Peggy and Andrew Cherng discuss the ‘Panda Way’
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From left, NRN Editor-in-chief Sam Oches interviews Panda Express founders Peggy and Andrew Cherng.Bret Thorn
Nation’s Restaurant News’ Brand Icon award is at “the intersection of legacy and innovation,” editor-in-chief Sam Oches told attendees of CREATE: The Event for Emerging Restaurateurs on Tuesday as he interviewed this year’s winners, Panda Express co-CEOs Dr. Peggy and Andrew Cherng.
The entrepreneurs started in 1973 with Panda Inn, a full-service restaurant that Andrew Cherng’s family opened in Pasadena, California. His father was a chef and Cherng had been working in restaurants in New York City.
“I thought we would be an instant success,” he said. “Boy was I wrong.”
Business grew, but very slowly in the first two to three years.
When business was slow, his mother would sprinkle salt on the restaurant’s threshold to get rid of evil spirits and therefore drum up business.
“We did that quite often,” he said.
But that struggle “made me appreciate every guest very, very well,” he said. “We were fortunate to go through that very difficult process. It was challenging, but it was wonderful.”
Ten years later, he had the opportunity to open a quick-service model of his restaurant. It wasn’t in a food court, but an inline store in the mall, “which is not very normal.”
But it was next to the mall’s escalator and a pizzeria, so foot traffic was robust, “and the business actually took off very easily,” he said.
Realizing that “opening in a mall is indeed a lot easier” than opening on the street, Cherng prioritized opening in more of the many malls that were opening in the 1980s, mostly in food courts.
“That was fantastic,” he said.
The menu evolved, figuring out what among the greatest hits of Panda Inn worked in a QSR environment, and the chain continued to grow. Today there are more than 2,600 Panda Express locations in the United States, with annual sales figures in excess of $6 billion, ranking it 11th among all the restaurant chains in the country.
While Andrew Cherng was the trailblazer in strategizing the business model, his wife Peggy Cherng was the systems organizer.
She explained to CREATE attendees that she’s an engineer by training, and she quickly came to understand the importance of capturing data to improve efficiencies, and also developed the chain’s point-of-sale system, something that barely existed in the mid-1980s.
“Before I joined the restaurant business, my goal was to be an inventor,” she said. “So automatically I was thinking of efficiently developing systems to help the business.”
Since POS systems weren’t yet readily available, “We had to develop it ourselves. It made people more efficient and helped them serve guests better,” she said.
But she’s not just a developer of systems. She also helped develop the “Panda Way” philosophy of love for people, guests, and the communities where they operate.
She said the industry tends to attract people “who don’t have the privilege of education, but they do have the ambition to change the community.” The company’s Panda University educates employees to achieve their full potential.
“They really want to be the best they can be, and then we can really serve our guests with love,” she said.
Developing people has long been a priority of both the Cherngs, and as Panda Express grew, Andrew would pick two members from an existing location, one from the front of the house and one from the back, to lead each new restaurant.
“We asked them to contribute only like $1,000, and they would own a 10% stake in the business. But of course they also got paid,” he said. Having them take ownership of the restaurant improved their loyalty and dedication to running it well.
He added that many employees, mostly lacking much education, initially lack self-esteem.
“They undervalue themselves, so we try to elevate our associates from ‘No, I can’t do this’ to ‘Yes I can.’ It’s to help them see the possibilities … I’m very proud that going to work at Panda is getting a ticket to get out from being poor. … Their kids are going to very good schools. All kinds of things happen.”
Panda Express also has a philosophy of constant improvement, which they call “No best, only better.” The Cherngs want to grow sales, hire better people, and help employees live a better life by learning to make the complicated restaurant business both fun and easier to execute.
“Even though we have challenges, we were so blessed to build a business like this,” Andrew Cherng said.
As for the future, Peggy Cherng told the audience, “Everything’s possible once you put your mind to it. It’s the same for you … We’re only in the 11th position as the biggest chain, so we have room to grow from there.”
Contact Bret Thorn at [email protected]
