Soy You Bought a Tofu Factory

Illustration by Nate Otto

In 1999, Jenny Yang discovered a small tofu company in her Chicago neighborhood that made the fresh soybean curd she remembered from her native Taiwan. Seven years later, when Jenny learned the business was in danger of closing, she impulsively stepped up to buy it. Jenny didn’t just guide Phoenix Bean Tofu through the transition, but opened new markets for her products and today is on the cusp of a major expansion.


Transcript

WAILIN: In 1999, Jenny Yang made an impulse purchase. She and her young daughter were taking a different route home from their neighborhood playground, and they passed a storefront with a sign written in Chinese.

JENNY YANG: I see the Chinese character and it was something with beans, and I smelled the aroma. I said, “What do you do here?” He said “Oh, we make tofu here.” I was like, feel so excited. I hit the jackpot because (laughs) I miss the fresh tofu. I say can I buy? They say yeah sure, so they give me a few package. I loved it. Really tasting good. So that was 17 years ago.

WAILIN: Jenny had discovered a business called Phoenix Bean Tofu, which had been operating from the Edgewater neighborhood on Chicago’s north side since 1981. It was primarily a wholesaler, but the owner was willing to sell Jenny a few packages. She started buying tofu from Phoenix Bean every weekend. After seven years of this, she made another impulse purchase, one that would change her life.

JENNY: One day, just like in normal Saturday, I came over to buy tofu and then the owner was kind of tired, not happy so he says he’s considering selling it and I said, “Well, what a good business, what a good product. Why you want to sell it?” He says the kids doesn’t want to take on so he decided to maybe look for somebody else to do it and then I just like, “Hey! Maybe me.” (laughs)

WAILIN: Jenny was working in corporate finance at the time. She didn’t know the first thing about tofu production. But she found herself volunteering, right then and there, to buy the company. Welcome to The Distance, a podcast about long-running businesses. I’m Wailin Wong. On today’s show, how Jenny Yang didn’t just keep Phoenix Bean Tofu from closing, but gave the business fresh life by finding new customers for a product that’s over two thousand years old. The Distance is a production of Basecamp. The brand new Basecamp 3 helps small business owners stay in control of projects and reduce email clutter. Tasks, spur of the moment conversations with coworkers, status updates, reports, documents and files all share one home. And now your first Basecamp project is completely free forever. Sign up at basecamp.com/the distance.

JENNY: My husband (laughs), he almost have a heart attack. Literally! He has irregular heartbeat.

WAILIN: It seemed like everyone in Jenny’s life wanted her to reconsider.

JENNY: When I first telling my friends here, my friends in Chinatown, my godmother, my kind of auntie figures, they’re more senior than me, they say, “Are you crazy? (Laughs) No, don’t do it!” Now I look back, I know why they say that. I think it’s really a lot of work.

WAILIN: Jenny’s no stranger to hard work. Back in Taiwan, where she grew up, she studied law and worked for an American radio station. She traveled the world as a flight attendant, earned two degrees in the U.S., and spent almost 10 years in corporate finance at United Airlines and Sara Lee. But when she made the spontaneous decision to buy Phoenix Bean Tofu, she entered a very different world. Even the previous owner of the tofu company, an older gentleman named Mr. Louie, had his doubts.

JENNY: He was just like, “I don’t think so; what can you do? Your husband is going to help?” I said, “No, just me, but if you want to continue, you can teach me, I want to learn.” He say, “Yeah, you can come in and watch.” And then (laughs) so eventually when we signed the letter of intent and we set a closing date, I went in about two months. It’s in the middle of the winter, the water is icy cold, we washed bean sprouts. My hands was like popsicles.

WAILIN: Bean sprouts was Phoenix Bean’s first line of business when it was founded in 1981 by a Chinese immigrant named Mr. Lam, and the company still grows and sells a small amount of bean sprouts. Mr. Louie, the second owner of the company, had been Mr. Lam’s head chef. When Jenny took over Phoenix Bean in 2007, Mr. Louie wanted her to buy the business and the building. Jenny hadn’t planned on purchasing the real estate, but Mr. Louie was eager to cash out and retire. Jenny decided to go for it.

JENNY: I split the investment half into the business, half into the real estate, just imagine, if I somehow I screw it up (laughs), and I still have the real estate to hold the value. The expectation I think when I go in was very low expectation. As long as I don’t screw it up, as long as I don’t lose the current client base, I think I will be okay. So that’s our goal at the first year or two, and then we did it.

WAILIN: Under Mr. Louie, Phoenix Bean had sold its tofu to Chinese grocery stores and restaurants in Chicago’s Chinatown and in the Argyle neighborhood, a smaller Asian enclave on the city’s north side. Jenny continued those relationships and also kept Mr. Louie as the chef so she could learn how to make tofu. He ended up staying for seven years.

