- The Washington Times - Friday, May 14, 2004

SCOTTSDALE, Ariz. — There are spring rolls and mu shu pork on the menu at P.F. Chang’s China Bistro, but the restaurant has more in common with Olive Garden or Outback Steakhouse than your local Chinese takeout.

P.F. Chang’s isn’t a family-run business, unlike the vast majority of other Chinese restaurants. It’s part of a nationwide chain of 97 restaurants, a fact that is unique. While there are plenty of sit-down restaurant chains across the country, the others are serving Italian cuisine, Tex-Mex, seafood, steak and salads, not Chinese dishes.

The Scottsdale-based company, founded in 1993, was planned as a high-end casual dining chain, and “the fact that it happens to be Chinese is a plus,” said Chief Executive Officer Rick Federico.

Successful Chinese casual dining chains have been rare. Darden Restaurants Inc., operator of Olive Garden and Red Lobster restaurants, closed its 51 China Coast restaurants in 1995 after the concept failed to take off.

Panda Restaurant Group, a family-owned company based in Rosemead, Calif., operates more than 600 fast-food Panda Express outlets nationwide, but only five upscale full-service restaurants in Southern California.

The Asian food market is dominated by independent operators. Eighty-seven percent of casual dining Asian restaurants are run by independents, according to market research firm NPD Group.

So far, analysts are upbeat about P.F. Chang’s chances of success.

It is “one of the most successful young restaurant companies ever,” said Mark Sheridan, a financial analyst with Johnson Rice & Co. “It’s not like another bar and grill being thrust upon us.”

There are 97 P.F. Chang’s in mostly suburban locations, and the company also owns 33 Pei Wei Asian Diners, more casual eateries akin to takeouts.

The menu at P.F. Chang’s is slightly smaller than those at many traditional Chinese restaurants and the prices average a couple dollars more for entrees. Along with standards like beef with broccoli and moo goo gai pan, the restaurant has its own specialties, including lettuce wraps and crab won tons.

The fact that P.F. Chang’s is a chain makes customer Carolyn Schoeppner of Phoenix feel like it’s less authentic. But she said she likes the crispy honey chicken and the stir-fried spicy eggplant at P.F. Chang’s so much that she eats there often.

Another customer, Trevor Bush, said that whether the food is authentic Chinese cooking is not a factor in his decision to eat at P.F. Chang’s. “That’s not my thought when I’m coming here.”

Bryan Elliott, an analyst for Raymond James & Associates, said it would be difficult now for any competitor to challenge the P.F. Chang’s bistros, which are generally large, airy restaurants.

“They’re big enough now, they probably have that upscale Chinese food niche at their price point locked up,” he said.

P.F. Chang’s went public in 1998, and more than doubled revenue from $234.1 million in 2000 to $559.2 million last year. In that stretch, the company has grown from 52 P.F. Chang’s and one Pei Wei, to 97 P.F. Chang’s and 33 Pei Weis.

Company officials foresee steady growth of 18 to 20 P.F. Chang’s restaurants a year, with the Pei Wei chain possibly growing faster.

Among the company’s most strategic advantages is the way it keeps bistro managers and kitchen heads: They are investors in the location where they work. “This locks key people into the restaurant,” Mr. Elliott said.

The P.F. Chang’s partner model is similar to the one used by Outback Steakhouse.

Analyst Sheridan said the restaurant’s fare combined with the company’s strategy and people development have driven the company’s success.

“They have a nice niche position,” he said.

The company is likely to see more competition for its Pei Wei outlets, but so far, Pei Weis have been outperforming initial expectations, Mr. Sheridan said.

“They are growing it aggressively, but the early results are pretty encouraging,” he said.

Mr. Federico said he believes Pei Wei has advantages over competitors because it still prepares food fresh using wok cooking and has a pleasant dine-in atmosphere, which many takeout places lack. About 40 percent of the business at Pei Wei restaurants is takeout.

Finding people to prepare the food may be the most challenging part of the company’s expansion plans for P.F. Chang’s and Pei Wei. Woks, steel bowls that can tolerate high flames, can be difficult to use right.

“Wok cooks just don’t walk in off the street. … It’s very much an art,” said Mr. Federico, who said it can take 90 days for a cook to become proficient enough to handle a weekend night at the stove in a P.F. Chang’s bistro.

The difficulty of preparing the cuisine is one of the barriers to entry for newcomers to the business, he said.

“It’s a cuisine that has been attempted. It just hasn’t been very successful,” Mr. Federico said.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide