Editor’s Note: 64-year-old Charlie Zhang and his wife, Ling, founded Pick Up Stix, which grew to a chain of 85 restaurants by the time it was sold in 2001 to TGI Friday’s. This week, the Business Journal publishes its annual list of the county’s biggest restaurant chains (see list, page 23). We asked Zhang, who was honored in May by CSUF with its Lifetime Achievement Award for Leadership and Philanthropy in Business and the Community, to explain how the couple built their chain.
My family ran a coffee roasting business in Communist China, which disliked business executives to the point of tossing my father in prison. My mother was a natural entrepreneur who gave me the basics of what a decent human being should do. If you screw it up, fix it.
As part of the Cultural Revolution’s effort to have urban youth work alongside rural peasants, I was sent from my native Shanghai to work for seven years in the countryside’s rice paddies.
By 1980, relations between the U.S. and China thawed. Even though Communist China controlled the media, everyone knew America was the land of opportunities. I jumped to grab one of the first student exchange visas as a musician.
At the age of 24, I arrived that year with only $20 in my pocket, secretly intending to stay in the U.S. I worked under the table at a Chinese restaurant, first as a dishwasher and then learning everything about the business, putting in 12 to 14 hours a day, six days a week. Before I came to America, I didn’t know how to cook; nowadays I’m a pretty decent cook!
I cut my hand in the kitchen, damaging my chances as a musician. After working for four years, I had saved $7,200 with the dream of my own restaurant because I wanted to be an American boss. With other investments from friends and a bank loan, I raised $50,000 in capital, enabling me in 1984 to open Shanghai Charlie’s in Dana Point. The next five years, we opened four more restaurants.
In 1985, I married Ling, an immigrant from Taiwan. We now have two strong Chinese-American boys, Josh and Benjamin, who have honored their parents by excelling at school and work and thanking the Lord.
Winning Recipe
Being a dishwasher wasn’t a waste of time—I studied what people didn’t eat because I had to throw it away.
I learned the three most popular plates were house special chicken, Mongolian beef, and a vegetable dish.
I always asked people why they liked their food. Since everyone sells chicken plates, the secrets are how the chicken is cooked and the spices used. Compared to Chinese diners, I found that American people like sweeter foods and spicier sauces that have kickers.
Some restaurants want to be “authentic,” having their food taste just like their native countries.
I would hold taste tests. On one side would be Chinese and the other would be Americans. Sometimes the Chinese would gush over a plate while the Americans stayed silent. In another dish, the Americans warmly praised a dish while the Chinese would be quiet.
I made a key decision to go with dishes Americans wanted to eat. Why? Because we’re in America! They are our customers.
Chain Secrets
For those thinking of building a chain, the biggest jump was going from one restaurant to two because we doubled everything—our employee count, our food purchases, our rental space. It was critical to get everything right. By the time we opened our third, we’re adding only 50% more of everything. With each new restaurant, those percentages went down and our learning increased.
By 1989, we changed the name to Pick Up Stix because it was a wordplay on a child’s game and it emphasized the type of service we provide—takeout Chinese food.
We developed three formulas:
n Sell winning dishes that weren’t too complicated to make. Always keep the food fresh.
n Keep costs low by avoiding expensive foods; for example, lobster has a low profit margin.
n Adapt to popular American taste buds. Chinese food has a reputation for grease, which we had to find a way to eliminate.
We tracked key margins that couldn’t be higher than the following as a percentage of sales: Labor, 30%; food costs, 28%; administration, 16%; and rent, 7%. That left a 19% operating profit margin, which gave us a cushion for slower times.
Culture Too
A crucial component was creating a culture. My mother taught me a lot about that. So did the Bible. I feel you should treat people the way you want to be treated. As a result, people love to work for me. I still have employees who have worked for me since the 1980s.
When I hired people, I didn’t care if they had a college degree. Their most important trait was a great attitude. A worker should be humble, cleanly dressed, and willing to learn.
One of my tells was to double check what a potential employee said. If he told me he’s very organized, I’d look in his car to see if it was clean. If it’s disgusting, the person had lied to me.
A cook is the most important person in daily restaurant operations.
The cook had to make sure the portions were correct—too little and the customer loses; too much and the restaurant loses. The food had to smell good with pleasant colors and of course be cooked correctly.
If a customer brought back a dish, saying the food was bad, we’d sit down with the cook and show the cook what to do to make sure the food was prepared correctly. If a customer brought back bad food a second time, that was far more serious and we put it in writing. If it happened a third time, that cook was gone.
Also, when a customer complained about the food, we gave their money back or replaced the food. I learned about 100% satisfaction guaranteed from In-N-Out Burger.
Orange County is a great place for restaurant chains. It has excellent demographics, income levels and work habits; people here are knowledgeable about food. If you do well in Orange County, you’ll make it in other parts of the country.
When I Knew
When we got to 10 locations, we opened a commissary to provide consistent food, from chopping vegetables to formulating sauces to packaging the meat.
About this time, I came to realize I would become successful in America.
Then one day, people knocked on our door and offered to buy our chain.
I came to America with $20 and they gave me $50 million!
I’m an entrepreneur so I wasn’t going to do restaurants forever.
After we sold the company, we took the weekend off and then went to work to start Zion Enterprises, developing shopping centers, medical buildings, office complexes, residential homes, and apartments. My wife and I in 2004 also co-founded Aseptic Solutions USA, a state-of-the-art premier bottling company that we sold in 2012 for $60 million to nutritional company Glanbia PLC.
Nowadays, we’re devoted to music; particularly the Pacific Symphony and helping children reach their potential at the OC Music & Dance facility that we have built in Irvine.
I’m sometimes a consultant for restaurants. But I don’t open them anymore—that’s a young person’s game.
