The Asian food space in quick service is grappling with increased demand for convenience and customization, in part sparked by a continuation of the pandemic.
Teriyaki Madness CEO Michael Haith says an uptick in customization, in particular, is something Asian counter-service brands can take in stride thanks to the popularity of bowl-style dishes.
“People want to be able to customize their food,” Haith says. “If they want to be a little naughty and they want to have some fried rice and some fried food, the opportunity is there. If they want to just eat vegetables and some clean protein, the opportunity is there.”
Teriyaki Madness’ power bowl, which is loaded up with fresh vegetables and chicken without noodles or rice, accelerated in sales as consumers emerged from quarantine habits, Haith adds.
Because Teriyaki Madness focused on convenience with third-party delivery and contactless pickup, the chain soared in 2020, with sales rising 18 percent, year-over-year. In 2021 so far, Teriyaki Madness jumped 30 percent. Haith says the company thrived during what was originally an uncertain time.
And it’s due, largely, to the delivery-friendly nature of Asian food.
“There’s some food that just doesn’t travel well,” Haith says. “The Asian food travels great. It stays hot. The flavors actually get better with it sitting during that travel time.”
Category giant Panda Express maintained the popularity of classic items like its Original Orange Chicken during COVID, while bringing in a limited-time offer of Wok Seared Steak and Shrimp, which also captured consumers’ attention, Panda Express Executive Director of Brand Innovation Evelyn Wah says. The brand also conducted behind-the-scenes work to elevate recipes for healthier eating, such as reducing sodium and sugar, and rolling out antibiotic-free chicken and cage-free eggs. But the past year ultimately brought changes to the industry Panda Express never expected, Wah says, adding the company invested in employees’ well-being. The brand implemented more than $30 million in additional benefits to help workers out. Panda Express also took consumer needs into account, lowering the price of Family Meals to $29 and launching a delivery platform and touch-free payment options.
“On the restaurant experience and marketing side, we lasered in on a singular question: ‘What do our guests need right now?’ One of the big menu changes was to improve our Family Meal with a better value,” Wah says.
Austin, Texas-based chain Tso Chinese Delivery saw off-premises business skyrocket as well, nearly doubling. As a delivery-first business with no dining spaces and its own fleet of vehicles, Tso Chinese Delivery was well-equipped for such a surge.
Even as dine-in restaurants reopened and coronavirus cases declined, sales continued to lift, Tso Chinese Delivery CEO and co-founder Min Choe says. Both the number of tickets and average ticket sales hiked, with the average order upping from $28 to about $33. This could be credited to the chain’s free delivery and no-tipping policy, which delivers a high-value proposition for customers, Choe says.
The pandemic was also a catalyst for Tso Chinese Delivery to begin its Tso Giving Initiative. With so many losing jobs and worried about where their next meal would come from, the company launched a drive to provide free food to those in the service industry. Overall, Tso Chinese Delivery donated $300,000 worth of food since the pandemic started.
Of course, Asian restaurants still had to navigate an overall hiring shortage that afflicted the sector at large. Haith says hiring is a much bigger challenge than it was pre-COVID.
Panda Express implemented several incentives to position itself as an employer of choice, such as offering fully vaccinated hiring prospects trips to Hawaii, creating referral programs, and increasing wages in some markets. Choe says Tso Chinese Delivery values work culture and a livable wage, getting many new hires from employee referrals. While Tso is not experiencing a labor shortage itself, Choe says the industry will see older people move into other industries and mostly younger people looking for restaurant work.
“We’re really going to have to work a lot on stabilizing our recruiting process and their training because at the end of the day, we all know it’s the employees, the staff that really run the company,” Choe says. “So we need to make sure that we have really good systems in place.”
Tso Chinese Delivery is helping to change the narrative that Chinese food is just greasy hangover food, Choe adds, and is instead experiencing a resurgence of interest. In fact, Tso Chinese Delivery is ready to scale at a large level, building a third location and looking to expand into the Dallas market.
Because of the increased attention given to the Black Lives Matter movement over the past year and #StopAsianHate, Choe says, Tso Chinese Delivery received more interest from the minority community.
When he thinks of the future, Choe believes there will be a shift in how restaurants are operated, including a transition of full-service restaurants flipping to quick service due to easier logistics.
One problem plaguing many operators, including the Asian market, is an increase in food costs. Choe says Tso Chinese Delivery pays nearly 50 percent higher for ingredients now. Because the company sells Asian food, it is difficult to increase prices to reflect commodity inflation.
“If you lose the value proposition on our pricing, then we may lose customers,” Choe says. “So we have to be really careful about that.”
There’s little doubt the past year brought several changes for the Asian food market in a deeper reliance on delivery and convenience. Panda Express’s Wah says the brand noticed customers prefer to use Panda’s direct digital channels over third-party delivery apps. For instance, the company saw more than 2.1 million deliveries completed through its channel Panda Delivers.
Earlier this year, Panda Express also unveiled Panda Digital Kitchen, the first Panda Express location that fulfills online orders in San Francisco. “The COVID-19 pandemic has reshaped the restaurant industry,” Wah says. “It accelerated consumer trends that will guide the way restaurants are designed and the technology used in different concepts. Because of this, we are rethinking our future restaurant layouts to best accommodate these trends.”
Panda Express noted a surge of racial violence toward minority communities and in response, launched the Panda CommUnity Fund in May, a $10 million investment program to support organizations in uplifting diverse groups, Wah says.
When it comes to Teriyaki Madness’s goals, if anything, the virus only increased expectations for the chain, which didn’t have to pivot since it was ahead of the game with technology and packaging.
While the Asian restaurant industry is dominated by mom-and-pops, the segment is coming to the realization technology is mandatory to a restaurant’s survival, Haith says.
“Consumers’ expectations have risen dramatically in convenience and user experience,” Haith says. “That means that everybody has to up their game. Even though there’s perhaps less competition because there’s been so many closures, the consumer expectations of ease of use have risen dramatically.”