Panda Express: a Chinese couple’s US success story

Panda Express: a Chinese couple’s US success story

Staff Reporter

2013-09-13

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Chinese nationals in the United States have a long history of making a living through opening restaurants serving Chinese food, however the number has grown rapidly over the last decade. Figures showed that there were about 28,000 Chinese restaurants in the US, which is equivalent to the total number of McDonald’s stores in the global market, reports the New Champions magazine. Panda Express — a Chinese fast food restaurant chain founded by a man with a master’s degree in mathematics and a woman with a PhD in electronic engineering — opens three new branches in the US almost every week.Cheng Zhengchang, the founder of Panda Express, started out in the US restaurant industry in 1973, targeting the average American to help his company expand faster.

Panda Express’s first store opened in California in 1983 and its ninth store opened in 1985. The company’s stores rose to 254 in 1997 with sales of US$178 million and the restaurant chain achieved its goal of US$1 billion in sales in 2010.

What is it that makes Panda Express successful in its operational management and what is it that sets it apart from other Chinese restaurants and fast-food brands that opened during the same period?

The participation of Cheng’s wife Jiang Peiqi allowed Panda Express to have a more systematic management approach. Jiang said that the company needed an easier ordering system, so she designed software that could monitor the inventory at all of its chain stores and purchase ingredients automatically. With Jiang’s patented Panda Automated Work Station, Panda Express became one of the first restaurants to embrace technology during the 1980s and the only Chinese restaurant to do so.

To emulate the experience offered by an American restaurant, Cheng hired several non-Chinese staff as senior executives and recruited talented individuals to accelerate the company’s development. In addition, given the nature of Chinese food in which the materials and dishes are varied, Panda Express chose to offer a simpler menu.

Cheng pointed out that it was important to standardize its flavor but simultaneously maintain the distinguishing features of Chinese food. Panda Express continues to sell orange chicken, one of the most popular dishes at the restaurant, but adds two new dishes every month in order to keep its menu fresh.

Moreover, the sauce and seasoning served at the restaurant has been standardized in order to achieve a unified taste. As for the processing of the ingredients it uses, the company’s suppliers are in charge of cleaning, cutting and shipping them to other stores to achieve further standardization.

Despite its considerable success, Panda Express has been relatively conservative about expanding outside of the US, only venturing into the markets in Japan and Mexico, the report said. Meanwhile, Cheng believes that the restaurant’s presence in the US market has not yet reached a saturation level.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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