FDD Talk: Panda Express Franchise Costs, Fees, Average Revenues and/or Profits (2022 Review)

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

Section I – Estimated initial investment (franchise costs) for a Panda Express franchise, based on Item 7 of the company’s 2022 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Panda Express franchise, based on Items 5 and 6 of the company’s 2022 FDD

Section III – Number of franchised and company-owned Panda Express outlets at the start of the year and the end of the year for 2019, 2020, and 2021, based on Item 20 of the company’s 2022 FDD

Section IV – News updates on the Panda Express franchise opportunity

Section V – Presentation and analysis of Panda Express’ financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:

• 2021 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 VI – Key ratios, comparables, computations, and analyses for the Panda Express franchise opportunity (exclusive content for Platinum subscribers)

Section I – Panda Express Franchise Costs

• Panda Express franchise costs, based on Item 7 of the company’s 2022 FDD:

• Initial License Fee:  $25,000
• Lease of Premises (Initial 3 Months’ Rent):  $10,000 to $425,000
• Leasehold Improvements:  $100,000 to $1,000,000
• Furniture, Fixtures, Equipment, and Supplies:  $120,000 to $420,000
• Initial Inventory:  $2,200 to $10,000
• Computer Hardware and Software:  $14,000 to $21,000
• Non-resettable Cash Register(s):  $6,000 to $8,000
• Insurance (Annual Premium):  $30,000 to $75,000
• Expenses Incurred During Initial Training:  $13,000 to $29,000
• Architectural and Design Fees:  $20,000 to $75,000
• Construction Supervision:  $20,000 to $125,000
• Sales Tax Deposits:  $4,500 to $10,000
• Telephone, Fax, and Other Communication Related Fees:  $500 to $1,000
• Licenses and Permits:  $1,500 to $60,000
• Miscellaneous Funds:  $0 to $10,000
• Additional Funds (3 Months):  $60,000 to $110,000
• Total Estimated Panda Express Franchise Costs:  $426,700 to $2,404,000

Section II – Panda Express’ Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Panda Express’ initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:

• Initial License Fee:  $25,000
• Royalty:  each Royalty Period you pay Panda Express 8% or as otherwise established, unless it is less than the minimum Royalty amount, which is currently $4,000. If the percentage Royalty amount is less, then you must pay the minimum Royalty amount for that Restaurant for that Royalty Period, unless otherwise negotiated between you and Panda Express.

Section III – Number of Franchised and Company-Owned Panda Express Outlets

Franchised

2019

• Outlets at the Start of the Year:  124
• Outlets at the End of the Year:  137
• Net Change:  +13

2020

• Outlets at the Start of the Year:  137
• Outlets at the End of the Year:  139
• Net Change:  +2

2021

• Outlets at the Start of the Year:  139
• Outlets at the End of the Year:  146
• Net Change:  +7

Company-Owned

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

2021

• Outlets at the Start of the Year:  2,099
• Outlets at the End of the Year:  2,153
• Net Change:  +54

Section IV – News Updates on the Panda Express Franchise

• Beyond The Original Orange Chicken Is Back by Popular Demand at Panda Express Restaurants Nationwide for a Limited Time

• Panda Express Orange Chicken Turns 35, Treats Fans with Deals, Promos

• Panda Express Celebrates Lunar New Year with Specialty Campaign

• Panda Express Commits to Source 100% Cage-Free Eggs Worldwide

• Panda Express Testing New Version of Its Original Orange Chicken Sandwich

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Panda Express Franchise (Item 19, 2022 FDD)

Captive Venues – Licensed Panda Express Restaurants Only – Financial Performance Representations/Full Year 2021

• The chart below contains unaudited historical gross sales data for calendar year 2021 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 133 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).

• 44 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 10 licensed Panda Express Restaurants that were open less than a year, and for 1 licensed Panda Express Restaurant that closed in 2021 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 25% 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 its Licensees 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:  $29,226,855
• Average Gross Sales:  $1,719,227
• Minimum Gross Sales*:  $0
• Median Gross Sales:  $1,756,466
• Maximum Gross Sales:  $5,023,902
• Number of Units Exceeding Average Gross Sales:  3
• Percent of Units Exceeding Average Gross Sales:  18%
• Average Age of Units in Years:  5.35
• Number of Units Exceeding Average Age in Years:  7
• Percent of Units Exceeding Average Age in Years:  41%
• Median Age of Units in Years:  4.55
• Total Number of Units:  17

Hospital

• Total Gross Sales:  $1,453,422
• Average Gross Sales:  $484,474
• Minimum Gross Sales:  $289,833
• Median Gross Sales:  $465,790
• Maximum Gross Sales:  $697,799
• Number of Units Exceeding Average Gross Sales:  1
• Percent of Units Exceeding Average Gross Sales:  33%
• Average Age of Units in Years:  9.55
• Number of Units Exceeding Average Age in Years:  2
• Percent of Units Exceeding Average Age in Years:  67%
• Median Age of Units in Years:  10.60
• Total Number of Units:  3

Military

• Total Gross Sales:  $46,935,376
• Average Gross Sales:  $1,173,384
• Minimum Gross Sales:  $356,583
• Median Gross Sales:  $1,113,290
• Maximum Gross Sales:  $2,593,777
• Number of Units Exceeding Average Gross Sales:  18
• Percent of Units Exceeding Average Gross Sales:  45%
• Average Age of Units in Years:  5.78
• Number of Units Exceeding Average Age in Years:  17
• Percent of Units Exceeding Average Age in Years:  43%
• Median Age of Units in Years:  4.82
• Total Number of Units:  40

University

• Total Gross Sales:  $34,279,152
• Average Gross Sales:  $496,799
• Minimum Gross Sales*:  $0
• Median Gross Sales:  $444,610
• Maximum Gross Sales:  $1,458,029
• Number of Units Exceeding Average Gross Sales:  29
• Percent of Units Exceeding Average Gross Sales:  42%
• Average Age of Units in Years:  6.01
• Number of Units Exceeding Average Age in Years:  29
• Percent of Units Exceeding Average Age in Years:  42%
• Median Age of Units in Years:  5.33
• Total Number of Units:  69

Casino

• Total Gross Sales:  $5,398,611
• Average Gross Sales:  $1,349,653
• Minimum Gross Sales:  $539,032
• Median Gross Sales:  $1,509,404
• Maximum Gross Sales:  $1,840,770
• Number of Units Exceeding Average Gross Sales:  3
• Percent of Units Exceeding Average Gross Sales:  75%
• Average Age of Units in Years:  3.56
• Number of Units Exceeding Average Age in Years:  1
• Percent of Units Exceeding Average Age in Years:  25%
• Median Age of Units in Years:  2.82
• Total Number of Units:  4

Total

• Total Gross Sales:  $117,293,416
• Average Gross Sales:  $881,905
• Minimum Gross Sales*:  $0
• Median Gross Sales:  $616,240
• Maximum Gross Sales:  $5,023,902
• Number of Units Exceeding Average Gross Sales:  54
• Percent of Units Exceeding Average Gross Sales:  41%
• Average Age of Units in Years:  5.94
• Number of Units Exceeding Average Age in Years:  56
• Percent of Units Exceeding Average Age in Years:  42%
• Median Age of Units in Years:  4.90
• Total Number of Units:  133

• *In 2021, 3 stores (including 2 airports and 1 university) were closed temporarily due to COVID-19. As a result, Minimum Gross Sales for those captive venues were $0.

Section VI – Panda Express Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️

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