P.F. Chang's China Bistro Inc.PFCB

Morningstar Rating

Stock Research and Analysis

by Jeremy Cohen

P.F. Chang's Bistro has established a leading presence in the niche Asian dining segment, but short-term economic woes will cause a temporary setback. Still, we believe the company has a healthy foundation and benefits from the increasing popularity Read more

Bulls Say

P.F. Chang's has secured a leadership position in the fast-growing Asian segment of the restaurant industry.

P.F. Chang's China Bistro ranked third among casual dining chains in the 2008 Consumers' Choice in Chain Awards.

The firm's partnership program allows top restaurant personnel to share in the profitability of their restaurants. We think this provides a strong incentive to improve performance and aids in the retention of key personnel.

The company's management team is among the best in the industry. Read more

Bears Say

Casual diners are susceptible to declines in consumer spending. A weakened economy is forcing customers to curb discretionary spending and instead allocate their money elsewhere.

Nearly one third of the firm's units are located in California, Arizona, and Florida, states that are being hit harder than others by the weak economy.

P.F. Chang's success has not gone unnoticed. More Asian-inspired menu items are popping up at restaurants such as Applebee's DIN, California Pizza Kitchen, Cheesecake Factory, and Chili's. Cheesecake poses a direct threat with the introduction of its Rock Sugar Pan Asian Kitchen restaurant.

The federal minimum wage rose nearly 10% in July 2009. This may hamper profitability for the firm by increasing labor costs. Read more

Strategy

Management scaled back growth in 2009 and is poised for only modest expansion in 2010. The firm expects to open five new Bistros and five new Pei Wei's in the coming year. The company cites that a lack Read more

Management

The company is led by co-CEOs Richard Federico and Robert Vivian. Federico joined the firm in 1996 and took over the title of CEO in 1997 from company founder Paul Fleming. Federico has also served as chairman of the board since 2000, a role that we Read more

Profile

P.F. Chang's owns and operates two restaurant concepts in the Asian niche. The Bistro chain consists of 192 full-service restaurants, which feature Chinese cuisine in a Read more

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