south beauty
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South Beauty Group : in Quest of a ‘Beautiful’ Growth Story
Syndicate 5
Agung Mahendra 29111324Rangga Tri Raeros29111314Joseph Enrico 29111349Reski Mapriharto 29111326Gilang Surawijaya29111350
Company Overview Catering industry with In 2007 expanded to a total 20
plush restaurant All restaurant were owned and
operated by the group Become a food service partner of
Chinese cuisine for the 2008 Beijing Olympics
Planning to expand restaurant to a total of 100 world wide
South Beauty Group’s Flagship Brand
LAN Club
Upper class segment of successful business
people for dining
segment (Luxury brand)
SUBU
Latest brand, health
conscious youth
South Beauty
Business people
MARKETSouth Beauty growth
Year Revenue (per restaurant) Location Restaurant Number Revenue
2000 5,000,000 Beijing 2 10,000,000
2001 6,666,667 Beijing 6 40,000,000
2002 7,500,000 Beijing 7 52,500,000
Shanghai 1 7,500,000
2003 10,000,000 Beijing 8 80,000,000
Shanghai 3 30,000,000
2004 12,500,000 Beijing 11 137,500,000
Shanghai 4 50,000,000
Chengdu 1 12,500,000
2005 15,555,556 Beijing 12 186,666,667
Shanghai 5 77,777,778
Chengdu 1 15,555,556
2006 17,500,000 Beijing 13 227,500,000
Shanghai 6 105,000,000
Chengdu 1 17,500,000
2007 19,200,000 Beijing 13 249,600,000
Shanghai 6 115,200,000
Chengdu 1 19,200,000
insight
2000
2001
2002
2003
2004
2005
2006
2007
0%
50%
100%
150%
200%
250%
300%
South Beauty revenue growth (per city)
BeijingShanghaiChengdu
shanghai35%
tianjing16%
chongqing15%
wuhan14%
jinan11%
zhengzhou10%
Revenue Forecasting by Cities (2007)
shanghai tianjing chongqing wuhan jinan zhengzhou0%
5%
10%
15%
20%
25%
30%
35%
annual growth rate
annual growth rate
Potential market of South Beauty There were only a few restaurant
offering Guangdong cuisine in plush office building in Beijing
South Beauty’s Business Model
O Divide two divisions:O Head office functionsO Restaurant operations
O Change in the management structure to company’s central management to achieve a greater synergies
O Need to distinguish to other restaurants
Positioning and Branding Upmarket restaurant focused on
office workers and business people Multi-brand strategy for the group
• South Beauty• Lan Club• SUBU
The mixture of controllable marketing variables that the firm uses to pursue the sought level of sales in the target market.
Service Marketing Mix
7P
Product (Service) A product that can provide benefits,
meet consumer demand and to satisfy consumers. Indeed, customers do not buy goods or services, but they buy the benefits.
An independent R&D team was placed in charge of creating new dishes and the Executive Chef was responsible for food quality
The first Chinese restaurant to offers Chinese food in a western style, and the first to mix food presentation with artistic elements
Menu Innovations
Place The delivery of goods at the right time
and at the right place to consumers. Physical distribution of product is possible through channels of distribution which are many and varied in character.
Place includes the following variables:
Types of intermediaries available for distribution
Distribution marketing channels available for
distribution
Transportation, warehousing and
inventory control for making the product
available to consumers easily and economically
Price• It is the valuation of the product mentioned by the seller on the product.
Pricing has an important bearing on the competitive position of a product. The marketing manager may use pricing as a tool for achieving the targeted market share or sales volume. Pricing can also be used for capturing market and also for facing market competition effectively.
Price mix includes the
following variables:
Pricing policies,
Discounts and other
concessions offered for capturing market,
Terms of credit sale
Terms of delivery, and
Pricing strategy selected and
used.
Location and Price•Restaurants were located in top-notch
office building in key cities•Combination of high-end location and
high pricing was also helpful in developing the upper-middle class brand image
Promotion Promotion is the persuasive communication about the
product offered by the manufacturer to the prospect.
Promotion mix includes the following variables:1. Advertising and publicity of the product2. Personal selling techniques used3. Sales promotion measures introduced at different levels4. Public relations techniques used for keeping cordial
relations with dealers and consumers5. Display of goods for sales promotion
Promotional activities are necessary for large scale marketing and also for facing market competition effectively. Such activities are varied in nature and are useful for establishing reasonably good rapport with the consumers.
