The temporary closure of eight Pei Wei restaurants in Arizona during March 2011 resulted in the loss of 29 sales weeks for P.F. Chang’s China Bistro offshoot during the company’s first quarter of 2011, ended April 3, 2011.
The closures were related to an employment-related identity theft investigation conducted by local authorities and equated to approximately $1.1 million in lost sales.
Excluding Arizona March sales, Pei Wei’s same store-sales increased 5 percent for March 2011 and 8 percent for the first quarter of 2011. At both concepts, same-store sales in the first quarter of 2011 included the benefit of a 2-to 3-percent menu price increase partially offset by unfavorable shifts in product mix/traffic. However, including Arizona sales, Pei Wei’s comps decreased 0.2 percent in the first quarter.
Also, as a result of this investigation and the store closures, Pei Wei lost a number of employees and therefore experienced higher labor and other costs during the first quarter related to hiring and training new employees. The overall estimated impact of the restaurant closures on Q1 ‘11 diluted earnings per share was approximately $0.04.
Overall for P.F. Chang’s China Bistro, total revenues increased 2.3 percent in the quarter to $317 million, up from $310 million in Q1 2010.
Net income increased 21.9 percent to $10.6 million as compared to $8.6 million during the same quarter last year.
2011 expectations
For Fiscal Year 2011, the company anticipates consolidated revenues will increase approximately 3 percent to 4 percent compared to fiscal 2010. Despite the impact of the temporary store closures in Arizona, the company also expects consolidated diluted earnings per share to range from $2.15 to $2.20 for fiscal 2011.
The company has slightly reduced its 2011 development schedule and now plans to open two new Bistro restaurants and five new Pei Wei restaurants. In addition, its international partners are slated to collectively open seven to 10 Bistro restaurants in international markets during FY ‘11.
Additionally, through a licensing agreement with HMS Host, the first two Pei Wei TakeAway locations in John Wayne Orange County Airport and Minneapolis-St. Paul Airport will open later this year.
The company plans to repurchase approximately $60 million in common shares under its current authorization during fiscal 2011.
