Story

How a Beloved Iowa Diner May Be the Next Big Thing in the Midwest and China (and Bring in More Doctors to Boot)

02_iowachinainvestment.jpg

Michael Lee, owner of the Hamburg Inn in Iowa City, eats lunch during a visit to Taizhou, China, on Friday, Sept. 29, 2017. Lee plans to expand his business to China, encompassing both food and education, with headquarters in Taizhou, north of Shanghai. Image by Kelsey Kremer. China, 2017.

Michael Lee, owner of the Hamburg Inn in Iowa City, eats lunch during a visit to Taizhou, China, on Friday, Sept. 29, 2017. Lee plans to expand his business to China, encompassing both food and education, with headquarters in Taizhou, north of Shanghai. Image by Kelsey Kremer. China, 2017.

TAIZHOU, China — Scoop a leftover slice of American pie into a plain, old ice cream milkshake. Mix vigorously.

You get an over-the-top hybrid treat called — what else? — a "pie shake."

As unlikely as it might seem, this signature dessert of Iowa City’s Hamburg Inn No. 2 serves as a symbol for the rising business and cultural ties between the United States and here in China.

In the last dozen years, Hamburg Inn has served as a culinary hotspot during the Iowa caucuses, visited by every living president since Ronald Reagan except for Donald Trump.

INTERACTIVE MAP: See the many places Iowa culture influences Chinese culture

WATCH: Follow our journey through China on our new Facebook Watch page

The diner's owner, Michael (Tzai Tao) Lee, has ambitious designs to open dozens of Hamburg Inns across the Midwest and in China and Asia, including opening a headquarters in Taizhou, China, not far from his home in Shanghai. And in the process, he hopes to use those franchises as conduits to bring more medical exchange students to Iowa.

A traditional meal in Taizhou has a far different flair. The lazy Susan that rotates in the middle of the table may lack a pie shake but is laden with succulent fresh crab, flavored tofu and the leathery delicacy that is donkey meat. Lee circles around the table with local government officials who must help provide key approvals.

He and investors in virtually every U.S. industry salivate at the opportunity of tapping into China's 1.4 billion consumers.

Among restaurants, McDonald's this year announced plans to nearly double its presence in China to 4,500 locations. Dominant brand Yum China (KFC, Pizza Hut) may add another 15,000 restaurants in 15 years to its massive footprint of 7,600 stores. 

But Lee’s vision reaches further, leveraging his business empire to drive a cultural exchange that will bring more Chinese students to study in America and fostering a national medical research center.

screen_shot_2017-11-15_at_10.00.58_am.png

Michael Lee, owner of the Hamburg Inn No. 2 in Iowa City, finishes his lunch during a visit to Taizhou, China, on Friday, Sept. 29, 2017. Lee plans to expand his business, encompassing both food and education, to China with headquarters in Taizhou, south of Shanghai. Image by Kelsey Kremer. China, 2017.

Michael Lee, owner of the Hamburg Inn No. 2 in Iowa City, finishes his lunch during a visit to Taizhou, China, on Friday, Sept. 29, 2017. Lee plans to expand his business, encompassing both food and education, to China with headquarters in Taizhou, south of Shanghai. Image by Kelsey Kremer. China, 2017.

screen_shot_2017-11-15_at_10.01.12_am.png

Michael Lee, owner of the Hamburg Inn No. 2 in Iowa City, eats lunch during a visit to Taizhou, China, on Friday, Sept. 29, 2017. Lee plans to expand his business, encompassing both food and education, to China with headquarters in Taizhou, south of Shanghai. Image by Kelsey Kremer, China, 2017.

Michael Lee, owner of the Hamburg Inn No. 2 in Iowa City, eats lunch during a visit to Taizhou, China, on Friday, Sept. 29, 2017. Lee plans to expand his business, encompassing both food and education, to China with headquarters in Taizhou, south of Shanghai. Image by Kelsey Kremer, China, 2017.

screen_shot_2017-11-15_at_10.01.24_am.png

Michael Lee, center, owner of the Hamburg Inn No. 2 in Iowa City, eats lunch with Donald Jia, left, and Wei Jie Gang, officials with the Foreign & Overseas Chinese Affairs Office of Taizhou, during a visit to the city on Friday, Sept. 29, 2017. Lee plans to expand his business, encompassing both food and education, to China with headquarters in Taizhou, south of Shanghai. Image by Kelsey Kremer. China, 2017.