Recruiting and training the right staff is required to create a competitive advantage. Customers make judgments about service provision and delivery based on the people representing the organization. People are one of the few elements of the service that customers can see and interact with.
Staff require appropriate interpersonal skills, aptitude, and service knowledge in order to deliver a quality service.
People
Initiated a large-scale training program for their staff
Waiters had to undertake a three-month training course
Managers had to complete a two-year on-job-training program
People management
Process
This element of the marketing mix looks at the systems used to deliver the service. All services need to be supported by clearly defined and efficient processes. In other words processes mean that everybody knows what to do and how to do it.
Advance IT Application potent tool to enhance the upper-middle class restaurant and improve efficiency
Using CRM system that build by its own to record customer information
ERP system was being set up to control the key financial and the purchasing process
IT Applications
Physical Environment Physical evidence is about where the
service is being delivered from. This element of the marketing mix will distinguish a company from its competitors. Physical evidence can be used to charge a premium price for a service and establish a positive experience.
Each South Beauty restaurant had a different décor
People came to the restaurants not only for the food, but also foe the ambience
No competitor could invest so heavily in interior decoration
Interior Decoration
Since 1990, china’s catering industry had been booming with over 15% CAGR
2007 Catering market size accounted for 4.87% of GDP
Three main section China’s industry : Breakfast stands Street Hawkers Restaurant
China’s Restaurant Market
Expansion required significant investment, in 2006 at least 10 restaurant chains announced their intentions to launch IPO
Franchise model became popular for chain expansion, the franchisees sometime crept out of the control of the principal companies and gradually set up their own similar brands
The majority of closed restaurants were franchisees only 30%
Expanding Chains
Issuing Securities
Basic Procedure for New Issue Obtain approval from board director Prepare and file a registration statement with
SEC During waiting period, company may
distribute copies of a preliminary prospectus A final prospectus must accompany the
delivery of securities or confirmation of sales Tombstone advertisement are used during
and after the waiting period
Financing by IPO
Process Raising Capital
Step in Public Offering• Pre Underwriting
Conferences• Registration
statements filed and approved
• Pricing the issue• Public offering and
sales• Market stabilization
Time• Several months• A 20 day waiting
period• Not before last day
registration period• After last day
registration period• 30 days after the
offering
Activities• Amount money & type
securities discussed• Registration statement• Research and analyze
for IPO• Underwriter buys
stipulated amount stock from the firm and sales
• Underwriter stand ready to place orders to buy
Methods of Issuing New Securities
The company need external funding for expansion
Become an public company Avoid to become family company Preparation for international expansion
South Beauty Group going Public
South Beauty Competitor Positioned in the high-end Chinese Dinner
segment Not compete directly with Fast Food, Hot Pot
and ordinary restaurants 2007 10 of 100 top restaurant companies
were in high-end Chinese Dinner Section Fake South Beauty restaurant, at least fake
restaurant Fighting with these fake players through legal
means
The Challenges Ahead To expand, the group had to consider the
prioritization of markets to enter Focus on the local market to realize its full
potential before venturing abroad, or to do both at the same time
Entry into new business such as airline catering and the supply of semi-processed food to retail outlet
South Beauty carried 380 item menu, moreover the restaurant were located in several places and had different chefs at each restaurant
Control the use of raw materials with computer software to calculate the number of dishes sold and the raw material used
Seeking Standardization
The process of dividing a larger market into smaller pieces based on one or more meaningful, shared characteristic.
1. Identify bases for segmenting the market
2. Develop segment profiles
Segmenting
Geographic• Big city• Upper level in the building
Demographic• Office worker• Older people• High income
Psychographic• High class people• Business man
Group that a firm selects to turn into customers as a result of segmentation and targeting.
3. Develop measure of segment attractiveness
4. Select target segments
Targeting
People in big city People aged 30-45
• Top-notch office building• People seeking pleasure and
ambience
Developing a marketing strategy aimed at influencing how a particular market segment perceives a good or service in comparison to the competition.
