Chinese restaurant brands rethink recipe for US market

For companies running Chinese restaurants in the United States and seeking growth, bringing authentic flavors across the Pacific may be only the beginning.

Success increasingly depends on whether they can build recognizable brands, understand local regulations and consumers, establish resilient supply chains and adapt their organizations to an unfamiliar business environment, industry executives and experts said at a recent China-US restaurant conference in Los Angeles.

"Most Chinese restaurant founders should approach the US as a completely new market with a mindset of learning and integration," Huang Geng, founder of Chinese restaurant chain Huang Ji Huang and chief consultant for the Chinese Dining Business Division at Yum China, told China Daily at the event.

Huang said companies cannot assume that a business formula proven in China will work unchanged in the US. Executives should spend time in the market themselves and develop a detailed understanding of local laws and regulations, financial planning and human resources, while drawing on the knowledge and networks of local partners and franchisees.

His comments come with a broader shift as Chinese cuisine expands overseas. Rather than simply exporting restaurants and signature dishes, companies are increasingly seeking to build international brands, localize supply chains and use digital technologies to compete in North America. At the same time, they face rising operating costs, tariffs, intense competition and regulatory requirements that can differ significantly from one US state to another.

That environment is forcing restaurant companies to rethink when, where and how they expand.

Hosted by TOA (Taste of Asia), a business platform initiated by the North America Asian Food Industry Association, the event brought together restaurant executives, franchisees, investors, supply-chain companies, technology providers and frontline operators from Asia and North America to discuss changing consumer demand, expansion strategies, operating costs and technological change.

"Today, what really concerns restaurant owners is no longer simply what kind of restaurant to open," said Cosmo Hu, founder of TOA. "They are asking when is the right time to expand, whether franchising is a better way to enter the market, how an Asian brand can truly establish itself in the US, and how to build the business model as labor, rent, ingredient and customer-acquisition costs continue to change."

For many Asian brands, California remains a natural first stop because of its large Asian communities, international connections and mature restaurant market — but those same advantages come with high costs and extensive regulation.

"California is the strictest market for doing business due to the regulations, so we believe that if you can make it in California, you can make it anywhere," said Amy Duan, founder of The Chihuo.

Economic scale

The state's economic scale adds to its attraction. California's nominal gross domestic product reached $4.25 trillion in 2025, maintaining its position as the largest state economy in the US and one of the world's largest economies.

But even within California, markets can differ sharply.

Andy Kuo, CEO of 85C Bakery Cafe, said Southern and Northern California require different business approaches, suggesting that mastering those variations can help prepare a company for expansion into markets such as Phoenix, Las Vegas or Texas.

"Restaurant operators need to understand the complexity of entering a new country," Kuo said. "One of the key questions is which parts of a successful business model can be replicated and which need to be fundamentally rethought when expanding internationally."

85C opened its first US store in Irvine, California, in 2008, while Bafang Dumpling entered the market through Southern California in 2022. Bafang CEO Stephanie Peng said an Asian customer base can provide an important foundation, but long-term growth requires brands to reach a broader US audience.

"We still have a journey to understand and fix all the operations before we open up a franchise," Peng said, noting that franchising represents a long-term relationship rather than simply an investment transaction.

As competition intensifies, franchising is emerging as an increasingly important route into the North American market.

Li Yu, co-founder and chief operating officer of restaurant technology company MenuSifu, said the company's operational figures from more than 10,000 restaurants suggest that newcomers can often find a clearer route to market by joining an established franchise rather than trying to build an entirely new restaurant brand from scratch.

He described North America's restaurant market as increasingly crowded and said operators need to continuously generate new sources of growth.

"Based on our internal analysis, restaurants unable to sustain annual revenue growth of around 6.2 percent could risk losing ground in an increasingly competitive environment," Li said.

That means restaurants need to explore new products, locations and business models, he said. But at the core of those efforts is a supply chain capable of being both stable and responsive.

Li pointed to what he described as China's "flexible supply chain" model as a potential source of lessons for North American restaurant businesses, particularly the ability to respond quickly to changes in consumer demand, introduce new products and adjust sourcing while maintaining operational consistency.