P.F. Chang’s China Bistro has reported financial results for the second quarter of fiscal 2011, which ended on July 3, 2011. Total revenues were $311.0 million in the second quarter of fiscal 2011 as compared to $312.8 million in the prior year. Net income and diluted net income per share were $9.1 million and $0.40, respectively.
Comparable store sales decreased 2.5% at the Bistro and 2.7% at Pei Wei in the second quarter of 2011 due, 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.
On a monthly basis, comparable store sales for April, May and June decreased 2.2%, 2.6%, and 2.9%, respectively, at the Bistro and decreased 4.0%, 2.5%, and 1.3%, respectively, 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. Additionally, general and administrative expenses included the benefit of lower expense primarily resulting from a decrease in the fair value of performance units and other share-based awards that are tied to the Company’s stock price (approximately $0.05 per share).
“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. We believe these initiatives will generate real opportunities to increase guest traffic and restore positive momentum to both the Bistro and Pei Wei over the long-term.”
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 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 ten 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.
Beginning with the second quarter of fiscal 2011, the Company’s Board of Directors approved a quarterly fixed cash dividend which is currently set at $0.25 per share. In prior quarters, cash dividends were variable and calculated based on 45% of the Company’s quarterly net income. The next quarterly dividend is payable on August 22, 2011 to shareholders of record at the close of business on August 8, 2011.
P.F. Chang’s China Bistro, Inc. owns and operates two restaurant concepts in the Asian niche. P.F. Chang’s China Bistro features a blend of high-quality, Chinese-inspired cuisine and American hospitality in a sophisticated, contemporary bistro setting. Pei Wei Asian Diner offers a modest menu of freshly prepared pan-Asian cuisine in a relaxed, warm environment offering attentive counter service and take-out flexibility. In addition, the Company has extended the P.F. Chang’s brand to international markets and retail products, both of which are operated under licensing agreements.