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Tag Archives: P.F. Chang’s

Small is beautiful

I had to drop into the local WalMart Supercenter to pick something up the other day. I don’t shop at WalMart very often, mainly because of ideological reasons, so I was surprised to see that the store was changing drastically. They were still renovating but much of the work seemed to have been done.

I was surprised to see that the display aisles were now only around 6 feet high, whereas before they were at least 8 feet tall.

There seemed to be less merchandise as well, although this could be a function of the unfinished nature of of the redo. Not only did there seem to be less of each item, there seemed to be less total items. I wondered if this was a concrete manifestation of the economic crisis that we’ve been going through. It looked like a fairly drastic downsizing of the Supercenter.

This seems to be borne out by this CNN article:

When I left the store, I noticed that the Superstore signage had even been removed. Perhaps they’re just changing the signage and it will continue to be considered a “Supercenter”, but I wonder if it’s being “demoted”. They certainly don’t seem to be shrinking the square footage.

Doing some superficial browsing, it looks like WalMart is contracting a bit. In one case, they actually cut the size of the store in half. It doesn’t look like that’s going to be the case here, but it does look like there’s going to be a much smaller inventory and assortment.

I think that we’ll see the same forces at work in restaurants as well. I wonder how long it will be before we see restaurants that used to open units with 200 seats start redesigning their new units to be 150 seats (just to use a random example). I wonder how long it will be until menus start contracting the number of items on their menus. And I wonder how long it will be before we start seeing smaller staff (larger sections, fewer hosts/hostesses/fewer managers stretched with more hours, fewer kitchen employees consolidating more and more tasks, etc.)  In many states, there’s not much savings in cutting waiters that make $2.13 – $4/hr, but there could be some savings in reducing the number of server assistants, putting more burden on waiters in general.

I saw this happen at P.F. Chang’s about 3 years ago when they went from one Server Assistant for every two servers to a couple of SAs for the whole restaurant. They did it the right way though and shrunk each server’s section by 1 table and added an additional server (that’s 1 more server and 2 less SAs).. SAs made 4.50 an hour, so this was a net gain against payroll and probably didn’t affect service too much. but I can see some big corporate entity with less savvy trying to trim staff without taking the impact on service into consideration (Darden, I’m looking at you!).

This trend could trigger some realignment of a large chain’s strategy and could also impact the gross number of jobs available to waiters in general. It could have a benefit of making it more feasable for smaller independent restaurants to make a go of it. If restaurants in general get smaller, then, in the eyes of the average consumer, a smaller indie restaurant might be on more of an equal footing with the larger chains due to the general perception in the US that “bigger is better”. On the downside, it could make waiters’ jobs more difficult and it might make great service harder to give and get.

These are just some random thoughts triggered by a mundane shopping experience. If anyone has seen some manifestations of this trend, feel free to comment. Or if you have any thoughts on the matter, please weigh in.

Yes, that’s a restaurant under the striped blue awning.

Photo is from “Rene G” at the “lthforum” at

It’s a “Chicago-based culinary chat site”.

P.F. Chang’s plans price hike as traffic improves – Nation’s Restaurant News

By Ron  Ruggless

And the insanity just goes on and on and on…

Darden sees potential for 1,000 more units

By Mike  Troy

Restaurant earnings: Beyond the numbers – from Nation’s Restaurant News

Restaurant earnings: Beyond the numbers

By Mike  Dempsey

(Feb. 18, 2010) Financial results were mixed this week as a cross-section of restaurant companies reported fourth-quarter earnings. Stalled consumer spending and continued traffic declines plagued top lines, while bright spots included positive earnings growth from cost-cutting moves and favorable comparison to year-ago figures.

Beyond the numbers, companies laid out strategies aimed at combating the sluggish economy and igniting sales and traffic.

Read the rest of the article here:

The article goes on to list four companies’ results, Darden, the parent of Red Lobster, P. F. Chang’s, which reported a doubling of profit in the 4th quarter of 2009, Denny’s and Jack in the Box. The article explains that there are bright spots in casual dining, while higher end chains still continue to struggle.

