Tuesday, February 19, 2019

Secrets of Fujianese American Restaurant Industry Go Public

My latest Menuism article carries the title "Why Are Chinese Restaurants So Similar."  However the title I gave the piece was "Secrets of Fujianese American Restaurant Industry Go Public."  While the titles are vastly different, the text is largely the same, with a small amount of editing consistent with the published title.  But the spin in the two titles is different.  The Menuism title emphasizes the result at the restaurant level of similar dishes and flavors at different restaurants.  On the other hand, my title emphasizes the new discovery of how the Fujianese-American restaurant industry is organized, with a single food supply company furnishing goods and services to over 3,000 mom and pop Chinese restaurants throughout the Southeastern U.S.  In the end the information contained is mostly the same, but the message is a tad bit different.  Here is my original article.

In the past quarter century, the growing influence of Fujianese American restaurants has been one of the major developments in Chinese dining in the United States. For the most part, most of this activity has been below the radar, away from the public eye, particularly since these events are attributable to the actions of literally thousands of mom and pop Fujianese restaurant operations, rather than involving a limited number of large players.

Fujianese immigrants have been flowing from China to a New York “mothership” since the late 1980s, and as we have written, has now reached the point where Fujianese dominate the Chinese restaurant industry east of the Mississippi river. From the Fujianese mothership in Manhattan Chinatown, Fujianese owned Chinese restaurants throughout the eastern United States are staffed via dozens of Manhattan Chinatown employment agencies, with newly hired workers ferried from Manhattan Chinatown by a system of independent bus lines to various points throughout the east, Midwest and south. This bus system is necessitated by the fact that a large portion of these Fujianese workers are illegally in the United States, and do not have the identification required for other modes of transportation. It also gives these workers incredible mobility in changing jobs—dissatisfied with your job in Orlando? Well, catch the Manhattan bound bus from Orlando, pop by one of the employment agencies in Manhattan Chinatown, and scarcely hours later be on a bus to your new job in St. Louis.

A general description of the Fujianese New York mothership was first publicized in 2001 in a New York Times article about Fujianese Chinatown.    While not focusing specifically on the Fujianese restaurant industry, it did introduce us to employment agencies, restaurant workers riding the bus lines, and Fujianese wedding banquets. Numerous subsequent articles in various publications have focused on the lives of individual itinerant Fujianese restaurant workers. We learn that Fujian restaurant workers are often housed in dormitories owned by their employer, that employees take turns as to who make the weekly Monday sojourn to Manhattan Chinatown to pick up supplies, and that some workers may change jobs (and job locations) several times in a month. But these articles provide little additional insight on the restaurant operations themselves.

The first clue that these Fujianese owned Chinese restaurants in the eastern United States were not exclusively a random aggregation of mom and pop operations appeared in two discussion threads a decade ago on the Chowhound message board.  One east coast observer noted that certain dishes appeared to be identically prepared at different Chinese restaurants in his area, while another eastern observer commented that some Chinese restaurants in his area appeared to have nearly identical menus. It is likely that neither observer was aware that their local Chinese restaurants were run by Fujianese immigrants, but message board responders caught on and raised the possibility that some kind of Fujianese organization was guiding these mom and pop operations in a manner promoting a degree of uniformity among these unrelated businesses. Some responders suggested that a mainstream food supply company like Sysco, or perhaps specialized Chinese food supply companies were providing ingredients to local restaurants. This led to a heated debate on the board as to whether small Chinese restaurants prepared all their dishes in-house, or whether they resorted to outside food suppliers.  In the end, with the lack of first hand knowledge, these discussions ended up unresolved, but certainly did plant the seed that there was some kind of guiding hand, be it some kind of cooperative organization or restaurant supply companies, helping the legions of Fujianese operated Chinese restaurants in the United States.

In the end, those who suggested that there were Fujianese businesses engaged in providing food supplies to small Fujianese operated Chinese restaurants were correct.   Interestingly, it has taken a financial news item to shed the light on the process. As you may know, except for the smallest businesses, most businesses in the US are operated in corporate or limited liability company form, for sound legal reasons. A small corporation may be owned by a single owner, or perhaps several family members, or two or more business associates. However, as a business grows it may have to bring in strangers as outside investors. And if it really becomes a large enterprise, its capital needs may result in the corporation selling stock to the general public in an initial public offering (IPO) registered with the US government’s Securities and Exchange Commission, and have its stock listed on NASDAQ or the New York Stock Exchange.

