Panda Express: How The World’s Largest Chinese Fast Food Chain Is Made?

Panda Express: The Rise of the World's Largest Chinese Fast-Food Chain

How did a small family-run restaurant grow into a global fast-food empire?

From its humble beginnings to its current dominance, Panda Express has revolutionized Chinese cuisine worldwide.

Join us as we delve into the intriguing journey of Cheng Zhengchang, the visionary founder who defied the odds and built a culinary legacy.

From Humble Beginnings to Fast-Food Giant

Which Chinese fast-food chain is the largest in the world, do you know? True Kung Fu? Is everyone content?

No, but there was a call from Panda Express. In 1953, Cheng Zhengchang, the creator of Panda Express, migrated to Taiwan with his parents from Yangzhou, Jiangsu Province. went to the United States after that.

With exceptional academic achievement, Cheng Zhengchang obtained a bachelor's degree in mathematics in 1970 and a master's degree in the same field in 1972. He also met the love of his life, Peggy Chiang, his wife, at the same time he was in school.

In the same year, Mrs. Chiang earned her Ph.D. in electrical engineering. The chain has long surpassed 2,000 locations globally, with 802 chains in the United States alone, and yearly revenues of 20.3 billion yuan!

In addition, Panda Express is currently opening three new locations virtually every week, significantly more frequently than the massive local fast-food chain Burger King. How, therefore, did it succeed?

For the first Chinese immigrants to the United States, opening a restaurant was a need for survival. The principal way of basic accumulation for the first generation of immigrants from Guangdong and Fujian to the United States is still starting restaurants.

Nonetheless, the number of Chinese eateries in the US has grown within the past ten years.

According to some research, there are over 28,000 Chinese restaurants in the United States, which is about the same number as McDonald's outlets globally.

This is also evident in the popular American television series "The Big Bang Theory," where the main characters get Chinese food virtually every day.

In 1973, Cheng Zhengchang opened his first restaurant in the United States. Unlike the Chinese eateries in Chinatown and the Chinese District, he first targeted Americans.

Chinese Americans are a minority in the US, he claimed, and expanding the company through economic dealings with Americans is the only viable strategy. Following the establishment of two Jufeng Yuan restaurants, Panda Express launched its first location in a California mall in 1983.

With $178 million in sales, the restaurant grew to nine in 1985 and 254 in 1997. Panda then decided to turn its business into a billion-dollar enterprise. Panda achieved their sales target of $1.069 billion in 2010.

Reinforced management

Like many other Chinese eateries, Zhengchang Cheng and Peggy Chiang, a husband and wife partnership with one holding a master's in mathematics and the other a Ph.D. in electrical engineering, are in charge of Panda Express.

More notably, compared to other fast food franchises from the same era and even to Chinese eateries in Chinatown, Panda's business management is significantly different.

In 1982, Peggy Chiang, his wife, joined the family business. Her prior education and professional background instilled a sense of efficiency and forethought in her. 

"As an engineer, it was obvious to me that we needed a system that would facilitate ordering and improve our understanding of our clientele's preferences." 

With Peggy Chiang on board, Panda's management and planning became more organized.

She created a software program that manages the chain's inventory automatically and enables the automatic acquisition of more materials.

After making improvements, she filed for a patent and gave the system the name "Panda Automatic Workstation." Panda was the only Chinese restaurant to adopt an automated management system and among the first in the US to use computerized management in the 1980s.

Panda Express's Growth Fueled by Expert Leadership and Conservative Financial Strategies

With the professional management experience of American restaurants and accelerating its expansion in the United States, Panda Express hired Don McComas, a management expert, to be the company’s president in 1992.

Fully responsible for the chain promotion project of Panda Express, breaking the situation that the company’s management was exclusive of Chinese descent for the first time.

Later, Cheng also brought in Joseph Micatrotto, president of the Chi-Chi chain, and Russell Bendel, former chief executive of El Torito, to serve as president and general manager. This talent program has effectively accelerated the pace of Panda Express's growth.

Panda Express has grown without debt, with only one recorded loan of $500,000 in 1983. “After forty years of catering, we have not taken a single penny from investors.” From the restaurant business in Cheng Zhengchang, every store opened to win first, then use the profits to develop. In the beginning, it takes $300,000 to $500,000 to invest in a store, usually within three years, to recover the investment.

