P.F. Chang's Expands, Refines Formats

SCOTTSDALE, AZ-P.F. Chang’s China Bistro Inc. plans expansions of its two established restaurant formats and refinements to its new Takeko Tavern format, company officials said Wednesday during a conference call in which they discussed the chain’s financial results for the first quarter that ended April 1. The company reported earnings of $10.5 million and 40 cents per share for the first quarter ended April 1, compared to $9.8 million and 36 cents a share for the first quarter of the previous year. Sales increased to $264 million compared with $229 million in the same quarter last year, with comparable store sales decreasing 2.5% at the Bistro chain and rising half of a percentage point at the Pei Wei Asian Diner restaurants.

The company plans to open 37 new Pei Wei restaurants during 2007, nine of which were opened by the end of the first quarter, and 19 new Bistro format restaurants, one of which was open by the end of the first quarter. In October the chain opened a Taneko Japanese Tavern, a new format that it is testing.

In connection with Takeko, Federico commented that the company’s first round of guest research has shown that diners at the Taneko give great marks for quality, service, an interesting menu and the look and feel of the restaurant. The research offers other positives too, but Federico noted that the Taneko customer base has turned out to be a “loyal following” in a “narrow demographic.” Typical customers are older than 50, with incomes of more than $125,000 per year, but the company would like to expand its appeal. To that end, Federico said that P.F. Chang’s is now developing marketing plans to make the Taneko Tavern concept more visible and attractive to guests in the 25-40- year-old age range because expanding the audience “will be critical to the success” of the new concept.

P.F. Chang’s plans to continue development of its Bistro concept in existing markets and plans to enter eight new markets in 2007, according to the company’s public filings Wednesday, in which it noted that it has signed lease agreements for all of its planned new Bistro and Pei Wei openings for fiscal 2007. The plans call for Bistro restaurants that typically range from 6,000 sf to 7,500 sf, and that require, on average, a total cash investment of approximately $2.8 million to $3 million. The Pei Wei restaurants generally range from 2,800 sf to 3,400 sf and require an average total cash investment of approximately $750,000 to $850,000.

Rick Federico, P.F. Chang’s CEO, said that the company plans changes to its site selection process for the Pei Wei chain, but he did not provide specifics of the changes. As of the end of the quarter, the 11-year-old P.F. Chang’s owned and operated 153 and 116 of its Pei Wei format restaurants, which it classifies as a quick casual concept. The company owns and operates all of its restaurants except for a Bistro restaurant in Honolulu that opened in September under a joint venture arrangement.