News

P.F. Chang's Q2 earnings disappoint exec team

July 27, 2011

P.F. Chang's China Bistro Inc. has reported a revenue decrease for its second quarter ended July 3, 2011. Total revenues were $311.0 million for the quarter as compared to $312.8 million reported for the same period last year. Net income and diluted net income per share were $9.1 million and $0.40, respectively.

Same-store sales decreased 2.5 percent at the Bistro and 2.7 percent at Pei Wei Asian Diner in the second quarter, in both cases, primarily to a decline in guest traffic. These sales declines occurred in the face of a one- to two-percent menu price increase at the Bistro and a two- to three-percent menu price increase at Pei Wei.

Consolidated restaurant operating income declined $7.6 million primarily due to softer-than-expected sales, higher health and workers' compensation insurance costs as well as increased labor expenses at both concepts. Restaurant operating income also included the impact of a $0.6 million non-cash asset impairment charge related to the full write-off of assets at one Pei Wei restaurant that continues to operate.

“We are disappointed with our second quarter results,” said Rick Federico, chairman and CEO. “Through enhanced consumer research and further internal analysis, we have gained more clarity into the issues and are taking immediate steps to improve our operating performance. We have initiatives planned and underway to meaningfully improve our price/value proposition, enhance the guest experience and continue to evolve the look and feel of our restaurants.”

2011 Outlook

Based on recent sales trends, the company now anticipates that fiscal 2011 consolidated revenues will increase approximately one percent from fiscal 2010, which assumes estimated same store sales declines of two to three percent at both concepts for the remainder of the year. The company also expects to experience incrementally higher labor costs and, as a result, anticipates that restaurant operating income will decline approximately 120 basis points compared to fiscal 2010.

Overall, the company now expects consolidated diluted earnings per share to range from $1.60 to $1.70 for fiscal 2011.

The company also expects to open two new Bistro restaurants during the second half of fiscal 2011. All five of the Pei Wei restaurants expected to open during fiscal 2011 are open. In addition, the company expects its international partners to collectively open nine to 10 Bistro restaurants in international markets during fiscal 2011, three of which were open as of the end of the second quarter.

The company also expects to open its first two Pei Wei Asian Diner airport locations late this year through a licensing agreement with HMS Host.

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