China's Spicy Hotpot Leader Cooks Up A New Brand In The U.S.

Forbes

28-05-2025

MalaTown specializes in spicy hot pot cuisine.
MalaTown
Expansion by China's largest restaurant chains in recent years has been fueled by the country's tasty cuisine, economic growth and improved management. Among the biggest winners: Yang Guofu, the founder of Yang Guo Fu. The Shanghai-headquartered business serves up spicy mala hotpot at more than 6,000 franchised locations across China and another 500-plus overseas; combined, the brand's restaurants employ more than 70,000 individuals globally. The founder tested the water for an IPO in Hong Kong in 2022 but that hope collided with the Covid pandemic.
A bigger push for international growth at the business is now coming from Gao Yang, a hometown classmate of the founder's son. Gao, born in mainland China but who has lived in the U.S. for the past decade and a half, believes the time is right in the American market for mala hotpot because of its healthy attributes. 'Food is universal,' Gao recently told Forbes China. 'Everyone wants something that's delicious and good for you.'
A Harvard grad who took over leadership of Yang Guo Fu's U.S. business in 2023, Gao is looking to expand beyond the franchising model that has brought success date; in October that year, he debuted a new brand in Union City, California: MalaTown. Gao believes the name and quality lifestyle positioning will help extend its appeal to non-Chinese diners. 'Great food knows no borders,' he said. 'Scalable business models don't either.' So far, Gao has opened nine directly operated MalaTown U.S. locations.
Founded in 2003, Yang Guo Fu illustrates how Chinese restaurant chains are moving up the rankings of franchise restaurants long dominated by Western giants such as McDonald's and KFC. Management at the Chinese eateries has improved to such an extent that larger ones are now able to attract graduates from top global business schools, Gao said approvingly.
MalaTown's mala-style hotpot, also known in Chinese as 'mala-tang,' differs from other Chinese hotpot flavors because of its unusually strong taste: the word 'mala' loosely translates into 'numb and hot.' Diners draw servings from a big, soupy pot holding spices such as chili and peppercorn, and can select from ingredients that include beef, tofu, bamboo shoots, ham, Chinese cabbage and shitake mushroom.
Ambitious Gao came to the U.S. from China to attend high school at age 16. In 2015 at age 20, he founded Regulus, which provided high-end lifestyle services to more than 1,000 overseas Chinese customers across the U.S.
Gao later earned a master's degree in finance from Harvard University. Returning to China after graduation, Gao joined e-commerce giant Alibaba as a senior specialist in customer operations, getting exposure to world-class strategic planning, entrepreneurship, business development and operational management.
By 2023, he was ready to step up as Yang Guo Fu's CEO in North America. Yang Guo Fu had earlier debuted in that market with a franchise-led model, primarily targeting the Chinese diaspora and catering to its tastes. Gao has already lifted the number of restaurants operating under the parent brand's name to 30 from only three when he first joined. He attributes that growth in part to the 'Matthew effect' – in which 'success compounds and attracts more success.'
Gao, however, has bigger goals and sees an even larger opportunity to bring the Chinese spicy hotpot concept to a wider group of North American consumers -- not just the Chinese community. Unlike the parent company's franchise approach, MalaTown has at least for now been directly operated by Gao.
'It's easy to open a store — it's much harder to keep it running well,' Gao said. 'Getting to the top of the mountain is one thing, but staying there takes much more.' The U.S. stores in markets like Cupertino, California have both Chinese and English details on the wall with a focus in messaging on health, helping mala-tang resonate with non-Chinese speakers, he said. It seems to be working: As of 2024, more than 70% of MalaTown's customers aren't ethnic Chinese, a share that's still on the rise, Gao said.
Tight management standards will be critical to future growth, he said. 'That means improving operational efficiency, strengthening management systems, and keeping tighter control of costs,' Gao explained. 'It's about building a solid foundation — refining the structure and processes to support the next stage of scaling.' To that end, the company operates a proprietary mobile app and point of sales system to enhance customer experience and streamline operations online. MalaTown is deepening its own supply chain through the purchase of a central kitchen and plans to begin selling frozen and dry goods.
The results have been good financially, Gao said. Each MalaTown store has been profitable so far, and even with centralized operational costs factored in, the parent company remains in the black; the new brand's revenue was $20 million in 2024, he said.
MalaTown CEO Gao Yang.
MalaTown
Looking ahead, Gao believes the company's internal systems — from IT to logistics — may one day be made available to other restaurant chains. 'This could not only become a new source of revenue,' he noted, 'but also lay the tech foundation for a future franchising model.'
Asked about his outlook for the future, Gao said: 'Painful, but joyful — and full of promise.' Above all, he believes, MalaTown has to be about more than just selling a bowl of mala-tang.