IIBMS DMS CASE STUDY SOLUTIONS – Retail Management – What is Rainforest Café’s retail offering and target market
IIBMS DMS CASE STUDY SOLUTIONS – Retail Management – What is Rainforest Café’s retail offering and target market
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Retail Management
CASE 1 Rainforest Café: A Wild Place to Shop and Eat
Steve Schussler the first Rainforest Café in the Mall of America, the largest enclosed mall in the worlds, in 1994. Before opening this unique retail store and theme restaurant, Schussler tested the concept for 12 years, eventually building a prototype in his Minneapolis home. It was not easy sharing a house with parrots, butterflies, tortoises, and tropical fish, but Schussler’s creativity resulted in a highly profitable and fast-growing chain.
In 1996, the Rainforest Cafés (www.rainforstcafe.com), located in Chicago; Washington, DC; Fort Lauderdale, Florida; and Disney World in Orlando, Florida, in addition to the Mall of America in Minneapolis, Minnesota, generated $48.7 million in sales and $5.9 million profits. They offer a unique and exciting atmosphere, with state-of-the-art décor and animatronics that recreate a tropical rain forest in 20,000 to 30,000 square feet. The cafés are divided in to a restaurant seating 300 to 600 people and a retail store stocking 3,000 SKUs of unique merchandise.
What is Rainforest Café’s retail offering
Retail merchandise accounts for 30 percent of the revenues generated by the cafés. Most theme restaurants stock fewer than 20 SKUs. At Rainforest, the merchandise emphasizes eight proprietary jungle animals featured as animated characters in the restaurant. They include Bamba the gorilla, Cha Cha the tree frog, and Ozzie the orangutan. In addition to stuffed animals and toys, the characters are utilized on clothing and gifts and in animated films and children’s books.
The menu features dishes such as Leaping Lizard Lettuce Wraps, Rasta Pasta, Seafood Galapagos, Jamaica Me Crazy, and Eye of the Ocelot (meatloaf topped with sautéed mushrooms on a bed of caramelized onions). The restaurants have live tropical birds and fish plus animated crocodiles and monkeys, trumpeting elephants, gorillas beating their chests, cascading waterfalls surrounded by cool mist, simulated thunder and lightning, continuous tropical rain storms, and huge mushroom canapés. As Schussler said, “Our cafés feature the sophistication of a Warner Brothers store with the animation of Disney.”
Rainforest Cafés contribute to the local community through an outreach program. Over 300,000 schoolchildren visit the cafés each year to hear curators talk about the vanishing rain forests and endangered species. All coins dropped into the Wishing Pond and Parking Meter in the cafés are donated to causes involving endangered species and tropical deforestation.
What is Rainforest Café’s retail offering
Technology is used in the Rainforest Cafés to increase efficiency and profits. When a party enters the restaurant, the host (called a tour guide) enters the party’s name in a computer, which prints a “passport” indicating the party’s name, size, and estimated seating time. The party can then go shopping or sightseeing, knowing it will be ushered into the dining room within 5 to 10 minutes of the assigned seating time. When the party returns, the computer tells the “safari guide” the table at which the party will be seated. Tour and safari guides communicate with one another using headsets. This technology enables the Rainforest Cafés to turn tables five to six times a day compared with two to three turns in a typical restaurant.
The company expanded rapidly. By 2000, it had annual sales of $200 million but earned only $8 million in profits from 28 locations. Many of the locations were in regional malls rather than high-traffic entertainment centers at which the restaurants were initially located. As of 2005, Rainforest café was the only restaurant concept at all three U.S. Disney locations. This restaurant can be found in 16 states and Canada, China, Mexico, and Europe.
What is Rainforest Café’s retail offering
After a protracted negotiation, Rainforest Café was acquired by Landry’s, which operates 300 restaurants in 36 states under the trade names Joe’s Crab Shack, Landry’s Seafood House, Crab House, Charley’s Crab, Chart House, Rainforest Café, and Saltgrass Steak House, generated $1.2 billion in revenue in 2004. Tilman Fertitta, the founder and CEO of Landry’s, explains his strategy for operating restaurants: “Our approach was always been simple. Put good concepts in good locations. Rainforest is a strong concept.
The problem wasn’t with sales. The worst stores do $5 million a year. That’s very different from other entertainment chains like Planet Hollywood and Hard Rock Café. The major problem was poor locations in shopping centers with high lease costs.” Following the acquisition, Landry’s closed a number of Rainforest’s mall locations but opened up new locations in London’s Piccadilly Circus, Euro Disney outside Paris, Niagara Falls, the MGM Grand Hotel and Casino in Las Vegas, and Fisherman’s Wharf in San Francisco.
DISCUSSION QUESTIONS
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What is Rainforest Café’s retail offering and target market?
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Were malls good locations for Rainforest Cafés? Why or why not? What would be the best location types?
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Many retailers have tried to make their stores more entertaining. In a number of cases, these efforts have failed. What are the pros and cons of providing a lot of entertainment in a retail store or restaurant?
What is Rainforest Café’s retail offering
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