Ruth’s Hospitality Group is such a restaurant operator still struggling with profits, although they “cut their losses” in the 4th quarter. According to NRN, they are still struggling with same store sales, falling 11.2%. You can read the whole article here:

This is a long way from 2005, when articles like this from NRN were legion:

Big high-end steakhouse chains are primed for 10% growth

Most steakhouses have struggled to fill seats and stem bloodletting from eroding covers. Some, like Palm Steakhouse, are expanding to foreign and other markets. Palm has recently opened a London restaurant and is planning several more in Europe and are eying the Pacific Rim. They are also opening Palm Bar and Grill, a micro version of the venerable restaurant, in JFK’s Terminal 4 (slated for opening last month) and, by all accounts, plan more in the future.  Morton’s is reaching even higher, announcing in-flight offerings from their famous brands. They’ve also offered a Filet & Lobster Tail Dinner via Lobster Gram, a full dinner for 2 delivered to your door for $149.00. You still had to cook it, but they tossed in a couple of “signature engraved steak knives” and Morton’s Signature Grilling Salt and clarified butter.  This program, started in November 2008, has since been discontinued. Guess it wasn’t the hit that they hoped for. 

Independent restaurants have also struggled. One ingenious thing that has been done in Nashville is Nashville Originals, an organization of like-minded indie restaurants designed to promote dining locally as well as offering the benefits of increased scale. While it’s been around for several years, it’s still a nascent organization. Its on-line presence is still a bit primitive and the promise hasn’t been fulfilled quite yet. When they first started, there was talk about possibilities like shared purchasing in order to get better prices, but I’m not sure that this promise has ever come to fruition (it’s probably logistically difficult). About the only shared thing that’s really evident other than the occasional press release is a gift certificate that can be used at any of the member restaurants. I hope that they can get some traction, but it looks like the day-to-day challenges of running an independent restaurant are preventing some serious traction. It’s probably like trying to herd a clutch of cats. Here’s their website:

As you can see, there’s definitely improvement to be made there.

I’ve noticed that there are such organizations in various communities throughout America. Hopefully, they can offer some benefits that will help indie restaurants through this challenging economic landscape.

Image found at

Super Bowl

The New Orleans storyline in today’s Super Bowl reminds me of the aftermath of Katrina.

I was working for P. F. Chang’s at the time and corporate pledged $500,000 for Katrina relief only days after the event. Included in that was something that the tipped employees pledged – we dedicated one day of tips to be donated to the cause. This was about a week after Katrina.

We had t-shirts printed up (mine is around somewhere; if I find it, maybe I’ll post a picture later.

It was a simple white t-shirt with a halftone screenshot of the radar image of Katrina immediately prior to landfall. Everyone wore the shirt and we told our guests that we were donating all tips to Katrina relief. Many guests tossed in extra money and we as a chain raised beaucoups of money.

If I remember correctly, we called it “The Lucky Cat Relief”. The Lucky Cat is part of P. F. Chang’s culture. Every Chang’s has a large Asian-styled ceramic cat which is holding one paw up. The “Lucky Cat’ is a symbol of wealth and luck and many Asian businesses use it in the hopes of attracting customers and wealth. While predominately associated with Japanese culture, it has been appropriated by the Chinese as well.

We were proud of ourselves, proud of corporate for stepping up to the plate and proud of our guests, who were extra generous in the face of a national disaster.

This is especially resonant in the aftermath of the Haiti earthquake. With donations starting to dry up, perhaps some restaurants might consider a similar “relief action”

Just putting that out there…

P.F. Chang’s to help develop True Food Kitchen

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From Nation’s Restaurant News breaking news:

P.F. Chang’s to help develop True Food Kitchen

By Ron  Ruggless

SCOTTSDALE , Ariz. (Aug. 12, 2009) P.F. Chang’s China Bistro Inc. said Wednesday it has agreed to lend $10 million to Fox Restaurant Concepts to develop more units of Fox’s True Food Kitchen, a health-oriented eatery that opened late last year in Phoenix.

