How Much Is a Panda Express Franchise in 2024?

This article is based on Panda Express’s 2023 FDD.

Panda Express is a fast-food franchise restaurant chain that primarily serves American Chinese food. Their menu consists of items that are inspired by traditional Chinese cuisines, such as orange chicken, Kung Pao chicken, teriyaki chicken, and Beijing Beef. And the sister company of Panda Express is Panda Inn, which is a more upscale, table service restaurant that offers similar meal items. The headquarters of the Panda Express franchise is located in Rosemead, California.

According to their FDD, Panda Express anticipates that most of their franchises will operate in “captive venues” under licensing agreements, such as airports, hospitals, casinos, and other similar facilities.

Contents

The Panda Express concept was founded in the 1970s by the Cherng family — Chef Ming Tsai Chern and his children Andrew and Peggy Cherng. It originally started as Panda Inn, a more upscale, sit-down restaurant. Although the business struggled at first, with Andrew having to offer coupons to attract customers, it was eventually able to flourish with the help of Terry and Dan Donahue. With this connection, they were able to expand their restaurant concept into food courts, creating the now-known fast-food restaurant Panda Express. In the beginning, Panda Express was only found in food courts, but eventually, it expanded into brick-and-mortar concepts. Now, less than 2% of existing Panda Express franchises exist in food court areas.

How Much Is a Panda Express Franchise?

Panda Express Franchise Fee

$25,000
The initial license fee for a Panda Express franchise is $25,000. This is the upfront fee that must be paid when opening a Panda Express franchise.

Panda Express Franchise Cost

The estimated total investment necessary to begin operation of a Panda Express franchise ranges from $480,000 – $3,220,000. This does not include the Panda Express Owner’s Salary.

Additional Cost Breakdown

The following costs are part of the upfront costs included in the initial investment. Many of these are one-time fees that are needed to launch the franchise.

Additional Cost Breakdown

Overall, Panda Express has a wide range of additional costs and fees. Their additional costs for the estimated total investment are on the higher end, especially in terms of rent, leasehold improvements, and insurance.

Ongoing Costs and Fees

The royalty fee for Panda Express is 8% of gross sales or the minimum amount of $4,000. The franchisee must pay the higher of the two.

How Much Do Franchise Owners Make?

Panda Express Franchise Sales Figures

The financial performance representations in Panda Express’s FDD were taken from currently operating licensed franchisees in the year 2020. Also, their financial performance representations are categorized by type of licensed location: in this case the airport, casino, hospital, military, and university, as well as the total numbers.

Below is a chart that showcases the most important of the financial information given by Panda Express — their average gross sales by location, median gross sales by location, minimum gross sales by location, and maximum gross sales by location.

In general, it seems that Panda Express units do the best financially in airport locations, with them having the highest maximum gross sales at $7,044,842; highest average gross sales at $2,715,434, and highest median gross sales at $2,565,765. However, the military locations outperform airport locations for total gross sales at $51,593,244 and the casino locations outperform for minimum gross sales at $449,205.

It is important to note that these financial representations only showcase the figures for gross sales, there is no information on the net profit of the average franchisee. In fact, given the high initial investment for a Panda Express franchise, one possible implication is that there might be a high operating cost, which could eat into even the high gross sales of Panda Express. Panda Express Owner Salary can be up to 15% of the sales and even more for top-performing locations.

Panda Express Franchisor Income Statement

 Panda Express Income Statement

Panda Express Franchisor Income Statement Key Insights

Overall, Panda Express is a profitable business, making almost $20M in 2022. Yes, the majority of their revenue comes from royalty income, and this could be because Panda Express charges a relatively high royalty fee of 8%, compared to the franchise average of 5%. Also, their expenses are relatively small compared to their revenue, meaning that they can make a significant net profit according to their income statement. Their net income in 2022 was more than $18,000,000.

How does this compare to other franchises in the food and beverage industry? Even though Panda Express is a major name in the industry, its revenues are relatively small compared to other franchises. However, it is important to keep in mind that the financial information revealed in their income statement is fairly limited, so the following comparisons are based on revenues from royalties and license fees rather than restaurant sales.

Compared to other franchises, Panda Express lacks transparency in regard to their financial statements as they do not indicate the revenue they make from their company-owned units.

How Many Panda Express Units Have Opened/Closed?

With a total of 2352 total U.S locations, Panda Express had a sustainable growth over the past 3 years.

Conclusion

Panda Express is one of the most prominent American-Chinese fast food chains in the United States, and they have franchises in 34 states of the U.S. Licensed franchisees will enjoy the benefit of a well-established brand and an extensive restaurant chain system. Furthermore, the gross sales of Panda Express units detailed in the Item 19 of their FDD are relatively high.

However, there are some cons to investing into a Panda Express franchise. A high total initial investment and operating costs only makes it accessible to investors with a substantial net worth. Furthermore, it seems that Panda Express is not as devoted to developing its franchise units compared to its internal development of company-owned units. Finally, franchisees must build their Panda Express units in an already existing retail space, meaning that they cannot construct their free standing unit.

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