The learning of the menu

Chinese cuisine varies greatly from one cuisine to another, with abundant raw materials and a wide variety of dishes, so Cheng Zhengchang believes that the most important thing to do in Chinese fast food chains is to solve the contradiction between maintaining the characteristics of Chinese food and standardization.

Considering the store size, logistics costs, and the menu’s simplicity, Panda Catering chose to “make fewer dishes.”

Panda Express focuses on Beijing and Sichuan cuisine. The orange chicken is one of its most popular dishes. It has a sweet and sour taste and spicy flavor, accounting for about 30% of sales.

Panda Express has only a dozen essential dishes. In addition to the particular varieties reserved throughout the year, it also innovates 2 types every month to keep customers fresh. The menu design is also simple, with ingredients and cooking methods indicated, so customers can order at a glance without wasting time.

Panda Dining's Hands-on Gourmet: Stir-Frying Tradition in a Fast-Paced World

The small number of varieties also allows Panda Dining to take an on-site, hand-made approach, where it stirs-fries the dishes on a traditional Chinese open fire to maintain the original taste and character of the container.

After the chef has finished stir-frying the words, they are placed on plates on the table to keep them warm. The quantity of each dish is not large and is stir-fried after it is sold out.

Cheng Zhengchang said that considering the characteristics of fast food, they gave up some time-consuming cooking methods, such as stewpot and sashimi. In addition, they make a uniform compound seasoning and sauce to achieve uniformity of flavor.

Panda Express also standardizes the handling of raw materials, leaving the cleaning, cutting, and transporting of food to suppliers, which also reduces the pressure and size of the kitchen.

Panda Express supplies only two types of meat: chicken and beef, which significantly facilitates unified stocking and ensures that each outlet can provide the freshest products. Cheng Zhengchang believes that a streamlined menu is crucial in ensuring quality and controlling costs.

Focus on community

Panda Express has been expanding at an accelerated pace in the last two years. It is based in California, in the western U.S.

The Western market is more fully developed. Stephen Blum, vice president of real estate, said they have focused on the east side for the past two years and are heavy on the community and family market. One of their strengths, he said, is that people know what Chinese food is, and that’s something people are familiar with.

Panda Express is mostly directly owned and operated. As the number of locations continues to grow, Panda Express has expanded from malls to all kinds of places, from supermarkets, airports, universities, office buildings, and casinos to libraries.

Along with the accelerated growth, the number of stand-alone stores on the street has also started to increase. Two of the most notable Panda Express locations in recent years are in the public library in downtown Los Angeles on the West Coast and in the financial stock market on Wall Street in Manhattan, New York.

Diversification and Global Expansion: Panda Restaurant Group's Strategic Roadmap

Cheng Zhengchang believes a diversified corporate strategy is necessary for Chinese food’s dynamic and competitive market environment.

In addition to Panda Express, Panda Restaurant Group operates the full-service restaurant Jufeng Yuan and the Japanese restaurant Hibachi-San. The fast-casual-format homestyle restaurant Double Double Panda, the Kitchen Garden restaurant, and the Bookends Cafe restaurant.

Getting a head start is necessary. Our decision to open a Japanese restaurant in 1992 was a defensive strategy to prevent Japanese restaurants from serving the same Chinese cuisine as Panda Express.

Panda Express is more cautious for multinational operations, taking a steady and gradual strategy, and has only entered Japan and Mexico.

Cheng Zhengchang believes that the U.S. market is still not saturated and should first be based on domestic investment to reduce the risk of foreign investment. For the Chinese market, his attitude is evident: “China does not need such fast food. The net increase is also too intense.”

Conclusion

The incredible path of Panda Express serves as an example of the strength of innovation, standardization, and an unwavering desire for growth.

Panda Express, the biggest Chinese fast-food restaurant globally, has transformed the sector by adhering to Chinese culinary traditions while serving a varied American clientele.

Panda Express has effectively adapted to changing market trends and consumer tastes, as seen by its early concentration on shopping centers and its smart diversification into a number of restaurant types. 

The business has been able to prosper in a market that is becoming more and more competitive because to its unwavering dedication to community involvement and its responsible financial practices.