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67 Planet Hollywood

Big egos, weak brand

Celebrity endorsements can help greatly in boosting sales of a product or service. For instance, when Oprah Winfrey recommended books via her branded book club, they were guaranteed bestseller status. Some brands also benefit from having their founder evolve into a celebrity, à la Richard Branson.

Then there are cases of celebrities turning their hand to business ventures. David Bowie lent his name to USABancshares.com, an internet bank where you could get Bowie-branded cheque books and credit cards. Manchester United’s Sir Alex Ferguson was a shareholder at toptable.co.uk, a restaurant information and booking service. U2 own a hotel and a nightclub. Bill Wyman owned his own restaurant.

One of the most famous of these celebrity-backed ventures was the Hollywood-themed eaterie, Planet Hollywood. Boasting such high-profile investors as Bruce Willis, Demi Moore, Whoopi Goldberg, Arnold Schwarzenegger and Sylvester Stallone, the chain was guaranteed maximum exposure when it launched in 1991. The company expanded quickly and soon had nearly 80 restaurants worldwide. In 1999, however, the company went bankrupt and numerous restaurants were shut down.

‘Planet Hollywood has gone belly up,’ declared wine critic Malcolm Gluck in the Guardian. ‘Cows, vegetarians, food critics and assorted jealous restaurateurs will be rejoicing at the news that the most hyped chain of eateries in the history of cuisine has been roasted alive.’ As soon as the news was out, Planet Hollywood lost even more customers and kept going in only a few of its original locations, with help of new investors from Saudi Arabia who made a relatively modest investment in the company.

So how could a brand that had achieved such exposure flop within less than a decade?

Firstly, the company expanded too quickly, launching new restaurants before seeing a profit in its original venues. The original plan was to open 300 branches by 2003.

Another factor was the food. Most people who eat out go because of the food, but Planet Hollywood never advertised this aspect of its business. In order to achieve long-term success, food or drink has to be the theme. Even McDonald’s is about the food, even if it’s the cost and convenience of it rather than the taste.

At best, Planet Hollywood attracted once-only visitors, lured by the novelty factor. ‘The magnet is purely that of being seen at such a place and seeing what other hip characters are there,’ wrote Malcolm Gluck. ‘The hope that one might catch a glimpse of the backers or the backers’ friends or celebrity hangers-on (who flock to the opening because of the chance of publicity and free food and drink but are never seen again).’ But this is not the basis upon which to build a long-term business with repeat custom, which any restaurant must have in order to survive, let alone expand. ‘It is great for tourists,’ said Richard Harden, co-editor of Harden’s London restaurant guides. ‘Or for those who want a day out with the kids. But it is a one-off. A case of “been there, done that”. There is no reason why the public should come back.’

As of August 2010 Planet Hollywood was owned by a partnership that includes Robert Earl, founder of the Planet Hollywood International Inc. restaurant chain, as well as private equity investor Bay Harbour and Starwood Hotels & Resorts Worldwide Inc. The company still believes that celebrity endorsement can win in the long run. On 12 August 2010 at Planet Hollywood Las Vegas, the stars of The Expendables, California Governor Arnold Schwarzenegger and one-time shareholder in the firm, Sylvester Stallone and Bruce Willis appeared for a preview of the film. Although rated as the bloodiest, most violent movie you ever will see it doesn’t look like adding much value to the brand.

Lessons from Planet Hollywood

Celebrity isn’t enough. ‘These bozos thought, cynically, it was enough to trade on their Hollywood backgrounds. Bad move, fellas,’ wrote Malcolm Gluck.

Word-of-mouth is crucial. Word-of-mouth is more important than advertising and media