Entrepreneur Insight

How Sriracha Sauce Founder Turned Crisis into Opportunity

David Tran is a rebel with a cause… or more accurately, a rebel with a sauce.

"I don't want money," says David Tran, chief executive of Huy Fong Foods, maker of the ubiquitous Sriracha sauce with the rooster logo that has inspired legions of fans.

The 70-year-old has not raised the wholesale price of his hot sauce in 35 years, he does not collect licensing fees from the businesses that use Sriracha in their products, he has not trademarked the name of his hot sauce, he does not spend any money on advertising, and until three years ago, he didn't grant interviews.

And yet, Tran says he sold more than $100 million worth of hot sauce last year, all made at his 650,000-square-foot factory in Irwindale, about a half hour east of downtown Los Angeles.

For Tran, it's not about the money. It's about love.

"I love my girlfriend," Tran says. And by girlfriend, he means, his sauce, which he wants to share with as many people as possible. That's why he is fanatic about keeping the price point low.

"My dream is everyone can have my product – rich man, poor man," Tran says.

It's chili grinding season at the factory, which is four months out of the year from August to November. Hours after the red jalapeno peppers are picked off the field at a farm, drivers drop off 30 to 50 truckloads of them at the factory. Once delivered, the peppers are dumped into a vast pit, where they are washed and grinded, mixed, and bottled.

All of the machinery is designed by Tran, who has no training in engineering but taught himself the basics. The hopper that dumps the peppers from the trucks into the wash pit, for example, is a piece of equipment that Tran designed by folding and taping up a manila folder into the shape he wanted, writing down the dimensions, and taking it to manufacturers to fabricate.

He has become something of a cult figure, something he never asked to be. It was a crisis that set it all in motion.

In 2013, the city of Irwindale sued Tran's company Huy Fong Foods and declared it a public nuisance after a small number of residents complained about odors created by the chili grinding. That's when Tran made the decision to open the doors of the factory to everyone and invite the public in to see (and smell) the operation for themselves.

Inside the company, it was a heated discussion. Tran says many of his family and staff were vehemently against the idea. The risks were serious – opening up meant allowing competitors to come in and scrutinize their operations, and possibly steal their ideas, at a time when they were already vulnerable. Nothing less than the life of the company was at stake, they argued. But Tran insisted.

"For me that's the only way. If you close the door, we have problem. So just open it," Tran says.

Sriracha fans came to the factory in droves. Now Tran greets the three thousand or so people who come to take free tours of the factory every Saturday during grinding season wearing a pair of Sriracha sneakers that a fan sent to him.

"David Tran is an innovator with passion and perseverance," says Gay Q. Yuen, board president of the Los Angeles Chinese American Museum, which debuted an exhibition called "L.A. Heat: Taste Changing Condiments," while the dispute was underway.

"The fact these diverse artists featured in the show happily agreed to participate and create artwork inspired by this hot sauce indicates that Sriracha has revolutionized the landscape of American cuisine by becoming an everyday condiment," Yuen said.

After Huy Fong Foods installed new filtration systems, Irwindale dropped the lawsuit.

Tran is no stranger to taking risks. He was a refugee who escaped from war torn Vietnam on a freighter ship in 1967, leaving his life as a chili pepper farmer behind to face an uncertain future. He named his company, Huy Fong, after the name of that ship that brought him to freedom. In the United States he started making his own chili sauce, hand spooning it into recycled baby jars and delivering them to customers.

"Only two spoonful per jar," Tran says, chuckling.

Now he is selling gallon jugs of the sauce to food service companies who use it to make Sriracha popcorn, potato chips, ice cream, beef jerky, and even beer, among a myriad of products.

At the end of the factory tours, everyone gets a complimentary nine ounce bottle of Sriracha, emblazoned with a new slogan in both Chinese and English: "Risk, Dare, Dream." Tran did not come up with that; it was on a bottle of Sriracha beer made by another company, but he liked it so much he adopted it for himself. It seemed fitting somehow.

What is his dream? If he wanted to, Tran can go huge – take the company public and dramatically increase operations. But Tran is not interested.

"My dream is to relax," Tran says.

He does have one big idea though still under his hat – he wants to build a factory next to the chili pepper fields so he can process the sauce right on the farm – a multi-million dollar proposition that may seem far-fetched to anyone but Tran, who has experienced first-hand, that anything is possible.

"I never thought hot sauce can be a business," he says, chuckling at how life has already gone beyond his wildest dreams.