Nathan Chan (left) and Mark Rao pose inside of Chengdu Famous Food. Photos by Charles Shan Cerrone.
Mark Rao and Nathan Chan remember the longest all-nighter of their college career, but it wasn’t to complete school work.
The two friends were in the midst of opening their restaurant, Chengdu Famous Food, in the summer of 2016. It was July 1 — already a month behind their originally planned opening date — and they were still setting up the place at 3635 Lancaster Ave., preparing menus, checking in with staff and making sure they could best serve first-day customers. They stayed up for 72 hours straight.
“In the afternoon right before our break, both Mark and I were passed out on the couch upstairs…” said Chan, currently a fifth-year marketing student in Drexel University’s LeBow College of Business, while reminiscing about that opening day.
“Next to a lot of empty cans of Red Bull,” added Rao, a fourth-year finance student in LeBow, finishing his friend’s sentence.
It’s now that same afternoon break before morning and evening service at Chengdu Famous Food, but some things are different. For instance, Chan and Rao are still friends and roommates prone to completing each other’s sentences. However, they’re no longer business partners, and no longer the owners of the restaurant.
In early 2017, just months after opening Chengdu and when they were already into the planning stages for its next-door sister business, Woosa Bubble Tea, they received an unsolicited but attractive offer to sell both entities.
Chan and Rao settle into a booth for an interview at the restaurant — now as mere customers — and describe how from inception to reality, from full-time business owners back to solely focused full-time students and student athletes/artists, it’s certainly been a journey getting to where they are now.
Rao and Chan’s journey began when they met back in 2015 during their freshman year, through LeBow’s Global Learning Community undergraduate program. In the program, they took classes and worked on group projects together, including presenting a viable business idea.
But Rao and Chan’s hypothesizing didn’t stop when the project ended.
“We started talking about actual possible business ideas that could become a reality,” Rao said.
They first thought about creating an app called Instant, designed for food truck and restaurant owners to facilitate deliveries. In early 2016, they brought their business plan to Assistant Dean of the Charles D. Close School of Entrepreneurship Charles Sacco, who warned the students that it might be tough to penetrate that market with so many local and national incumbents.
“I challenged them to think about the opportunity differently and whether there was something they could do in the short-term that might require less capital and might be less risky,” Sacco remembered.
The partners still wanted to focus their entrepreneurial endeavors on the restaurant industry, so they shifted their sights to opening one themselves — and not just any restaurant, but “the most authentic Chinese food in the University City area,” according to Chan.
Both Chan and Rao are self-proclaimed “foodies,” and also both grew up in China — Chan was born in Los Angeles but grew up in Hong Kong, and Rao was born and raised in Chengdu, the capital of China’s Sichuan province.
When Rao moved to Philadelphia to attend Drexel, he was disappointed that he couldn’t find the authentic Sichuan food that he grew up eating, even after exploring the offerings in Chinatown and other parts of the city.
“I found a problem that they all kind of focused on [common dishes],” Rao said. “So we started talking, and we formed this idea that we would concentrate on small dishes, a straightforward type of food.”
Delivering quick, affordable, delicious Sichuan food to the University City audience — especially international students and others like Rao who grew up eating this authentic street food — became the basis of Chengdu Famous Food’s offerings, and its success.
“Their trajectory has been pretty amazing given the competitiveness of the restaurant space, and they hit the right market and the right time,” Sacco said of Rao and Chan. “As students themselves, they saw something that students in University City wanted, and built it to serve a familiar market.”
There were several people who helped Rao and Chan turn Chengdu Famous Food from a viable business idea to a reality.
Their parents provided funds when they were originally trying to move forward with the app, and then outside shareholders came out of the woodwork to invest in the restaurant from as far away as Hong Kong and close as Ohio.
Once they secured the funding, the students set out to hire a well-known chef, and thankfully found Jack Xue, a Chengdu native who also had experience cooking in Hong Kong and in Center City.
“The menu was made by the chef and the two of us,” Chan said. “Mainly Mark, though, because he’s from Chengdu and he knew about almost all dishes on the menu.”
Chef Xue also played a big part in the kitchen design, and then the students hired a contractor who guided them through the rest of the setup for the restaurant, as well as the ins and outs of the industry.
