In the early 1990s, a handful of Hollywood celebrities combined with strong restaurant professionals to form Planet Hollywood, a restaurant that combined casual food (burgers and chili) with props and costumes from Hollywood. Opening first in New York and then in Southern California, the restaurants are notable for their ability to attract famous actors and actresses to their openings and for surrounding diners with the trappings of the entertainment industry. The effort has proven extraordinarily successful: in less than ten years, the company has entered the international market and is now traded on the New York stock exchange. It has expanded operations to include a sports-themed restaurant chain and has entered into agreements with ITT Sheraton and Disney to expand its markets. Planet Hollywood merchandise, including shirts and jackets, and even a Planet Hollywood credit card, are all available to consumers, and the company continues to expand its marketing efforts. This research explores the company's success and considers its future marketing direction.
Planet Hollywood combines merchandising with traditional restaurants in such a way that customers can purchase items ranging in price from $3.50 (for pins) to more than $325 (for leather jackets). In 1995, merchandise accounted for as much as 40 percent of the company's revenues, which, in turn, contributed significantly to the company's profitability since merchandise has a higher profit margin than food and beverage. In the case of Planet Hollywood, that resulted in revenues that averaged $10 million to $15 million in its third year of operation; the busiest locations generated revenues in excess of $50 million.
Recognizing that Planet Hollywood appeals to a younger crowd than traditionally visits casinos, ITT Corporation (owner of Caesar's Palace in Las Vegas) announced in 1996 that it would develop, manage and operate Planet Hollywood-themed casino hotels in Las...