South Beauty Group: In Search of a “Beautiful” Growth Story (B)

The restaurant segment was the largest in China’s catering industry, which was divided into four categories: fine dining (mainly Chinese cuisine), hot pot, fast food (Western and Chinese) and tea houses (and coffee houses).Surprised by the immense popularity of Western fast food in China in the 1990s and early 2000s, the leading Chinese fine-dining restaurants, including South Beauty Group, were exploring how to expand their scale through the development of restaurant chains. Given the difficulties of standardizing Chinese cuisine, the scale expansion of the Chinese fine-dining segment was slower than that of the hot pot and Chinese fast-food segments.The (A) case provides an introduction to South Beauty Group’s founder, Ms. Zhang Lan; the Group’s origins, development and business model in 2007; consumer trends and opinions; China’s restaurant market; and the Group’s future plans and challenges. The (B) case, to be read by students after the (A) case is taught, describes more recent developments at the Group, which faced significant challenges in 2011.