Hard Rock Café looks set to be put up for sale by its owner the Rank Group. The company officially said it was looking at strategic options but the most likely outcome is a trade sale.
The iconic restaurant, hotel and casino chain is the final non-gambling operation retained by the leisure conglomerate. The disposal will release cash to invest in the deregulating gaming market.
The price on the chain is likely to be over £500m, based on a 10 times multiple of forecast earnings before interest, tax, depreciation and amortisation for 2006. Last year, EBITDA came in at £34.8m. The chain accounted for about 30% of Rank's total sales in that period.
The Hard Rock operation comprises 121 restaurants of which 50 are operated under franchise. There are also 11 hotels and casinos and two stand-alone casinos.
In its trading statement, Rank said: \Hard Rock has performed strongly as part of the Rank Group and is now entering a new phase of its development as it seeks to expand its business in the restaurant, casino and hotel markets.\
It added that investment bank Merrill Lynch has been appointed to look at the options over the next few months.
Sol Melia has a JV with Rank called Lifestar Hotels encompassing four hotels (Chicago, Madrid, New York and a condo-hotel in San Diego). There are also two resort properties in Asia built in a JV with Ong Beng Seng.
Rank is perhaps best known for its involvement in the film industry although its empire stretched across a huge range of leisure activities. It once encompassed Odeon cinemas, Pinewood Studios and Butlin's, the holiday camps.
But is has embarked on a break-up of its sprawling conglomerate status over the past few years to leave it focused on Mecca bingo halls, Grosvenor Casinos and online bookies Blue Square.
Even with the hotel casinos within Hard Rock, the restaurant group has sat uneasily as part of this increasingly focused gaming operation. The disposal of Hard Rock will bring to a formal end the era of the great leisure conglomerates in the UK that once encompassed Bass, Allied Lyons and Grand Metropolitan.