Michael Lee, center, owner of the Hamburg Inn No. 2 in Iowa City, eats lunch with Donald Jia, left, and Wei Jie Gang, officials with the Foreign & Overseas Chinese Affairs Office of Taizhou, during a visit to the city on Friday, Sept. 29, 2017. Lee plans to expand his business, encompassing both food and education, to China with headquarters in Taizhou, south of Shanghai. Image by Kelsey Kremer. China, 2017.

screen_shot_2017-11-15_at_10.01.43_am.png

Crab and shrimp are served for lunch on Friday, Sept. 29, 2017, in Taizhou, China. Image by Kelsey Kremer. China, 2017.

Crab and shrimp are served for lunch on Friday, Sept. 29, 2017, in Taizhou, China. Image by Kelsey Kremer. China, 2017.

screen_shot_2017-11-15_at_10.04.28_am.png

A peach pie shake is served for lunch Friday, Oct. 6, 2017, at the Hamburg Inn No. 2 on Rochester Ave in Iowa City. The pie shake is a well known menu item organically created as a way to use poorly cut slices of pie that would not be served otherwise. Image by Kelsey Kremer. United States, 2017.

A peach pie shake is served for lunch Friday, Oct. 6, 2017, at the Hamburg Inn No. 2 on Rochester Ave in Iowa City. The pie shake is a well known menu item organically created as a way to use poorly cut slices of pie that would not be served otherwise. Image by Kelsey Kremer. United States, 2017.

screen_shot_2017-11-15_at_10.04.40_am.png

Lucy, 10, Will, 7, and their father Tom Maxwell, of Iowa City eat breakfast at the Hamburg Inn No. 2 on Friday, Oct. 6, 2017, in Iowa City. Michael Lee, owner of the Hamburg Inn plans to open versions of the American style restaurant in China. Image by Kelsey Kremer. United States, 2017.

Lucy, 10, Will, 7, and their father Tom Maxwell, of Iowa City eat breakfast at the Hamburg Inn No. 2 on Friday, Oct. 6, 2017, in Iowa City. Michael Lee, owner of the Hamburg Inn plans to open versions of the American style restaurant in China. Image by Kelsey Kremer. United States, 2017.

screen_shot_2017-11-15_at_10.04.52_am.png

Gleidson Gouveia, an employee of Michael Lee, the owner of the Hamburg Inn No. 2, holds an old photo that hangs on the wall of the Hamburg Inn on Rochester Avenue on Friday, Oct. 6, 2017, in Iowa City. This second location of the restaurant was the first of many expansions planned for the U.S. and China. Image by Kelsey Kremer. United States, 2017.

Gleidson Gouveia, an employee of Michael Lee, the owner of the Hamburg Inn No. 2, holds an old photo that hangs on the wall of the Hamburg Inn on Rochester Avenue on Friday, Oct. 6, 2017, in Iowa City. This second location of the restaurant was the first of many expansions planned for the U.S. and China. Image by Kelsey Kremer. United States, 2017.

screen_shot_2017-11-15_at_10.05.08_am.png

Political buttons and newspaper clippings hang on the wall of the Hamburg Inn No. 2 on Friday. Oct. 6, 2017, in Iowa City. The Hamburg Inn has become a popular place for presidential candidates to visit during caucus season.  Image by Kelsey Kremer. United States, 2017.

Political buttons and newspaper clippings hang on the wall of the Hamburg Inn No. 2 on Friday. Oct. 6, 2017, in Iowa City. The Hamburg Inn has become a popular place for presidential candidates to visit during caucus season.  Image by Kelsey Kremer. United States, 2017.

screen_shot_2017-11-15_at_10.05.19_am.png

A photo of Terry Branstad, former governor of Iowa and current U.S. ambassador to China, hangs on the wall of the Hamburg Inn No. 2 on Rochester Avenue in Iowa City on Friday, Oct. 6, 2017. The note reads, "Michael Lee, Congratulations on the new Hamburg Inn." Image by Kelsey Kremer. United States, 2017.

A photo of Terry Branstad, former governor of Iowa and current U.S. ambassador to China, hangs on the wall of the Hamburg Inn No. 2 on Rochester Avenue in Iowa City on Friday, Oct. 6, 2017. The note reads, "Michael Lee, Congratulations on the new Hamburg Inn." Image by Kelsey Kremer. United States, 2017.

screen_shot_2017-11-15_at_10.05.28_am.png

Two customers walk down the sidewalk after eating at the Hamburg Inn No. 2 on Friday, Oct. 6, 2017, in Iowa City. Image by Kelsey Kremer. United States, 2017.

