How a PhD in a Electrical Engineering made her fortune by running a Chinese restaurant.

By Sophia Viklund (Partner, BackCode) & Esther Nam (Web Developer, Self)

Currently co-chairman and co-CEO of Panda Restaurant Group, Dr. Peggy Cherng got into the restaurant business with her husband, who started their first Chinese restaurant. Prior to that, she had worked in the aerospace industry for 5 years, witnessing a lot of innovation. She brought to the restaurant business an important change – the adoption of portable computers for processing orders. Today, every single check and order has to be digitalized and portable computer terminals are everywhere in Panda’s restaurants.

Panda Express’ management keeps track of every single transaction that goes through the restaurant’s system daily and analyzes the data. Panda Express has pioneered the use of such automation in the restaurant business. Of course, automation in the restaurant business is common practice but Panda Express was an early adopter.

Panda Express made over a billion dollars in revenue last year with Dr. Cherng was an integral part of Panda’s success. She was the guest of honor at a recent dinner hosted by the CalTech Alumni Association, and graciously turned her spotlight at the CalTech Alumni Dinner into a dialogue – answering many of the questions the audience members posed.

How does innovation happen in your business, and do you overcome people’s resistance to new ideas?

Dr. Cherng: Change has to occur not only in the system, but in the behavior and culture as well. The only thing one can change is one’s vision and goals. This is the reason Panda Express came up with its vision of becoming one of the world’s top 100 companies, for both its employees and its guests. Achieving this goal is the responsibility not just of the managers, but also of every single employee. As long as a clear vision is present, everyone can see the map and figure out the way to get there.

The way to be a good communicator is not just to reach a person’s intellect, but also their heart. How we present and carry ourselves is entirely up to us, and the secret to being welcomed in the business community is to be humble, no matter how fantastically competent or educated one may be.

Having a PhD may open up doors that otherwise would not be opened, especially in this economy, but as important as education and intellect are, it is more important not to show off or behave as though one is better than others. A humble attitude helps innovative ideas to be better heard and more easily accepted in the business community.

How many of the people who work for you make decisions that affect your business, and is there a single person who makes a particular decision in regards to all your restaurants?

Dr. Cherng: Right now, Panda Express has have over 1,500 stores and we have over 20,000 employees. So with regard to decision-making: strategically, the decisions are made at the top. But the execution of better serving, our restaurants has to be done on the front lines. Because we are a chain restaurant, we need consistency, so we need to articulate our criteria. For example, there are four core items on our restaurant’s menu that we offer at every single location.

We also have optional items where ingredients could be picked out from the menu system, per local preference. So we encourage de-centralizing creation, but they also have to let us know how customers like the new items, so we can track how many new items were sold, so we can understand what customer’s preference is.

Does Panda Express currently employ or hire engineers? What do engineers have to offer to the business world?

Dr. Cherng: We do have engineers, and not just in our research department. We try to use the mentality of an engineer in seeing new ways to do things. A lot of people ask me about my PhD – “What exactly does your PhD qualify you for?” The only response I can think of is that it will open the doors for you. It’ll give you credibility in your ability to think and do research – because you need to do your research to get your dissertation done. So it’ll also enable you to think about how you can create change, about what else can be done better.

Engineers are at the forefront of many innovations, because they never stop thinking about ways to innovate. Along with intellect and education, it is important to have curiosity and a vision to see how things could be done differently, or in a new way. Engineers often bring more value to the table than they usually get credit for in the business world.

What are the ups and down of having a personal relationship and business relationship with your husband, while running a business?

Dr. Cherng: It is definitely not easy, as we are a bit different. For example, I like to think things through; he likes to get things done. Focus on leveraging the differences and value the strengths, but not try to change each other: in management we try to emphasize each other’s strengths and leverage each other’s weaknesses – to complement each other and work as a team. And not ever try to change each other, but work on trying to change ourselves. Do not try to change your spouse!

What led Panda Express to expand their restaurant business to a whole chain of restaurants, and what was it like when Panda took its first steps toward expansion??

Dr. Cherng: In the very first restaurant we opened (in Pasadena, CA), we focused on setting a higher standard of service, and raised the bar by treating Panda’s employees better than the competition did theirs. Usually people who work as servers in a restaurant see it as a means to survive until they can move on to something better, and never consider it as a potential career path. When Panda Express opens a new location, we invite our employees to participate and become shareholders in the business.

In the first 10 years of Panda Express’ existence, we worked to ensure the survival of the restaurant and reinvested back into the business. During the next 10 years, the main focus was on growth and expansion. After experiencing tremendous growth, Panda’s management realized that a system was needed to keep track of how multiple restaurant locations were doing. This is how the implementation of a centralized computer system and data processing automation came about. We need computers to give us real-time sales data and know everything that is going on in our business every day.

Cooking Chinese food is a creative process and different people will cook different dishes in their own unique ways. At a chain restaurant, guests expect to find the same dishes in all the chain’s locations. This is where standardization becomes important. For a chain restaurant, one of the criteria for quality is meeting the client’s expectation of having the food taste the same in all restaurants. Every single restaurant has the same recipes that restaurant chefs must follow. In Panda’s training classes, the focus is on standardization.

It’s also about the business structure, the support structure, and the most important element of all is discipline, because standardization and structure may be in place but you also need people who can follow both things. What makes Panda Express different from other restaurants is its focus on employee development, because we want to the employee to have a great career at Panda.

We train our employees to give good service, the most important part of which is to smile at the customer. You don’t want to “manage” people the way you manage tasks – you want to inspire them. The most important thing in management is to be able to get commitment directly from your employees’ hearts, because you care, because you show interest in them and respect for them, and because you really want them to be there each day.

As for Panda Express’s brand recognition, guests are Panda’s best judges. Everything is centered around our guests and their experience – high quality and consistency in how food tastes, excellent customer service, and beautiful ambience in all restaurants.

How does your support of non-profits and educational institutions like CalTech fit into your company’s vision?

Dr. Cherng: One thing I am very passionate about is education and children. In 1998-1999, we decided that we’d be a part of the community instead of just doing business in the community. We’ve created a program called “Panda Care.” This is where my Ph.D. comes in – this was our vision: the mission of Panda Care is to help educate underserved children. So we partner up with children’s hospitals and schools everywhere, in hundreds of different locations. Every Panda restaurant location has the Panda Care program, putting a school or a children’s hospital in its care. We provide food while our associates initiate the program’s activities and also volunteer their time. Our organization is very much involved in local communities, and we also inspire our associates to have the same goals.

Editor’s note: Got a question for our guest bloggers? Leave a message in the comments below.

About the guest blogger: Sophia Viklund is a Partner at BackCode, LLC, a Pasadena, CA-based game development company that focuses on game development for entertainment and education. Follow her on Twitter at @backCode.

About the guest blogger: Esther Nam is a web developer based in Santa Monica, CA. You might run into her at various Python/developer meetups around Los Angeles. Follow her on Twitter at @estherbester.