Sure, Charles Zhang can wok the walk now.
He is president, founder and majority owner of San Clemente-based Pick Up Stix Inc., the Chinese fast-food chain that’s a fixture in Orange County and spreading elsewhere, with 48 stores, 1,100 employees, and reported sales last year of $36 million, up 24%. Zhang is projecting sales this year of $50 million, half way to his goal of building a $100 million-a-year restaurant business by 2005.
“This company is a blessing from God,” Zhang says, with conviction.
Before he immigrated to the United States 20 years ago, Zhang, now 44, was obliged to spend seven years of his life bending over rice paddy fields and wheat fields and picking cotton under the supervision of the communist Chinese government.
The eighth in a family of nine children, Zhang was raised by his mother. He said his father, a coffee bean retailer, was imprisoned for 25 years for speaking out against the Chinese government.
Zhang was 25 years old when he came to the United States in 1980. He had $20 in his pocket and knew only a few English phrases: “Sit down,” “Please” and “Thank you.”
“Once I walked into the women’s room because I couldn’t read the sign,” said Zhang, whose thick Chinese accent belies his good English.
Zhang admits he lied to the Chinese government so he could get a student visa to come to the U.S. A clarinet player, he told the authorities that he wanted to study music; he played the clarinet, but once here he never stepped a foot on a campus. Instead he moved in with his uncle and worked as a jack of all trades. First he was a liquor store clerk, then he served and bused at restaurants, then he managed a string of gas stations. By 1984 he had saved enough money to launch his first restaurant in a Laguna Niguel shopping center, Shanghai Charlie’s.
He and his partner, Jeff Wang, each put in $12,500 and got a $70,000 five-year loan. Zhang still remembers being disappointed that their first-day sales only amounted to $235, but business soon improved.
And Zhang struck up a friendship with a florist at the center, Bill Beckett, who liked Zhang’s restaurant and urged him to create a chain.
Becket bought out Wang, and he and Zhang launched a second full-service restaurant in 1988 under a new name, Stix, also in Laguna Niguel. A year later, Zhang and Beckett created a smaller, quick-service store, called Pick Up Stix.
Shanghai Charlie’s and Stix are still in operation, as is a second full-service Stix at Park Place in Irvine. All of the other restaurants that have opened are Pick Up Stix. The smaller stores sell about 65% of their orders to take-out customers, while the bigger restaurants do about 40% take-out.
Zhang said his approach is to have American-style service and healthy food (no MSG) made fresh when a customer places his order. Zhang says his quick-service competitors make their dishes in bulk and keep them warm in a steam table.
Pick Up Stix has a commissary next to its headquarters in San Clemente that employs about 35 to 40. It functions as a sort of test lab. The commissary also serves as the preparation center for all of the Southern California stores,a departure from many fast-food joints, which prepare much of their food at the outlets. Zhang said the food is chopped, diced and packaged each morning and delivered to the stores before the lunch crowd arrives. He said the procedure helps control quality, protect trade secrets and reduce kitchen space in stores, giving the chain more flexibility in choosing locations.
The Chinese food industry is mostly comprised of mom-and-pop operations, but Zhang and his team see no reason why they can’t apply the chain concept, with its uniformity and quality-control aspects, that has worked for hamburgers, Mexican food and chicken.
“We try to compete, not on price, but with product quality and service,” said executive VP and CFO Steve Tanner.
There are some good-sized dragons in the industry, such as Pasadena-based Panda Management Company Inc., a 326-unit quick-service chain that operates in 34 states, including 22 stores in OC. P.F. Chang’s China Bistro, the Phoenix-based chain of upscale sit-down restaurants, has 35 units including stores in Irvine Spectrum Center and Fashion Island in Newport Beach; its company-wide sales last year were $153 million. There are also smaller chains such as Chin Chin in Los Angeles and Canadian-based China Inn.
“Successful Chinese chains are run by Asians such as Panda Express and China Inn,” said industry consultant Janet Lowder, president, Restaurant Management Services in Rancho Palos Verdes.
The restaurant industry, which is growing at a rate of about 6% annually, is expected to remain strong. According to the California Restaurant Association, the state’s projected restaurant revenue is expected to top $30 billion this year, representing about 45% of today’s food dollars spent.
Zhang said he owns about 70% of the company. The rest is owned by Carol Beckett (now retired), vice president of operations Lisa Martin and two of Zhang’s cousins.
In its 11-year history Pick Up Stix has closed only one restaurant. It has attained the magic $1 million average-store sales that chain stores covet, company officials said.
“I would rather have 50 profitable locations than 500 that are not,” Zhang said.
Stores average 1,800 square feet to 2,000 square feet and are mostly in grocery or theater-anchored centers with convenient parking.
The company’s 48 stores in three states include two Stix full-service concepts and seven franchisees. There are 20 stores in Orange County, nine in Los Angeles county, nine in San Diego county, two in Ventura County, one in San Bernadino County and five stores in Las Vegas.
The company’s target is 20% to 25% annual growth, with a plan to open eight to 10 stores annually, all company-owned and with the approximate $250,000 cost per store funded from cash flow. New stores are utilizing a warmer design with lighter colors.
The company stopped franchising about five years ago. “There is so much involved in getting a store open and it takes so much of our time that we don’t want to give it to someone else,” Tanner said.
The company recently designed an icon, which incorporates its familiar logo. The new design will be used for signage and other branding.
The company is launching its first radio campaign May 29 for the OC and Los Angeles markets. Also, Pick Up Stix has begun installing billboards on its fleet of seven company trucks featuring photographs of store chefs firing up a wok.
“We are working on a radio campaign now that is focused on selling the sizzle,” said Richard Alessandro, 52, vice president of purchasing and marketing. “The sizzle is heard in the background and the tagline is ‘Pick Up Stix, Chinese Wok’d Fresh.’ ”
