A Passion for Panda
Andrew Cherng’s recipe of tasty Chinese fast food, technological savvy and personal development for employees has made his Panda Express empire No. 1 in its field.
By Bettijane Levine 07/01/2011
Meet your neighbor, Andrew Cherng. You may have seen him hiking the hills with his dog, or out for dinner in Pasadena with his wife and business partner, Peggy. Perhaps you saw him interviewed on Nightline or noticed his name in Forbes. The magazine recently reported that Cherng is about to invade China, bringing his Arroyo-inspired brand of casual Chinese food back to the country of his birth. He will neither confirm nor deny the move, saying only, “We are considering it.”
Cherng has lived in the San Gabriel Valley for 40 years, raised three children here and kept a relatively low profile while elevating his Panda Restaurant Group to its current position as one of the largest, fastest-growing and most successful privately owned restaurant chains in the nation. He is, in other words, king of America’s fast-casual Asian cuisine, with 1,400 Panda Express stores in 39 states and Puerto Rico which reportedly earned $1.4 billion in 2010. And even in this challenged economy — or perhaps aided by it, selling food that rivals McDonalds’ thrifty price point — he continues to add new stores and rack up sales-growth figures that defy the general downward trend. And no, Cherng wouldn’t think of going public. “We wouldn’t know how to deal with shareholders,” he says.
On a recent day, the founder of Panda Restaurant Group was trying to sit still for an interview in his exquisitely designed Rosemead headquarters — a two-story building precisely calibrated to reflect the Panda style and philosophy. The elegant, minimalist entry features exposed steel ceiling beams juxtaposed with tall urns that hint of Asian antiquity. The entire building is a magnified vision of any Panda Express eatery: It reels you in, makes you feel welcome and at home, but doesn’t inspire you to linger too long. That’s one of many visible clues to Panda Express’ success. A more important saga lies beneath the surface. It’s a classic American immigrant tale of sweat and toil spiked with advanced academic degrees, personal development courses and 21st-century technological twists.
Cherng, now in his 60s, exudes the suppressed energy of someone much younger — a guy who’d like to leap out of his office chair and go for a run. With his buzz cut, casual clothes and low growl of a voice that commands attention, he is a man of few words that seem carefully chosen. He is polite, yet refreshingly candid. Ask too vague a question and he’ll respond with another: “What exactly do you mean by that?” He gives the impression of having acquired wisdom through struggle and a search for meaning. Trump-style self-promotion and a quest for fame do not seem remotely appealing to him. He underplays his success, saying he has learned much but still has much to learn.
Cherng was born in Yangzhou on the northern bank of China’s Yangtze River. He grew up in Taiwan, where his chef father, Ming-Tsai Cherng, settled with his close-knit family. In 1963, they all moved to Yokohama, Japan, where his father had taken a job as a chef. Prospects for the younger Cherng’s success as a Chinese person in Japan didn’t look promising. As Cherng recently told Bloomberg Businessweek magazine, “There’s a line…if you’re not Japanese, you can’t cross it.”
So in 1966, at age 18, he traveled alone to the U.S. He spoke no English and desperately missed his family but was determined to get an American college degree. He chose Baker University in Baldwin, Kansas, because it didn’t require applicants to take the SATs, which are given in English. He chose math as his major because it required numbers rather than command of a language he didn’t yet speak. As a Baker sophomore, Cherng met his future wife, Peggy Tsiang. She was a 17-year-old freshman just off the plane from Hong Kong. Both were math majors, who shared the travails of foreign students in a strange and difficult setting.
Cherng worked summers, weekends and on holiday breaks, earning money for tuition while soaking up English and the vagaries of the restaurant business. He soon realized that Americans were falling in love with Chinese food.
Cherng and Peggy entered graduate school at the University of Missouri-Columbia, where he earned a master’s degree in applied mathematics and she a master’s in computer science, staying on to earn a Ph.D. in electrical engineering.
