Traditional Chinese Restaurants are Closing in the U.S.

    This fast-casual brand’s CEO is experimenting with ways to turn that reality around.

    Junzi Kitchen

    In 2015, Zhao opened the first Junzi location in New Haven, Connecticut, near his alma mater of Yale University

    Chinese food is at a crossroads in the U.S.

    The cuisine is underserved in the fast-casual space, and the count of traditional, family-run Chinese restaurants is shrinking as original owners near retirement and next generations venture into different careers.

    Yong Zhao, CEO and cofounder of Chinese fast-casual chain Junzi Kitchen, is working to veer the cuisine onto a more successful path. This year, he discovered a way to leverage Junzi’s successful fast-casual model for the continuation of traditional mom-and-pop operations.

    “Instead of the Americanization of Chinese restaurants, it’s the reverse—we’re taking this American model and making it work with Chinese food,” he says.

    In 2015, Zhao opened the first Junzi location in New Haven, Connecticut, near his alma mater of Yale University. He’s opened three other brick-and-mortars in New York and one ghost kitchen since, and now he’s experimenting with growth strategies for the brand that efficiently expand Junzi and also revive family-run Chinese concepts.

    In November 2019, he finished raising $5 million from investors for the purpose of revitalizing traditional takeout spots. The idea is to try out a range of updated models, menu simplifications, and other updates on older restaurants that lack a succession plan, adding them to the Junzi fold in the process.

    “This project is mutually beneficial; we want to reform and inherit tradition but also grow Junzi. This isn’t a charity fund, and there are lots of transitions and challenges down the road as we begin working with these establishments. It’s sad we’re seeing the decline of Chinese food and we’re looking for more reliability and consistency in order to scale these traditional restaurants,” Zhao says.

    Recently, The New York Times reported that, according to new Yelp data, the percentage of Chinese restaurants in the top 20 metropolitan areas has fallen from an average of 7.3 percent to 6.5 percent over the last five years. That fall is equal to the closure of around 1,200 restaurants.

    Zhao says that this decline reflects a business model that fits the situations of older immigrants, but hasn’t evolved along with the education and lifestyles of young Chinese-Americans whose parents started the restaurants.

    “Family-based Chinese restaurants rests on an immigration system that has changed over the years—these older immigrants need to retire, but their sons and daughters have received a better education than they did, and they don’t want to work in restaurants,” Zhao says.

    In addition to this lack of successors for current operators of smaller, older Chinese dining spots, Zhao says that the labor practices in place in many of these establishments are unsustainable. Staff members are often immigrants who are frequently paid low wages for work that requires a depth of specialized kitchen knowledge.

    Junzi Kitchen

    The intrinsic way of making Chinese food is very labor- and skill-intensive, which has made it difficult to serve in a quick-serve format.

    A majority of traditional spots also feature layered, expansive menus, decreasing replicability and requiring a host of ingredients and specific kitchen training that vary from location to location. Zhao’s hope is to simplify these staff requirements and menu demands at the traditional locations he targets with funds, potentially aligning them with Junzi’s pared-down menu.

    “The intrinsic way of making Chinese food is very labor- and skill-intensive. The food is not easy to make and, to make this cuisine work in fast casual, a new way of cooking Chinese food has to emerge. Basically, the future is a simplification of the menu that will help these restaurants scale, and also better machinery and automation that will increase consistency and reduce cost of labor,” Zhao says.

    READ MORE: Junzi Kitchen's Mission to Revolutionize Chinese Food

    At Junzi, this new way of making Chinese food is already in place. Guests can build their own noodle bowls and chun bing (thin flour-pressed dough) wraps, or choose from signature options like the Jaja Beef Noodle Bowl (spring noodles, Jaja sauce, braised beef shank, bean sprouts, cucumber, and chive ash) or Garlic Chili Mushroom Bing Wrap (wheat Bing, king oyster mushrooms, cabbage, leeks, pickled daikon, cilantro, and a garlic chili sauce). Only two sides—a sweet mango pudding and Chinese Lay’s chips—are available.

    "At some point, Chinese will take off in fast casual, and we are looking to create a smoother transition from the family business to a scalable model when that happens." Yong Zhao, CEO and cofounder of Chinese fact-casual chain Junzi Kitchen.

    Rather than functioning as a full-service restaurant selling intricate dishes at quick-serve prices like many traditional Chinese restaurants, Junzi turns Chinese cuisine on its head by serving a few, thoughtfully-curated authentic options at reasonable fast-casual price points. The brand’s simplified operations and ingredient list allow for both healthy wages for staff and upped value for customers—noodle bowls at Junzi cost $10.99 and a bing wrap runs only $6.99.

    Junzi’s model and menu serves as the inspiration for Zhao as he embarks on his project to reform more traditional spots. But all of the restaurants in line for reform may not be groomed to align exactly with Junzi; Zhao says this depends on the neighborhood and identity of each individual concept.

    The plan is flexible rather than set in stone. Now that Zhao has a first round of funding, stage one will include establishing the infrastructure needed to modernize various restaurants that are already in talks with the Junzi team. Zhao says he will be trying out different models—ranging from fast-casual eateries to ghost kitchens—to see what works best for the older concepts.

    “We are already having conversations and have already targeted different regions. In this particular market of Chinese food, there are all kinds of restaurants in operation, so not every part will be easy to reform. Some of these establishments are historical restaurants transferred among various family members and will be preserved,” Zhao says.

    He doesn’t have an end date in mind for the project. Instead, the updates will be ongoing, and will be the main vehicle for Junzi Kitchen’s growth. The goal of traditional Chinese restaurant reform has been with Zhao and his cofounders since Junzi Kitchen was in the conceptual stages, and the $5 million raised in 2019 is just a first step towards this long-time goal.

    “This is a global issue, and we have been working on this fundraising from the very beginning. At some point, Chinese will take off in fast casual, and we are looking to create a smoother transition from the family business to a scalable model when that happens,” Zhao says.