During 2018, there was such an IPO for a company called HF Food Group (NASDAQ—HFFG) out of Greensboro, North Carolina. A 20 year old man named Min Ni Zhou immigrated from Fujian to Manhattan in 1987, part of the early wave of Fujianese migrants. Starting at the bottom of the Chinese restaurant profession and working tirelessly and ambitiously, within four years of arriving in the US, Zhou owned a chain of eight Chinese restaurants and a catering business in the Southeast. Six years later in 1997, bedeviled by problems of procurement of supplies for his Chinese food operations, he established HF Food Group. Eventually, HF Food Group expanded into procuring Chinese food supplies for third party Chinese restaurants. At the time of the IPO, HF Foods had sales of $300 million with a customer base of 3,200 Chinese restaurants throughout 10 southeastern states, serviced by a fleet of over 100 refrigerated trucks. It operated warehouses in Greensboro, Ocala FL and Atlanta, and operated a 24 hour call center for its customers located in Fujian province. HF Foods’ filing documents also confirmed the dominance of Fujian restauranteurs within its trading area, estimating that over 80 percent of their customers were Fujianese.

Clearly H F Foods is the big dog in the Fujianese American Chinese restaurant supply sector. But H F Foods only operates in the Southeast, so are there similar companies in the Midwest and East? The H F Foods IPO filing does provide a couple of clues as to this question. One reason for H F Foods going public is to provide it the capital to expand its geographic footprint. In this regard, H F Foods refers to the general fragmentation of the Chinese restaurant food supply industry in the United States, and the need of H F Foods to make acquisitions of existing participants in the industry to expand its geographic footprint. This would lead to the conclusion that there are similar Fujianese operated Chinese food supply companies operating in the United States, but not nearly on the scale operated by H F Foods.  In any event, we are fortunate to have gotten this peek as to a major element of the Chinese restaurant industry in the United States.

Tuesday, February 12, 2019

Video Shoot Is Hard Work

I had a great video shoot today with Clarissa Wei, now Senior Reporter for Goldthread, the digital arm of Hong Kong daily South China Morning Post focusing on Chinese food, culture and travel.  As you may know, Clarissa is the writer who discovered me and my Chinese restaurant spreadsheet back in 2012 when she was writing for L.A. Weekly, and wanted to do a video interview in her current position and introducing/updating what I've been up to for her new audience. 

The overall theme was evolution of Chinese food in California and the United States, so the first location was Ocean Star Seafood Restaurant in Monterey Park, whose early 1990s opening probably marked the apex in large Hong Kong style seafood and dim sum palaces in the United States.  At this venue we discussed Chinese food in America through the end of the 20th century when Cantonese was by far still the dominant type of Chinese food here, and indeed for the first century of its existence, the rural Toishanese version was the only exemplar of Chinese food in the United States.  Then with the change of the immigration laws in the late 1960s, immigrants from Hong Kong and Taiwan brought more modern and appetizing versions of Chinese food to our shores.   We also discussed how the San Gabriel Valley was shaped to be the future home of Chinese American communities and Chinese food by the previous years of housing discrimination against minorities, including Asian Americans, and that new residential construction in Monterey Park co-incident with the Civil Rights movement provided an escape from the previous housing segregation.  We finished this segment by going through some of the Chinese restaurant menus I had collected over the years.

Next it was off to San Gabriel for some street scenes along Valley Blvd. and in the San Gabriel Square shopping center.  I gave some information about this shopping center and the adjacent centers on the next two blocks.  They then had me walk from Kee Wah Bakery to the corner, then cross the street to the center adjacent to the San Gabriel Hilton, all through that shopping center, then back across the street.  The entire time a cameraman was walking with me either fronting me or behind me, or sometimes on the side.  I can imagine what the people out on the sidewalk and in the shopping center might be thinking.  We then did the same walking routine through the first level of San Gabriel square.  Lastly then they told me to stand in front of a fountain and smile, while facing the cameraman who was not still, but kept walking side to side and back.  Then they had me slowly move my head and look at the different buildings in the mall.

