Panda Express Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$510,000 - $3,268,000
Franchise Fee
$12,500
Total US Locations
2,414
Business Summary
Panda Express restaurants are a chain of limited service establishments that offer gourmet Chinese and other Asian food items, beverages, and related menu items for both on-premises dining and carry-out. Panda Express emphasizes convenience and quality, with menu items prepared using specific recipes, proprietary products, and special marketing techniques. Franchisees operate these restaurants, often in "captive" venues such as military facilities, airports, campuses, and hospitals.
Corporate History
The Panda Express business initially started in 1983 with the opening of the first Panda Express Restaurant in Glendale, California, by Galleria Panda Express, Inc. This entity was later merged into Panda Express, Inc. (PEI) in 1994. Citadel Panda Express, Inc., the franchisor, was incorporated in California in 1990 and is a wholly-owned subsidiary of PEI, which itself is a subsidiary of Panda Restaurant Group, Inc. (PRG). Citadel Panda Express, Inc. began offering and registering Panda Express franchises in various states in 1995, and since 2004, it has been granting franchises under the current licensing agreement structure. The company also offers international licenses.
Financial Overview
Investment Range
$510,000 - $3,268,000
Franchise Fee (Low)
$12,500
Franchise Fee (High)
$25,000
Royalty %
8%
Equipment Costs (Low)
$297,500
Equipment Costs (High)
$2,455,000
Working Capital
$24,000
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
Citadel Panda Express, Inc. appears to be in good financial health, receiving an unqualified audit opinion for its financial statements. The company has shown significant net income growth, reporting over $22 million in 2023 and nearly $18 million in 2022. While there was a notable decrease in cash from 2022 to 2023, the company also reported a substantial increase in funds owed to it from an affiliate, nearly $12 million in 2023, which helps balance the cash position. This financial activity is linked to related party transactions, specifically Panda Restaurant Group's management of airplane purchases and sales on behalf of Citadel Panda Express, Inc. The company has no disclosed concerns about its ability to continue operations.
Financing Details
Panda Express's affiliates (Panda Restaurant Group or Panda Express, Inc.) may occasionally offer direct financing to franchisees, though these arrangements have been infrequent. These loans are primarily for construction or build-out costs, with amounts typically under $100,000 and repayment terms ranging from 1 to 2 years. The interest rate is 7%, but it increases by an additional 5% upon default. While no down payment is required, franchisees must sign a Security Agreement, which uses all current and future property as collateral, and a Continuing Personal Guarantee, potentially also requiring a spouse or domestic partner to co-sign. There are no prepayment penalties.
Performance Metrics
Total US Locations
2,414
Franchised Units
165
Corporate Units
2,249
Avg Square Footage
1,000
Franchising Since
1995
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
8
Litigation Summary
Panda Express is currently involved in two pending lawsuits, both filed in 2023 by a former associate named Aveon Goosby. One of these alleges violations of California labor laws regarding minor employees working excessive hours. The other lawsuit claims whistleblower retaliation, wrongful termination, and intentional infliction of emotional distress. Panda Express states it intends to vigorously defend against these claims. Additionally, Panda Express has successfully concluded several other lawsuits in the past, primarily relating to labor and employee claims such as unpaid overtime, wage statements, and harassment. These historical cases were resolved between 2014 and 2018, with settlements ranging from $8,000 to $4.1 million.
Bankruptcy History
Panda Express has no bankruptcy history to disclose.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew, Panda Express franchisees must notify the franchisor in writing between 6 to 12 months before their current operating term ends. The franchisee must be in "Good Standing," meaning no defaults on obligations. The restaurant itself needs to fully comply with current standards for new units, which can require a complete update and renovation of the restaurant and its assets. All financial obligations to Panda Express and its affiliates must be satisfied, and the franchisee must pay a $10,000 successor fee. Additionally, franchisees will need to sign a general legal release and any other required documents, and may be required to sign a new license agreement with materially different terms or a renewal/extension amendment to their existing license agreement.
Training & Support Program
Franchisor Assistance
Panda Express provides various forms of assistance to its franchisees. Before opening, Panda Express helps by reviewing proposed restaurant locations within 30 days of receiving a complete submittal package and offers generic interior layout assistance. It also provides an initial training program for up to 8 attendees per restaurant as part of the initial license fee. For existing restaurant purchases from an affiliate, sufficient initial inventory is ensured. During operation, Panda Express loans access to its operational manuals, grants the license to use its brand marks and system, and conducts periodic inspections and evaluations of restaurant operations, offering guidance through various methods including electronic communication, written materials, phone calls, web-based training, and on-site consultations. The franchisor also discloses trade secret and confidential information, provides guidelines for purchasing products and services, and conducts annual reviews covering performance data and business strategies. If the agreement terminates due to the franchisor's default, Panda Express will repurchase unused inventory and cover de-identification costs.
Initial Training Hours
356
Training Location
Panda Express's company-owned restaurants, a certified training unit owned by a licensee, or other designated locations. Some pre-work is online.
Ongoing Support
Panda Express provides ongoing support through periodic inspections and evaluations of restaurant operations, offering guidance via various methods including electronic communication, written materials, phone calls, web-based training, and on-site consultations. Panda Express also conducts annual reviews of the franchisee's restaurant operations, covering performance data, business plans, and growth strategies. Franchisees are required to participate in customer survey efforts and ensure at least six Head Chefs/Cooks obtain updated cooking certifications annually. Remedial training may be required if System Standards are not maintained. For franchisees operating five or more restaurants, Panda Express recommends an Operations Training Leader and may require a Head of Operations to ensure compliance with brand standards and support continuous training.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Supervisory
Territory Type
Non-Exclusive
Staff Count
10
Territory Size Requirements
Panda Express does not award any protected, reserved, or exclusive territorial rights to its franchisees. The franchisor or its affiliates can establish other Panda Express restaurants or competitive brands anywhere, regardless of proximity to a franchisee's location. Franchisees are not restricted from soliciting customers from any location.
Staffing Notes
Panda Express requires franchisees to maintain specific staffing levels with certified personnel. Each restaurant must have at least one certified Store Manager or Assistant Manager, six certified Panda Express Chefs/Cooks, and three certified Service Associates. These minimums can increase based on weekly sales volume. A Store Manager must be present at the restaurant during all operating hours to supervise food preparation and safety. Changes to the Store Manager or Designated Individual require prior written approval and successful completion of initial training and certification. Annually, at least six Head Chefs/Cooks are required to obtain updated cooking certifications. For franchisees operating five or more restaurants, Panda Express recommends an Operations Training Leader and may require a Head of Operations to ensure compliance with brand standards and support continuous training. All employees must meet skill, training, and experience levels consistent with Panda Express's quality standards.