Zhang Lan cooks up beautiful success

South Beauty founder eyes global role for elegant restaurants

She is 54, but still makes heads turn with her tall, elegant looks, impeccable dress sense and business acumen.

Though her face has graced the cover of Forbes magazine several times as one of the most visible faces of entrepreneurial success in China, Zhang Lan says her journey is still far from over.

Zhang, chairwoman of the South Beauty Group, an upscale Chinese dining chain that has tasted success in the domestic market, wants her company to become the "Louis Vuitton" of the global dining market.

"China's catering culture is time-honored and splendid. It offers everything from nutrition to taste. But it has suffered due to lack of promotion and the absence of high-end brands. I want to change the cheap price and bad atmosphere tag that most Westerners have about Chinese food," Zhang said.

Zhang does not feel out of place when she tucks into her favorite local delicacies like boiled tripe at small restaurants in downtown Beijing in an elegant Armani dress.

"I strike a balance between popular and high-end brands in my daily life. This also works for South Beauty Group, which aims to attract customers to a modern place to enjoy high-grade and popular Chinese cuisine," Zhang said.

An art collector, Zhang finds time to squeeze in visits to exhibitions and galleries despite her busy schedule. Her artistic flair is apparent in the modern interpretations of age-old spicy Sichuan cuisine that are tastefully and attractively presented at her restaurants.

"Most people in China don't know how to present food. I am happy that I have given some importance to the appearance of food."

Dramatically presented cuisine, upscale decor, a good dining atmosphere and waiters who can inform customers about the dishes they are serving, all combine to give diners an exquisite and memorable Sichuan dining experience, Zhang said.

Stone-grilled beef, one of the most popular dishes at South Beauty, is a classic example of the creative elegance visible in most of its outlets. The dish comprises moist slices of beef cooked on the table in hot oil over stones with a fiery chili and garlic sauce. Stir-fried shrimp are arranged on a plate around a goldfish bowl filled with live fish.

"Buoyed by the booming domestic high-end catering market, South Beauty Group is looking to be a major luxury brand in the global catering industry. It is not an easy task considering that there are different cultures and eating habits. But my past experience has taught me that opportunities often come along with challenges," Zhang said.

High-end dining experience

It was her resolve and passion for innovation that helped Zhang overcome many challenges when she decided to transform her single restaurant into a high-end chain, said An Yong, co-CEO of South Beauty Group, who credits Zhang for most of the group's success.

It was Zhang who insisted that the group should take the high-end dining route, said An, who has worked with the company for more than 12 years.

Beijing-based South Beauty Group was set up in 2000 and has 71 restaurants, of which 43 are in major cities such as Beijing and Shanghai. The restaurants, well known for their innovative fusion style of authentic Sichuan cuisine, are popular among businessmen and expatriates.

Though she declined to reveal the group's revenue and profit for this year, Zhang said the figures have been good.

Both revenue and profits have registered double-digit growth in recent years and are likely to continue to rise over the next five years, Zhang said during the opening ceremony of South Beauty's new restaurant in Yizhuang, Beijing, in September.

In 2008, CDH Investment and China International Capital Corp Ltd purchased a 10 percent stake in South Beauty for around 300 million yuan ($48.06 million). These investments put the value of the company at more than 3 billion yuan four years ago.

With accumulated wealth of 3.1 billion yuan, Zhang was also ranked as China's second-richest woman entrepreneur in the 2011 China Restaurant Rich List by Rupert Hoogewerf, chairman and chief researcher of the Hurun Report, best known for its China Rich List, a ranking of the nation's wealthiest individuals.

Zhang said overseas expansion, a robust domestic market and a focus on innovation will be key weapons in her arsenal as she strives to achieve her goal of making the group a major global luxury brand.

But overseas expansion will have to wait for now, she said, as market conditions in Europe and the United States are not conducive enough. Due to uncertain economic conditions, South Beauty Group will initially look at investing in the Asian market, particularly in Singapore, and then Europe and the US.

Less ambitious compared with last year, when she announced that the group would open restaurants in London and Singapore by 2012, she said the group does not have a specific timetable for new overseas restaurant openings.

Most customers who visit the company's outlets are those with high disposable incomes who want high-end service and Zhang said she has the same target audience in mind for overseas markets.

But she said it is impossible for the group to set up restaurants in Chinatowns. Outlets in bustling commercial centers are the only choice.

Part of that strategy also lies in not complying with the old saying of "do as the Romans do" when tapping overseas markets, Zhang said, adding that the group's cuisine will, however, maintain the characteristics of traditional Chinese food.

"The distinctive and unique features of Chinese food are our biggest advantages when competing in overseas markets," Zhang said.

In 2007, the group began to increase its international profile by providing Chinese food on flights from China to France, the Netherlands and South Korea.

It began to win more global popularity when it was selected as the food and beverage provider for the 2008 Beijing Olympics.