5. Develop positioning for target segments
6. Develop a marketing mix for each segment
Positioning
High-end Chinese Dinner restaurant Focus on office workers High-quality, stylish and confortable environment Hygienic and delicious food
SWOT Analysis
Strength• High quality interior
design• Delicious food
(unique taste) present aesthetically
• Strong R&D in new menu
• Good service quality
Weakness• Too many list
menu, about 380 item
• Quality of each dish relied on the experience chef
Opportunities• No other
restaurant invest so much on interior design
• Varies new dishes• Selected as the
food supplier of Olympic Games 2008
Thread• Fake South
Beauty restaurant
• Other restaurant copy their menu
Expansion ModelBy mid-2007, the South Beauty Group had
expanded to 19 restaurantsMarket share of South Beauty in the total
industry was less than 0.1%Annual growth for the company is 55%Considering to move from single-restaurant-
based operation to company-based management
Franchise Business Model A franchise typically involves the granting by one party
(a franchisor) to another party (a franchisee) the right to carry on a particular name or trade mark, according to an identified system, usually within a territory or at a location, for an agreed upon term.
The franchisee is granted a franchise license to use the franchise company’s trademarks, systems, signage, software, and other proprietary tools and systems in accordance with the guidelines in the franchise contract.
Not only must you run the business according to the operations manual and the franchise contract, but you must pay them an upfront franchise fee (license fee), and ongoing royalties.
Difference Between Franchise & Non-Franchise
Franchise•Provides a detailed, step-by-step, business “blueprint.”•There are very specific rules that must be followed, including the use of approved signage, and marketing materials, hours of operation, etc.•Franchisors also provide ongoing support to their franchisees.•Franchising is also highly regulated, and there are a lot of things that a franchisor must do to legally set it up.
Non-Franchise
•Provides a “blueprint,” but it’s usually not as detailed.•The actual contract that you’re given to review prior to signing a business opportunity type of business may be one to two pages in length. (Franchise contracts are 20 to 40 pages long)•No ongoing royalties
ADVANTAGES OF BEING FRANCHISORS Capitalized Expansion - Expansion requires the investment of capital
and resources that for many successful business owners is limited and, sometimes, difficult to raise. Franchising serves as a source for the capitalized expansion of a successful business. Rather than borrowing funds from lenders, franchisees invest their own funds to expand your business.
Continuing Revenue Streams - Successful franchisors benefit from continuing royalties that are, typically, based upon a percentage of franchisee gross sales and paid on a monthly basis.
Brand Development - The Multi-unit expansion associated with franchising serves to supplement and expand the value of your brand. Franchisee contributions to local and regional advertising further serve to expand brand recognition.
Economies of Scale - If managed properly the multi-unit expansion associated with franchising results in increased volume purchases and leverage with business suppliers and vendors.
Managerial Talent - Franchisee owners - who have invested their own capital and savings - typically serve as better managers and operators than paid employees who do not possess a vested interest in the business.
DISADVANTAGES OF BEING FRANCHISORS
Legal Regulation - Franchising is a regulated activity and requires compliance with federal and state franchise laws. To successfully establish a franchise, franchisors are required to work with an experienced franchise lawyer to establish a solid blueprint for franchising.
Investment - Although franchising serves as a source for the capitalized expansion of business (i.e., franchisees invest in your expansion), the establishment of a franchise system requires the investment of capital to cover legal fees and the cost of establishing a franchising infrastructure.
Image - If a franchise unit develops a bad reputation for quality or service, it affects the reputation of the franchise as a whole. If a unit underperforms, it also means less in royalties for the franchisor.
ADVANTAGES OF BEING FRANCHISEES The business is based on a proven idea. You can check how
successful other franchises are before committing yourself. You can use a recognized brand name and trade marks.
You benefit from any advertising or promotion by the owner of the franchise - the 'franchisor'.
The franchisor gives you support - usually including training, help setting up the business, a manual telling you how to run the business and ongoing advice.
You usually have exclusive rights in your territory. The franchisor won't sell any other franchises in the same territory.
Financing the business may be easier. Banks are sometimes more likely to lend money to buy a franchise with a good reputation.
You can benefit from communicating and sharing ideas with, and receiving support from, other franchisees in the network.
Relationships with suppliers have already been established.