Terms of the deal were not disclosed, but P.F. Chang’s said the debt capital could be converted into a future majority equity position. Fox Restaurant Concepts president and chief executive Sam Fox partnered with wellness author Dr. Andrew Weil to open the restaurant in the Biltmore Fashion Park as a regionally sourced “global” eatery.

“We have admired the work of Sam Fox and his team for quite some time,” Bert Vivian, co-chief executive of P.F. Chang’s, said in a statement. “We are pleased to be able to provide capital for the growth of their newest creation.”

P.F. Chang’s said the transaction would not have a material impact on its financial condition or prospects for the foreseeable future. In 2005, P.F. Chang’s first ventured outside its China Bistro and Pei Wei Asian Diner concepts to open Taneko Japanese Tavern in Scottsdale. The concept failed to gain a profitable following and was closed after sale attempts were made in 2008.

Read the rest of the article here:

I find this to be an interesting trend, especially in these days of rough economic waters. Restaurant chains becoming debt capitalists  in order to diversify their holdings without actually creating new companies themselves? As the article indicates, it might not always be smooth sailing, but it it a creative use of capital. This sort of thing has gone on in other industries, and, for all I know, it might not be a new development in the restaurant world, but I’m more familiar with buyouts and mergers. Obviously, this could lead to ownership or a true merger down the road.

Whether or not this ends up offering a good return on investment, it’s just another way that P. F. Chang’s seems to be thinking outside the box. But I guess it’s just business as usual for the only company that has really been successful at growing a nationwide Chinese-themed restaurant chain – note I didn’t call it a Chinese restaurant chain. Other larger entities (Darden by way of General Mills) have tried it and failed.

I suspect that the companies that survive this economic downturn are the ones that aren’t scared to cautiously expand, either into their areas of strength or in creative ways such as this. Refusing to give into panic is key – finding ways to create what the military calls force multipliers will allow operations to aggressively combat weak economic times. This might include cost-cutting measures, but, as doctors found in the 18th century, bloodletting only gets you so far.



P.F. Chang’s turns profit despite drop in sales revenues

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From Restaurant News:

P.F. Chang’s cost cutting lifts 2Q By Sarah E.  Lockyer



SCOTTSDALE, Ariz. (July  22, 2009) P.F. Chang’s China Bistro Inc. reported Wednesday that cost-cutting efforts helped the company book improved second-quarter earnings despite a continued decrease in sales.

The company also increased its full-year earnings expectations.

For the quarter ended June 28, P.F. Chang’s earned $11.6 million, or 49 cents per share, compared with earnings of $9.4 million, or 39 cents per share. Latest-quarter total revenue fell 0.6 percent to $301.4 million. Same-store sales fell 6.8 percent at the company’s P.F. Chang’s casual-dining concept and declined 0.1 percent at its Pei Wei Asian Diner fast-casual brand.

The company, which operates 351 restaurants under both brands, said it was able to boost earnings mainly through reduced costs. Its pre-opening expenses, for example, were slashed to $461,000 from $1.8 million a year ago. The drop is a result of P.F. Chang’s slowed development schedule, which includes plans for the opening of eight P.F. Chang’s and seven Pei Wei locations during this fiscal year. Last year the company opened 42 restaurants”.

Read the rest of the article here:

This shows one way that restaurants are trying to maintain profitability in the face of continued economic decline. Organizations that can’t act nimbly are going to be hurting.

Every operation has its waste and redundancies. The key is finding them and dealing with them without reducing quality and perceived service. Having first hand experience with P.F. Chang’s, I’m not surprised that they’ve been able to identify inefficiencies and respond in a way that keeps the bottom line afloat. Their corporate structure is savvy and the stores are closely monitored without being overly repressive, as can be the case in many corporate situations (or at least it seems so to non-management).

All restaurants could take some lessons from this quarterly reports on how to attack the problem of less butts in seats. Even free-standing non-corporate stores.