A?South Beauty restaurant in Shanghai, China, July 8, 2013. CVC Capital Partners Sicav-FIS SA completed its investment and became the majority shareholder in South Beauty Investment Co Ltd.?[Photo/dfic.cn]

CVC Capital Partners Sicav-FIS SA completed its investment and became the majority shareholder in South Beauty Investment Co Ltd, a medium and high-end restaurant chain in China. Expansion to more cities is planned, and the move may boost the country's flagging dining industry.

CVC has received regulatory approval for the deal, it said in a statement on Tuesday. South Beauty's founder Zhang Lan remains an owner and as chairwoman will oversee the company's strategic direction. An Yong stays as president and executive board director in charge of day-to-day operations.

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"CVC's investment will help South Beauty drive greater economies of scale and increase operational efficiency," Zhang said.

"South Beauty will gradually expand into new cities," An said. It "will be able to further enhance its core competence and brand."

CVC will support management in areas such as changing the corporate business model and menu, it said in the statement. At the end of October, South Beauty had 80 directly operated restaurants in 24 Chinese cities.

China's government is cracking down on high-end spending of public funds, and consumers have shifted from buying luxury items including bags and watches to luxury experiences such as restaurant meals, travel and hobbies, Ben Cavender, senior analyst of the China Market Research Group, said.

South Beauty's constantly changing food offerings and eating environment should attract customers as families and friends spend more on medium and high-end restaurants, he said.

Profit growth of the top 100 restaurants has been the worst in decades, according to the China Cuisine Association. More than 20 of them have lost money, and profit growth slowed by more than 63 percent.

Association President Su Qiucheng said the restaurant industry experienced a bubble. Competition tightened among restaurants targeting a mass market, and top-end restaurants needed to adapt. Most face surging labor, rental and raw material costs.

China Quanjude Group Co Ltd, a chain famous for its roast duck dish, suffered a 27.6 percent decline in profits last year. Listed top-end chain Beijing XE Flavor Group's revenue fell 41.2 percent to 800 million yuan ($129.72 million) and had a 560 million yuan loss in 2013. It turned to new operations in cultural and environment protection businesses to reverse the slide.