Last stop was Bistro Na's in Temple City.  They put us in a private dining room that held a table for 15 people.  Whereas Ocean Star represented old 20th century Cantonese food, Bistro Na's represents today's non-Cantonese regional Chinese food, often operated by Mainland China based restaurant chains.  Clarissa pulled up my Chinese restaurant list on her laptop and we discussed some of the entries.  We then went to talk about the flip of Chinese dining from Cantonese to Mainland food over the past decade or so.  The video shoot finished showing me driving out of the Camellia Square parking lot.  What wasn't shown was that I had to go downstairs to the underground garage where I had parked, and drive up to surface level so they could shoot the final scene.

All in all, it was 5 1/2 hours on location, which when adding travel time to and from the San Gabriel Valley was a good 7 hour day.  I have to say that it was more draining and tiring that I had anticipated, but clearly it was also an enjoyable day, and I'll be interested to see what the final product looks like after the two month post-production period.

Friday, February 1, 2019

My Visit To Bistro Xia's (not Bistro Na's)

Chinese restaurant names have proven to be an interesting subject of their own.  There's my Menuism article listing some of my favorite Chinese restaurant names.  Then there was LA Times reporter Frank Shyong's personal blog article analyzing my Chinese restaurant listing for trends in Chinese restaurant names.  Separately there's the issue of Chinese restaurants often having a lack of respect for American concepts of trade name protection.  This has been most prominently demonstrated by names of famous Chinese restaurants in China and other parts of Asia being stolen by operators in the United States.  Examples of such thievery include the use of the names Little Sheep, Din Tai Fung, 85 Degrees, Hui Lai Shan and Crystal Jade, all of which were eventually stamped out when those real restaurant chains became aware of the situation.

Another example of the lack of trade name respect is the current use of names like Northern Cafe and Tasty Noodle House by different, unrelated owners in the Los Angeles area, as well as Dolan's Uyghur Cuisine by unrelated parties in Los Angeles and Washington DC.  And then there are nearly copycat names like the original Betelnut in San Francisco and the copycat Beatlenut in Miami.  Then there's the recent opening of Longo Seafood in Rosemead, which I can't help but think is appropriation of the Longo car dealership name (what does Longo have to do with anything Chinese)?  This was followed suspiciously soon after by New Century Lobster also opening up in Rosemead.  (New Century BMW is one of the premiere car dealerships in the San Gabriel Valley, though admittedly New Century is much more generic than Longo.)  I'm surprised that Apple Green Bistro is still operating in the shopping center directly across the street from the Apple II campus in Cupertino.  And oldtimers may remember after Chinese seafood restaurants called ABC, NBC and CBS became popular in Los Angeles, they were followed by CNN Seafood and also NBA Seafood, too.

One can only speculate as to whether the newly opened Bistro Xia’s deliberately copied Bistro Na’s name or not, though given the possessive “Xia’s”, I would suspect so. Of course the similarity ends there because Bistro Xia’s is located in a well worn shopping center in Alhambra, and it serves a combination of Xi’an style and Shanghai style food, mostly noodles, but also a few other items, such as big plate chicken and some off menu specialties. However, while Bistro Xia’s is no Bistro Na’s, our first meal there was quite impressive. Particularly noteworthy was the Shanghai style yellowfish potherb noodle soup, one of the most flavorful noodle soups (if not the actual best) I can recall eating. 

The broth was very distinctive, a combination of seaweed and unnamed herbs. The handmade noodles visually resembled western spaghettini but less dense. I asked the lady who runs the restaurant (easily distinguished by the maroon streaks in her hair) if it was a Shanghai or Shaanxi noodle, and she replied it was neither, but rather a creation of her own.

Our second dish was the Bistro Xia’s House Special Half Noodle Soup, called “half” because it was halfway between soupy and dry. Not as good as the yellowfish noodle soup, though I suspect if I had only eaten this dish I would have been quite impressed. Clearly there is bean paste in the sauce, but the lady claimed that it was only a small part of the concoction.

Obviously you can’t judge a restaurant on just two dishes, but this visit was definitely an impressive start.