Levendary Café Case Levendary Café is an established soup, salad and sandwich restaurant. The former CEO Howard Leventhal was very strong in keeping Levendary’s concept of delighting the customer, the restaurant evolved into a multi-billion dollar firm comprised of over 3,500 cafés nationwide. Howard Leventhal stated that “It’s wholesome soups, salads, and sandwiches using high quality ingredients, and a commitment to service in a comfortable, friendly, environment distinguished Levendary Café from other quick casual restaurants.” “Delighting the customers” is the key concept and strategic base of Levendary’s café serving in the U.S.
However, although Howard Leventhal had done well with Levendary’s domestic expansion, the company’s domestic growth was slowing since 2008. Seeing lots of fast food restaurants such as KFC and McDonalds successfully opened stores in China, Levendary Café thought China was a great market to expand into, because there was an affluent middle class and also a large increase of women in the workforce which equate in a growing population trend to eat out. To take the lead in the China initiative, Howard Leventhal selected Louis Chen. He comes with a wealth of knowledge of the culture, consumers, local atmosphere, and business connections to support Levendary’s expansion. Louis began modifying Levendary’s signature menu items and the overall café environments without consulting U.S. management, which created disagreement with Mia Foster. As the expansion into China grows, Levendary’s new CEO Mia Foster is faced with a number of pressing matters.
The main issue in this case, in which I think, is not the strategy for Levendary Café to enter into Chinese market, but the communication breakdown between the China CEO Louis Chen and the U.S. head office. There are several factors: * Management styles: Chen has full control over the operations and strategy for Chinese market, which differs from Foster’s management style, which is more process driven and valued standardization. * Culture differences: Mia Foster insists on enforcing headquarters’ own rules and policies regardless of the local preferences. * Lacking experience: besides China, Dubai was Levendary’s only international operation. Howard Leventhal made a right choice by giving the control power to Louis Chen. He has great experience as a retail property developer, which was very valuable in terms of store locations. Also, network of contacts in China and the passion about foods made him the best person to be work with. The way Chen chose to enter the market is brilliant. Selecting a corner in the expatriate-heavy Pudong region of Shanghai really caught people’s attention. After finding out the accounting techniques company used in China, Foster strongly felt that China operation would not be grew into a lager portion of total revenue. She preferred to let Levendary’s auditor to manage the China audit and insisted to protect the integrity of the Levendary’s structure. But she didn’t understand how big the difference is between the Chinese and US market. Making changes was not easy, for those who don’t understand Chen, “plastic chair” and “dumplings” were disasters and destroyed the original concept. Levendary Café as it exists in the US will not work for China.