H3 Enterprises Inc (HTRE)

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Hard Rap Cafe? Xbox sponsors gaming restaurants. Hip hop restaurant franchise H3 entered into a multi-year sponsorship deal with Microsoft's Xbox to supply consoles and equipment for its HipHopSodaShop restaurants.

May 13. 2008 2:05PMBy: Samantha Marshall

H3 Enterprises Inc., a publicly-traded hip hop restaurant franchise, announced Tuesday a new multi-year sponsorship deal with Microsoft’s Xbox 360 to supply consoles and equipment for its fledgling chain, HipHopSodaShop.

While the size of Microsoft’s investment in the restaurants was not disclosed, Xbox will benefit from co-branding as HipHopSodaShop launches outlets nationwide over the next few years.

“HipHopSodaShip is a great example of bringing video gaming into a social environment to create a unique entertainment experience that people of all ages will enjoy,” says Mike Fischer, general manager of marketing for Microsoft’s Xbox.

A “gaming lounge” at each location, featuring 30 to 40 play stations, will enable customers to rent the use of the consoles for a small fee and play online games like Madden NFL 08 and NBA 2K7 both individually and in tournaments. In March, H3 partnered with Sharkwaters, Ltd., a pay-for-play competitive online gaming company, to help boost online sales.

“A lot of urban youth are challenged in terms of affordability, so we are making state-of-the-art gaming available for a small fee,” says Dr. Benjamin Chavis, Chief Executive of H3 Enterprises.

H3, headquartered on John Street in Manhattan, opened its first location, an 11,000-square foot SodaShop in Tampa, Florida, in December amid much fanfare, with rappers like Busta Rhymes, Doug E. Fresh, Jim Jones and Juelz Santana in attendance, plus about 2,700 hip hop fans. The company plans to open another one in Miami next week.

One of the few publicly-traded hip-hop themed businesses, the penny stock company had planned to open locations in New York City more that two years ago, but wasn’t able to close on leases.

Dr. Chavis, an African-American civil-rights activist who is also president of Russell Simmons’ Hip Hop Summit Action Network, was appointed CEO of H3 just under a year ago to give more credibility to the company, which is positioning itself as a Hard Rock Café for the hip hop generation. Besides food and beverage sales, H3 makes money from gaming, merchandising, a recording studio and music events. The Tampa location is expected to generate about $1.2 million in revenue in its first year, says Dr. Chavis.
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