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Why Chinese Restaurateurs Get Stuck Selling Cheap

Egg drop soup, courtesy of Serious Eats’ Robyn Lee

I got an interesting comment on my post about why Chinese restaurants are so cheap about a month ago. (And my friend Sam sent in an excellent post about the culinary fundamentals that work against Chinese chefs.) The reader was Jack Neefus, a Baltimore resident who works in finance and dabbles in cooking and travel. He’s been to China few times, including my dad’s hometown of Heilong Jiang.

I asked if I could repost his comment, so he took an extra step beyond to rewrite it into a thoughtful essay. For space purposes, I’ll recap the beginning and excerpt my favorite parts. (I’m so high on my editorial power. You have no idea.)

Jack makes an economically-driven argument for Chinese restaurant owners’ motives. Chinese restaurants, he contends, are frequently owned by immigrants who view their businesses as a relatively stable form of income, compared to the restaurateur driven by love of cuisine and hospitality.

In his writeup, oversupply and price competition are major issues. One interesting point he raises is that American Chinese food tends to favor cheap, bulky vegetables that don’t require a lot of cleaning or cooking, and maintain volume. Ex. broccoli and onion. He also touches on the commodification of Chinese food, and how it’s now viewed as another fast food category with a factory-issued menu.

I found that his personal experiences (let’s call them abbreviated case studies) added the most value to his argument. He draws on his connections in China as well as Baltimore to make some pretty provocative statements.

Jack also breaks down the variety of niche, higher-priced Chinese foods, ranging from jacking up the decor to regional dish specialization.

If you’re nerdy about food (as I am), this is a fun read. I don’t necessarily agree with all of his logic or assertions, but that’s part of the fun.

Please chime in with your own experiences, thoughts, or rebuttals.

Will Chinese Restaurants Ever Become More Expensive?

by Jack Neefus

Here’s a cross-section from my experience seeing Chinese restaurateurs driven more by economics than culinary aspirations:

1) Tony has run a modest restaurant for years, carved out of a gas station on the Maryland Western Shore.  He has been successful enough to set up restaurants in other cities for each of his children.  But he is not particularly interested in food per se, and spends much of his week now hiring Chinese day laborers and subcontracting small commercial renovation projects.

2) Wu-Jin has owned seven ordinary Chinese restaurants in Baltimore. She saved enough to buy a small apartment building, and has sold her restaurants to focus on multi-level marketing.

3) Pan came to the US from Fujian without his family seven years ago. He is working class, illiterate, and has never learned to speak English.  He opened a restaurant in Florida which netted $70k annually at its peak.   He then took on two partners to start a large Chinese buffet in Florida and went bankrupt.  Pan now lives New York’s Chinatown and is working construction.

4) Li-Min, my girlfriend’s brother, owned a seafood restaurant in Heilong-Jiang before giving it up in a divorce.  Li-Ping has encouraged him to come to America and start a higher-quality, more authentic Chinese restaurant, possibly a hot pot establishment.  However, he runs a heating and appliance business with his brother now, does not speak English, and he would see it as a big step backwards to emigrate to the US.

These stories are typical of Chinese restaurant owners and illustrate why the industry has never been a source of culinary innovation in the US. [Ed. note: Pretty strong statement. Do you agree or disagree?]

Attempts to create a higher-end segment of Chinese restaurants are hamstrung by price expectations set by downscale places that rely heavily on takeout. But most restaurant owners would like to be able to charge more.

Is there a potential market for more elite, expensive Chinese restaurants with more accomplished chefs and more authentic dishes?

There are actually several ways this may take place:

1) Inauthentic Chinese Food in Better Surroundings.
Strangely enough, one of the few places to have broken through the price wall is PF Chang’s. While not authentically Chinese, they serve versions of American Chinese dishes along with cocktails in a nicer atmosphere in locations where American consumers expect to spend more. PF Chang’s competes with places like The Cheesecake Factory and The Macaroni Grill, and the average bill per customer reflects that.

2) Chinese Specialties that Appeal to American Tastes.
Authentic Chinese hot pot or ‘Muslim restaurants’ goes over very well with Americans.  It is commercialized in China by chains like “The Little Fat Sheep,” but stateside has only been introduced into California.  There’s no reason this segment shouldn’t become nationwide.

