Panda Express to underscore American-Chineseness in Japan re-entry

Panda Express, a Los Angeles-based Chinese restaurant chain, has brought its brand back to Japan through a partnership with Chikara no Moto (CMC), which runs the Ippudo ramen chain.

Panda Express previously operated a number of restaurants in Japan but withdrew after apparently struggling to adapt to local tastes. Its new premises, which opened on 25 November, is in Kawasaki, close to Tokyo.

The store will be the company’s second in Asia-Pacific after Seoul. Family-owned Panda Express operates in an eclectic range of markets outside the US including Canada, Mexico, Dubai, Saudi Arabia, Guatemala, Puerto Rico and Guam. It has around 1,950 restaurants in the US.

The restaurant is positioned as ‘fast casual’, serving American-Chinese cuisine (think dishes like General Tso’s chicken), which is not widespread or widely understood in Japan. Glenn Inanaga, SVP of Panda Restaurant Group, said in an interview in Tokyo that the company hopes to open further stores in Japan but that the initial opening will serve to introduce people to the concept and understand their preferences. He said Panda will not veer from its American interpretation of Chinese food, but that it will localise to a degree in the dishes that it serves.

“We have to deliver the message of being American-Chinese, not just Chinese,” Inanaga said. He explained that Panda Express is targeted mainly at families, but aims to be seen as more upscale than the likes of McDonald’s and distinct from typical ‘family restaurants’. He said it will serve as an entry point for people interested in Chinese food but who might feel intimidated by the menu in a typical Chinese restaurant.

He said a differentiating factor is that customers can see the ingredients and watch the preparation of the dishes, as opposed to being served pre-assembled products. This has special significance in Japan, where a 2015 safety scare dealt McDonald’s a blow that it is only just recovering from.

“I think people would like the convenience of the faster service model with the assurance of quality and detail in the cooking process,” Inanaga said. The company plans to rely on word-of-mouth to raise brand awareness.

Commenting on the launch, Yoshi Matsuura, senior planning director at McCann Japan, said it will not be easy for Panda Express to succeed in Japan. Matsuura noted that a number of Western fast food chains have entered, left and in some cases re-entered Japan over the years. “Market competition is fierce and consumers are super sensitive to quality and cost,” he said.

But he said Panda Express stands a good chance given the absence of major Chinese fast-food chains offering table dining. He said the key is relevance to Japanese consumers. The US positioning won’t necessarily hold meaning or add value, he warned; instead, the focus should be firmly on meeting local taste requirements and offering value for money.

Matsuura said starting out in a low-key city like Kawasaki makes sense as a means of testing. “Starting in downtown Tokyo is risky if you don’t have everything perfect from day one,” he said. “I think the key is to enter the market quietly and learn about the model that can succeed nationwide. If you do it right, this market is still one of the biggest.”

Inanaga said Panda Express is also looking to expand into India and the Philippines in Asia. US fast-food chains to move into Japan over the past two years include Taco Bell, Shake Shack and Carl’s Jr.