Zhang Lan: The Introduction Of CDH Investment Is The Biggest Mistake Of South Beauty.

Behind Zhang Lan's frequent high profile is the bitter reality of the overpackaged Chinese food brand.

Zhang Lan, the 53 year old chairman of South Beauty, is the most famous Chinese restaurant industry.

But even so, people actually know little about her business.

As a family business, the real business situation of South Beauty has never been publicly disclosed.

At different times and on different occasions, South Beauty has announced a series of ambitious expansion plans, including the internationalization of Japan and other overseas markets, but they have not been implemented within the timetable set.

Last March, Zhang Lan also told the media: "in the next ten years, when you go to Paris, Milan and New York, you will see South Beauty in any business corner.

At the end of next ten, we hope to enter the top five hundred in the world.

In the next ten years, that is, the goal of twenty years, the giant of the retail industry is WAL-MART, and the catering industry keeps abreast of South Beauty, becoming the top three of the top 500 in the world.

"I am not a high-profile, I am confident."

In an interview with reporters in August 10th, Zhang Lan said, "the ceiling is ambitious and can not be achieved, and it is slow to achieve."

Just like these seemingly impossible goals.

According to a reporter close to the securities and Futures Commission, told reporters that the listing of Jiangnan was stranded because the entire catering business was "killed by a stick".

In addition to the south of the Yangtze River, the Jingya group and its catering companies listed on the list last year, such as Shun Feng Group, Goubuli and Guangzhou restaurant, were also tardy.

In the current A share market, except Xi'an catering (catering industry is not its main business), there are only two catering listed companies, namely Quanjude listed in November 2007 and xiangeqing listed in November 2009.

On the overseas capital market, there are Hongkong's listed enterprises, including the thousand dollar noodle, the little fat sheep and the rural base that landed on the New York Stock Exchange last year.

Analysts said that the SFC's supervision on the application of catering and chain enterprises is mainly because the income and cost in these accounting statements can not be reliably measured.

"I don't know why, but I don't know, but it's in line.

I don't understand very well. Anyway, we submitted it. It loved us, but it has nothing to do with us. "

Zhang Lan said somewhat negatively.

But perhaps South beauty should really look at itself.

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The key problem is that the scale of expansion is not as good as expected, and it is a bitter reality of its ability to improve management.

South Beauty is not a case.

Just like choosing the small sheep that sell the controlling power to Yum international, the past brand of instant food brands now encounter the ceiling of scale expansion. The weakness of standardization and fine management is against the pressure of rising cost of raw materials, manpower and rents, and the beautiful franchising mode often leads the brand into a more chaotic situation.

Zhang Lan wants to change all this.

At the beginning of last year, Zhang Zeng came to Wei Yu, a former McKinsey Global Director, and acted as CEO, but Wei resigned earlier this year.

Zhang Lan has repeatedly claimed that Jiangnan did not make family businesses, but in June 13th, South Beauty announced that Wang Xiaofei was formally appointed to CEO.

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Capital love and hate

On the personal experience of Zhang Lan, it is very familiar to many people: in 1989, he went to Canada to study abroad while working in Canada. After earning 20 thousand dollars, he gave up the permission of the Canadian immigration and returned home to start the Alan restaurant. In 2000, all the industries were sold back to 60 million capital, and the first South Beauty in Beijing was opened in China World Trade Center.

The reason why South Beauty is famous is its decoration and design and the unique environment it creates.

"Unlike most of the previous catering businesses, South Beauty is at the forefront of creating a comfortable and high-end dining environment. This is also the main reason for its success in the past few years."

Another domestic restaurant manager similar to South Beauty said to "Global Entrepreneur".

Zhang Lan applied this technique to the extreme.

During the Bali Island tsunami, Zhang even risked his life to bring back a large number of Bali Island items for storefront decoration.

In the storefront design, it is very important to invite foreign famous designers.

For example, the first store in South Beauty in China World Trade Center was designed by an American Chinese designer from the Department of architecture of Harvard University. After that, all the stores that were sold in the decoration design were also expensive.