Dumpling restaurants are another authentic Chinese category that goes over well in the US.  There are a few storefront restaurants, such as China Bistro in Rockville, MD, who offer an expanded range of dumplings as the main draw, but nothing like the establishments in Chinese cities.  Ingredients can vary from vegetables to lobster, and presentation can be upscale and whimsical.  In the right setting, it could easily become a trendy category.

3) Authentic Haute Cuisine. Americans tend to dislike many authentic Chinese luxury dishes such as shark’s fin or bird’s nest soup, and are unwilling to pay high prices for them.  But American foodies tend to like a variety of unusual items on the menu even if they’re not ordered.  Having them on the printed English menu, and not just the verbal Chinese menu, may now draw customers rather than repel them.  With the huge influx of upper-middle-class Chinese immigrants, the potential to find consumers and not just voyeurs is greater as well.

Americans expect a fine dining experience to include décor, and here too trends are changing slowly but noticeably.  China itself has experienced a wave of lavish and artistic restaurants, and some new Chinese restaurants have gone beyond the fish tanks, horoscope placemats, and mountain posters.

Hunan Taste, a new storefront restaurant in Catonsville MD, features hardwood floors, carved calligraphy, and high-end furnishings imported from China.  Their menu has items like fish intestines along with spicier and more authentic Hunan dishes than American patrons are familiar with.

If that trend continues, you may one day be able to walk into a restaurant in New York and order bear’s paw or Pao Yu snail in a spectacular setting for the same outrageous prices you used to pay at the Quilted Giraffe.

Lingbo’s caveat

I thought I’d add here as well – just as there are great Chinese chefs who care about their craft, just as there are lackluster American chefs who just want to put out a burger that doesn’t get sent back.


18 Responses to “Why Chinese Restaurateurs Get Stuck Selling Cheap”

  1. Nicely written post! Was it necessary to list all your personal caveats against his broader idea before he had a chance to explain it though?

    Posted by Joel | August 20, 2010, 11:17 am
  2. I only had one caveat – that this wasn’t representative of everyone. (I’ll move that to the end of the intro for clarity’s sake.)

    Posted by Lingbo Li | August 20, 2010, 11:27 am
  3. Of course these things are never representative of everyone, but he’s actually pretty on point. Books on the history of Chinese cuisine in America have documented the almost industrial efficiency of starting a Chinese restaurant. There is a template for everything from menu photos to fortune cookies to dishes calling for “brown sauce.” Most Chinese immigrants who work in or own Chinese restaurants in America don’t have restaurant training at all. Chinese food in America evolved as a survival economy for immigrants not able/welcome to do most other types of work (much like Korean laundromats), and the low barriers to entry translate to lower quality product and lower prices for customers. Even though some (very few) newcomers are doing it for the love of craft, you can’t ignore this history and the stigma of Chinese food being cheap/dirty/fake that came out of it.

    Posted by Zoe | August 20, 2010, 12:04 pm
  4. Also, hi! Came across your blog recently through Serious Eats but we also know some of the same people at Harvard. I live and eat in NYC currently, but I’m planning on going to culinary school in China within the next year to address this topic – I think there are huge opportunities to transform/reform Chinese food in America. I used to blog about eating with strangers in NYC, and I don’t do the writing part so much anymore, but I do still enjoy eating with strangers. If you ever want to grab a bite, hit me up!

    Posted by Zoe | August 20, 2010, 5:47 pm
  5. I have no doubt that there are many restaurant owners who are not so interested in food per se. I’m sure you could say the same thing about owners of Greek pizzerias, Turkish kebab shops, and so on. But there are certainly some owners who start a restaurant, as opposed to another business, due to love of food, certainly some chefs at those restaurants who love food, and whether loving food or not, one might imagine an owner to care about food quality because it might improve profits! But point taken.

    However, I’m not sure I agree with the statement, “Attempts to create a higher-end segment of Chinese restaurants are hamstrung by price expectations set by downscale places that rely heavily on takeout.”