DISADVANTAGES OF FRANCHISE MODEL Costs may be higher than you expect. As well as the
initial costs of buying the franchise, you pay continuing management service fees and you may have to agree to buy products from the franchisor.
The franchise agreement usually includes restrictions on how you can run the business. You might not be able to make changes to suit your local market.
The franchisor might go out of business. Other franchisees could give the brand a bad
reputation, so the recruitment process needs to be thorough
You may find it difficult to sell your franchise - you can only sell it to someone approved by the franchisor.
All profits (a percentage of sales) are usually shared with the franchisor.
Before franchising your business, be sure it is the type of operation conducive to franchising.
To be a good candidate for franchising, a business should offer something unique in its industry and have a model that is easy to replicate.
It should also be adaptable to a variety of different geographic areas, especially if your plan is to franchise on a large scale.
Consideration
STANDARDIZATION South Beauty Restaurant carried a list of 380
dish in main menu, excluding soft drinks and wine
Different restaurant has different chef. Raw material depended on the scattered local
suppliers• Quality of dish relied on the experience of the chef
Standardization for service can be achieve through training, rules, inspections, and the right incentive systems.
Standardization for the menu still in its nascent phase
STANDARDIZATION• Standardization or standardisation is the
process of developing and implementing technical standards.
• The goals of standardization can be to help with independence of single suppliers (commoditization), compatibility, interoperability, safety, repeatability, or quality.
STANDARDIZATION RECIPE FOR RESTAURANT
Definition : The United States Department of Agriculture
(USDA) defines a standardized recipe as one that “has been tried, adapted, and retried several times for use by a given foodservice operation and has been found to produce the same good results and yield every time when the exact procedures are used with the same type of equipment and the same quantity and quality of ingredients” in the manual
STANDARDIZATION RECIPE FOR RESTAURANTBenefit : Consistent food quality
The use of standardized recipes ensures that menu items will be consistent in quality each time they are prepared and served.
Predictable yieldThe planned number of servings will be produced by using standardized recipes. This can help to reduce the amount of leftover food if there has been overproduction, and also will help to prevent shortages of servings on the line. A predictable yield is especially important when food is transported from a production kitchen to other serving sites.
Customer satisfactionWell-developed recipes that appeal to students are an important factor in maintaining and increasing student participation levels. Schools may take a lesson from national restaurant chains that have developed popular menu items consistent in every detail of ingredient, quantity, preparation, and presentation. Standardized recipes provide this consistency and can result in increased customer satisfaction.
Benefit : Consistent nutrient content
Standardized recipes will ensure that nutritional values per serving are valid and consistent.
Food cost controlStandardized recipes provide consistent and accurate information for food cost control because the same ingredients and quantities of ingredients per serving are used each time the recipe is produced.
Efficient purchasing proceduresPurchasing is more efficient because the quantity of food needed for production is easily calculated from the information on each standardized recipe.
STANDARDIZATION RECIPE FOR RESTAURANT (Cont’d)
STANDARDIZATION RECIPE FOR RESTAURANT (CONT’D)Benefit : Inventory control
The use of standardized recipes provides predictable information on the quantity of food inventory that will be used each time the recipe is produced.
Labor cost control
Written standardized procedures in the recipe make efficient use of labor time and allow for planned scheduling of foodservice personnel for the work day. Training costs are reduced because new employees are provided specific instructions for preparation in each recipe.
Increased employee confidence
Employees feel more satisfied and confident in their jobs because standardized recipes eliminate guesswork, decrease the chances of producing poor food products, and prevent shortages of servings during meal service.
Reduced record keeping
A collection of standardized recipes for menu items will reduce the amount of information required on a daily food production record. Standardized recipes will include the ingredients and amounts of food used for a menu item. The food production record will only need to reference the recipe, number of planned servings, and leftover amounts.
Determine the factor to be used Calculate cost that might occurred Prepare standard operating procedure Evaluate the standardization from time to
time
Implementing Standardization
The franchisee is granted a franchise license to use the franchise company’s trademarks, systems, signage, software, and other proprietary tools and systems in accordance with the guidelines in the franchise contract.
single suppliers (commoditization), compatibility, interoperability, safety, repeatability, or quality.
Domestic target zhengzhou, jinan, wuhan, chongqing, tianjing.
IPO when the revenue is optimum.
Conclusion
Thank You