria are used to assess managers for set bonuses in a 3-year weighted
moving average: 40% of the most recent year's sales, 40% of the year before, and 20% of sales
two years earlier in calculating his moving average. A bonus is calculated if café general managers
exceed their goals. We can find out how employees find out how they're doing and what's
expected of them using this weighing method, as well as develop quantifiable objectives,
measure performance, and incorporate it into the budgeting process with this 3-year approach

Q-5) Name several variables besides those mentioned in the case that could be used as good
predictors of daily sales in each cafe.

Ans: One very useful variable is to check every day bills of each café; this can help to monitor
every day sales of all the cafes. Daily detailed or partial sales report gQ-5) Name several variables
besides those mentioned in the case that could be used as good predictors of daily sales in each
cafe.eneration through POS software is also a good variable; all the cafes' POS can be linked to
each other, and a total sales and comparison report can be generated through the systems;
another important variable is to email all these system generated reports to Tod to counter
analysis daily sales of each c The food stock may also be kept track of and utilized as a variable to
determine what was in and what was out, allowing the difference to clarify sale
- Compare sales volume per square meter for similar stores in similar locations and similar size.
- Focus on household incomes.
- How many households that need your goods live within one mile?
- How much will they spend on these items annually, and what percentage of their
spending will you get compared to competitors.
- Vacation/Holiday schedules for local communities around the restaurant and other
regions if the restaurant is located in a heavy tourist location.
- Previous weather patterns for the time period they are forecasting.
Q-6) At Hard Rock’s Moscow restaurant, the manager is trying to evaluate how a new advertising
campaign affects guest counts. Using data for the past 10 months (see the table), develop a least-
squares regression relationship and then forecast the expected guest count. Also develop a scatter
plot.

Ans:

We believe there is a link between the amount of money spent on advertising and the number of
people who visit our Hard Rock Café. As a result, the following variables might be defined:
y: The number of people who have visited our Hard Rock Café in kPersons (dependent variable).
x: The amount of money spent on advertising in k$ (independent variable).
GuestCount(kPersons)=0,9236*Advertising(k$) +1,7948 may be deduced from the equation. So, if
we invest $65,000, we may expect to receive the following number of visitors:
GuestCount(kPersons)=0,9236*65+1,7948= 61,829 kPersons= 61.829 persons
The R square value (0,8733) indicates how much of the monthly fluctuation in visitor count can
be explained by changes in advertising investment. Our linear connection may be said to explain
87,33% of the variation in monthly guest numbers.