How Much Does It Cost To Open A Panda Express Franchise In 2022?

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written byIncome Geek Staff Writers
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Orange chicken with rice

The Panda Express Story


The Panda Express franchise (parent company Panda Restaurant Group, Inc) is a popular Chinese food chain that started in the United States and is primarily located in shopping malls, food courts, military bases, or Asian shopping plazas. Although the chain has expanded around the world, it is still based in Southern California. With more than 2,200 locations around the world, Panda Express is one of the largest Chinese restaurant chains in North America. The founder Andrew Cherng and his wife Peggy Cherng founded this successful chain of Chinese food restaurants in 1983 and is known for its high-quality food, fast takeout service, and great operations.


One thing about this business that sets them apart is that they don't give out franchisee licenses to just anyone. You must literally be either in the family or have an already established relationship with them, i.e. their employees with first-hand knowledge of how their company operates. Today, we will discuss the Panda Express franchise cost and how much it may take to open your first Panda Express location.


Famous Dishes


There is a reason why so many prospective franchisees want to own a Panda Express restaurant. It offers some of the most popular menu items including Orange Chicken, Kung Pao Chicken, Beijing Beef, and Beef and Broccoli and these dishes have become fan favorites and pop culture Asian foods. Not only are these dishes delicious, but they are also cooked with high-quality ingredients through a very systematic operations process. New franchise owners are trained via the "Panda Way", where their company values are focused on hard work, personal and interpersonal development, healthy lifestyle, continuous learning, developing, and acknowledging others.


Franchise Costs


Franchise Fee:


The total investment to open a Panda Express franchise in 2022 is estimated to be between $450,000 and $1.9 million, where $25,000 goes straight to the franchise fee. This fee is non-refundable and covers the initial training program that will be given to potential franchisees and their families as well as the cost of a training manual, equipment, and other brand-related products.


Property Lease:


The property rent is combined into 3 month periods, and the range varies based on the real estate location as well as the restaurant size, but the range is anywhere from the low end of $20,000 to over $450,000 for high traffic areas in major cities. Other factors to take into consideration include:


  • Square footage

  • Neighborhood environment

  • Age and condition of the property

  • Leasing company and agreements

  • Type of food court (heavy traffic airports like LAX will be much more expensive)


The typical square footage will also vary, but the large majority of shops will be about 500 to 1,500 square feet, with larger-sized restaurants occupying about 3,000 square feet.


Initial Inventory:


When starting a Panda Express franchise, there are certain costs that are associated with getting the business up and running. One of these costs is inventory investment. This cost includes the purchase of


  • Food products

  • Proprietary spice, mixes, flavorings, seasonings, marinades, etc

  • Sauces and take out sauce packets

  • Beverages

  • Paper products

  • Cleaning supplies and equipment

  • ... and other miscellaneous items needed for the operation of the restaurant


The initial inventory investment can be costly, but it is necessary to ensure that the restaurant has the items it needs to service customers. Additionally, having a well-stocked kitchen can help reduce waste and keep food costs down. The total initial investment range for inventory will be somewhere between $2,500 to $3,800 and must be purchased through preapproved third-party vendors and suppliers.


Restaurant Equipment, Furniture, And Back-office Supplies:


In order to open a Panda Express restaurant, you will need some basic furniture and equipment. You will need at least two cooking ranges, a deep fryer, a refrigerator, and a freezer. You'll also need some office supplies such as computers and software, as well as basic cooking equipment such as woks and rice cookers.


The estimated investment range in furniture, equipment, and office supplies will be around $100,000 to $250,000. This will cover the cost of furniture, cooking equipment, office supplies, and computer hardware and software. Of course, this estimate may vary depending on the size and location of your restaurant. 


Before you open your doors, it's important to make sure you have all the necessary supplies in place. This includes cooking equipment as well as furniture like tables and chairs. You'll also need plenty of kitchen utensils and serving dishes. 


In addition to the physical necessities, you'll also need to invest in some office supplies. A computer with internet access is a must, as is software that can help manage your inventory and finances.


Lastly, you should also include an additional cost for architectural design fees, which can range between $20,000 to $40,000, depending on your restaurant location.


