Taiwan’s New-Generation Food Revolution
Aug 02, 2020

In the past five years, 340 new restaurant brands have sprouted up in Taiwan and old favorites have gotten facelifts as second-generation restaurateurs take over. How are they changing the vibe of Taiwan’s food scene?

Step into the Sinchao Rice Shoppe in the Breeze Xinyi complex in eastern Taipei and one is immediately drawn to its fashionable retro look.

Counters cut from cherry red marble and seats with print fabrics matched with deep green flannel wall coverings ooze sophistication, and the Western-style retro design elegantly blends Taiwanese-style arches and swanky window grills. The exterior wall of the open kitchen frames an electronic screen simulating a dragon fish swimming around. The overall décor is a scintillating blend of the new and the old, of retro accents and new technology.

Meanwhile, in the Taipei 101 shopping mall’s food court, another restaurant grabs the attention of those who walk by with its pink color scheme and bright look..

This is Dim Sum Yuan, the brainchild of Alexandria Wu (吳珮菁). She is a third-generation member of the family behind the Three Coins restaurant, a Taipei landmark for the past half century that has garnered a Michelin star each of the past two years. Wu has brought a refreshing look to a classic dim sum, her steamed salted egg yolk lava buns adorned in a pink skin and the shrimp dumplings showing a hint of red through the translucent white exterior. Her restaurant has the feel of a modernistic Chinese-style tapas place.

Turning Restaurants into Trendsetters
Trendy restaurants that stress fashionable décor and technology, such as Sinchao Rice Shoppe and Dim Sum Yuan, have sprouted up all over Taipei’s upscale Xinyi District, whipping up a food “fashion” revolution. They reflect the pulse of the market, stressing rapid product and marketing innovation rather than a high table turnover rate, but they also vulnerable to the industry’s high failure rate.

The main movers behind many of these trendy restaurants are the second-generations of successful entrepreneurs in the business. The owner of Sinchao Rice Shoppe, Hsueh Shun-ti, also heads renowned Kaohsiung seafood restaurant Old New Taiwanese Cuisine, which was founded by his father. Extension 1 by Orange was conceived by the second-generation sister and brother team of the Yuan family that runs the Michelin Plate-rated Orange Shabu Shabu House.

These well-educated, internationally-oriented young upstarts, who have grown up in the restaurant business, now represent the driving force for innovation in the industry and are reshaping Taiwan’s fine dining environment.

Many of them studied overseas. The sister and brother CEOs of the Orange Shabu Group, Jocelyn Yuan (袁悅苓) and Kevin Yuan (袁保華), studied mass communications and chemical engineering abroad, respectively, and their international mindsets and experience in other industries has injected new vitality into the sector.

As for Hsueh Shun-ti and A-Sha Restaurant third-generation manager Wu Chien-hao (吳健豪) they are both graduates of Taiwan’s top hospitality school, National Kaoshiung University of Hospitality and Tourism (NKUHT).

Pan Wei-ta, the son of the founders of renowned Ningxia Night Market teppanyaki stalwart S.L.T. Pan-yaki, has a Ph.D. in hospitality management from National Taiwan Normal University (NTNU) and is currently teaching there. He set up a restaurant group called “Miss-Teppan Catering Group,” and many of its top managers hold master’s degrees from NKUHT or NTNU, elevating the overall caliber of his staff.

Yet while this new generation explores new frontiers, it faces a tougher business environment than in the past.

Taiwan’s food and beverage industry set a new record with NT$811.60 billion in revenues in 2019, but competition has intensified.

According to figures from the Taiwan Chain Stores and Franchise Association, 340 new food and beverage brands have popped up in the past five years, leading to an increase of 4,578 outlets during that time. With convenience stores venturing into new territory, selling items like fried chicken and pizza, restaurants have had no choice but to reinvent themselves.

Restaurants’ Structural Revolution
From a Simple Bun to NT$10,000 Meals

Changing consumer behavior has also propelled this passion for innovation by the younger generation.

