Andrew Cherng remembers growing up in Taiwan during a “not very prosperous time” and the joy of finally getting his first bike — a hand-me-down from his cousin.
“That was wonderful, the independence, the ownership, the freedom that I felt,” Panda Restaurant Group’s co-founder said in a recent video interview. “That probably has a lot to do with why I am in business.”
Cherng didn’t mention how he learned to ride the bike, but chances are it was less painful than his early entrepreneurial days in Pasadena when he and his father Ming-Tsai scraped together $60,000 to open a Panda Inn restaurant in 1973.
“I thought, ‘It’s going to be a hit.’ Was I wrong!” Cherng said. “The whole family was working. Of course nobody is getting paid, and that really taught me something — the business is not easy. … We probably worked 12, 13 hours a day.”
The Cherngs waited almost 10 years to expand and add a Panda Inn location in Glendale. Shortly after, at the urging of a loyal customer, Dan Donahue, whose company developed the Glendale Galleria, they introduced a fast-casual version of Panda Inn and dubbed it Panda Express.
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The new venture, which offered “a faster and more convenient experience for guests to enjoy American Chinese favorites,” was a hit, and in 1985, “Panda Express went from five locations to nine in the span of one year,” according to the Rosemead-based company. Broccoli beef and Kung Pao chicken quickly became permanent menu fixtures, but the game-changer was the orange chicken, which made its menu debut in 1987. The chain dishes out an estimated 90 million pounds of the customer favorite at its restaurants each year.
Cherng’s wife Peggy, who holds a PhD in electrical engineering, left her job at Comtal/3M to help scale and streamline the business. The couple opened their 100th store in 1992, 500th in 2002, and by 2007, they had reached 1,000 locations and $1 billion in revenue.
Over the years, the focus was on “creating crave-able, innovative dishes that blend both origins of traditional Chinese dishes with American taste preferences,” according to the company.
Fast forward to 2018 — Panda Restaurant Group posted $3.4 billion in revenue, a 13.3% year-over-year uptick. Its workforce of 38,344 helps run more than 2,200 Panda Express restaurants, 18 Hibachi-Sans, four Panda Inns and Wasabi — a sushi restaurant at Universal CityWalk.
A recipe for success
The company attributed its substantial growth to continuing to expand its global footprint, while also taking the steps to listen to what guests want. “With a heavy focus on menu innovation, our team works to craft new dishes that fit our guests’ ever evolving tastes, (including) health-forward, better-for-you dishes,” the company said.
Panda plans to add more stores in existing markets, as well as expand its Asia footprint with five stores in the Philippines.
Steady economic growth in the United States, low unemployment and higher consumer confidence also helped boost the group’s growth pace, according to industry analysts.
“Quick-services restaurants (QSR) — the segment Panda is in — has been more successful at taking advantage of this environment compared to other sectors,” said John Benson, a director in AlixPartners’ restaurants, hospitality and leisure practice. “We see this when we look at performance in public markets. Publicly traded QSR companies have outperformed the equity markets while both the fast casual and casual dining segments have underperformed.”
The Cherng family owns nearly all of its restaurants and partners with licensors in Aruba, Canada, Guatemala, Japan, Mexico, Saudi Arabia, South Korea and United Arab Emirates. The company said it has kept operations company-owned and managed instead of expanding via franchising in an effort to ensure consistently high quality.
Panda Restaurant Group invested in several complementary ventures in the last couple of years, including Rancho Santa Margarita-based Pieology Pizzeria and Japanese ramen restaurant Ippudo in 2016, as well as the Ventura-based Urbane Café chain in 2017. The group has served as the American franchiser of Uncle Tetsu, a Japanese cheesecake restaurant, since 2016, and last year, it signed a franchise agreement with Baton Rouge, La.-based Raising Cane’s Restaurants to open fried chicken eateries in Hawaii and Alaska.
When deciding on which restaurants to invest in, the group said it looks for brands whose offerings “align nicely” with its own commitment to offering guests “high-quality menu items along with unmatched guest service.” The companies “need to have shared values to achieve the best results not only for the business but for the people.”
Innovation in the kitchen
The company said it also runs an Innovation Kitchen at one of its Pasadena Panda Express locations, which serves as a “platform for experimenting with new flavors and dishes, as well as elements of service, design and decor.”
Moving forward, the company said its focus will be on “elevating our menu and ingredients, with new introductions and returning favorites, such as using chicken raised without antibiotics for the sixth return of Honey Sesame Chicken Breast.”
Other additions to the menu, currently available at the Innovation Kitchen and two other locations include build-your-own wraps and salads. Five Panda Express locations in Southern California feature Panda Tea Bar, which the company says is “a modern tea house experience with a wide variety of hand-crafted drinks featuring fresh fruits, fun mix-ins and imported teas.”
In addition to tweaks in food offerings, the group is revamping its restaurant base, and adding natural light and “festive communal seating” in order create a homier atmosphere.
Top place to work
Panda prides itself on employee morale and initiatives, including one-on-one coaching, mentorship programs and leadership courses through the University of Panda to help associates develop interpersonal and professional skills. And Cherng, in turn, attributes the company’s growth to its workforce. For him and his wife and fellow co-founder, Peggy, “Panda is more than a food company — it is a people development company that helps people and communities reach their highest potential.”
The passion and dedication of Panda’s employees was on display this summer when the company was named one of the top places to work in Los Angeles by the Business Journal. At an event to honor the winners, Panda was represented by more than 20 team members who enlivened the proceedings with loud cheers when the company’s name was announced.
“When I look around today, the pillar of the business are the people that started from counter help, kitchen help, and they’re still here, and they’re holding up the businesses,” Cherng said.