JENNY: All my friends tell me: Six months, he will leave, when I first bought it. They all say six months and I feel that he can do what I cannot do—or maybe I can do it with machinery—but I feel that he is the tofu master. My end result is I want a good tofu, not Jenny’s tofu. I want tofu that’s done right, done well.

WAILIN: Tofu is soybean curd, and it’s believed the Chinese have been making it since the Han Dynasty, which started in 206 BC. It’s also a staple in Japan, Korea and Southeast Asia. Phoenix Bean’s tofu requires just three ingredients and about five steps. First, the soy beans are washed and soaked for almost 24 hours. Then they’re placed in an automated grinder. When Mr. Louie was working at Phoenix Bean after selling the business to Jenny, this is the position he worked, only he was using an older machine. It was the hardest job at the company.

JENNY: You literally dump into the grinder by hand, so if I have at that time maybe 20 bushels a day and that’s how many? That’s 1,200 pounds of dry beans and then soak it in the water, it’s 2,000 pounds minimum a day, so he has to dump it in there. Three years into the role, he said, “Jenny, it’s too hard for me.” He’s getting older so I said, you know, “Let me buy the machine for you,” automation. Even though I don’t have money, I used credit card to buy it. (laughs) So he allowed me to buy the machine, so I start saying the joke to him that you got the easiest job now (laughs).

WAILIN: The ground-up soybeans are put in a high pressure cooker and then into a machine that separates the liquid from a soybean mash, which gets discarded. The liquid is the purest kind of soy milk, just soybeans and water. Some of this soy milk is bottled and sold. To make soy milk into tofu, the liquid is mixed with a coagulant to make it curdle into a gelatin-like form. Then it’s placed in a porous box lined with cheesecloth, and workers manually press water out to get to the right level of firmness. The tofu-making process generates a lot of water, and it seems to be everywhere in Phoenix Bean’s thousand square foot kitchen. Jenny wears rubber clogs to protect her feet as she maneuvers around the tiny space.

JENNY: They will press water out further, so you see all this dripping, a lot of water out. A lot of holes on there, and then the cheesecloths they just wrap it around. So it keeps the shape and the thickness, so if you didn’t press it right, correctly, it will crooked. So one side is bigger than the other, so it takes some skills. This is as fresh as you can get, Illinois soybeans come here to us directly and then we cook it this morning, so this is the freshest tofu you can get in Chicago area.

WAILIN: Phoenix Bean’s 17 employees work almost elbow to elbow in loud, cramped quarters. Jenny has plans to address that, something you’ll hear about a bit later. She’s made a lot of changes to the business, not so much in the basic process of making tofu, but in soybean suppliers, marketing and customer relationships. Mr. Louie had used a broker to buy his soybeans, which would come in from Iowa, Michigan and Canada.

JENNY: It doesn’t work for us that way. Sometimes tofu is golden yellow, beautiful, really beautiful. Sometimes really pale white and people say, “What did you put in there?” And I said, “No, it’s just the beans it came out like this.”

WAILIN: Jenny was also getting inquiries from more entrepreneurial farmers who wanted to sell her organic, Illinois grown soybeans. She started talking with one of them.

JENNY: Could you grow non GMO organically for me? In transitional land, and he’s like not sure, not sure. I think it take two years for me to convince him. And he said “Okay, I will try,” so he basically his back yard, 20 acres (laughs) behind his house, he just put the beans in there. First year’s harvest, it was really fun. The whole family all went to see the farm. And the weeds is taller than the beans, because they, he didn’t use any pesticide or control, but he was able to harvest some, and it was very small amount and he says, “If you want to continue this route, I will partner with you,” so that takes three years for him to come to the quantity I wanted.

WAILIN: That same farmer later bought some additional land, turning the original 20 acres into 175 acres. He’s one of three Illinois farmers that Jenny buys her non-GMO organic soybeans from, and being more discriminating about the source of her beans is a selling point for the customers she wants to reach: people who aren’t familiar with tofu, but are looking for alternative sources of protein or like to eat organic. This was not a market that interested Mr. Louie. He didn’t even want to sell to H Mart, an Asian grocery store chain founded by a Korean businessman. H Mart expanded into the Chicago area in 2006.

JENNY: He is very, I would say this way, very traditional man. So he keep all his Cantonese customers very well taken care of. They all really respect him a lot. With Korean coming, H Mart open, he doesn’t want to do business with them because Korean has your own tofu, why you want to buy Chinese tofu? So we lost that opportunity to grow with H Mart.