South Beauty advocates a shop decoration style, striving to make a unique cultural atmosphere in every shop.

While decorating the first LAN Club in the Gemini building in Beijing, Zhang Lan and Wang Xiaofei spent 12 million yuan to invite Philip Stark, a French designer who designs Paris Bacca-rat Crystal Palace (Philippe Starck).

The orchid club is extremely luxurious. Tens of thousands of yuan, one crystal cup, hundreds of thousands of yuan, one chandelier, the world is full of famous paintings, with a total investment of more than 300 million yuan.

At the poly autumn auction in 2006, Zhang Lan also used the 22 million yuan to capture the famous contemporary painter Liu Xiaodong's 10 meters long and 3 meters wide huge oil painting "Three Gorges new immigrants".

This painting is now placed in the second orchid clubs opened in Shanghai new world in 2008.

Besides the LAN Club, Jiangnan also began to implement multi brand strategy.

At the end of 2007, Jiangnan opened the first famous fashion brand restaurant named SUBU for young fashion customers. In March 2009, another new brand steamed STEAM and opened in Shanghai Xintiandi.

These huge investments test the capital chain of South beauty.

"There is no bank loan in the south of the Yangtze River, and no debt has been issued. The cash flow is very good."

Zhang Lan was willing to declare.

After the popularity of South Beauty, many investors also offered to take the initiative.

Around 2005, Fiat Group, a world famous company, offered to buy South America for $1 billion.

But according to a VC who originally wanted to invest in the south, Zhang Lan's attitude is very arrogant: "she can not fully understand the source of profit under the massive expansion, and her financial statements are also in a mess."

The final result is no agreement.

But after the outbreak of the financial crisis in September 2008, Zhang decided to introduce external investors in order to ease cash pressure and plan to buy some properties.

3 months later, the south of the Yangtze River announced publicly that it would sell 10% shares to CDH investment and CICC and raise 300 million yuan.

"Not so much. In the end, only CDH investment was made, and CICC later did not take part in it."

A senior executive in South Beauty confirmed to this magazine.

According to the official website, the actual amount of financing is only 200 million yuan.

But this experience of financing left Zhang Lan with unpleasant memories.

Wang Gongquan, the partner of Ding Hui, led the investment.

"Wang Gongquan and Zhang Lan are two characters. They were very happy at the beginning, but later they did not know how the relationship became rigid."

The above resignation executives revealed.

After Wang Gongquan's "elopement" resigned, Ding Hui is now in charge of the South Beauty project, vice president of venture capital Wu Hua and Hu Xiaoling, managing director. When this reporter asked the two to verify the relationship with South Beauty, Wu Hua said: "it's not convenient to tell."

Hu Xiaoling said: "we will not do any communication with the media on this.

We have a good relationship with South beauty. We have two meetings a week, and we should be a financial investor.

Some rumors about the outside world are not exact.

In fact?

"Introducing them (Ding Hui) is the biggest mistake of South beauty. It is meaningless.

Private entrepreneurs pay tuition fees.

Zhang Lan told the Global Entrepreneur in the interview, "they didn't bring us anything, so little money diluted the share."

Zhang said she had long wanted to return the investment, but Ding Hui demanded a double return.

Zhang recalled that it did not occur to me that the worst downturn in the financial crisis passed in 3 months, and that when the Chinese economy began to show signs of recovery, the money was not yet fully accounted for.

Zhang's support is also limited. "Do not even look at financial statements."

This year, the listing of A shares in the south of the Yangtze River failed to make her love and hate for the capital market again.

Zhang explains that the main purpose of the listing is not to exclude listed companies, but that it can better attract senior talents after being converted into shareholding system.

At the same time, its assets and brands can improve its financing capability after listing.

However, she also believes that the concept of Chinese food is hard to please the capital market. The high return of investors requires that South Korea must replicate its rapid expansion, which will make the unique charm of Chinese food lose. "The capital market wants you to make money, but reproducible popularity is welcome."

After the A share market is almost hopeless, then South Korea will probably seek overseas listing.

But Zhang Lan said he would no longer consider introducing equity investors.