He then moved to Los Angeles, where he managed a cousin’s Hollywood restaurant until his parents came to the U.S. in 1973. That’s when he reportedly took a bank loan of $20,000, borrowed $40,000 in small chunks from family and friends and opened his first sit-down restaurant — the Panda Inn in Pasadena.
Cherng installed his father as master chef, while he ran the front of the house. Various relatives joined the staff, contributing to the company’s growth over the next 38 years. There are now six Panda Inn restaurants dotting Southern California. “We were blessed,” says Cherng, “but it wasn’t easy. It was a family effort from early on. We worked very hard, didn’t make money for the first few years. My father, mother, brother, sister all tried to help make a go of it. We have a very loyal family.”
In 1983, 10 years after the first Panda Inn opened, one of Cherng’s customers suggested he open a mini Panda at the then-new Glendale Galleria Food Court. That was the start of the Panda Express empire which has grown so prodigiously — but not without cost. Cherng had to create a new fast-food formula by designing new recipes and new methods of preparation and distribution. The chain’s signature orange chicken recipe was conceived back then and remains a customer favorite. The chain uses more than 65 million pounds of chicken per year — a figure that continues to grow.
But even all that was not nearly enough to guarantee successful expansion. The secret ingredient was Peggy Cherng, who joined the firm just as the firm’s big surge began. She brought with her expertise that may have saved the company from the dire fate of other Chinese fast food chains that opened with high hopes and quickly failed. Peggy is a software expert and systems analyst who’d worked at Comtal/3M and McDonnell Douglas, where she designed computer systems that helped build missiles. At her family firm, she designed the software and oversaw the technology that would lead to the successful standardization of record-keeping, allowing each restaurant to track its own inventory and automatically re-order ingredients. This led to the patented Panda Automated Work Stations now in every Panda Express across the country. Peggy also designed software to regulate other aspects of the business and helped with financial planning. She was named CEO in 1990 and company co-chair soon after.
By 1992, Panda Express had expanded to 97 locations, sporting colorful new décor distinguishing them from competitors and generating revenue growth of about 33 percent each year. “We’ve always had the longest line in all the mall food courts,” he says. “However, adapting that concept from food courts into successful stand-alone street locations, and taking it a step further to drive-through locations” has been an extraordinary challenge. “It takes enormous attention to detail and demands excellence not only in the food we pre-sent but the quality of our people.” He stops for a moment, as if overwhelmed by the complexity of trying to explain it all.
Cherng’s timing was fortuitous. By the ’90s, Chinese fast-casual food was becoming trendy. It was newer and more exotic than Mexican and a potential goldmine for anyone who could do it right. Even in the worst part of the recession, which has adversely
affected the restaurant industry as a whole, the non-burger category of fast food has remained stable, according to Bloomberg Businessweek. Bonnie Riggs of the research firm NPD Group told the publication that Asian fast food figures actually went up while the rest of the category
remained flat. And Panda Restaurant Group, which is 10 times larger than its closest competitor, “drives the entire category,” Riggs said.
Somewhere along the way, Cherng seems to have realized that excellent people, as much as excellent food, are key to his success. “I think that how fast we continue to grow is directly related to how we grow our people,” Cherng says of his approximately 20,000 employees. “If we do a good job growing them and they’re happy, then we have a very dedicated and hardworking group that can really make a difference — not just in the business but in the world at large. We try to find the right people, we pay them more, we treat them well, not only in their pocketbook” but in their minds and spirits, he says.
Cherng has been described in many publications as a devotee of personal development programs that encourage a healthy lifestyle and the advancement of the human spirit. He has reportedly subscribed to a Taiwanese group called Life Academy and a program called Landmark Forum — personal training and development seminars that grew out of Werner Erhard’s est — which claims to improve personal relationships as well as business performance. In Cherng’s mind, the customer comes first. And since the customer can’t be happy unless he is cared for by happy Panda employees who are improving their own lives while improving his bottom line, he pays for their seminars.
“And while we’re talking about great people,” Cherng adds, “I’d like to say there are none better than here in the San Gabriel Valley, where this whole business started. My customers have been loyal and generous. Without them, none of this could have happened the way it did.”