The 41 year old spent 120000 to open a frozen food restaurant

The 41-year-old spent $120,000 to open a frozen food restaurant – now it makes $4.5 million a year

This upbringing taught Liu Spellman the importance of sharing authentic Chinese cuisine and inspired her to open her first Dumpling Daughter retail store in 2014. Based on her family's recipes, she now sells dumplings, made in a factory and frozen fresh, in her restaurants and grocery stores.

According to documents reviewed by CNBC Make It, these frozen bites and other products sold on Amazon grossed over $4.5 million from November 2022 to October 2023. Liu Spellman says her three restaurants, all in the Boston area, account for the bulk of that revenue, selling up to 4,000 dumplings a day.

“Dumpling Daughter” is deliberately less glamorous than Sally Ling's. Liu Spellman modeled it on her father's advice. He told her that if she were to get into the food industry, she “shouldn’t open a high-end restaurant.” [Instead] “Develop a business model where you can sell a lot, but you don't have to be there all the time,” Liu Spellman, 41, tells CNBC Make It.

Here's how Liu Spellman used her parents' advice to start a restaurant chain and why she specialized in building a more profitable brand:

Despite her success, Liu Spellman's parents didn't want her in the restaurant industry. The restaurant caused her relationship to fail, and her father pushed her to find a career that would allow her to be a “self-sufficient woman,” she says.

She moved to New York City and worked in finance for five years. Despite her demanding job, she realized that she preferred cooking and going to restaurants to being in the office.

“As you get older, you think about it [the] Highlight moments of your childhood, and in some ways I really wanted to relive them “These moments,” says Liu Spellman. “I also wanted to show respect to my parents. [legacy].”

Liu Spellman with her parents Edward Nan Liuand and Sally Ling.

Courtesy of Nadia Liu Spellman

So she quit her job in 2008 with $97 in her bank account and moved in with her mother, who ran a Sally Ling's store in Fort Lee, New Jersey. She served as the restaurant's general manager for two years and used her observations to develop a business plan for a “quick service” restaurant.

Liu Spellman married her childhood sweetheart, Kyle Spellman. and moved back to Boston in late 2010, a year after her father's death. Soon after, the plan to form Dumping Daughter was put into action.

Liu Spellman spent about $120,000 – most of which came from two loans from family members – to open the first Dumpling Daughter restaurant in her hometown of Weston, Massachusetts.

“Naturally” followed the press: “People were excited to see the next generation of what my parents built,” she says.

Then came the crowds. Three months after opening, Dumpling Daughter had lines out the door and around the building and was often sold out, Liu Spellman says. “There were moments where I would just stand in the walk-in freezer and cry for 30 seconds… and then walk out because there were 40 people… waiting for food.”

Dumpling Daughter's factory freezes dumplings raw, just like her grandmother used to, to ensure freshness.

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Inventory wasn't the only challenge: In 2015, two former Dumpling Daughter employees opened an exact replica restaurant called Dumpling Girl less than 40 miles away away. Liu Spellman filed a federal lawsuit, and rivals quickly demanded a settlement.

The legal drama hasn't slowed Dumpling Daughter's momentum: a second location opened in 2018.

“I was very happy with one restaurant, but it was the customers and the response we got that forced me to expand the brand,” says Liu Spellman. “No matter what happens in your career…don’t let all the noise get in the way of your goals.”

Dumpling Daughter grew steadily until 2020, when the Covid-19 pandemic forced restaurants to adapt to survive. Liu Spellman's team launched a direct-to-consumer website where customers could order boxes of the same frozen dumplings straight to their homes.

“I feel a real obligation to my parents and to Chinese cuisine to introduce this type of dumplings to the world,” Liu Spellman tells CNBC Make It.

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The strategy worked and Dumpling Daughter eventually started selling more products, such as their special brown sugar and chili oil dipping sauce, on Amazon.

The packaged dumplings — sold in grocery stores around the East Coat and Midwest — and new products now account for about a third of the business and bring in just over $1 million a year.

Despite its multi-channel success, Dumpling Daughter is not yet profitable. This is not unusual for young online companies: E-commerce margins are initially small, but “size helps,” consulting firm McKinsey & Company reported in 2021.

Most restaurants are profitable, but only by a narrow margin. According to the National Restaurant Association, the average restaurant has a pretax profit margin of about 5%.

“In a consumer product line, you have to spend money so people know who you are [and] “Finding them online,” says Liu Spellman. “To me, this is a very scary business.” [because] You’re actually losing money because you’re…spending on growing the company.”

Liu Spellman estimates it will take at least two years for Dumpling Daughter to become profitable, but hopes the e-commerce efforts will eventually make the brand a household name. Her goal is to not only expand the reach of her business, but also for Dumpling Daughter to serve people for as long as possible.

“I know that I can't live on my parents' tails forever, but that I have to create a brand, a feeling or a product that serves today's customers,” says Liu Spellman. “They definitely served the customers of the 1980s, but I think Dumpling Daughter will serve the customers of today and beyond with Chinese comfort food.”

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