NBA City is building its first-ever pro basketball restaurant in Orlando at CityWalk - a dining/retail development in between the new Islands of Adventure theme park and Universal Studios, which is owned by The Seagram Company Ltd. (VO). NBA City plans to begin serving food to customers this summer, just across a lagoon from where the NASCAR Café opened for business last month.
Why are the NBA and NASCAR getting into the meat-and-potatoes business? With their high level of marketing expertise, and legions of hard-core followers, the better question may be "why not?"
"The NBA brand is globally recognized and represents the fastest-growing sport in the world," proclaimed David Berk, the president and CEO of Hard Rock Café, the NBA's partner in the new restaurant. "The marketing strength and massive broadcast reach of the NBA will help ensure the long-term success of NBA City both in Orlando and in many other locations around the world."
Hard Rock is a wholly owned subsidiary of London-based The Rank Group Plc. (RANKY).
NBA City officials are considering expansion franchises for Tokyo and Mexico City, as well as other U.S. sites.
The new restaurants won't be cast in the same mold as the sports bars of the '80s. NBA City opts for a classier style that features weathered brick interiors with wood and leather accents. Alongside the dining area will be a high-tech gallery of sports games and video games.
"This restaurant is not about memorabilia on walls. It's about the strengths of the NBA with its incredible programming and videotape archives," said NBA spokesman Terry Lyons. "We'll have live action and archived footage and photographs, incredible behind-the-scenes access to the game. Every time you walk in, there will be something different."
The newest NASCAR Café's opening on Feb. 8 in Orlando featured some of racing's elite, including ace drivers Dale Earnhardt, Darrell Waltrip, Dale Jarrett and Terry Labonte. Six giant-screened televisions surround diners with around-the-clock coverage of NASCAR events and racing highlights. Reproductions of Earnhard's and Jeff Godon's Daytona-winning race cars hang from the ceiling of the restaurant, which is No. 3 in a series that includes Myrtle Beach and Nashville.
H&C Racing Inc. of Knoxville owns the three racing-themed restaurants. A fourth NASCAR Café entry will open this summer in Sevierville, Tenn., and a fifth is under construction at the Sahaha Hotel & Casino in Las Vegas, site of this weekend's Las Vegas 400 auto race.
Analyst Allan F. Hickok at Piper Jaffray said that unusual décor packages are not enough to sustain mediocre restaurants.
"I'm not raining on the parade here for NASCACafé (or NBA City) because certainly they are enjoying unprecedented popularity in those sports," he said. "But if the food is no good, it just doesn't work."
The NBA City menu will feature a diverse mix of upscale American cuisine. The NASCAR Café offers a more down-home style of cooking with pizza, pasta and other mainstream favorites.
There are a number of other choices on the themed restaurant menu. One is Outback Steakhouse (OSSI), which is enjoying a recent spate of popularity that includes "buy" and "strong buy" ratings from most analysts who follow the Australia-themed restaurant company's stock. Another analyst favorite is Rainforest Café Inc. (RAIN), which operates moderately priced restaurants that sell food and drinks plus clothing, toys and gifts in a rain forest-themed environment.
Planet Hollywood (PHL) practically created this genre and it still owns one of the most recognizable restaurant names in the world despite a serious business slump. In January, Planet Hollywood President William H. Baumhauer announced a new plan to "refresh, refocus and relaunch" the brand by developing an improved menu and offering more fashion-oriented merchandise.
Analyst Michael Smith from Fahnestock & Co., the national brokerage firm, agreed that the cuisine has to be tasty to earn repeat business.
"It's trite, but true. If it's a restaurant, it's the food that matters," said Smith, who has a Strong Buy recommendation on Rain Forest Café.
Memorabilia, video clips and high-tech games may lure the curious in once, but the experts say the key to drawing diners back for second and third helpings is quality food at the right price.
Hickok's top restaurant pick is Dave and Buster's (DANB), which operates 17 high-volume eateries in the United States and two restaurants in England that offer food and drinks alongside an array of entertainment attractions like interactive simulators and virtual reality systems plus pool and some traditional carnival-style games.
"It is a serious restaurant and it has every game ever invented," Hickok said. "It's so much fun you can't believe it. It's just a riot for adults."
For any dining establishment, the old adage "location, location, location" can't be ignored.
"I think there are, in certain high-traffic and tourist locations, certainly opportunities to build a theme restaurant that can stick around for awhile," Hickok said. "It is far less clear Â… that one is able to build a restaurant chain or big company on the same concept."
Hickok noted that ESPN Sports Zone, a sports bar operation, and the All-Star Café, which is part of Planet Hollywood, are also trying to carve a niche in the sports-themed dining industry.
"To succeed, they better have a darn good restaurant operator, good location and good price points," the Piper Jaffray analyst warned. "If it is not successul on those points, and not a good restaurant, it will probably see the same failure rate as other restaurants."
Written By John F. Thorsberg, CBS MarketWatch