Panda Express is on a roll and there’s simply no other way to put it. The limited-service Asian concept expanded its footprint by 2.5% in 2022, while sales jumped by 16%, according to the Top 500 in partnership with Datassential.
Panda Express grew its unit count from 2,316 to 2,374 — good for the 21st largest chain by units.
The chain’s sales, however, jumped from $4.4 billion in 2021 to $5.1 billion in 2022. This puts the company at No. 14 for sales — up from No. 19 in 2021 — and pushes it past heavyweights Popeyes, KFC, Olive Garden, Dairy Queen, and Arby’s. Panda’s estimated sales per unit were also up by double digits, increasing from $1.95 million in 2021 to $2.18 million in 2022.
With these numbers, Panda Express stands on its own in the limited-service Asian category. With its $711 million year-over-year gain, no other such concept has annual systemwide sales that reach even half of what Panda added last year.
According to Panda CFO David Landsberg, the chain has nearly doubled its AUVs in recent years due to an increase in guest counts and the company’s efforts to improve store capacity; for example, improving kitchen capacity to handle higher volumes and prioritizing drive-thrus and digital orders. The 40-year-old chain recently introduced a new store model to create more efficiencies and accommodate the increased demand for off-premises business. It includes a larger back-of-the-house area and reduces the dine-in seat count by 15%.
“We recently relaunched our app and kickstarted a delivery service, resulting in a substantial increase in digital sales,” Landsberg said. “Since the pandemic began, Panda has more than tripled its already strong delivery business, and our digital business has also grown since launching Panda Delivers in 2020.”
Panda’s digital business now accounts for nearly 20% of the sales mix. The chain’s momentum also comes from a sharpened focus on menu innovation.
“We’re consistently introducing new menu items. … We see our guests coming back more often and new guests trying Panda when we introduce new dishes,” Landsberg said. In 2022, for instance, the company launched plant-based Original Orange Chicken for a limited time, which Landsberg said introduced the brand to new consumers and generated incremental sales.
To continue this momentum, Panda plans to stay the course with its “no best, only better” strategy, which means a focus on continuously making small, incremental improvements in operations and people. The Panda Express Innovation Kitchen, for instance, is venturing into creating different occasions, such as more hand-held items for convenience and snacks. The company will also test dim sum items this year. On the ops side, the company began an automated wok rollout in 2022 to help employees prepare heavier and larger volume items like Chow Mein, and it is testing drive-thru AI technology.
Further, Panda will maintain its “purpose-driven and people-first” approach, which has helped the chain better navigate labor shortages throughout the past two years. Landsberg said Panda emphasizes professional and personal development and offers one of the industry’s highest hourly wages and benefits packages.
“Our highest earning manager earned $277,000 last year,” he said. “What’s been very effective in our recruiting efforts is communicating our earning potential and career growth opportunities. At Panda, 68% of the managers started out as hourly associates and 100% of our above-store leaders began their Panda journey working in our restaurants.”
All of these “incremental improvements” are driving the chain’s potential, which is huge. Landsberg said the company’s ultimate goals are to stay focused on opening stores, to drive digital and to invest people. All of this, he said, should drive the brand to “become a $10 billion business in the not-too distant future.” For context, this would put Panda Express squarely in the top 10 alongside players like Subway and Burger King.
Contact Alicia Kelso at [email protected]