Training Cost:


In order to operate your own Panda Express restaurant, you'll need to attend their initial training program for new franchise owners and budget for the cost of training. You should plan to budget between $15,000 and $35,000, and that's just for the first restaurant. New franchise owners can expect to pay for their own travel and lodging expenses during training, which can last anywhere from two to four weeks.


In addition, there will be ongoing costs and updated training associated with running a Panda Express restaurant. But with over 2,200 locations nationwide and its mainstream adoption, Panda Express is one of the best options for popular Chinese food chains in America. So if you're looking to break into the restaurant business, this could be a great opportunity.


Royalty Fees:


When you become a new Panda Express franchise owner, there are several important dates and payments you must remember. First, on the 15th day of each month, you are required to pay an 8% royalty fee on your restaurant's gross sales from the previous month. This fee is paid to Panda Express corporate and helps them manage high-quality food sourcing and services to all franchisees. Be sure to keep these dates in mind as you plan your business budget and cash flow.


Marketing Fees:


In order for Panda Express to market, brand, and promote the restaurant chains, franchisees will need to plan on spending around $300 to $1000 per year on promotional and marketing materials. This is a small price to pay for the continued success of the company. Approved campaign materials must be purchased from Panda Express' marketing department prior to being used in any advertising or marketing campaigns.


In addition to the corporate marketing fees, local store marketing expenses may also be needed. This can include costs such as local advertising, hiring a local marketing expert, and any fees involved to promote your location to the local population.


Labor Costs:


Panda Express labor costs will range depending on your location and size of operation and revenue. The larger the restaurant, the higher the labor cost; as revenue increases, the labor cost percentage also rises. However, a franchisee can expect to pay around 19% of sales in wages and benefits, on average. This number may be slightly higher or lower in specific markets, but it gives a good estimate for operators looking to budget for this cost.


Licenses and Permits:


Panda Express restaurant licenses and permits can cost franchisees from $1,500 to $30,000. The amount of the fee is dependent on the location of the restaurant and the applicable laws and regulations. Franchisees must also adhere to all local ordinances.


Insurance:


Opening a Panda Express can be a lucrative business venture, but it is important to factor in the cost of insurance before signing any leases.


The cost of insurance for a Panda Express restaurant will vary depending on the location and the risk factors associated with that area. For example, if the restaurant is located in an area that is prone to natural disasters, the cost of insurance will be higher than if it is located in a safer area. In addition, local regulations can also affect the cost of insurance. For example, some states require restaurants to have specific types of insurance, such as workers' compensation insurance.


The average cost of insurance for a Panda Express restaurant ranges from $25,000 to $70,000, again depending on your location and local laws, so please consult with an expert so you can budget for this expense.


Taxes:


A Panda Express restaurant will incur a number of tax expenses, depending on the local regulations and tax rates. A typical tax rate to budget into your expenses would be in the range of 20-30%. There may be additional local or state taxes that are specific to the location of your business. You will also need to pay sales tax on the items you sell. Be sure to consult with an accountant or tax specialist to get a more accurate estimate for your business prior to opening a Panda Express.


Miscellaneous Expenses:


Running a Panda Express restaurant can be costly, especially with the miscellaneous expenses that are unforeseen. Security deposits for businesses can be expensive, as can utility, rent, food, and labor cost increases. Having a budget of at least $10,000 set aside for these types of expenses is crucial for the success of the Panda Express restaurant.


Capital Reserves You Need To Turn a Profit:


Running a new Panda Express franchise can take some time to turn it into a profitable business, so you must put away some necessary capital at the beginning. This amount covers the cost of setting up the business, including leasehold improvements, furniture and fixtures, and inventory. Additional ongoing expenses include marketing and advertising, food costs, and employee salaries. To support the business until it becomes profitable, you will need to have at least $60,000 to $120,000 in capital reserves.


Are You Up For It?


Panda Express restaurants are a common sight in many parts of the United States and a great example of an immigrant business success story. The restaurant chain is famously known for its fast service and high-quality Americanized Chinese food. However, franchise opportunities are rare for someone who has no personal, family, or work connections to this family business. Prospective franchisees will need to first becomes Panda Express employees in order to qualify for a chance to own their own Panda Express restaurant.