“Never has Taiwan’s food and beverage industry been more segmented than it is today. You can get meals ranging from NT$100 to NT$10,000,” observes Sandra Lee (李姝慧), the former vice president of marketing for restaurant group Hasmore Ltd. and now the general manager of Hsinchu restaurant Ookinn. Life. She said segmentation was relatively rare in the past because few people had the means to afford expensive feasts, but Taiwanese today are willing to spend big on culinary experiences.

Even before the new generation took over, the restaurant business was already undergoing structural change, with department store outlets replacing street-side stores as mainstream locations.

Shift to Department Stores
Higher Revenues, Short Shelf Lives

Why department stores? They attract heavy foot traffic, and food is a key part of what they do, with food and beverage sales accounting for 20-45 percent of their revenues. Though it costs NT$1 million-NT$2 million more to set up a restaurant in a department store than in more conventional locations, sales can be two to five times higher, and several top brands such as Thai Town Cuisine and Kanpai Yakiniku have expanded their presence in tune with the proliferation of shopping centers.

Orange Shabu Shabu House, known as the “Louis Vuitton of the hot pot world,” was first invited to set up shop in a department store more than 10 years ago. Founder Yuan Yung-ting declined at the time, worried that service standards would suffer. But when his son Kevin Yuan took over the chain, the younger Yuan knew expanding into department stores was a must and opened a location in the Shin Kong Mitsukoshi Taipei A9 Store Department Store in September 2018. The chain plans to launch another outlet in a Shin Kong Mitsukoshi department store in Taichung next year and hopes to have a presence in Taiwan’s six major metropolitan areas by 2025.

While the previous generation focused mostly on survival, the new generation has fewer inhibitions and is more given to pursuing breakthroughs and innovation.

Before launching the Sinchao Rice Shoppe, Hsueh Shun-ti created a brand called Yonshin Tea and Cake, a fashionable tea salon with vintage décor that was a huge hit with Instagram KOLs.

Born into a family that specialized in Taiwanese cuisine, Hsueh thinks it has been underestimated, not so much because of the flavors but because its restaurant designs, styles and service lack a high-quality feel. The desire to elevate Taiwanese cuisine has spurred a revolution in the field and a fusion of Western and local styles.

To Hsueh, a simple formula captures a key to success for restaurants in department stores: “go three, plan for five.” It means signing a contract with the department store for three years but planning to operate for five years to be able to amortize the necessarily considerable investment that must be made.

The interior decoration budgets for Sinchao Rice Shoppe and Yonshin Tea and Cake, somewhere below NT$12 million, are considered par for the course in the industry. Hsueh’s secret touch, however, is the addition of antique furniture from his collection to his restaurants, giving them a unique flair.

The Second-generation’s Dilemma
Burden of Fame/Hard Act to Follow

For the children of successful restaurateurs, deciding whether or not to take over the family business can pose a real dilemma.

Entrepreneurs who start with nothing can push forward without having to look back, but those who come next have to live up to the previous generation’s success. Do well, it’s expected; do poorly, live in infamy.

“Of the second-generation entrepreneurs, Yang Hsiang-shun has the toughest act to follow,” said Orange Shabu’s Kevin Yuan, referring to the oldest son of Din Tai Fung Chairman Warren Yang. The younger Yang will eventually take control of Taiwan’s most successful global restaurant brand.

Born in 1992, Yang Hsiang-shun returned to Taiwan three years ago after studying in the United States and went to work for the family’s restaurant, eventually earning the title “senior specialist.” Earlier this year, when Din Tai Fung partnered with Costco on “Din Tai Fung fried noodles,” it was the first project led by the younger Yang.

“He is very shy, and has worked his way up from the bottom, arranging tables, pouring tea, doing pretty much everything. He even knows how to wrap xiaolongbaos,” observed Far Eastern Department Store President Nancy Hsu (徐雪芳).

Three Coins Managing Director Charles Wu (吳東璿), who earned an MBA in the UK, has opened seven restaurants since returning to Taiwan that have run the gamut from Cantonese food to a bistro offering Italian and French cuisine fused with Japanese flavors. Six of them have failed at a total cost of NT$100 million, and the Fukuoka branch of Three Coins, where business had been good, was shut down in May because of the COVID-19 epidemic.