Two customers walk down the sidewalk after eating at the Hamburg Inn No. 2 on Friday, Oct. 6, 2017, in Iowa City. Image by Kelsey Kremer. United States, 2017.

screen_shot_2017-11-15_at_10.05.36_am.png

Michael Lee, owner of the Hamburg Inn No. 2 in Iowa City, points to the construction of the future home of his business in China, including the expansion of restaurants, on Friday, Sept. 29, 2017, on Taizhou, China. Image by Kelsey Kremer. China, 2017.

Michael Lee, owner of the Hamburg Inn No. 2 in Iowa City, points to the construction of the future home of his business in China, including the expansion of restaurants, on Friday, Sept. 29, 2017, on Taizhou, China. Image by Kelsey Kremer. China, 2017.

screen_shot_2017-11-15_at_10.05.47_am.png

Michael Lee, owner of the Hamburg Inn No. 2 in Iowa City, hopes to partner with China Medical City and the University of Iowa to provide greater educational opportunities for Chinese medical students. Image by Kelsey Kremer. United States, 2017.

Michael Lee, owner of the Hamburg Inn No. 2 in Iowa City, hopes to partner with China Medical City and the University of Iowa to provide greater educational opportunities for Chinese medical students. Image by Kelsey Kremer. United States, 2017.

screen_shot_2017-11-15_at_10.05.57_am.png

Wanghai Tower, a popular tourist attraction in Taizhou, China, on Friday, Sept. 29, 2017. Image by Kelsey Kremer. China, 2017.

Wanghai Tower, a popular tourist attraction in Taizhou, China, on Friday, Sept. 29, 2017. Image by Kelsey Kremer. China, 2017.

screen_shot_2017-11-15_at_10.06.06_am.png

Fiona Wang, deputy director for business development at the China Medical City, gives a tour of the organization's museum on Friday, Sept. 29, 2017, Taizhou, China. Michael Lee, owner of the Hamburg Inn No. 2 in Iowa City, hopes to partner with CMC and the University of Iowa to provide greater educational opportunities for Chinese medical students. Image by Kelsey Kremer. China, 2017.

Fiona Wang, deputy director for business development at the China Medical City, gives a tour of the organization's museum on Friday, Sept. 29, 2017, Taizhou, China. Michael Lee, owner of the Hamburg Inn No. 2 in Iowa City, hopes to partner with CMC and the University of Iowa to provide greater educational opportunities for Chinese medical students. Image by Kelsey Kremer. China, 2017.

screen_shot_2017-11-15_at_10.06.15_am.png

The Hamburg Inn No. 2 on Friday, Oct. 6, 2017, in Iowa City. Image by Kelsey Kremer. United States, 2017.

The Hamburg Inn No. 2 on Friday, Oct. 6, 2017, in Iowa City. Image by Kelsey Kremer. United States, 2017.

A single Iowa diner may seem like a minuscule lever to help Lee win over Chinese appetites. But the Hamburg Inn has cultivated a national reputation among political followers who know that candidates must stop there as a rite of passage, or have even seen the restaurant as a setting on prime-time TV.

It has become synonymous with old-fashioned retail politicking, not only milkshakes.         

Iowa also is a key ingredient in the Hamburg mystique because it holds a special place in the heart of Chinese President Xi Jinping.

Thirty-two years ago the state gave him his first taste of America when he was a young communist official on an agricultural tour. And now his “old friend” Terry Branstad, who was Iowa governor when they met, has joined him in Beijing as U.S. ambassador to China. 

Lee's Hamburg Inn venture, complete with its pie shakes, taps into China’s quirky fascination for Iowa that is coming of age in the Xi era.

MORE: Iowa in the Heart of China: The series so far

An Iowa City institution

The Hamburg Inn is a rustic Iowa City diner that first opened in the 1930s in the rowdy hometown of the Iowa Hawkeyes.

Bleary-eyed college students still flock to the restaurant to slump over plates of omelets and pancakes. Nostalgic alumni cradle steaming mugs of black coffee as they reminisce about their bygone antics.

Lee is among the Hawkeye faithful: He studied journalism in the 1960s at UI. And last year he bought the Hamburg Inn.

As an American restaurateur, his pedigree is nontraditional. He was born in Taiwan, grandson to a general in the Chinese Nationalist army. Thanks to the tumult of World War II and its aftermath, Lee said his childhood memory “is almost like a blank.”    

He grew up oblivious to even the concept of a burger and fries. 

“As a kid, I never had American food,” he said. “I have never heard of anything like hamburger. Or I don't even know what is cheese.”

