Delicious investment: when considering buying a stake in restaurant group Crystal Palace, LVMH-owned L Capital Asia commissioned a taste test for soup dumplings, or xiao long bao. (Flickr/Daniel Go)
The world’s largest luxury conglomerate may have made its fortune from a brand portfolio known for high-end handbags and top-shelf spirits, but LVMH’s private-equity arm has decided that it’s now time to add Chinese food to its vast portfolio.
According to Singapore news outlet Business Times, LVMH-owned L Capital Asia has purchased Singapore-based Chinese restaurant group Crystal Jade for an estimated US$100 million. The buy will give the company more than a 90 percent stake in the chain that was founded in 1991.
Crystal Jade operates multiple dining concepts that range from the mass market to the top end, according to the report. Currently, fine dining accounts for only 10 percent of revenue for the company, which operates not only in Singapore, but also across Asia in locations including southern China and Hong Kong.
L Capital hopes to help the Crystal Jade globalize with increased wine offerings and improved branding. The company is eyeing Europe and the Middle East, as well as China’s lower-tier cities for expansion opportunities. Restaurant chain executives have expressed optimism about its prospects thanks to LVMH’s branding expertise. "The new owner ... is good in planning, promoting, marketing, know-how that we lack,” said Crystal Jade Group Chairman And CEO Ip Yiu Tung. In addition, he added that LVMH’s global retail presence will help the company line up prime real estate for new restaurants across the world.
With annual profit growth averaging around 20 percent a year since its founding, Crystal Jade is clearly an attractive investment opportunity, but L Capital also took pains to make sure it was impressed with the quality of the food: according to the report, it meticulously checked online reviews and commissioned a taste test for the restaurant’s noodles and xiao long bao (often called "soup dumplings" in English).
The investment is part of LVMH's efforts to build up a diverse portfolio as China's traditional luxury market slows. Last July, L Capital Asia bought a stake in Chinese beauty brand Marubi, and is currently hoping to buy a Chinese online fashion company.