Hard Rock slowdown leaves Rank in a difficult place

Rank Group, the casino and bingo company, yesterday said it was cutting its reliance on its Hard Rock Café chain, whose struggles against a slowdown in tourism were behind a 34 per cent drop in profits for the year.

The café chain, which is frequented mainly by tourists, has seen a fall off in the number of US visitors and sales of T-shirts, caps and other Hard Rock merchandising has suffered in the restaurants, which actually saw a rise in like-for-like food and drink sales.

Mike Smith, the chief executive of the company, said" "American tourists buy the merchandise but they haven't been coming to the UK. We have now slimmed down the range of merchandise we offer."

He added thatsales fell 14 per cent in Europe due to a decline in tourism.

Rank, which owns the Mecca Bingo chains and Grosvenor casinos, is instead more focused on gearing up to sweeping changes in the laws governing gambling in the UK. At present, casinos applying for new licences have to prove in court that there is overbearing demand for another casino in the area. But these restrictions will fall away under regulations proposed by the Government, which will also allow Rank to set up sports betting shops in its casinos.

"We continue to believe Hard Rock is a good brand and we are expanding it in the UK and in the US, where we are setting up Hard Rock-branded hotels and casinos. But the cafés are increasingly on a franchise basis. We are more interested in investing in our gaming opportunities. This is where our main focus will be," Mr Smith said.

Sales at its gaming division climbed 70 per cent to £865m and Rank plans to invest between £70m to £80m before further industry deregulation. Rank is preparing for the gambling changes by lining up its bingo halls and casinos next to each other, which it can then run as single units. Mr Smith said: "We have the situation where at the moment where we can have a bingo hall next to a casino, but we have to have a wall dividing them."

The group has secured two new casino licences in Bolton and Stoke-on-Trent and applications for at least five new casinos have been planned. If these succeed, Rank will have 41 casino licences in the UK. It also bought the online betting company Blue Square last year, which is now making profits for the group.