Panda Express lends principles of fast food to dry cleaning

12/31/2011 8:04 AM

12/31/2011 8:04 AM

The California entrepreneurs who brought Panda Express Chinese food to malls and airports throughout the country are now betting that Americans will want the same standardization in something a little less tasty — dry cleaning.

Co-chief executives Andrew and Peggy Cherng, who built a fast-food empire of quick-serve Asian cooking, now want to bring the same chain-venue principle to clothes.

The Cherngs’ new Rosemead, Calif.-based company, Panda Dry Cleaning, plans to open as many as 200 standardized shops nationwide in the next five years in conjunction with consumer goods giant Procter & Gamble. The first of the franchised shops, under the name Tide Dry Cleaners, opened Tuesday in the Las Vegas suburb of Henderson, Nev.

“There isn’t any consolidation in this particular industry,” Andrew Cherng said. “There is no McDonald’s of dry cleaners. We see this as an opportunity.”

The closest is probably Martinizing, a 62-year-old Ohio-based chain that claims to be the country’s largest dry-cleaning franchiser, with locations across the U.S. and in eight other countries and territories.

Panda is set to open at least five more Tide cleaners in 2012. Many of the future shops could be planned for California, where they have exclusive rights to develop the facilities.

As it did decades ago with Chinese food, the Panda team hopes to take a scattered market and create a dominant national brand. With the Panda fast-food restaurants starting to crowd one another in key markets, the Cherngs looked to dry cleaning as another way to stretch their entrepreneurship muscles.

“The restaurants are already pretty saturated,” Cherng said. “Doing another line of business presents us with more real estate opportunities.”

The Panda plans brought a major boost to the Procter & Gamble dry-cleaners franchising venture, which launched a year ago and has six outlets in Ohio and Kansas. They feature drive-through concierge service and customer access to 24-hour lockers and drop boxes.

The cleaning machines look like large orange boxes of Tide, a Procter & Gamble signature brand.

The $9.2 billion dry-cleaning industry is made up of nearly 39,000 establishments across the country, according to the research group IBISWorld. The market is highly fragmented, with the top four companies generating 2.5 percent of total revenue. More than 90 percent of dry cleaners have only one facility.

Analysts think dry cleaners are headed for a revival in the next few years amid heightened demand from hospitals, restaurants and hotels. But the past five years have been rough, with the number of dry-cleaning companies shrinking nearly 2 percent each year between 2006 and 2011 as consumers scaled back spending and operators struggled with rising utility costs, more stringent environmental regulations and concerns that too much dry cleaning wears out clothing.

Jeff Wampler, chief executive of Agile Pursuits Franchising, which manages the Tide dry-cleaners business at Procter & Gamble, said the standardized nationwide system will provide better service for customers. “They’ve generally been dissatisfied with the poor physical environment, routine errors with garment care and unremoved stains common at many dry cleaners,” Wampler said. “We’re trying to elevate the industry.”

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