This summary is based on the first quarter fiscal 2007 earnings call conducted by P.F. Chang’s China Bistro, Inc. (PFCB: chart) on April 25, 2007.
Management:
Chief Financial Officer: Mark D. Mumford
Chairman and Chief Executive Officer: Richard L. Federico
Executive Vice President – P.F. Chang’s China Bistro and President – Pei Wei Asian Diner: Russell G. Owens
President – P.F. Chang’s China Bistro: Robert T. Vivian
Key Investors Issues
- Consolidated restaurant operating income came in at 5.7% versus a forecast of 6%.
- Revenues were $56.7 million, $200,000 better than forecasted.
- Same-store sales were positive 0.5% compared to a negative 0.7% in original forecast.
First Quarter Highlights
Revenues were $56.7 million, $200,000 better than forecasted.
- Same-store sales were positive 0.5% compared to a negative 0.7% in original forecast.
- The company opened 9 new Pei Wei locations versus a plan of ten, 2 restaurants in Detroit, and 1 in each of the following cities: Columbus, Sacramento, San Diego, Austin, St. Louis, Las Vegas and Waco, Texas.
Plantation, Florida location was completed and sitting ready to open for two months, waiting on the developer to resolve issues holding up the center’s Certificate of Occupancy.
The company is one unit short, nine sales weeks short of goal as a consequence.
New restaurants’ average weekly sales were $37,100, below 2007 goal of $39,000 per week.
The company opened 9, not 10 new restaurants and those restaurants’ average weekly sales were $37,100, not $35,900 as earlier reported.
Restaurant operating income margin of 3.7% was right in line with forecast.
- Cost of sales was favorable due to pork and scallop prices.
- Labor costs were basically on target.
- Operating costs were better than expected.
- The company was unfavorable in G&A costs due to timing of certain expenses but mostly as a result of an error in forecast.
- The company omitted some salaries and related costs for operating partners that were scheduled to be adding through the course of the year.
- The company was right on target with $2.1 million in restaurant operating income and net income was ahead of first quarter forecast.
- Average weekly sales came in at $104,592, with comparable store sales declining 2.5% versus forecasted decline of 1.3%.
While inclement weather occurs every year, this year’s storms unfortunately played havoc, with weekend business.
Thus, the company was negatively impacted to a larger degree than last year.
- Irrespective of the weather business remains soft, with traffic patterns hovering in the negative 3% to 5% range.
- On average, the company serves about 800 guests per day at the Bistro. Thus, the company lost about 25 to 40 guests per day per restaurant in the first quarter versus last year.
- The companies continue to experience a decline in lowered tickets versus prior year, a trend that began in the first quarter of last year. The lunch day part is experiencing higher degrees of loss versus dinner, with weekday traffic loss being greater than weekend.
Geographically, California is the weakest market.
Of the 250 basis point decline in comparable store sales, California accounted for 90 basis points. Texas, Nevada, and Arizona are the next three weakest markets and constituted another 100 basis points of pressure. These four states comprised 39% of first quarter revenue but contributed over 75% of comparable store sales pressure.
