Thanks to a stable of concepts based on a high-quality experience, this company has taken Asian food to a whole new level. There is no doubt that Chinese food is one of the most popular ethnic-style cuisines in America. But the quality and value can vary greatly from place to place. The Panda Restaurant Group (PRG) has grown its empire based on the concept that high quality, inexpensive Chinese food, coupled with a great customer experience, can all go together no matter the location.
“Our competition is traditional fast food and existing Chinese restaurants,” said Glenn Lunde, CMO. “Panda has brought that quality and service to a segment that was really a fragmented industry. Quality, consistency, and cleanliness are how we differentiate ourselves.”
The largest and fastest growing Asian restaurant chain in the country, PRG is still led by Andrew Cherng, founder and chairman, and his wife, Peggy Cherng, PhD, co-chair. The company has three concepts: Panda Inn, Panda Express, and Hibachi-San, the largest of which is Panda Express.
The first Panda Inn opened in Pasadena, Calif. in 1973, followed by Panda Express 10 years later and Hibachi-San in 1992. Overall, the company now has more than 1,300 stores in 38 states and Puerto Rico. Same store sales have consistently increased over the last 15 years, and nearly 550 restaurants have opened in the last four years.
“Panda Express is the primary growth vehicle; we built 88 Panda Express stores last year and will build about 75 this year,” said Lunde. “We’re moving east, having started in the west, and we’re looking for places where the brand will be readily accepted and real estate is available.”
Most of PRG’s portfolio is made up of street locations, although the company has also demonstrated its ability to find opportunities in malls, airports, colleges and universities, and amusement parks. All of the stores are company-owned, with the exception of certain licensees in places like airports and universities.
“This is still a family business, and we believe we can provide the best food and service by running them ourselves,” said Lunde. “Sometimes companies franchise to grow really fast, but we’re more concerned with maintaining quality, plus the fact that we are growing fast on our own at about 15% to 20% a year.”
Today, new store development continues to focus on end-caps, free standing buildings, and drive-thru locations. In fact, the organization currently has more than 330 drive-thru stores. The key for Panda Express, and indeed all PRG properties, is providing that first class experience through clean, attractive locations, excellent food, and experienced staff, turning trial customers into regulars and advocates.
“When we go to new markets, we have grand openings and give away free food,” Lunde said. “We believe in the power of the food, and we’re big on sampling, which can’t be done by traditional fast food companies.”
Lunde said there is a lot of room for Panda to continue growing domestically in places like New York, Philadelphia, Dallas, and Boston. The company is heavily penetrated in areas like Los Angeles, Phoenix, and Las Vegas, but everywhere else has plenty of opportunities. However, the company is considering other places in North America to begin taking Panda international.
“We’d like to keep as much control over quality as possible, so it makes sense for us to go first to places where we can manage it, get the right supplies, and keep the food consistent,” said Lunde.
Panda is also looking at ways to grow within the brand. Lunde mentioned deserts as one area where the company is considering non-core Chinese food items that could appeal to customers.
One of the company’s greatest strengths going forward is the fact that most of the above-store leaders in PRG have been with the company for more than 15 years. That consistency in people means the leaders training new store GMs have years of experience with the company and know the concept intimately.
“That ability to retain people by providing them with excellent career opportunities is critical for us, and the company prefers to promote from within,” Lunde said.
At the same time, Panda is always looking for ways to improve operations. For example, the company designed and recently opened a new prototype store in New Jersey that upgraded store aesthetics, food quality, and staff uniforms, and that prototype is set to roll out on a wider basis. Recipes have also been enhanced by adding more meat.
The company also launched a retail line, really getting off the ground with that just last summer when PRG started a line of bottled sauces sold in places like Costco and Walmart, as well as within the restaurants themselves. Now, the company is selling everything from sauces and Asian snack mix to noodles and stuffed Panda bears. That effort is mostly focused on the West Coast right now, and in the first quarter of this year, the retail numbers at Costco and Walmart have been in excess of $2 million.
More than anything, PRG strives to be a good corporate citizen that cares about all the communities it serves. The company’s Panda Cares initiative was established in 1999 and donates food, money, and volunteers to organizations working with children and disaster relief. It has donated around $3 million to nonprofits in the last few years alone. Coupled with its proven concepts, Lunde sees more opportunities than challenges ahead, although he knows the company will remain vigilant about not growing beyond its means.
“We can only grow as fast as our people, so we are focused on training and growing our people personally and professionally so they can then staff them,” he said. “That will always be our biggest challenge, not outpacing our people growth with store growth.”
Greystar Products, Inc.
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