Tso Chinese Delivery set for strong growth

A Tso Chinese Delivery Tesla driving down the road

Written by Jack Ivins

Longtime Austin, Texas residents Min and Jenna Choe started out entertaining family and friends at home and are now setting out to create a Chinese restaurant empire based on online ordering and delivery.

In the South, entertaining and cooking go together. Fittingly, there is a longstanding joke in the Choe household about Jenna’s inability to cook in small portions. That led the couple to take a crack at the restaurant business.

In 2007, the Choes opened their first Chinese takeout restaurant in west Austin. It was not a completely foreign concept as Jenna’s family is in the restaurant world. While that first restaurant closed, the Choes fell in love with the restaurant industry, inspiring the pair to stay and evolve within the industry.

Starting with a question

The origin of Tso Chinese Delivery did not start with food. Rather, it started with a question: “Why isn’t there a Domino’s Pizza for Chinese food?” Most Chinese restaurants in America are small, usually owned by a single family. These owners are not trying to scale the business; they are simply trying to run a business that can take care of their families and get their children through college.

Back in 2016, Min had a different vision. He looked at the problems restaurants around him were having with staffing and rent, and he decided that delivery was a better business. But Choe and Chief Technology Officer Angell Tsang decided that before they would try to become the Domino’s of Chinese food, they needed to vertically integrate everything in their business. They didn’t know it at the time, but eventually Tso would end up building out its own digital platform.

The company started small but is looking to become the Lone Star State’s largest player in the Chinese food market. With three Austin locations and a fourth on the way by the fall of 2022, Tso is on pace to expand to seven or eight locations in Central Texas by the end of 2023. Furthermore, Tso has established the Dallas-Fort Worth metroplex as the first major market outside of the greater Austin area, where it expects to build as many as 20 additional locations.

Building the technology

For 18 months, before Tso opened its first store, Choe and Tsang toiled over the tech side of the business.

Choe explained: “Initially [Tsang] expected to hack together several programs on a Shopify backend, but soon realized that what we wanted to do wasn’t possible by ‘Frankensteining’ multiple applications together. And there wasn’t an over-the-counter solution available, so we decided we were going to build it ourselves. To do that, we needed to raise money, so we borrowed some money from friends and family and started writing code.”

The approach was challenging but accomplished the company’s goal. By building and controlling its platform and managing its own software team, Tso is not beholden to the Uber Eats and DoorDashes of the world. If Tso has an issue with the app, it does not have to wait for DoorDash tech support. Tso has a tech team available to fix any bug immediately.

Additionally, third-party apps add large fees to both the customer and the restaurant. This may not be a big deal for a restaurant that does 10% or less in delivery sales, but Tso was never set up to be a dine-in establishment. The business model always revolved around delivery, and the third-party apps would take all of Tso’s profits. Now that they were able to cut out that middleman, Choe and Tsang looked to take a unique approach to the delivery side of the business as well.

Owning the delivery fleet

Business owners must make a lot of choices when deciding to do delivery. They can hire contract drivers or hire them as employees. That latter was Tso’s approach. The company owns a fleet of delivery vehicles, and the drivers are employees. Drivers use company cars that are fueled on the company dime. Tso started with Priuses but in 2021 began a pilot program testing electric vehicles. Ultimately, the goal is to transition to Teslas or Polestars.

Choe and Tsang realized that while it was a large upfront cost, in the long run, they would save money by going electric. Eco-friendly solutions are always Tso’s aim. The money saved in delivery costs, coupled with their own tech stack, allowed them to implement both fee-less delivery and a no-tipping policy. This way, the customer only pays the price listed on the menu. Their drivers are well compensated to offset the need for a tip.

Instead of being singularly focused, Tso now finds itself in three businesses — the food business, the software business, and the delivery business.

Growth and Giving Back

While friends and family were able to help finance early parts of the business, eventually Choe and Tsang turned to outside investors to help expand their vision. In March of 2020, Tso closed a $2 million seed funding round, which included investment from former Whole Foods co-CEO Walter Robb, Bazaarvoice co-founder Brett Hurt, and Bonobos and Trunk Club founder Brian Spaly.

The Choes also feel that it is important to give back to the people of the city who are ordering their food every day. That is why Tso has given over $220,000 in meals to the community since the beginning of Covid through its #Tsogiving initiative.

As a result, Tso was named a General Business Award honoree by the Austin Chamber of Commerce. Co-founders Min Choe and Angell Tsang also were named “Inspiring Leaders” by Austin Business Journal.

Lessons from co-founder Min Choe

The Choes have come a long way from their first restaurant in 2007. Hard work and long hours are a given in any successful business, but for Choe, “the most important [things] are the people and relationships. … every day is a learning experience and … we do our best to soak everything in.”

For restaurants that are thinking about getting into in-house delivery, Choe believes a company needs to meet three criteria:

  • Is there enough demand to offset the infrastructure and development costs?
  • Does the food travel very well?
  • Does it have the tools to manage delivery logistics?

Choe believes Tso made the right choice and is skeptical about restaurants making money with third-party delivery.

“I would highly advise against building a concept that is fully dependent on the relationships with third-party delivery companies as [your] primary source of generating traffic and revenue,” Choe said. “There’s just not enough profits to go around.”

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