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Fast-food Chinese Chain Panda Express is Turning Self-help Tenets into Serious Cash Flow

Bloomberg Businessweek, by Karl Taro Greenfeld, November 22, 2010

The following is a series of excerpts from an article that appeared in the Bloomberg Businessweek  in the November 22-28, 2010 issue.

Fast-food Chinese chain Panda Express is turning self-help tenets into serious cash flow

Panda Express Staff
Jeff Minton

Andrew and Peggy Cherng with the Rosemead (Calif.) Panda Express staff

The Pandas are in an affectionate mood. Seventy-one Panda Express managers are gathered in the banquet room of the Dynasty Restaurant in San Jose, Calif., waiting in line to make a commitment in front of their colleagues to improve themselves—and the business. They are wearing orange T-shirts advertising their newest entrée, Kobari Beef. "I'm feeling saucy," the shirts read.

They call themselves "Pandas" because they are employees of Panda Restaurant Group (PRG), a  privately owned, 1,350-location "fast casual" Asian restaurant chain with $1.4 billion in annual sales. Part of being a successful Panda is buying into a process that founder and Co-Chief Executive Officer Andrew Cherng, 62, calls "a continuous commitment to sharpening yourself." That means standing before your fellow Pandas and speaking honestly and openly about your personal and business failings. . . .

. . . .

Cherng is an avid consumer of self-improvement programmes. He urges his Pandas to maintain healthy lifestyles and eat a well-rounded diet; he recently challenged the Pandas to run three miles in under 36 minutes. He has since 2003 been a participant in Life Academy, a Taiwanese organisation that follows a "life manual" dedicated to the "advancement of the human spirit." He is a devotee of Stephen Covey's Seven Habits of Highly Effective People, Deepak Chopra's The Seven Spiritual Laws of Success, and Don Miguel Ruiz's Four Agreements. Recently, Cherng has become passionate about the Landmark Forum, a programme that utilizes Werner Erhard's EST methodology, which Psychology Today described as one that, "tore you down and put you back together."

According to the group's literature, Landmark improves everything from personal relationships to business performance. It is a kind of programme Cherng has been relying on for almost a decade. "I see the benefit of Landmark to the human race," he says. "If you quit Panda tomorrow, I still want you to go to Landmark."

During the sharing, it becomes clear that every one of the 71 managers present has already attended the introductory Landmark Forum and many have completed the Landmark Advanced Course and Landmark Communication Course as well. The classes are intensive, three-day sessions where participants are urged to shed their past, break down obstacles to personal growth, and "bring about positive and permanent shifts in the quality of your life."

Cherng, perhaps emulating the Landmark coaches he has learned from, runs his regional meetings more like encounter groups than corporate conferences. He stands in the back of the room, arms folded, nodding as he listens to his managers share their pain, sorrow, joy, and pleasure, and pumps his fist when he hears an inspiring share. He has silver crew-cut hair, a round face, appraising eyes, and a slight underbite, all of which are reminiscent of an Asian Pete Rose. He wears casual clothing, today a Patagonia hoodie, khakis, and loafers. As he paces the rear of the banquet hall, crossing back and forth in front of the breakfast tables, he nods his head and devotes himself to "active listening."

At the end of the meeting, Cherng throws up a PowerPoint slide comparing Panda Express to a variety of restaurant chains. Right now, he explains, Panda is averaging about $1.4 million in annual sales at each of its 485 California locations. In-N-Out Burger is averaging $8 million to $10 million at its best locations.

"We need to be at $2 million per store," he says. "I'm challenging all of you to be impeccable, to aim higher, to grow!" Cherng's belief is that the personal improvement of his staff—by dieting, working on communication skills, running faster, and, of course, attending seminars—is directly transferable to sales. "I challenge you," he repeats."I challenge all of you to grow."

. . . .

The restaurant industry in general has been suffering through two years of declines, but the sector called "fast casual," which is basically non-burger fast food, has bucked the trend, according to Bonnie Riggs of NPD Group. The research firm reports that for the three-month period ended in August, Asian-themed fast casual food was up 4 percent, while the industry as a whole was flat. "Panda drives that category," says Riggs, noting that Panda is 10 times larger than its nearest competitor. With no true national competition in its category, Panda Express now sees the giants of the fast-food industry—McDonald's (MCD), Taco Bell, Burger King (BKC), and the like—as its main rivals.

. . . .

In his office, he is surrounded by a sculpture of a golden Buddha; a sculpture of a dragon; a basketball signed by John Wooden; and framed photos of his three daughters with their families. His bookcase is filled with self-help titles. Even back when he had just one restaurant in Pasadena, his waiters recall him bringing in cassettes of the latest business management seminar he had attended. Years later he moved from management to personal enlightenment. "For a while it was Seven Habits, then Life Academy, then Landmark," says Alan Huang, senior vice-president for operations and a Panda since 1988. "I rebelled in the beginning, but Andrew kept pushing so I went."

"Business is a playground," says Cherng, sitting down. He takes a moment to think before he reverts to his customary smile. "Business is where you practice your human skills. It's where you grow. You have to grow! You grow as a person, and then you will grow in business. That's how you go forward."

Spending time with the Pandas is unlike visiting almost any other corporation. Where else will an employee walk up to you, as one store manager did to me during a corporate meeting, give you a hug, and say: "Hi, I'm Francis Yee, and I'm making a commitment to being more open."

Cherng is unapologetic about his focus on what he calls "personal growth." "Before 2003 we used to be more task-based," he says. "But now, if you want to be a manager at Panda, you have to be committed to being positive, to continuous learning."

Eugene Lam, a regional vice-president managing 340 stores, says that joining Landmark isn't mandatory. "Every now and then we have some individuals who say all they want to do is work and go home and do nothing," he says. "But those people will eventually feel like they won't catch up, they'll feel behind in the workplace."

. . . .

Perhaps Cherng's obsessions with personal growth stem from his desire to keep himself motivated as his company, already worth billions, continues to expand.

. . . .

Cherng still sees the company's growth more in personal rather than professional terms. Reaching his goals, he believes, means "better service, better execution, better environment. Every one of these things requires a human touch. Every one of these things benefits from Landmark.....Forget about return on investment. This is a tremendous overall contribution to society."

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