WAILIN: Jenny eventually got her tofu into H Mart. But she saw a larger opportunity in the positive way her non-Asian friends and family reacted to the tofu dishes she brought to potlucks. She started selling her products at local farmers markets.

JENNY: So the first year was really tough. People question is: Is this made in China? Where the soybean grown? And where is your shop? I put it on the table, nobody will come and try it, so I put sauces on the table and then they start tasting a little bit and they still doesn’t want to buy because they don’t know what to do with it.

WAILIN: Jenny realized that tofu newbies had no idea how to cook it. That gave her the idea to make ready-to-eat tofu. Today, Phoenix Bean produces five spice smoked tofu and other packaged varieties. You can find the company’s tofu at places like Whole Foods and restaurants outside of Chinatown. Jenny even sells to Eli’s Cheesecake, a Chicago company that uses Phoenix Bean silken tofu in its vegan cheesecakes. Jenny says she connected with many of her customers at local farmers markets.

KATHLEEN WILLIAMS: We have shoppers that ask about her every single day because they have great regular tofu that you can buy, but also tofu that’s already mixed with some of the sauces that Jenny makes in her kitchen.

WAILIN: That’s Kathleen Williams, the operations manager at Green City Market, one of Chicago’s largest farmers markets. It runs year round and over a hundred chefs, many from local fine dining restaurants, shop directly from the 63 vendors at the market.

KATHLEEN: She was the only tofu person and she is the only tofu person that we have right now. She really brought a sense of diversity to the market with something new and something different that is not often found at a farmers market in the midwest.

WAILIN: Phoenix Bean has tripled production since 2010. Last year, it made 1.2 million pounds of tofu and tofu products like soy milk and soybean noodles. But there’s so much more Jenny can do with soybeans. There’s something called tofu skin, which is the tissue of cream formed on the top of hot soy milk when it comes in contact with cold air. There’s tofu pudding, a sweet dish often served at Cantonese dim sum. There’s soy sauce and tempeh, a fermented soybean patty eaten as a meat substitute.

JENNY: The red building with the gates, that is our tofu cafe kind of concept. So all the fried tofu you saw, and salads, will be here.

WAILIN: Jenny is doing something Mr. Louie would never have done. She’s opening a tofu cafe in a storefront that used to be a wholesaler of Asian groceries, just steps from Phoenix Bean’s current building. Jenny had been scouting locations to expand the company, and she’d looked as far away as Indiana. But her employees live mostly in the neighborhood, and she does too. When the owners of the wholesaler were retiring and asked Jenny if she wanted to buy the property, she agreed.

JENNY: So we’ll have a new concept that’s a tofu bar so people can scoop whatever kind of tofu they like with all the different flavor, and then we’ll have tofu skin there. We’ll have tofu donuts. We’ll have tofu ice cream, so it’s all soy based, kind of specialty store here.

WAILIN: Further up on the same block is a former taxi garage that’s 10,000 square feet. Jenny bought that building too, and she plans to move Phoenix Bean’s tofu production to that bigger space. When her expansion plans are completed, she’ll have a large-scale production facility, a cafe and her old building, which she’ll keep using for bean sprouts.

JENNY: Here will be a block of making tofu. I didn’t plan it. I think people call this organic growing. (laughs)

WAILIN: Phoenix Bean makes blocks of tofu from organic soybeans, and the company’s organic growth is now helping to create an entire city block of tofu production. Jenny couldn’t have predicted this journey when she impulsively decided to buy Phoenix Bean from Mr. Louie. All she had at that time was a sense that she wanted to take over the business. Jenny had felt that kind of certainty only one other time before.

JENNY: I know it’s very risky and we have to put our house—we have to sign everything, sign our life away to buy this building. But I felt, when I made the decision come to the United States and decided that I wanted to stay in the United States, I have the same feeling that I did the right thing. I said, “This feeling is actually even stronger than that decision that left my parents and family at home in Taiwan and come here by myself.” I said: If I made the right decision to come to the United States, I think the same feeling even stronger that was the tofu. I think we should give it a try.

WAILIN: The Distance is produced by Shaun Hildner and me, Wailin Wong. Our illustrations are done by Nate Otto. Thanks to Marc Schulman of Eli’s Cheesecake for his help with this story. If you’re not already subscribed to The Distance, please go to iTunes or wherever you get your podcasts and hit subscribe. And while you’re at it, please rate and review us on iTunes! The Distance is a production of Basecamp, the app for helping small business owners stay in control of projects and reduce email clutter. Your first Basecamp project is completely free forever. Try the brand new Basecamp Three for yourself at basecamp.com/thedistance.


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