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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.