In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Panda Express franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Panda Express franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Panda Express franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Panda Express outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of Panda Express’ financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020 total, average, median, maximum, and minimum gross sales; and average and median age of units in years for licensed Panda Express restaurants located in airports, hospitals, military facilities, universities, and casinos, separately stated, that were open for a minimum of 52 weeks (although some were subject to seasonal closures specific to the venue, such as for universities)

Section I – Background Information

16 Things You Need to Know About the Panda Express Franchise

Launches $10 Million Program to Uplift Diverse Groups

1.  In early May 2021, Panda Express launched the Panda CommUnity Fund – a $10 million community investment and response program that supports immediate and sustainable solutions from national and local organizations to uplift diverse groups, including people of color and other marginalized communities.

2.  During Asian American & Pacific Islander (AAPI) Heritage Month, Panda kicked off the Panda CommUnity Fund, with a $1.5 million pledge to AAPI organizations dedicated to offering critical aid, as well as promoting cultural understanding and acceptance. The Fund will continue to allocate resources across various initiatives over the next five years to help foster a more respectful and inclusive society for tomorrow.

3.  Peggy Cherng, co-founder and co-CEO of Panda Express, said, “We are proud of our multicultural heritage and have always believed that this identity connects us to the best of American culture. Because of the duality in who we are, Panda champions a greater sense of belonging and supports engagement efforts that reflect the diversity of our guests, associates and communities. Following a year of hardship and civil unrest, it has become more apparent that the responsibility is on each of us to come together to create meaningful change. And that is why we are making the commitment to put forth the resources and platforms needed to continue energizing community organizations on the ground.”

4.  As an American-born company founded by Chinese immigrants, Panda values the grit and resilience required to overcome adversity on the path to success; in the same breadth, it recognizes the unsettling reality that there is still a long journey ahead to dismantling systemic racism, which is one of the driving forces behind this $1.5 million pledge.

5.  In its first phase of grant-making, Panda has committed to organizations that are combating anti-Asian racism and strengthening the community physically, mentally, and emotionally, including Asian American Advancing Justice Chapters, GoFundMe.org AAPI Community Fund, Welcome to Chinatown, and Asian Mental Health Collective.

6.  Additionally, the Panda CommUnity Fund will support initiatives focused on education and empowering representation across various verticals through partner organizations, such as Gold House and The Asian American Foundation. Beyond its monetary commitment, the American Chinese brand will continue to leverage its national platform, resources, and influence to amplify AAPI voices and organizations. ​

7.  With respect to all differences in life, across unique backgrounds, experiences, thoughts, and ideas, Panda’s commitment to Diversity, Equity & Inclusion (DE&I) was created to embrace and uplift the needs of the underrepresented, helping to reinforce a greater sense of compassion, inclusion, and belonging in our greater communities. Intended to amplify Panda’s mission to inspire better lives, the Panda CommUnity Fund partners with 501(c)(3) nonprofit organizations on DE&I related initiatives that help shatter the perception of a monolithic America and embrace the diverse identities that represent the American people.

8.  While grant proposals are by invitation only and unsolicited proposals will not be accepted, each organization will be thoughtfully vetted based on its mission and direct impact on the communities it serves.

Debuts ‘Beyond the Original Orange Chicken’ at Select Stores

9.  In mid-July 2021, Panda Express announced that it was debuting Beyond the Original Orange Chicken at select locations. Crispy pieces of plant-based Beyond Chicken are wok-tossed in Panda’s signature sweet and tangy The Original Orange Chicken sauce, making it just as crave-able as the bold flavors fans know and love.

10.  As the first national Asian restaurant concept to serve Beyond Meat, this new premium entrée captures the irresistible texture and flavor of The Original Orange Chicken while also being a good source of plant-based protein. With the unveiling of this innovative menu option, guests now have another exciting way to enjoy this classic American Chinese staple.

11.  Other plant-based dishes include Eggplant Tofu, Super Greens, Chow Mein, Vegetable Spring Rolls, and Steamed White and Brown Rice. Beyond The Original Orange Chicken was available in select locations throughout NYC and SoCal starting July 26, while supplies lasted.

12.  According to Chef Jimmy Wang, executive director of culinary innovation at Panda Express, “As the creator of The Original Orange Chicken, Panda has significant brand equity in this staple American Chinese comfort food. We know guests’ tastes and preferences have evolved and look to us for variety. Beyond The Original Orange Chicken is the next step in the brand’s journey to offer more diverse and plant-based options, while still delivering comfort and crave-ability in innovative ways. Creating a fresh new take on a classic favorite is a great and accessible way to introduce plant-based proteins to our guests and perhaps even drawing a new audience for Panda.”