Tuition fees

There is a reason why Jiangnan is not popular with the capital market. In the past 11 years, it did not perform well in scale expansion.

In 2009 and 2010, Jiangnan put forward the goal of opening 20 stores during the new year, and this year's target is 30.

But as of now, the number of stores in the south of the Yangtze River is 21 in Beijing (including 1 STEAM and 1 SUBU), 20 in Shanghai (including 2 STEAM), 5 in Shenzhen, and 1 in Tianjin, Chengdu, Suzhou, Qingdao, Shenyang, Nanjing, Xi'an, Xi'an and Xi'an, with a total of 55 branches.

In addition to the official outlets posted on the official website, South Beauty is still in some other cities. There are still a number of franchisees in Nanjing, Taiyuan, Qingdao, Guiyang, Xuzhou, Qinhuangdao, Ordos and other cities.

But Zhang Lan acknowledges that she is gradually shutting down or repurchasing all the franchisees.

Reporters learned from Jiangnan official website that in the beginning of this year and July, Jiangnan has lifted the franchise agreement with Qingdao and Guiyang franchisees.

Recently, the franchise dispute between South Beauty and its Nanjing franchisee, Jiangsu Jiangnan catering Cci Capital Ltd has also emerged.

At present, Jiangnan has already reported the Jiangsu Jiangnan restaurant to Chaoyang Court, and requested to stop using "Jiangnan" trademark, logo, special dishes, etc., and return all the "South Beauty" franchise information, payment of arrears of franchise fees and liquidated damages and other expenses totaling more than 3 million 430 thousand yuan, the reason is "upload business data problems".

"Our franchisees have invested a lot of money, and Zhang Lan seldom came to us before. They talked to us about buying back some time ago, and the price was still very low."

Jiangnan Nanjing 1912 shop investor, Jiangnan dining chairman Zhu Zhenyu told the "Global Entrepreneur" indignantly.

According to its introduction, the 1912 shop in Nanjing is the first branch of South Beauty in Jiangsu and the first franchisee in South beauty.

At first, the franchisee was Wuxi Zhengda livestock and poultry Co., Ltd., Zhu's classmate, and now Ye Fei, the first venture manager, is the first store manager of this store.

According to the conditions of joining the South Beauty Club, the franchisee must pay 2 million franchise fee, 500 thousand deposit and 800 thousand designated decoration cost at the beginning.

Zhu said, plus these, it invested a total of 13 million yuan for the shop.

"We are self financing and we have to look at the color of the south."

We also need to extract from our turnover every month. "

Zhu said.

Because of the unsatisfactory operation at the beginning of the business, Ye Fei took him in to join the group until the beginning of this year.

"We opened up territory for the development of Jiangnan in Nanjing, and now we do not want us at all. Last year they opened another store in Nanjing."

Ye Fei said that Nanjing stores should be the best in the franchised stores scattered in the south of the Yangtze River.

It is understood that the original franchisee in Qingdao was forced to close because it had been losing money.

In July 14th of this year, Jiangnan and its Guiyang franchisee, Guizhou Hai di er Catering Management Co., Ltd., formally decided to terminate the contract by the court.

Zhang Lan rethinks that South Beauty is too optimistic about the franchise mode.

Zhang explained that 3 years ago, the reason for joining is that the number of counterfeit shops has surpassed that of South beauty itself.

At that time, a law firm said that there were altogether 137 stores in the country called Jiangnan or similar names, and only 37 of them were in the south.

Zhang thinks that the damage to the brand is too great, so it is better to open the franchise mode to integrate these counterfeiters.

For this reason, Zhang dug a senior executive from McDonald's to take charge of franchising, and set up a franchise contract for the south of the Yangtze River Based on the legal documents of McDonald's franchise.

"But I forgot one thing: Chinese people don't talk about contracts."

South Beauty wants to use IT system to control franchisees from purchasing to products, but the latter wants more freedom of control.

Zhang Lan, for example, gave the lawyer's letter to the latter when he got the deadlock.

"Affiliation only brings expansion speed to enterprises, and can not bring benefits to shareholders.