Wu knew that his family’s renowned Michelin star brand would one day be his, so why was he so desperate to venture out on his own to start up new brands?

The family matriarch for 30 years and head of Three Coins Chiu Ching-hui considered selling the restaurant at one point before it got a Michelin star because of its aging clientele.

Things changed after it received its first Michelin star in 2018. Customers old and new swarmed into the venerable eatery, and the dining area often turned chaotic, with some customers even cursing Chiu to her face. She got so angry that she summoned her son from Japan to take over the restaurant in Taiwan.

Inevitable Generational Clashes
The Three Stupid Things Successors Love to Do

Turning a restaurant into a full-throttled enterprise requires more than simply good flavors and attentive service. Second-generation entrepreneurs usually have to modernize their establishment in tune with the times and instill greater professionalism, but the process of change can often be painful.

After seeing their father work 15 hours a day in a greasy environment, Teng and his younger brother had no interest in following in their dad’s footsteps. Yet after going abroad to study, they suddenly developed a passion for the restaurant business and returned to Taiwan to take it over.

Armed with new concepts, the brothers quickly discovered that modern methods were not terribly effectively with old employees.

As soon as Teng grabbed the restaurant’s reins, he spent NT$600,000 on POS systems for the family restaurant’s three locations. But the older employees were either not familiar with computers or were unwilling to learn, and Teng often had to fix the computer system after finishing his duties in the kitchen. In the end, he had to give up on the systems and dump them.

Third-generation restaurateur Grace Lin (林佳慧), who got her family’s restaurant “Smart Fish” featured on Netflix’s Street Food, has also faced generational clashes in trying to modernize the 67-year-old family business.

Lin’s proposal to install a POS machine to keep track of orders and cashier functions and request to buy a cart to collect dishes were fiercely resisted by her parents. Her mother would even return new equipment she bought to the original vendor, leaving Lin fuming and often in tears when she was alone at night.

“It simply wasn’t possible for our family to sit down and calmly talk about an issue,” said Lin, who later decided to do take things into her own hands when her parents were not looking. She took advantage of when they took a trip abroad to redo the restaurant’s interior. By the time her parents returned, the changes were a fait accompli – new equipment had been installed and employees had learned how to use it – leaving her parents no choice but to accept the new reality.

Regardless of the obstacles they have faced, these new entrepreneurs are forging new business models in Taiwan’s restaurant industry.

“This second generation is willing to inherit the flavors of these old establishments. That already is the biggest contribution they are making to Taiwan’s restaurant sector,” observed Ookinn. Life’s Sandra Lee.

Based on their abilities, they could have chosen other career paths, Lee said, but instead they were willing to carry on their family enterprises, and without that passion, it would have been hard for them to continue.

Ultimately, however, restaurants still must rely on delicious offerings to conquer customers’ palates. Food writer Yeh Yi-lan cautioned that the changes brought by younger generations tend to involve aesthetics, company systems or brand identities, but they rarely focus their attention on the food itself.

“If a brand starts to make money and grow but the quality of the food falls off, that’s a pretty big danger,” Yeh said.

Fudy Chen, a third-generation leader of the Gloria Hotel Group, has brought a different kind of change to the group.

Chen, who has worked in two three-star restaurants in the United States and is the culinary director of group brands L’Idiot Restaurant and TK Seafood & Steak, has dumped the hotel’s strict rules requiring food ingredients to be purchased at the lowest cost possible.

He proved to his father through his new operation, Wild Donkey, that it was perfectly feasible to pick out and buy fish at the harbor, purchase beef where it was produced, and plant one’s own vegetables.

“Many top restaurants are not necessarily able to supply vegetables from their own gardens, especially hotel restaurants with purchasing restrictions,” Yeh said. With Fudy Chen picking vegetables, Gloria Hotel restaurants are better able to earn the loyalty of gourmets, Yeh said.

Chen’s approach embodies the spirit of these new-generation restaurateurs, dedicated not only to preserving and sustaining the flavors of their memories but also creating a new future for Taiwan’s restaurant industry.