Friday, Nov. 27, 1998 | 11:47 a.m.
Despite a rough quarter for their parent company, Las Vegas' Official All Star Cafe and Planet Hollywood restaurant are staying open, a company spokesman said.
A representative of Planet Hollywood International Inc. said it will be business as usual at both properties on the Las Vegas Strip. The All Star Cafe is at Showcase mall and Planet Hollywood is at the Forum Shops at Caesars Palace.
"The speculation runs rampant when you have a bad quarter," said Rob Weiner, director of investor relations for Planet Hollywood.
Developers of the Showcase mall have been trying to determine which All Star Cafe they're dealing with at their property: the one whose foundering parent company has already a closed a restaurant as it limps through 1998 or the one that is planning a major remodeling project at its Strip location.
While rumors of an imminent closure have been swirling around the 36,000-square-foot sports-themed restaurant, Showcase principals Bob Unger and Barry Fieldman say they haven't been notified of a shutdown. In fact, they say the company is about to submit plans to Clark County finalizing a remodeling that would remove some of the windows along the front of the building and open the restaurant up in a true cafe atmosphere.
Because Planet Hollywood has had a financially rocky 1998, Unger and Fieldman have been braced for the worst -- but that hasn't occurred.
"The rumors just don't match up with what we've experienced," said Unger, one of the co-developers of the Showcase. "We've been concerned with the whole national Planet Hollywood financial situation."
Unger said the cafe is current in its lease payments. Fieldman, his partner, said the planned remodeling would make the restaurant more inviting. He said he did not know how much the company plans to invest in the makeover.
Fieldman said the parent company has made some personnel changes and is on a mission to improve its existing properties instead of expanding into new markets.
He said there has been no consistent crowd pattern at the All Star Cafe -- sometimes it's very busy, while other times crowds are sparse.
"But I'd say if you serve good food and have good people at this location, you're going to do well," Fieldman said.
Fieldman bases that on crowd estimates generated by counts from special digital cameras trained on the pedestrian areas in front of the Showcase. He said the property generates 250,000 pedestrian visits a week.
"The UA (United Artists) theaters exceeded their (projected) numbers," Fieldman said. "M&M (World) says their numbers are blowing people away. (World of) Coca-Cola has been extremely happy."
The numbers have been impressive enough for Unger and Fieldman to begin work on Phase II of the Showcase. It will be a three-story building developed similarly to the existing vertical mall. The principals would not disclose tenants or with whom they are negotiating.
Meanwhile, documents filed with the SEC show the Official All Star Cafe's corporate parent, Planet Hollywood International Inc., as a company in trouble. And, 1998 has been particularly tumultuous, especially in Las Vegas.
In the course of the year, losses replaced earnings, the stock has plummeted, long-time executives have stepped down and a planned Las Vegas hotel project was scuttled.
An analyst said earlier this week that Planet Hollywood's business is deteriorating at an "astonishingly rapid rate."
Stacy Jamar, an analyst with Salomon Smith Barney in New York, said the company could be out of cash by the end of next year.
Jamar cut her earnings estimates to a loss of 15 cents a share from break-even for 1998; to a loss of 15 cents from earnings of 10 cents for 1999, and to a loss of 4 cents from earnings of 27 cents in 2000.
Jamar estimated that the company had a loss before interest, taxes and depreciation -- a cash flow measurement -- of about $4 million in the third quarter.
Despite a company regulatory filing last month asserting that it will have enough cash on hand to meet requirements for the next 12 months, her summary said Planet Hollywood could be virtually out of cash next year if a planned sale-lease-back fails to occur.
Planet Hollywood's stock took off when it went public two year ago on the attraction of such star investors in the chain as Arnold Schwarzenegger and Bruce Willis. Given that no new celebrity additions have occurred in some time, the summary said, "we question if the brand's image faces a fairly serious devaluation in consumers' minds."
After hiring Bear Stearns & Co. five months earlier, Planet Hollywood also retained Goldman Sachs & Co. in July to review its financial and strategic alternatives.
In the third quarter, the company reported a $10 million loss compared with a third-quarter profit of $25.2 million a year ago. Revenues fell from $373.1 million in 1997 to $311.9 million this year.
Moody's Investors Services began reviewing Planet Hollywood's $350 million of debt and is considering downgrading its rating. Hotel Properties Ltd., a Singapore investment company, announced it was selling 10 million shares of Planet Hollywood stock for $45 million, reducing its stake in the company from 21 percent to 12 percent.
Acquiring the stock is Kingdom Planet Hollywood Ltd., a company indirectly controlled by Prince Alwaleed of Saudi Arabia. When that deal closes, Kingdom will have a 16 percent interest in the company and will have the right to develop All Star Cafe and Sound Republic units in 23 countries throughout the Middle East and Europe.
The 52-week high on the stock was $15.75 about a year ago. On Wednesday, it closed at $2.75. On the first day the stock was publicly traded in 1997, it went for $32.13.
Keith Barish, one of the co-founders of the company and the movie producer behind "Sophie's Choice," stepped down as chief operating officer in July. He was replaced by William Baumhauer, who used to head the Fuddruckers gourmet hamburger chain.
In the wake of the third-quarter losses, Barish announced earlier this month that he was resigning as chairman of the company's board of directors, although he is staying on as a member. Robert Earl, the other co-founder and the man who launched the Hard Rock Cafe franchise, took over as chairman.
In September, Aladdin Gaming Holdings LLC in Las Vegas, developer of the new Aladdin hotel-casino, announced it was seeking new partners for a music-themed resort on its property. The reason: Planet Hollywood, with which the company had been negotiating, didn't have the financing completed for its half of the joint venture.
The Sound Republic hotel-casino, a new Planet Hollywood concept, was to have included a 1,000-room hotel and a 40,000-square-foot casino with 1,500 slot machines and 50 table games.
Meanwhile, the company closed its Aspen, Colo., Planet Hollywood and put on hold plans to expand the All Star Cafe franchise. Located in Atlanta, Atlantic City, Honolulu, Miami, New York, Orlando, Fla., and Myrtle Beach, S.C., as well as Cancun and Melbourne, Australia, the All Star Cafe franchise is built around the popularity of seven professional athletes. Those sports stars are Monica Seles, Ken Griffey Jr., Wayne Gretzky, Joe Montana, Shaquille O'Neal, Tiger Woods and Las Vegan Andre Agassi.
An SEC filing presents a dim outlook for the Sound Republic project as well as the All Star Cafe concept.
The company summarized the difficulty of competing in the Las Vegas market with 20,000 new hotel rooms coming on line in 1999 and the availability of gaming in other states. The document listed Caesars Palace, The Mirage, Treasure Island, the MGM Grand and the Hard Rock as chief competitors in the Las Vegas market.
The SEC document filed earlier this month points to uncertainty in the Sound Republic project and the All Star concept.
"Our new Sound Republic concept and our various new strategic ventures are unproven," the filing says. "We cannot assure you that Sound Republic or any new strategic venture that we operate will be successful or that any new strategic ventures will contribute to our revenues and cash flow.
"Our Official All Star Cafe theme concept remains in a relatively early stage of the development and has not met our original expectations. In light of Aladdin's recent announcement regarding the failure to conclude negotiations with us concerning the Las Vegas project, you cannot be sure that the Las Vegas project will be pursued."
SUN WIRE SERVICES contributed to this report.
archive
