41-year-old spent $120,000 launching a frozen food restaurant—now it brings in $4.5 million per year

Dumpling Daughter CEO Nadia Liu Spellman didn’t grow up in your average family-owned restaurant.

Her parents ran Sally Ling’s, a popular fine-dining Chinese restaurant in Boston. For decades, she watched her mother and father serve and host celebrities like Julia Child and Yo-Yo Ma.

That upbringing taught Liu Spellman the value of sharing authentic Chinese cuisine and inspired her to open her first Dumpling Daughter storefront in 2014. Based on her family’s recipes, she now sells dumplings, which are made in a factory and frozen fresh, in her restaurants and grocery stores.

Those frozen morsels, plus additional products sold on Amazon, brought in over $4.5 million from November 2022 through October 2023, according to documents reviewed by CNBC Make It. Liu Spellman says her three restaurants, all in the Boston area, are responsible for most of that income and sell up to 4,000 dumplings per day.

Dumpling Daughter is intentionally less glamorous than Sally Ling’s. Liu Spellman modeled it after her father’s advice. He told her if she entered the food industry, she shouldn’t “open a high-end restaurant. [Instead] make a business model where you can sell a lot, but you don’t always have to be there,” Liu Spellman, 41, tells CNBC Make It.

Here’s how Liu Spellman used her parents’ advice to launch a restaurant chain and why she branched out to build a more profitable brand:

Despite their success, Liu Spellman’s parents didn’t want her in the dining industry. The restaurant burned out their relationship, and her father urged her to find a career that allowed 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 she preferred cooking and being in restaurants over the office.

“As you get older, you think about [the] highlight moments of your childhood, and in a way, I really wanted to relive those moments,” Liu Spellman says. “I also wanted to pay respect to my parents’ [legacy].”

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

Liu Spellman married her childhood sweetheart, Kyle Spellman, and moved back to Boston at the end of 2010, the year after her father died. Soon after, the plan to launch Dumping Daughter was set in motion.

Liu Spellman spent roughly $120,000 — the majority of which came from two loans from family members — to launch the first Dumpling Daughter restaurant in her hometown Weston, Massachusetts.

Press “naturally” followed: “People were excited to experience 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 frequently sold out, Liu Spellman says. “There were moments that I would just stand in the walk-in freezer and cry for 30 seconds … and go back out because there were 40 people … waiting for food.”

Inventory wasn’t the only challenge: In 2015, two former Dumpling Daughter employees “opened an exact copy-cat” restaurant called Dumpling Girl less than 40 miles away. Liu Spellman filed a federal lawsuit, and the competitors quickly asked to settle.

The legal drama didn’t slow down Dumpling Daughter’s momentum: In 2018, it opened a second location.

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

Dumpling Daughter grew consistently through 2020, when the Covid-19 pandemic forced restaurants to adapt for survival. Liu Spellman’s team launched a direct-to-consumer website, where customers could order boxes of the same frozen dumplings directly to their homes.

The strategy worked, and the Dumpling Daughter eventually started selling more products, like its special brown sugar and chili oil dipping sauce, on Amazon.

The boxed dumplings — sold in grocery stores around the East Coat and Midwest — and new products now represent about a third of the business, bringing in just over $1 million in a year.

Despite its multi-channel success, Dumpling Daughter isn’t yet profitable. That’s not uncommon for young online businesses: E-commerce margins are initially slim, but “scale helps,” consulting firm McKinsey & Company reported in 2021.

Most restaurants are profitable, but also by a narrow margin. The average dining establishment has a roughly 5% pre-tax profit margin, according to the National Restaurant Association.

“In a consumer products line, you have to spend money for people to know who you are [and] to find you online,” Liu Spellman says. “It’s a very scary business for me [because] you actually lose money because you’re spending … for the growth of the company.”

Liu Spellman estimates it will take at least another two years for Dumpling Daughter to become profitable, but is hopeful the brand’s e-commerce efforts will eventually make it a household name. Her goal, beyond merely expanding her company’s reach, is to keep Dumpling Daughter serving people for as long as possible.

“I know that I can’t ride my parent’s coattails forever, that I have to create a brand or a feeling or a product that serves today’s customer,” Liu Spellman says. “They definitely served the customers of the 1980s, but I think Dumpling Daughter is going to serve the customers today and beyond Chinese comfort food.”

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