    I really think the main obstacle to haute Chinese restaurants in the US is the substantial difference in content between what makes great Chinese food and the usual process by which other cuisines become haute in the United States. This is a topic I explored further in a previous blog posting. And there are, in fact, expensive Chinese restaurants in the United States, and not just P.F. Chang’s. From Mr. K’s and Shun Lee Palace in New York City, to Wing Lei in Las Vegas, spending heavily for mediocre Chinese food is not so hard.

    But, I think you are right about the ways in which authentic Chinese food can be introduced more broadly. For example, there is now a Little Sheep Hotpot (小肥羊) restaurant in Arlington MA, with a second branch set to open in Boston soon. Similarly, there are a number of restaurants around Boston that have a really wide variety of dumplings, from Wang’s and Qingdao Garden, to the aptly named Gourmet Dumpling House. And there are certainly lots of restaurants now that have both authentic items on the menu as well as Chinese-American dishes. Such restaurants are able to satisfy Chinese ex-pats, adventurous Americans and the standard demand for Americanized take-out .

    But I’ve always wondered why Chinese restaurants did not put authentic dishes on the English menu before. I don’t think it’s because the very presence of beef intestine on a menu would ward off Americans from ordering other items. I think there is this idea among Chinese people that real Chinese food can’t be appreciated by non-Chinese. Fortunately, another idea deeply embedded in Chinese culture — good business — has been leading more and more Chinese restaurants capable of making authentic food to advertise that fact widely.

    Posted by Sam | August 20, 2010, 10:14 pm
  6. I think all the points made here are quite spot on. Something you want to think about, and was mentioned specifically, is that the Chinese f&b industry in the US is “frequently owned by immigrants who view their businesses as a relatively stable form of income”. With that in mind, the Chinese take-out and dine-in business model is designed to work like a factory of sorts. I would go even as far to say that if you take notice to Chinese take-outs in the US, they are more or less the same; menu, decor, pricing are identical when taking into account metro vs. suburb locations. That being said, the majority of Chinese restaurants in the US have similar operating principles of McDonalds or any fast-food joint–create menu items and experiences that are just good enough to keep them coming back and have very particular expectations of what the menu should be, and what the resulting flavors will be.
    Using this concept and business practice has enabled thousands of Chinese restaurant entrepreneurs to sprout up across America with relative ease. As an American now living and running my ownbusiness in China for ten years, I have had the great experience of tasting truly great Chinese cuisine. But, I also appreciate how effectively Chinese restaurants have been able to canvas the American landscape so easily, and with so little resources available to the small mom & pop business owner.The small business owner had an operating manual before they even launched. That operating model was created and standarized by the sweat and tears of other successful (and sometimes failed) Chinese establishments. The restaurant entrepreneurs observed, learned, implemented, and then iterated to create menus and experiences that fit the tastes of American culture and life.

    Posted by Joseph Constanty | August 27, 2010, 6:36 pm
  7. mann i expecially love bird’s nest soup even IF its made from spit!!! <333

    i eat it like once every monthish and used to bought from website hongkong-bird-nest.50webs.com/index_e.htm sometimes, my mom went back to hong kong and bought a full suitcase of it cause its cheaper there XD

    Posted by Chaeles Bagli | September 1, 2010, 11:51 pm
  8. Great topic! wish i could have found this in romanian …

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  9. thanks for this info. i’m impressed that you’ve an realize of all that, excellent work for Some nice content that you share on here.

    Posted by Michel Sieracki | December 8, 2010, 4:03 pm
  10. Always wondered why Chinese food is so darn cheap. I knew there should be a well defined reason behind this…now I know thanks to you. :)

    Posted by Thommy | February 22, 2011, 1:51 am
  11. i think the success of Mission Chinese Food here in SF demonstrates there’s insatiable demand for ‘hipper’ Chinese food, if not higher quality too.

    With the heavy emphasis on farm-to-table and whole-animal cooking, it seems like a no-brainer that someone would adopt this to the Chinese restaurant model – where you could justify the higher prices w/ ingredient cost, sustainability, etc. This removes the stigma of cheap & dirty. And, then, once you’ve got your foot in *that* door, you could justify another price hike w/ technique.

    I think it’s a can’t-miss model in an urban area.

    Posted by ChuckEats | March 22, 2011, 3:45 pm
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Lana Lingbo Li

I'm a world traveler / enthusiastic eater who's now blogging and producing videos over at HelloLana.com. Visit me there!

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