Hard Rock Café staff out of pocket in messy share sale bid

The arbitration commission of Jing’an District has started investigating after a case was filed by employees from the Hard Rock Shanghai branch, who say the restaurant withheld wages totalling almost 1 million yuan (US$146,000).

Hard Rock International, the parent company of the Hard Rock brand, has sued its franchisee in Hangzhou and Shanghai in order to protect its brand in the Chinese market after being made aware of the situation, the famous catering chain told Shanghai Daily on Monday.

The franchisee, namely ADA Holdings registered in Britain, was operating Hard Rock Café in Shanghai and Hangzhou. A further outlet in Chengdu is waiting to open after interior decoration.

But the branches in Shanghai and Hangzhou were shut down on July 28, without employees and vendors being informed.

On July 30, two days after the café shut down, ADA Holdings’ shareholder and funder HRC World Plc, a listed company on NASDAQ Copenhagen, released an announcement, claiming a change in operating structure which involved a Share Sale Agreement for the sale of HRC Asia Ltd.

According to open information on HRC’s website, HRC Asia is the company that owns the existing Hard Rock Cafés in Shanghai and Hangzhou. The consideration receivable by HRC World Plc was US$20 million.

The sale will be tabled on August 23, but HRC World also stated that it would not impact on their expansion of Hard Rock Cafés in China as the company will maintain involvement here on a management basis. 

A week before the announcement of share sales, the company released its consolidated statement of comprehensive income until March 31 this year. It recorded a total loss of US$61.95 million dollars from 2017 until March 31 of 2018.

The company said this was due to still being in the “business expansion stage."

Hard Rock International denied any relation or affiliation with HRC World Plc. It refused to further comment on whether it will deprive ADA Holdings’ use of the Hard Rock Café brand in China and whether they will provide aid to the employees and vendors seeking unpaid wages.

Shanghai Daily tried to reach out to HRC World Plc but received no reply. Our reporter then tried to contact Alex George, the CEO of HRC World Plc, but George hung up the phone as soon as he heard the word “Hard Rock Café.”