Company History

13.  Panda Express traces its history to 1973 when Andrew Cherng and his father opened Panda Inn in Pasadena, California. The restaurant serves Mandarin and Szechuan cuisine, which at the time was not as popular or as well-known as Chinese-Cantonese food, which most Chinese American dishes are based on. In 1982, Cherng’s wife Peggy joined the business and the following year they launched Panda Express as a quick-service version of Panda Inn.

14.  Over the next few years, the Cherngs continued to open Panda Express locations in major shopping malls. In 1987, head chef Andy Kao developed the recipe for what is now the most iconic dish from Panda Express, Orange Chicken. Panda Express’ growth continued over the next decade and in 1997, the company opened its first stand-alone restaurant in Hesperia, California.

15.  Today, Panda Express has grown into the largest Asian segment restaurant chain in the United States. Panda Express also has international locations in Canada, Guatemala, Japan, Mexico, El Salvador, the Philippines, South Korea, and the United Arab Emirates. The Cherngs continue to own and operate Panda Express. To keep things fresh, the chain often releases limited-time menu items.

Entrepreneur’s Franchise 500

16.  Panda Express did not rank on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Panda Express franchise costs, based on Item 7 of the company’s 2021 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Panda Express’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year:  108
• Outlets at the End of the Year:  125
• Net Change:  +17

2019

• Outlets at the Start of the Year:  125
• Outlets at the End of the Year:  138
• Net Change:  +13

2020

• Outlets at the Start of the Year:  138
• Outlets at the End of the Year:  140
• Net Change:  +2

Company-Owned

2018

• Outlets at the Start of the Year:  1,897
• Outlets at the End of the Year:  1,979
• Net Change:  +82

2019

• Outlets at the Start of the Year:  1,979
• Outlets at the End of the Year:  2,046
• Net Change:  +67

2020

• Outlets at the Start of the Year:  2,046
• Outlets at the End of the Year:  2,099
• Net Change:  +53

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

Captive Venues – Licensed Panda Express Restaurants Only – Financial Performance Representations/Full Year 2020

• The chart below contains unaudited historical gross sales data for calendar year 2020 reported by Panda Express Restaurants operated by Licensees and located exclusively in airports, military facilities, hospitals, universities, and casinos (“captive venues”).

• The information relates only to 128 Panda Express Restaurants operating in captive venue locations for a minimum of 52 weeks (although some were subject to seasonal closures specific to the venue, such as for universities and theme parks).

• 45 of these Panda Express Restaurants are licensed as joint ventures in which an Affiliate of the franchisor is a minority owner.

• Excluded from this chart is data for 7 licensed Panda Express Restaurants that were open less than a year, and for 4 licensed Panda Express Restaurants that closed in 2020 and which had been operating more than a year before closing.

• The franchisor also excluded data for 4 Panda Express Restaurants located in a theme park, a corporate campus, travel plaza, and a store-in-store, respectively, due to privacy considerations because they are the only licensed Panda Express Restaurants in these kinds of venues and their data could not be cumulated with other similarly situated Licensees.

• “Gross Sales” is defined as all charges and/or revenues that are received or earned by you (and/or any Affiliate of yours):

• a. by, at, or in connection with any Panda Express Restaurant operated by you including beverage sales, whether they are (i) part of a Panda Express combination plate offering, or (ii) being purchased through a Panda Express register and sold under Panda Express Marks or Trade Dress;
• b. from sales of Panda Express Products in contravention of the Franchise Agreement at locations outside a Restaurant;
• c. from proceeds of any business interruption insurance, less the deductible amount;
• d. from mail, fax, and telephone orders and/or any orders received through other electronic or other means and filled on or from a Restaurant;
• e. from all deposits not refunded to purchasers;
• f. from orders sold under Panda Express Marks or Trade Dress though filled outside a Restaurant;
• g. in connection with any Similar Business operated in violation of the Franchise Agreement.

• All sales and/or billings, whether collected or not, will be included in Gross Sales, with no deduction for credit card or other charges.

• Gross Sales does not include sales tax collected and paid when due to the appropriate taxing authority and actual customer refunds, adjustments, credits, and employee discounts actually given.

• Panda Express Restaurants located in geographical areas with multiple operating Panda Express Restaurants and stronger brand recognition tend to outperform Panda Express Restaurants located in less developed areas.

