Levendary Café

Part I - Background

Levendary Café spun out of private equity ownership in 2011 .Mia Foster taking over as CEO from the founder, Howard Leventhal.

Special focus on the Chinese expansion on the Levendary Café . Mia concerned with Chinese stores incorporating dramatic departures from Levendary's U.S concepts - in store design and menu selection.

Levendary Café's USP: high quality ingredients and a commitment to service in a comfortable friendly environment.

Local menu adaptation was a norm in the U.S

Concept and marketing had been managed by the same person CCO Lucian Leclerc- since start of firm

About two thirds of the stores of Levendary Café were franchise owned.

With slowing domestic growth, Levendary Café decided to expand internationally. Planned to expand into China, which showed great market potential.

CEO Leventhal dropped the original idea of a joint venture with a Chinese operator and entrusted Levendary China to a Louis Chen. Chen had a decade long experience as a retail property developer as well as a network of contacts to speed up bureaucratic process

Part II - Situation Analysis

General mistrust of the Chinese wing : No senior executive had been to China after the launch of the first store in Pudong . There was henceforth a general scepticism on the growth the Chinese market had registered.

Difference in accounting procedures : Levendary Café being a publically listed company in the US required accounting to be done as pe GAAR framework . Current reporting structure for Chinese wing was basis local tax laws and Chen was disinterested in making it consistent with US practices. There was also the disagreement on who would bear the cost of converting to the GAAR practices

Non Standardized Operations : After the standardized set of operations in the US , it was found that Chen had tampered with the standardized look and feel of the café and tweaked it to meet local tastes . The format of few stores was also changed to suit the market of operation. There was evidence of another Japanese company tasting success in China by tweaking its menu/format

Chen growing into a local baron : Chen was given a free reign by Leventhal and went about his business without much consultation with the Levendary café board . His influence had grown significantly over the last 18 months as the number of stores increased simultaneously. Chen still had another six months in his contract and needed to be accommodated elsewhere in case the firm asked him to leave.

Cultural issues : Levendary café was positioned as a premium outlet that catered to middle - upper income groups . Except for a few locations, the same