He’s unsure of his precise age and may be as old as 72. But he conducts daily business with the intensity of a workaholic mid-career entrepreneur.

He lives in Shanghai but also keeps a house in Iowa City. 

Lee made his fortune selling English textbooks in China, customized to the schools that purchased them.

He’s a divorced dad of two adult daughters. But he also counts among his children more than 30,000 students from Asia who went to schools overseas (mostly in the U.S.) through his firm, Academic Studies Abroad (ASA) Global. 

His affection for his alma mater and consistent work in academia helped Lee see the Hamburg Inn not only as a cherished rustic diner but also as a rare and promising business opportunity to export.

Lee already has opened a second, smaller Hamburg Inn on the northeast side of Iowa City, attached to a convenience store just down the street from the local Catholic high school. 

A third Johnson County location is on the way next year in North Liberty. 

If Lee’s broader plan blossoms, dozens of Hamburg Inns will open across the Midwest in the next several years while their counterparts overseas proliferate across China and Asia.

“China has the population,” Lee said. “China has the purchasing power.” 

And China has a 16-story office being built in Taizhou on the Yangtze River by the China Construction City Co., a modest corner of which will provide a headquarters for Lee’s Chinese chain of American Presidents’ Diners. 

“Hamburg Inn: It’s a cultural place,” Lee said, referencing the diner's presidential pedigree, its walls plastered with political paraphernalia. 

Lee's vision is to leverage that distinct culture to sell American diner food — pie shakes and all — to the growing appetite of China’s vast and booming middle class, through the exotic allure of American politics as seen from the state that China’s president loves best.

He also aims to sell “Ambassador Coffee” in honor of Ambassador Branstad, among other branding touches. 

A conduit for medical students

All this food ultimately is a means to an end — circling back to Lee’s core business of educational exchange.

The Hamburg Inn franchise in the United States will provide investment vehicles for wealthy Chinese families whose children want to study medicine. Many domestic medical schools, UI included, don't accept international students except under rare circumstances.

But legal permanent residency is possible through the EB-5 immigrant investor visa, which requires the investor back a project with at least $500,000 (or $1 million, depending on the region) that creates a minimum of 10 full-time jobs.

Thus, each restaurant could represent access to an American medical degree. 

“The U.S. has the best education in the world, especially in the medical fields,” said Ryanyi Guo, Lee’s 30-year-old business partner, who hails from southern China and was educated in Shanghai and (through ASA Global) Arkansas.  

Lee and Guo's plans in Taizhou include not only the headquarters of American Presidents’ Diner but perhaps a partnership with the local Zhejiang University and the creation of a new international high school.

UI deans Downing Thomas, with International Programs, and Daniel Clay, with the College of Education, have traveled to Taizhou to meet with the local government. They signed memoranda of understanding to work with the city and ASA Global to help flesh out plans. 

MOUs are not binding contracts. But possible deals under discussion among UI administrators include "a range of things that involve hospitals and clinics, specifically women’s health," Downing said.

China in 2015 began to phase out its policy limiting families to one child, which instantly magnified the need for obstetrics and gynecology clinics. So UI could lend expertise and training to perpetuate OBGYN care in China.

Taizhou also boasts China Medical City, a massive national research complex that houses everything from a stem-cell bank to labs where both animal and human vaccines are developed.

Just a dozen years ago it was a rice field. But now 800 companies and brands such as Nestle and Takeda work here.

This may be a way that UI partners with industry with the "opportunity for cross-pollination," Downing said, and the "commercialization of University of Iowa original research."

The allure of foreign students

Meanwhile, more than 400,000 Chinese college students study annually in the United States. International enrollment surged in the last decade in Iowa, particularly among Chinese.

But in the last year, Iowa’s three public universities saw 533 fewer international students, a 6.4 percent drop. UI welcomed 407 fewer students from China this fall compared to last. 

An ASA Global high school in China could help provide a more stable influx of international students who become Hawkeyes.

And if aspiring doctors can commit to an educational track while still in high school, their families' EB-5 applications will have more time to wind through the backlogged approval process.

Yet Lee is thinking bigger still.

“The goal is to set up the University of Iowa to have a UI-related university in China," he said. "That’s my life goal."

So rather than just a pie shake or even an entire diner, Lee hopes to import a Hawkeye campus to China. 

How much of his grand scheme materializes remains to be seen. He knows that he likely won't be around to see his plans completed.

“I'm going to live for five or seven or eight, 10 more years,” he said. “So all my students are my children. American or Chinese. 

“Education and food.”

Taking in all those ingredients, the pie shake is not as simple as it seems.