Then it was invited by the Shanghai World Expo in 2010 to provide catering services at the exhibition venues. "These international events have given us great confidence in planning overseas expansion," Zhang said.

She likes to read biographies about successful global CEOs. She is "crazy" for management studies and has completed EMBA courses from China Europe International Business School and Cheung Kong Graduate School of Business, two of China's internationally acclaimed business schools. She is enrolled as an EMBA student at Shanghai Jiao Tong University.

"The case studies that are part of the study curriculum at the EMBA courses often give me a lot of inspiration and confidence," she said.

Zhang said the company plans to standardize its process in order to better control costs and foster expansion.

"Standardization is very important for Chinese restaurants to expand rapidly and steadily, because it can increase operational efficiency and ensure quality. We have also worked with (US global management consulting company) McKinsey to advance our standardization process," Zhang says.

The group is also accelerating its domestic expansion.

"We plan to open 30 new restaurants annually in the next three to five years, most of which will be in less-developed cities, such as Chengdu in Sichuan province," Zhang said.

According to a recent feasibility study by McKinsey, out of China's 800 main cities, more than 300 hold potential for South Beauty Group.

Zhang said compared with Beijing and Shanghai, less-developed cities enjoy lower costs in terms of rent, labor and raw material purchasing, while the number of potential customers grows.

Her success is the epitome of China's fast-growing dining market, analysts said.

The nation's dining business has maintained annual double-digit growth during the past 30 years. Last year, revenue from China's dining industry topped 2 trillion yuan. The figure is expected to reach 3.7 trillion yuan by the end of 2015, according to the Ministry of Commerce.

The domestic market offers higher returns and lower costs compared with foreign markets, with the steadily growing middle-class providing a strong impetus for the group to expand domestic operations, said Guo Jie, an analyst with Beijing-based Citic Securities.

Guo said despite the downturn in China's dining industry, hit by rising costs and slowing economic growth, the market for mid and high-end dining is still huge.

Zhang, who never visits spas, said work is her best reward and she never draws a distinction between work and life. "The secret for me to stay energetic is to do things that I like every day."

Born in Beijing in 1958, she worked as an accountant at a State-owned construction company after graduating from Beijing Technology and Business University in 1987.

She went to Canada to pursue further education in 1989. While studying there, she once took six part-time jobs at the same time, including washing dishes and cutting chunks of beef.

"During that period, I was so tired by the end of the day that I had to lift my legs onto the bed with my hands," Zhang says. Through hard work at restaurants and beauty shops, she made her first $20,000 within two years.

In 1991, Zhang opened a small but special restaurant serving Sichuan cuisine in Beijing. At the time, not many people were dining out, but Zhang focused on the cleanliness of the restaurant and the quality of dishes to distinguish it from others.

She traveled to the countryside in Sichuan province and hired farmers to gather bamboo, which was taken to Beijing by train and helped transform her restaurant into a little bamboo house.

In 2000, she opened her first South Beauty Restaurant in Beijing's China World Trade Center, a high-end office building in the capital's Central Business District.

Ambitious moves

"It was a bold decision, as rents were high, but I knew the returns would also be high," she said. The results proved she was right.

In 2006, she opened Lan Club, a luxury restaurant in Beijing, and spent nearly 200 million yuan collecting art from around the world to decorate it.

She also invited Philippe Starck, the French designer, to design the restaurant. She paid him 12 million yuan for the work, while the restaurant facelift involved a total investment of 300 million yuan.

"I was not disheartened when some people said that I threw money away like dirt and 12 million yuan was too much for a design draft. But I got great publicity and brand recognition with this design, far more than what is received by most companies which spend millions of yuan on television advertisements. Not everyone in China can boast of a Starck design in their restaurant," Zhang said.

The group also founded the SUBU club in Beijing in 2007 and opened another Lan Club in Shanghai in 2008. These three restaurants are now under the direction of her son Danny Wang, CEO of South Beauty Group.

Last year, the group was rated by the China Hotel Association as one of the top 10 Chinese restaurant brands.

Luo Yun, who looks after the group's marketing activities, said the main reason why other senior executives of the group strongly believe in Zhang is her ability to make the right decisions.

"She has great courage to do something bold and innovative. And the results often prove that she is right," Luo said.

Zhang said South Beauty Group is looking to list its shares to fund expansion.

"We hope to attract more investors and capital, but are still not sure where to list. It would mostly be a toss-up between the A-share market and the Hong Kong Stock Exchange depending on the market conditions," she said.

"Our mission is to promote authentic Chinese cuisine across the world. With Chinese economy growing steadily and its cultural influence gaining, it will not be long before we see some big global Chinese catering companies, much like McDonald's," Zhang added.

huhaiyan@chinadaily.com.cn

(China Daily 11/03/2012 page10)