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Panda Express

Free essay Panda Express is a fast-food restaurant chain that offers American Chinese cuisine. Its revenue was $2.5 billion in 2015 (Forbes, 2016). Panda Express is one of the companies owned by Panda Restaurant Group. Andrew Cherng and his father, Ming-Tsai Cherng, established it in 1973, in Pasadena, California. The first restaurant was called Panda Inn. As to Panda Express, the first restaurant opened in 1983 (Panda Express, 2016). Later, the Cherng introduced Hibachi-San. Hence, the Panda Restaurant Group consists of Panda Inn, Panda Express, and Hibachi-San. The mission of the whole Panda Restaurant Group and, consequently, Panda Express is to “deliver exceptional Asian dining experiences by building an organization where people are inspired to better their lives” (Panda Restaurant Group, Inc., 2016). Panda Restaurant Group operates on foundations of proactivity, respect, growth, great operations, and giving. Proactivity means that the company identifies growth opportunities and strives for the set goals. Respect in Panda Express is a win-win relationship with customers. Growth is an openness to new ideas and changes. Moreover, Panda Express undertakes great operations and upholds operating culture. Giving the principle of Panda Express finds its expression in the Panda Cares charity foundation. All these principles form the operating base of Panda Express. The paper discusses the target market of Panda Express and its competitors, provides internal and external analysis and describes its strategies.

Target Market

Customers who enjoy Chinese fast food form the target market. These customers can be from any demographic. Based on psychographics, Panda Express targets customers who lead an active lifestyle and those whose values are family and traditions. Panda Express positions itself as a family restaurant. The family of Panda Express includes owners, customers, and employees (Panda Express, 2016).

Competitors

The main competitors of Panda Express are local authentic Chinese restaurants. Meanwhile, American Chinese restaurants, which can be considered Panda Express competitors, are Chinese Gourmet Express, Leeann Chin, Manchu Wok, Pei Wei, P. F. Chang’s, Pick Up Stix, and Crazy Stir. However, none of the named chains is as large as Panda Express (Duncan, 2016).

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Internal and External Analysis

The aim of the internal analysis is to identify the strengths and weaknesses of an organization. Strengths are factors that form a base for the company’s competitive advantage. Competitive advantage is a unique feature that allows a business to surpass its competitors. Revenue is often a measure of a company’s performance because great revenue comes from high demand and indicates the popularity of a company among people. The competitive advantages of Panda Express are its brand name and unique concept of employees-customers ‘family’ (Hua, 2015). These form the basis for such strength as a positive reputation. Private ownership also influences a company’s philosophy and reputation. This way, the company is able to move in a certain direction, without focusing only on margins. Another competitive advantage named by Panda Express itself relates to great operations. This competitive advantage bases upon the company’s openness, desire to grow, as well as the corporate culture of win-win relationships with customers. All of these factors form the company’s strengths. The convenient location is also a strength of the company. Panda Express restaurants are usually located at universities, shopping malls, military bases, amusement parks, airports, and casinos. Malls are the best trade spot for a Chinese American restaurant because it is easy to get shoppers as customers (Eng, 2013). In addition, there are many stand-alone Panda Express restaurants. Thus, the company started from fast-food restaurants in malls, and then it grew to chain with many street locations. The last strength of Panda Express is the lack of serious competitors.

Weaknesses of a company are the factors that affect it in a negative way. The absence of core strengths may also be seen as a weak side. The main weakness of Panda Express is common to every company in the restaurant industry: when external operating costs, such as minimum wages, supplies, and rent increase, it is harder to generate greater revenue. Another weakness is the lack of creativity in new dishes. Customers of chained fast-food restaurants get used to traditional menus, so it can be difficult to introduce a new creative dish.

