The counterintuitive path to $27M per restaurant

Hey everyone,

Have you been to a Din Tai Fung restaurant? 

I’ll confess I haven’t, but after a little research on them, I’m 100% going to check one out.

Because they’re one of the craziest restaurant chains in the world. Each one brings in $27 million, more than double any competitor.

What’s cool is how they got there: 

By refusing to grow. For decades.

Yang Bing Yi fled China for Taiwan in 1948 with nothing. After years of failed ventures, he ended up selling Shanghai-style soup dumplings from a small stall.

Business started slow. Incredibly slow.

But instead of pivoting or adding menu items or running promotions, Yang just kept making the dumplings better. And better. And better.

Years pass. It becomes a local favorite.

Then in 1978, a notoriously harsh food critic from Japan walked up, tried the crab dumplings, and wrote a glowing review. Japanese tourist buses began including the shop as part of their tours.

In 1993, it happened again, this time in the New York Times, and the restaurant became world famous.

Meanwhile, Yang keeps making better and better dumplings. 

This is product-led marketing in its purest form. 

And it's rare because it requires something most business owners hate: patience.

The restaurant didn’t open new locations for decades, and he turned down every offer to franchise, expand, or license. 

From a growth-at-all-costs perspective, this sounds crazy. 

But instead of playing to maximize, Yang was playing to not lose what he'd built.

By the mid-90s, they started expanding. Today, they have 180 locations. 

Success, though, only happened because they stayed laser-focused on quality. 

Before opening their first international location in Japan, staff had to train for a full year in Taiwan. Even today, their dumpling chefs train for three months before they touch the line.

Every dumpling is folded exactly 18 times and contains exactly 21 grams of filling.

And they spend 50% of their revenue on staff, while most restaurants fight to keep labor under 30%. 

It’s a flywheel:

High pay attracts great people. Great people follow exacting standards. Exacting standards create consistency. Consistency justifies premium prices. Premium prices fund high pay.

It just takes serious investment upfront. 

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By the way: Look at what Din Tai Fung ignored.

They didn’t franchise to scale faster. They didn’t grow once they found product-market fit. They didn’t fight to keep labor costs down. They didn’t try to train people quickly (or do anything quickly, for that matter). 

It’s a good reminder that a lot of “conventional wisdom” is just convention. 

The hard part is knowing which rules are real constraints and which are just habits the industry fell into.

Worth thinking about, whatever your business.

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Thanks for reading!

Michael

P.S. HoldCo Conference is going to be amazing this year. Check out the whole speaker lineup at holdcoconference.com.

P.P.S. Two new lectures on the schedule! Check them out below.