As China’s luxury sales remain slow and consumers expect more from their shopping experience, top global luxury brands are expanding into the restaurant and hospitality businesses as a way to both boost their branding and diversify their revenue.
This week, Gucci opened its world’s first full-service branded restaurant in Shanghai at the IAPM mall (there’s also a Gucci cafe at its museum in Florence). Called 1921Gucci, the new establishment can be reached through an elevator in the Gucci store and serves Italian food in a stylish setting that includes Gucci-labeled napkins, silverware, and menus.
Fashion labels likely see luxury-branded cafes as a way to boost the shopping experience for consumers while conveying brand DNA. The opening of cafes comes at a time when luxury malls are using everything from high-end art to children’s activities to lure shoppers amidst slowing economic growth and luxury sales. In April 2015, fashion label Vivienne Westwood opened its first branded coffee shop in the world at Shanghai’s K11 Art Mall that features Westwood design on everything from the cutlery to the desserts—especially the brand’s signature plaid pattern. Meanwhile, Alfred Dunhill’s Alfie’s restaurant is available at the stores flagships at Parkview Green in Beijing, Prince’s Building in Hong Kong, and Plaza 66 in Shanghai.
While this trend is happening across Europe and the United States with restaurants like Ralph Lauren’s Polo Bar in New York and Dolce & Gabbana’s Ristorante Gold in Milan, China and Chinese tourist hotspots in East Asia are particularly popular locations for brands to get into the dining business. For example, Chanel’s only branded restaurant, Beige Alain Ducasse Tokyo, is located at Chanel’s Ginza store and features Asian and Western food made under the instruction of the Michelin-star chef. The posh Ginza district is also home to Bulgari’s signature four-story handmade chocolate shop that opened in 2007. Meanwhile, Hermès has its own museum in Seoul with its decadent Cafe Madang attached, a location that features an array of desserts adorned with a chocolate version of the brand’s “H” logo.
In addition to branding purposes, the restaurant business is often seen as an investment for luxury companies as they diversify their revenue—a move that can help keep business stable in austere times. For example, in 2014, LVMH’s Asian investment arm L Capital Asia bought more than a 90 percent controlling stake in Chinese restaurant group Crystal Jade for more than $100 million—prompting Chinese media to point out with glee that this technically means that LVMH now sells steamed buns.
In addition to restaurants, luxury brands are also getting into the hotel and interior design business in China and throughout Asia. For example, Armani Group will be opening the 65-floor Armani Art Residence in Chengdu in 2016 and is designing the interiors of a Ma Yansong-designed residential project in Beijing’s Central Business District set for completion at the end of 2017. Bulgari has also been on the expansion path with its hotel brand. It has been pursuing extensive marketing efforts to attract Chinese tourists to its property in Bali (such as hosting a Chinese celebrity destination wedding), and will open locations in both Beijing and Shanghai in 2017. Macau is a popular spot for luxury brands to open hotels, with Karl Lagerfeld and Versace both designing opulent properties there.
Brands with a long history focused on fashion or leather goods run a risk of diluting their image if they don’t put the same level of thought and quality into their new ventures as they do their main collections. The key is for brands to provide a dining experience that matches the level of the goods they’re selling, which makes a top chef collaboration like Chanel with Ducasse a smart move. Since a mis-match in quality can deplete the brand’s image, it makes sense to bring in an expert chef and team who can ensure that the brand doesn’t have guests leaving with any bad impressions.