Keeping The Hard Rock Rolling
Clad in black, looking every bit the late-night roue, Jim Berk cruises through New York's Hard Rock Cafe, on a lunchtime inspection tour. Bursting with his customary good cheer, Chief Executive Berk, in town from Hard Rock's Orlando headquarters, likes how the sound system pumps out Madonna's Holiday. He's pleased with the mounting of the memorabilia--Elvis Presley's white jumpsuit, Michael Jackson's rhinestone jacket, Axl Rose's shiny guitar--on the walls. Then Berk spots a flaw. "The lights are way too bright, man," he tells a manager.
Like the dedicated high school educator he was until five years ago, James G. Berk, 38, is a stickler for details. The former pedagogue corrects, in pen, his executives' draft memos and letters. He goes over the music playlists to ensure that there are sufficient numbers of tunes from each decade to please everyone who grew up on rock 'n' roll. And he regularly samples the high-calorie chow, washing it down with a chocolate shake.
DANGEROUS DEFECTORS. It's not every day that a former teacher ends up heading a $400 million company. But the Hard Rock is an unusual enterprise, with unusual troubles. So it has turned to Berk, who won acclaim by founding an innovative music academy in the Los Angeles school system and then revitalizing the Grammy awards. London-based Rank Group PLC, which owns the Hard Rock chain, hired him in April, 1996. Says Rank Chairman Andrew Teare: "Jim knows music and gets things done."
Founded in London in 1971 by Isaac Tigrett and Peter Morton, two American expatriates who loved rock and missed hamburgers, Hard Rock originated the mass-market theme-restaurant concept. Hard Rock Cafes popped up all over the globe in the 1970s and 1980s. Unfortunately, the chain faltered after Tigrett and Morton split their holdings in 1985. Tigrett's 70% stake ended up in Rank's hands in 1990.
Worse, in the 1990s, Hard Rock encountered competition in the "eatertainment" arena it pioneered. Robert Earl, who once headed Rank's Hard Rock Cafes, started the movie-themed Planet Hollywood International Inc., while Hard Rock co-founder Tigrett reemerged to start House of Blues.
Enter Berk, whose relentless energy and copious ideas have been wowing people since he first walked into a classroom in Los Angeles in 1982. A trumpet player in high school, Berk yearned to teach music. Four years later, he talked a reluctant city school board into creating a music academy within Alexander Hamilton High School, whose enrollment was dwindling as middle-class parents pulled their kids out. "Jim's enthusiasm was contagious," says then-principal Betty Maltby. When student enrollment surged, Berk, at 30, became one of the city's youngest principals ever, overseeing all of 2,000-student Hamilton.
While Berk plays down his ambitious side, friends saw a man eager to advance. "This was no mild-mannered teacher," says Mark Slavkin, former Los Angeles school board president. Berk made contacts when he got Hollywood studios to donate equipment to his program. His break came in 1988 when the National Academy of Recording Arts & Sciences held its Grammy awards in Los Angeles. Berk persuaded organizers to let him put on a "Grammys in the Schools" show at Hamilton that featured composer Henry Mancini and jazz great Al Jarreau.
Impressed, NARAS officials brought him aboard to head marketing for the Grammys, whose TV ratings were flagging. Says Joel A. Katz, an Atlanta entertainment lawyer who chaired the organization then: "We needed someone who was good at relating to young people." As chief of the NARAS Foundation, its marketing arm, Berk attracted viewers by such youth-oriented moves as adding a rap-artist category.
That success brought him to the attention of Rank executives. When they made him CEO 18 months ago, he quickly fixed scores of flaws, such as skimpy food portions. More important, he reunited all Hard Rock Cafes under Rank, spending $450 million to buy co-founder Morton's eateries and others.
Berk's improvements appear to be kicking in. Merrill Lynch & Co. predicts that after years of flat performance, Hard Rock's operating earnings will leap 24%, to $98 million, on $392 million in revenue, in 1997. And now, Berk is embarking on a major expansion. He is spending $50 million yearly to add a new restaurant a month through 2000. Then there are the brand extensions: Hard Rock oldies albums through the Rhino Records label and a televised concert show on VH1, Hard Rock Live. Next is a series of Hard Rock resort hotels, in partnership with Singapore investor Ong Beng Seng. And Berk has also begun negotiations with the National Basketball Assn. to start a separate line of NBA-themed restaurants to rival Planet Hollywood's Official All Star Cafe unit. Says Berk: "We're really gonna rock 'n' roll here."
Not everyone is as big a fan. Ronald N. Paul, president of restaurant consultant Technomic Inc., says that Hard Rock depends on tourist dollars, yet its expansion is largely in nontourist areas; the most recent opening was in Sacramento. Competition from fast-growing Planet Hollywood, which has 61 outlets vs. Hard Rock's 81, will likely stiffen. And rivals are waiting to see if Berk has the ability to manage his ambitious plans. Planet Hollywood CEO Earl dismisses him as "some schoolteacher Rank hired with no experience in the industry."
Berk, who relaxes at home by playing the trumpet, shrugs off the perils posed by his rapid ascent. He insists he was having such fun in each of his jobs that he left them reluctantly, enticed by a new challenge. This one is no different. Sitting at a table in the Atlanta Hard Rock on a recent evening, snapping his fingers to the music, Berk trades banter with a waiter. While Van Halen's Hot for Teacher plays, Berk jumps up to check out the kitchen, a teacher intent on making Hard Rock hot again.