The revenues and profits of the franchisee itself are not included in the financial statements of the enterprises, but only the affiliate fees are charged, while the enterprises pay the price of the brand.

If the franchisee has problems, the threat is the whole brand. "

Wei Yu, formerly known as CEO, told reporters.

Wei believes that the management of its own is still in the stage of strengthening. It is right to stop and join in the future, or to rejoin the expansion road after the listing.

Similar to the setbacks in the domestic opening plan, the overseas sales plan of South Beauty has been delayed.

In December 2008, after receiving investment from CDH, Zhang Lan said that the money would first be used to open stores overseas.

"In 2009, 20 new stores will be added, and overseas markets will occupy 1/4 of new stores."

Du Wei, vice president of Jiangnan group, revealed at the time.

At the time, South Korea is negotiating the 5 shops in New York, Zurich, Jakarta, Tokyo and London.

In the Japanese market, South Beauty began to cooperate with Royal, Japan's largest catering company in 2008.

Royal has more than 1000 restaurants in Japan and offers 70% from Japan to aviation catering.

What Zhang Lan sees is Royal's "store resources".

According to Zhang Lan's plan, the two sides will gradually pform the Japanese stores in Royal, and export brands and chefs to the south of the Yangtze River, making up 51% of the shares. Royal is responsible for the capital investment.

However, it is not easy to accept the plan for Royal with its own resource advantages.

"Our negotiation has been going on for over a year. The difficulty is that Japan is a country that is more confident and conservative in its own culture. It is rather hesitant to make changes."

Zhang Lan said.

In order to strengthen Japan's confidence, Zhang Lan specifically collected the messages from the Japanese presidents of the Japanese restaurant in the south of the Yangtze River to show them to Royal, which proves that Japanese businessmen and young people have a good reception for South beauty.

But this cooperation and the opening plan of several other cities eventually ended.

After that, Zhang Lan put the target of overseas first store in London.

The reason is that South Beauty believes that the 2008 Olympic Games in Beijing have been well received by leaders and athletes. Meanwhile, former British Prime Minister Blair also made an oral invitation.

Zhang also set a timetable for purchasing real estate in London after the Spring Festival of 2009, and the London branch was officially opened in 2010.

Now it seems that all these things are still beautiful.

"This year, Jiangnan will open 30 branches in China, and open 10 branches in Singapore, New York, London and Taiwan, China, and 300 to 500 stores in the next 3 to 5 years," he said.

On the eve of the Spring Festival this year, Zhang Lan made such a bold statement at the opening ceremony of the Tengda building store in Beijing.

She also revealed that opening overseas stores through cross-border acquisitions is one of the ways for South Beauty to implement the "going out" strategy, and four or five buyers in South America are negotiating.

"Is Jiangnan going to open a fast food chain?" another domestic restaurant owner heard this number and laughed at this reporter.

Even considering the expansion capacity of SUBU and steamed STEAM in the south of the Yangtze River, it is hard to see whether the plan can be realized as scheduled.

Now, the overseas road map revealed by Zhang Lan to this magazine is to first go to Asian markets, such as Hongkong and Taiwan, to accumulate international talents and implant into South Beauty Culture. The second step is to go to Europe and North America.

In the last three years, it will focus on the Asian market.

It is estimated that in October this year, the first shop in Taiwan will officially open, and the store will be located next to the famous Taipei 101 building.

Before, Zhang Lanceng looked at the eighty-sixth restaurant of the 101 building, but after evaluating the rent and investment decoration cost, he dismissed the idea.

Successor

As for the profit level of the southern part of the Yangtze River, although the market participants generally believe that its volume is roughly the same as that of xiangeqing (002306), which has been listed on A shares, the specific figures have always been a mystery.

According to public information, since the beginning of the 2000, Jiangnan has already made profits. After 8 consecutive years of profit, the sales volume of 2007 in the south of the Yangtze River has reached about 1 billion yuan.

In 2009, Zhang Lan first became a third richest list of Hoo food and fortune, valued at 2 billion 500 million yuan.

According to Wang Xiaofei micro-blog, there are about 7000 employees in South Beauty, who receive 20 thousand guests a day.

