There’s a Bitter Fight Between Café China and Its Former Employees



Outside of Cafe China’s new location on West 37th Street. Photo by Teresa Zhang


As a Michelin Star restaurant in Midtown East for more than a decade, Café China, has long been the go-to spot for authentic Szechuan cuisine. But in late July, the husband-wife owners, Xian Zhang and Yiming Wang, closed the East 37th restaurant in preparation of reopening a new, larger location down the block in October. But what happened to Café China’s former staff, and what those employees did next, is at the heart of a bitter dispute.

As Zhang and Wang were applying for a new liquor license and getting the gas installed in their new restaurant, a phone call from their long-term supplier brought shocking news. “My supplier told me that one of my cooks is now the head chef at a new restaurant that was built at my old location,” said Zhang. “There were rumors about people from my staff started their own restaurant there.”

The rumors were true. Only a month after Zhang closed his former location in late July, Café China’s previous manager and assistant manager took over the lease and opened a new Chinese restaurant, Chili, after accusing Café China’s owners of firing all the employees when they moved to the new location. In an Instagram post, Chili owners said the restaurant hosts, waitstaff and chefs were previously employed at Café China.

But Zhang and Wang said Chili not only imitated Café China’s 1930s Shanghai vibe that they designed in 2011 but also copied 90% of their menu. And those aren’t the only similarities between the two restaurants. According to New York City Department of Small Business Services’s public records, Chili was operating under Café China’s food services establishment license up until early October. A new license under Chili’s name is not in place yet, according to the records, despite the restaurant being open for business.

Dennis Ward, who works in food safety and community sanitation for the Department of Health and Mental Hygiene, said it would be illegal for Chili to use Café China’s license. Any restaurant that plans to open in New York City needs to apply for a permit first and then call the city for an inspection, and only after passing the inspection can the restaurant get a license and open their doors to the public, said Ward.

Zhang said he was talking to his lawyer about possibly suing Chili for using the license and copying the concept of the restaurant without permission, but he did not comment after Chili surrendered the license after using it for almost two months. He added that copying may be hard to prove because he and Wang did not trademark their menu.

Stephen Zagor, a professor at Columbia Business School who focuses on restaurants and food businesses, said most individual restaurants don’t trademark their menu because of the cost and the complexity.

“To go through a copyright and trademark process costs thousands of dollars,” said Zagor. “Most restaurants don’t unless you are a chain, like TGI Friday’s, where you have in-house lawyers.”

Zagor said trademarking is a grey area in the restaurant business. “Concepts of restaurants – that’s the menu, the way that it looks, and even the service style – are very, very difficult to trademark, even menus and recipes, because all you have to do is to change basically one ingredient, and you haven’t violated anybody’s trademark,” he said.

Zhang declined the request to speak to his lawyer, but Zagor found it surprising that Café China’s owners did not take actions earlier against Chili using their license.

“Shame on the old restaurant for letting them do that,” said Zagor. “If the old owner’s name is still on the license, they are responsible for whatever accidents that happen in the new restaurant.”

But at the heart of the dispute between Chili and Café China isn’t the menu and décor, but Café China’s former employees.

Café China’s owners, Zhang and Wang, posted a statement on Instagram on Sept. 8 that said their previous employees had opened up a copycat restaurant at Café China’s former location, even though Café China had promised to move the whole team to the new site when it’s open.

And some of Café China’s regulars are remaining loyal to the original owners.

“I’m just really pissed off when I saw what happened,” said Ariel Han, about Chili’s launch. “I don’t have any problem with them opening other restaurants, even in the original location if that is what they preferred, but they need to come up with their own vision, like the menu and the interior design.”

Chili posted a statement on Instagram two days later in response to Café China, denying all the allegations.  “In no way are we an imitation of what Café China claims to be,” the statement says. “We were merely the hosts that sat you, the waiters that took your orders, the chefs that cooked your food, the bussers that cleaned your tables, and the managers that ran the day to day.”

Chili’s employees said they were not allowed to talk to the press. The owners of Chili, Miki Niu and James Zheng, declined multiple interview requests, but a close friend of theirs, Jake Diamond, who used to be a Café China regular, said the staff had no choice but to open their own restaurant.

“The old owners planned to move to the new location, and they were packing things up and suddenly told all of the staff that they were no longer needed to work for Café China,” said Diamond. “They just fired the entire flesh and bones, the people who made that place Café China, and these people are just trying to make a living.”

Zhang and Wang said only the executive chef plans to stay with them when the new Café China location opens.

One restaurant expert, Justine Hwang, a restaurateur in California who has been in the hospitality industry for a decade, said she is skeptical about Café China’s version of events.

“Copycatting isn’t cool,” said Hwang. “But there’s something kind of concerning about an entire staff revolting,” adding that poor treatment could be the motivation.

Café China’s new location is expected to open later this month though the exact date remains unknown.

“We are very tired and stressed out at this point, and we are just trying to get the restaurant open,” said Zhang. “We believe Café China is a really competitive brand that’s here to stay.”