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South BeautyGroup : in Questof a ‘Beautiful’Growth StorySyndicate 5Agung Mahendra 29111324Rangga Tri Raeros 29111314Joseph Enrico 29111349Reski Mapriharto 29111326Gilang Surawijaya 29111350
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
SouthLAN Club SUBU Beauty Upper class segment of successful Latest brand, business health Business people for conscious people dining youth segment(Luxury brand)
Potential market of SouthBeauty 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 functions O 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
Upmarket restaurant focused on office workers and business people Multi-brand strategy for the group • South Beauty • Lan Club • SUBU
Service Marketing MixThe mixture of controllable marketing variables thatthe firm uses to pursue the sought level of sales in thetarget market.
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
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: Transportation, warehousing Distribution marketing and inventory control for Types of intermediaries channels available for making the product available for distribution distribution available to consumers easily and economically
• 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. Pricing policies, Discounts and Pricing other strategy concessions selected and offered for used. Price mix capturing includes the market, following variables: Terms of Terms of delivery, and credit sale
• 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 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.
PeopleRecruiting and training the right staff is required tocreate a competitive advantage. Customers makejudgments about service provision and delivery basedon the people representing the organization. Peopleare one of the few elements of the service thatcustomers can see and interact with.Staff require appropriate interpersonalskills, aptitude, and service knowledge in order todeliver a quality service.
People managementInitiated a large-scale training program for their staffWaiters had to undertake a three-month training courseManagers had to complete a two-year on-job-trainingprogram
ProcessThis element of the marketing mix looks at the systems usedto deliver the service. All services need to be supported byclearly defined and efficient processes. In other wordsprocesses mean that everybody knows what to do and howto do it.
IT ApplicationsAdvance IT Application potent tool to enhance theupper-middle class restaurant and improve efficiencyUsing CRM system that build by its own to recordcustomer informationERP system was being set up to control the keyfinancial and the purchasing process
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.
Interior DecorationEach South Beauty restaurant had a different décorPeople came to the restaurants not only for thefood, but also foe the ambienceNo competitor could invest so heavily in interiordecoration
China’s Restaurant MarketSince 1990, china’s catering industry had beenbooming with over 15% CAGR2007 Catering market size accounted for 4.87% ofGDPThree main section China’s industry : Breakfast stands Street Hawkers Restaurant
Expanding ChainsExpansion required significant investment, in 2006 atleast 10 restaurant chains announced their intentionsto launch IPOFranchise model became popular for chainexpansion, the franchisees sometime crept out of thecontrol of the principal companies and gradually setup their own similar brandsThe majority of closed restaurants were franchiseesonly 30%
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
Process Raising CapitalStep in Public Time ActivitiesOffering • Several months • Amount money & type• Pre Underwriting • A 20 day waiting period securities discussed Conferences • Not before last day • Registration statement• Registration statements registration period • Research and analyze filed and approved • After last day registration for IPO• Pricing the issue period • Underwriter buys• Public offering and sales • 30 days after the offering stipulated amount stock• Market stabilization from the firm and sales • Underwriter stand ready to place orders to buy
Methods of Issuing New Securities Traditional negotiated cash offerFirm commitment cash offer Best effort cash offer Dutch auction cash effort Privileged subscription Direct rights offer Standby rights offer Non traditional cash offer Shelf cash offer Competitive firm cash offer Private Direct placement
South Beauty Group going PublicThe company need external funding for expansionBecome an public companyAvoid to become family companyPreparation for international expansion
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
Seeking StandardizationSouth Beauty carried 380 item menu, moreover therestaurant were located in several places and haddifferent chefs at each restaurantControl the use of raw materials with computersoftware to calculate the number of dishes sold andthe raw material used
Segmenting The process of dividing a larger market into smaller pieces based on one or more meaningful, shared characteristic.1. Identify bases for segmenting the market2. Develop segment profiles
Geographic • Big city • Upper level in the buildingDemographic• Office worker• Older people• High income Psychographic • High class people • Business man
Targeting Group that a firm selects to turn into customers as a result of segmentation and targeting.3. Develop measure of segment attractiveness4. Select target segments
People in big city People aged 30-45• Top-notch office building• People seeking pleasure and ambience
Positioning 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 segments6. Develop a marketing mix for each segment
High-end Chinese Dinner restaurant Focus on office workers High-quality, stylish and confortable environment Hygienic and delicious food
SWOT Analysis Strength Weakness • High quality interior • Too many list design menu, about 380 item • Delicious food • Quality of each dish (unique taste) present relied on the aesthetically experience chef • Strong R&D in new menu • Good service quality Opportunities Thread • No other restaurant • Fake South Beauty invest so much on restaurant interior design • Other restaurant copy • Varies new dishes their menu • Selected as the food supplier of Olympic Games 2008
By mid-2007, the South Beauty Group had expanded to 19 restaurants Market 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 Non-Franchise• Provides a detailed, step-by- • Provides a “blueprint,” but it’s step, business “blueprint.” usually not as detailed.• There are very specific rules that • The actual contract that you’re must be followed, including the given to review prior to signing a use of approved signage, and business opportunity type of marketing materials, hours of business may be one to two operation, etc. pages in length. (Franchise• Franchisors also provide ongoing contracts are 20 to 40 pages support to their franchisees. long)• Franchising is also highly • No ongoing royalties regulated, and there are a lot of things that a franchisor must do to legally set it up.
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 wont 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.
ConsiderationBefore franchising your business, be sure it is the typeof operation conducive to franchising.To be a good candidate for franchising, a businessshould offer something unique in its industry andhave a model that is easy to replicate.It should also be adaptable to a variety of differentgeographic areas, especially if your plan is tofranchise on a large scale.
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, int eroperability, safety, repeatability, or quality.
STANDARDIZATION RECIPE FORRESTAURANT 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 FORRESTAURANTBenefit : 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 yield The 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 satisfaction Well-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.
STANDARDIZATION RECIPE FOR RESTAURANT (Cont’d)Benefit : Consistent nutrient content Standardized recipes will ensure that nutritional values per serving are valid and consistent. Food cost control Standardized 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 procedures Purchasing is more efficient because the quantity of food needed for production is easily calculated from the information on each standardized recipe.
STANDARDIZATION RECIPE FORRESTAURANT (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.
Implementing StandardizationDetermine the factor to be usedCalculate cost that might occurredPrepare standard operating procedureEvaluate the standardization from time to time
ConclusionThe franchisee is granted a franchise license to use thefranchise company’strademarks, systems, signage, software, and otherproprietary tools and systems in accordance with theguidelines in the franchise contract.single suppliers (commoditization), compatibility, interoperability, safety, repeatability, or quality.Domestic targetzhengzhou, jinan, wuhan, chongqing, tianjing.IPO when the revenue is optimum.