If per capita consumption is 150 yuan, annual sales will be nearly 1 billion 100 million yuan.

The Deputy Secretary General of the Chinese Cuisine Association introduces the frontier, which is similar to the high-end catering chain enterprises such as Jiangnan. The average net profit margin of the industry is between 5% and 8%.

This means that the average annual net profit of South Beauty is more than 55 million.

And xiangeqing's net profit last year was roughly 58 million 20 thousand.

Now, Zhang Lan pushed Wang Xiaofei to the stage.

Zhang Lan set Wang Xiaofei's CEO "Probation" for 3 years.

"I am bold and careless.

He pays more attention to details and people's feelings, as well as market acuity.

If I go too fast, he will pull and push along sometimes.

Zhang evaluated Wang.

Zhang said, Wang Xiaofei is very kind, but as a manager, a soft rib is "too much compassion".

But it does not matter, "as long as kindness, in the catering industry, this conscience industry will not be big, will not do anything illegal."

Zhang hopes Wang will let go to promote the internationalization of South beauty.

But the problem is that South Korea's bigger worry may lie in the fact that its dining environment is gradually losing its advantage, while the attractiveness of its cuisine to consumers is declining.

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Song Yang of Beijing Zhicheng Hui Valley consultant Co., Ltd. said: "traditional Sichuan cuisine is made of Chinese tunic suit or a pair of shoulder bags."

In fact, the major food magazines no longer listed Jiangnan as the best business restaurant.

Although Jiangnan has always been known as improving and innovating dishes, it is still a limited number of dishes that have been launched in the past few years, such as Jiangshi beef cattle and rock salad.

With the popularity of Sichuan cuisine restaurants in recent years, a number of competitors, such as spicy temptations and cheaper ones, appear successively.

The most consumer criticized in South Beauty is 10% of the service charge. Besides, consumers also have some criticisms about the price performance of Jiangnan.

Many consumers are not very good at evaluating their dishes and services.

It is said that this angered Wang Xiaofei, who had planned to withdraw South Beauty from the public comment online.

In his view, business people in the south of the Yangtze River do not go online to comment on the restaurant. He does not want the objective comment from "public" to affect the target group in the south of the Yangtze River.

Wang Xiaofei's formal appointment as CEO also meant that the experiment of professional manager launched by Zhang Lan in previous years failed.

"The catering industry is not very profound. It requires diligence and love for this industry.

We must not bring in the personnel struggle of big companies.

The introduction of professional managers in the past was too serious.

Zhang Lan said bluntly.

During his presidents as president of the Yangtze River, Wei Yu proposed the idea of "four modernizations" management reform: enterprise, information, industrialization and internationalization, and truly realize the pformation from "rule by man" to "mechanism", enhance standardization and strengthen supply chain management.

Zhang Lan also agrees with this.

However, achieving this change is not easy.

"The biggest challenge for enterprises lies in the complacency and arrogance of management. Competition in this industry is not going forward."

Wei Yu said frankly.

Besides the limited number of professional managers, most of the middle and senior managers in the south of the Yangtze River are mostly from the grass roots, with limited educational background and knowledge.

But Zhang Lan's strong management style made him feel strongly on Zhang's imprint.

Can Wang Xiaofei break all this? Wei Yu said, "if you want to further expand the South Beauty, the biggest challenge will be" man "in my opinion.

Wei Yu believes that the key is to see two problems: first, it is not enough enough to insist: many times he can make the right decisions, but this needs strong execution.

The two is balance with the founder, mother Zhang Lan.

Wang Xiaofei revealed on micro-blog that he is now asking all the senior and senior staff to learn from him the Autobiography of Howard Schulz, founder and chairman of Starbucks, along the way.

"After reading, I am very encouraged. Let me reconsider the original intention of making brand and doing business.

He stressed that the relationship between people is respect.

He hated the smell of sandwiches in the coffee shop because it was not the main product.

It will even cost millions of dollars a day to sell tens of thousands of staff training espresso.

This book tells us that although we must go all the way, we must return to the origin and never forget our original intention.

Wang Xiaofei wrote.