Chris Arnold , communications director at Chipotle, said that
the Asian concept "absolutely lends to the Chipotle model." He
added: "We have long believed that Chipotle's success isn't
necessarily about tacos and burritos, but rather it's about a
simple model that keeps us focused on doing just a few things, but
doing them very well. With the same disciplined approach to
ShopHouse, we think it will do well, too." Mr. Arnold said there
will be no advertising initially, so there is no ShopHouse
agency.
Yum Brands is also tentatively getting into the space: Last week
it made a bid to up its minority stake in Little Sheep, a
well-known hot-pot chain in China, to 92.3%. Little Sheep also
operates a handful of units in California and Texas.
Panda Express, though not available everywhere, is the dominant
player in this country's limited-service Asian category, with
market share of 45.7% and U.S. sales of $1.4 billion in 2010,
according to Technomic.
Whatever critics might think of the mall staple, "consumers say
that they believe it to be fresher and healthier," said Bonnie
Riggs, restaurant industry analyst at NPD Group.
Panda Express plans to expand its number of restaurants over 70%
to about 2,300 nationwide by 2015. Much of that growth is planned
for the eastern part of the U.S. Still, with roughly 1,330 units at
the end of 2010, the company posted 12.8% growth in U.S. sales, and
a 4.9% increase in locations, according to Technomic.
As for Panda Express' marketing plans, Glenn Lunde, chief
marketing officer, said, "We are increasing our investment in
guest-focused initiatives to continue our commitment to exceptional
dining experience for every guest. This will always be our priority
and best marketing strategy."
In 2010, the chain spent about $6.5 million on U.S. measured
media, nearly all of which was on spot TV. It works with Siltanen
& Partners, Los Angeles, for creative and Pal8, Santa Barbara,
Calif., for media.
Other regional restaurants have expansion plans. P.F. Chang's
fast-casual outlet Pei Wei -- the No. 2 limited-service Asian
restaurant in the U.S. by sales, according to Technomic -- had 168
stores in the U.S. at year-end 2010 with sales of $310 million, and
plans to open 10 to 12 units in 2011. Minnesota-based Leeann
Chin's, which had about 42 locations at the end of 2010 and
estimated U.S. sales of $46.7 million, according to Technomic, has
talked of franchising nationwide.
But with all this potential for growth, there lie some
hurdles.
One failed experiment, perhaps too far ahead of the curve, was
China Coast, which shuttered in 1995. The Darden-owned chain lasted
five years and grew to 51 units before the company pulled the
plug.
Ms. Riggs said full-scale development in the Midwest could pose
challenging. "The most developed areas for Asian food are in the
Mountain and Pacific regions of the country, and the Mid-Atlantic.
... It's going to be a challenge for these concepts in the Midwest,
because people are exposed to other kinds of food less."