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The external analysis includes a review of opportunities and threats. Opportunity for a company is an external potential for growth and an increase in profits. One of the main opportunities is to fulfill the needs of vegetarian customers. Panda Express can open a new market by adding vegetarian dishes such as meatless chicken or shrimp. This way, traditional American Chinese dishes can become vegetarian, and Panda Express will attract more customers. Expanding the menu is also an opportunity: the company can add new categories to their menus such as the Chinese breakfast menu and dessert menu. As a result, it can increase a company’s growth rate and market. Currently, the Panda Express dessert menu offers only fortune cookies (Panda Express, 2016). Thus, an extended dessert menu can include sweet rolls with different flavors. One more opportunity for Panda Express growth is in getting into the Asian and European markets. Recently the company has opened two restaurants in the United Arab Emirates (Sambidge, 2014). American Chinese cuisine gains popularity among non-American customers and this fact encourage Panda Express to open a new market.

Threats are negative external factors. An increase in the number of local Asian restaurants is a threat to Panda Express. Some of them may price their products lower than Panda Express does. The location of these restaurants is also an important factor, as Panda Express operates mainly in public places while Asian restaurants operate in the streets. Government regulations or restrictions can also affect the company in a negative way. Such restrictions can create barriers to the growth of the company. Since Panda Express operates as a foreign company in many countries, it may face restrictions imposed there. Local competitors in European and Asian countries are also a threat to the company.

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The results of internal and external analysis form S.W.O.T. matrix.

S.W.O.T. matrix for Panda Express

Strengths

  • positive reputation
  • private ownership
  • great operations
  • convenient locations
  • lack of serious competitors

Weaknesses

  • revenue depends on operating costs
  • lack of creativity in new dishes

Opportunities

  • attracting new clients by adding vegetarian dishes to the menu
  • including new categories to the menu (Chinese breakfast menu, dessert menu)
  • getting into Asian and European market

Threats

  • expansion of local Asian restaurants
  • government regulations or restrictions
  • barriers in foreign markets

Overall Strategy and Analysis

Panda Express successfully markets itself as a family Chinese fast-food restaurant. It has a good reputation among customers and many opportunities for growth. Certainly, Panda Express can overcome threats and minimize the negative effect of its weaknesses.

The results of the SWOT analysis influence the company’s strategy. It is generated in four directions: strengths-opportunities (S-O), weaknesses-opportunities (W-O), strengths-threats (S-T), and weaknesses-threats (W-T).

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S-O strategy includes opportunities that fit the company’s strengths. For example, the lack of serious competitors and the opportunity of entering the vegetarian market make it possible for Panda Express to conquer the segment. Meanwhile, Panda Express restaurants, located at the universities and in business centers, can attract more customers by serving breakfasts. In addition, the great operations of the company and its customer service will make penetration into Asian and European markets easier.

W-O strategy enables the company to overcome its weaknesses in pursuit of opportunities. Although the variety of new dishes in American Chinese cuisine is limited, the ability to make vegetarian food balances the lack of new dishes. Operating costs affect revenue, but they can be reduced when using new energy-efficient cooking equipment, for example.

S-T direction focuses on the elimination or lessening of threats with the help of the company’s strong features. The good reputation of the company overcomes the threat of the expansion of local Asian restaurants. The new local Asian restaurants might not have such a strong brand name and reputation as Panda Express does. In this case, the customers might not be majorly affected by pricing.

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W-T direction explains how to defend a company against threats that can be assessed through weaknesses. Threats and weaknesses of Panda Express have nothing in common, so to defend against threats and sustain weaknesses the company has to use positive opportunities and maintain its strengths.

Conclusion and Recommendations

The strategy of Panda Express expansion and stabilization bases on its opportunities and strengths. Panda Express has a strong good reputation, which helps it to market new products successfully. The concept of a family restaurant with traditional American Chinese cuisine is a key concept for Panda Express. The balance of weaknesses and opportunities allows the company to maintain its strong sides while pursuing new goals. Local Asian restaurants and government can impose the threats that Panda Express might face while running its business. Meanwhile, the strengths of Panda Express provide a wide base for its operations, growth, and defense against possible threats.

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