• Panda Express Restaurants for which results are reported here have limited geographic diversity, with captive venue Panda Express Restaurants being located in 33 states and with approximately 27% of them established in California and Texas. Climate, local demographics, cultural and other differences in geographical areas can significantly affect results.

• A new Licensee’s results may be materially different from those described here due to factors such as operating experience.

• The financial performance figures shown do not reflect costs of sales, operating expenses, or other costs or expenses that must be deducted from the gross revenue or gross sales figures to obtain your net income or profit.

• The franchisor used information reported to it by its Licensees to prepare this document. The franchisor assumes the information as supplied by them and their respective operations and Panda Express Restaurant managers to be accurate. The information has not been audited. The information presented is not presented in accordance with generally accepted accounting principles.

• As of the Issuance Date of the current Disclosure Document, the global pandemic involving the novel coronavirus (“COVID-19”) is ongoing. Its duration and the economic consequences that may result are uncertain.

Airport

• Total Gross Sales:  $19,059,939
• Average Gross Sales:  $1,191,246
• Minimum Gross Sales:  $184,872
• Median Gross Sales:  $995,281
• Maximum Gross Sales:  $3,453,579
• Number of Units Exceeding Average Gross Sales:  7
• Percent of Units Exceeding Average Gross Sales:  44%
• Average Age of Units in Years:  4.58
• Number of Units Exceeding Average Age in Years:  6
• Percent of Units Exceeding Average Age in Years:  38%
• Median Age of Units in Years:  3.57
• Total Number of Units:  16

Hospital

• Total Gross Sales:  $1,309,846
• Average Gross Sales:  $436,615
• Minimum Gross Sales:  $224,732
• Median Gross Sales:  $436,391
• Maximum Gross Sales:  $620,658
• Number of Units Exceeding Average Gross Sales:  1
• Percent of Units Exceeding Average Gross Sales:  33%
• Average Age of Units in Years:  8.56
• Number of Units Exceeding Average Age in Years:  2
• Percent of Units Exceeding Average Age in Years:  67%
• Median Age of Units in Years:  9.96
• Total Number of Units:  3

Military

• Total Gross Sales:  $39,026,818
• Average Gross Sales:  $1,027,022
• Minimum Gross Sales:  $224,732
• Median Gross Sales:  $901,747
• Maximum Gross Sales:  $2,563,580
• Number of Units Exceeding Average Gross Sales:  16
• Percent of Units Exceeding Average Gross Sales:  42%
• Average Age of Units in Years:  5.02
• Number of Units Exceeding Average Age in Years:  15
• Percent of Units Exceeding Average Age in Years:  39%
• Median Age of Units in Years:  4.10
• Total Number of Units:  38

University

• Total Gross Sales:  $28,408,154
• Average Gross Sales:  $424,002
• Minimum Gross Sales:  $123,104
• Median Gross Sales:  $373,496
• Maximum Gross Sales:  $1,162,498
• Number of Units Exceeding Average Gross Sales:  26
• Percent of Units Exceeding Average Gross Sales:  39%
• Average Age of Units in Years:  5.45
• Number of Units Exceeding Average Age in Years:  25
• Percent of Units Exceeding Average Age in Years:  37%
• Median Age of Units in Years:  4.54
• Total Number of Units:  67

Casino

• Total Gross Sales:  $3,527,500
• Average Gross Sales:  $881,875
• Minimum Gross Sales:  $420,343
• Median Gross Sales:  $879,860
• Maximum Gross Sales:  $1,347,439
• Number of Units Exceeding Average Gross Sales:  2
• Percent of Units Exceeding Average Gross Sales:  50%
• Average Age of Units in Years:  2.56
• Number of Units Exceeding Average Age in Years:  1
• Percent of Units Exceeding Average Age in Years:  25%
• Median Age of Units in Years:  1.82
• Total Number of Units:  4

Total

• Total Gross Sales:  $91,332,258
• Average Gross Sales:  $713,533
• Minimum Gross Sales:  $123,104
• Median Gross Sales:  $528,794
• Maximum Gross Sales:  $3,453,579
• Number of Units Exceeding Average Gross Sales:  52
• Percent of Units Exceeding Average Gross Sales:  41%
• Average Age of Units in Years:  5.20
• Number of Units Exceeding Average Age in Years:  49
• Percent of Units Exceeding Average Age in Years:  38%
• Median Age of Units in Years:  4.37
• Total Number of Units:  128

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