“The contractor had basically worked on a big portion of all the restaurants in Chinatown, so he had a lot of knowledge about how to start a restaurant and he gave us a lot of advice on how to run this place,” Chan said.
Then, Rao and Chan had to hire a staff. They started with Dominic France BSBA ’18, who was on a part-time co-op in Center City the summer they opened, and thought working at the up-and-coming restaurant could help expand his marketing and consulting experience. He did so well, in fact, that Rao and Chan decided to hire France as the manager of the restaurant the following fall term when they got busier with classes and sports (Chan is on the University’s varsity squash team).
“I did management consulting for them, hiring, staffing, bills, marketing — everything that didn’t need their signature on it, pretty much,” France said.
As a means of ensuring success on opening weekend, France recruited the members of his honors frat, Phi Sigma Pi, and whoever they knew, to patron the restaurant. From there, the team advertised on online platforms like Facebook, Instagram and Yelp, as well as the Chinese messaging app WeChat. They also received free advertising from The Triangle, Drexel’s student newspaper, in exchange for free food. With that and word of mouth, the reputation of the restaurant started to grow.
“It’s a very fun experience serving University City students and residents in the area who are just used to it being only pizza restaurants on Lancaster Ave.,” France said. “Plus, [Rao and Chan] created a very friendly, supportive environment where the staff wanted to help each other out, have a great time and do well in classes. They created a great family culture among staff.”
After half a year in business, everything was going well. But then, they got an offer they couldn’t refuse.
The Selling Point
Chengdu Famous Food boasted several loyal customers under Rao and Chan’s ownership. In fact, two regulars who came in at least every other day, Chan said, loved the food so much that they approached the owners with an offer to buy.
“They were both business students in LeBow and are both from Chengdu as well,” Chan said. “They thought it would be a really great, long-term investment.”
The attractive offer, plus the opportunity to focus more on school, squash (for Chan) and music (for Rao, who plans on pursuing music production as a career), made them approach their shareholders about the opportunity.
France decided to stay on as the restaurant’s manager, and also gained shares and became the point of contact for existing shareholders and the new owner.
“It was my part-time job during co-op, and now it’s my full-time thing post-grad,” he said. “[Rao and Chan] definitely spent a lot of time at the restaurant, so when they said they wanted to focus on classes and the varsity team, it wasn’t surprising.”
Chan said that it was initially a tough decision that they needed time to think through, but that it ultimately made the most sense to sell.
“After we graduate, we’re not sure where we’re going to be,” he said. “So I think, on top of the offer, it was time for us to sell. But I would say it was a good, one-year experience of enjoyment in opening the restaurant and I think nothing gives us more satisfaction than to see customers and their happy faces.”
The Lessons Learned
Rao and Chan do still see customers’ happy faces, and stop by Chengdu Famous Food to dine with friends or just to check in, but they no longer have roles or stakes in the business. But having been responsible for everything in getting the restaurant off the ground — from payroll to taxes to food supply — was a great learning experience for the two business majors.
“That experience is good because you get to learn the business inside and out,” Rao said.
Chan agreed, adding that management courses he’d taken at Drexel also helped guide his approach to running the business with Rao.
“Our professors had been teaching us that, especially when starting a business, it's not a sprint and it's more like a marathon,” he said. “You just need to believe in all the small steps that will help your business grow. And it might take days or sometimes even weeks or months or years, but eventually, you’ll help your business succeed and you'll be proud of what you've done.”
France will see the business through the forthcoming weeks, months or even years as he continues on as manager. He said that the restaurant continues to draw new customers from other neighborhoods in Philadelphia and its suburbs, and even from as far away as New York City. A glowing review from the Philadelphia Inquirer’s Craig LaBan in Jan. 2018 brought on a new wave of foodies seeking out the traditional cuisine.
“It’s very fun to get those sort of costumers, and it’s from Nate and Mark’s ability to brand us as a place to come for good, authentic food,” France said.
All in all, the experience not only helped prepare the students for their futures, but also brought Rao and Chan closer as friends.
“A lot of people say that when you go into a business or partnership with your friends, you can kind of have some issues later on,” Chan said. “But I think the two of us just really trust each other so much, and being in a business together helped us understand each other a lot more.”