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8-K - FORM 8-K - P F CHANGS CHINA BISTRO INC | c12980e8vk.htm |
EX-99.1 - EX-99.1 - P F CHANGS CHINA BISTRO INC | c12980exv99w1.htm |
Exhibit 99.2
CORPORATE PARTICIPANTS |
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Rick Federico
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P.F. Changs China Bistro, Inc. Chairman, co-CEO | |
Robert Bert Vivian
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P.F. Changs China Bistro, Inc. Co-CEO | |
Mark Mumford
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P.F. Changs China Bistro, Inc. CFO | |
CONFERENCE CALL PARTICIPANTS |
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Jeffery Bernstein
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Barclays Capital Analyst | |
Destin Tompkins
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Morgan Keegan & Co., Inc. Analyst | |
Lawrence Miller
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RBC Capital Markets Analyst | |
Joe Buckley
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xxx (Firm deleted) Analyst | |
David Tarantino
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Robert W. Baird & Company, Inc. Analyst | |
Brad Ludington
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Keybanc Capital Markets Analyst | |
Andy Barish
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Jefferies & Co. Analyst | |
John Glass
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Morgan Stanley Analyst | |
Nicole Miller Regan
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Piper Jaffray & Co. Analyst | |
Sharon Zackfia
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William Blair & Company Analyst | |
Bryn Elliott
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Raymond James Analyst | |
Bart Glenn
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D.A. Davidson & Co. Analyst | |
Karen Haltest
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Credit Suisse Analyst | |
Matthew DiFrisco
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Oppenheimer & Co. Analyst | |
Peter Saleh
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Telsey Advisory Group Analyst | |
Howard Penney
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Hedgeye Risk Management Analyst | |
Greg Ruedy
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Stephens Inc. Analyst | |
John Ivankoe
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JPMorgan Chase & Co. Analyst | |
Mitchell Speiser
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Buckingham Research Analyst |
PRESENTATION
Operator
Good afternoon, and welcome to P. F. Changs China Bistro fourth quarter 2010 earnings release
conference call. (Operator Instructions).Todays call is being recorded. If you have objections,
you may disconnect at this time. I would now like to turn the call over to Mark Mumford, CFO.
Please go ahead, sir.
Mark Mumford P.F. Changs China Bistro, Inc. CFO
Thank you. Good morning, everyone. Thanks for joining us today for P. F. Changs fourth quarter
2010 earnings call. Joining me today are our co-CEOSs, Rick Federico and Bert Vivian. Both will be
available to answer your questions in a few minutes. A number of our comments today will be
forward-looking in nature, and include risks and uncertainties. We recommend that all investors
thoroughly review our quarterly and annual filings with the SEC, before taking a financial position
in our Company. We will file our Form 10K later today. We will start with a quick review of our
fourth quarter and 2010 results, and then discuss our current thoughts about 2011 before opening
the call up for your questions.
Overall, we are pleased with our performance in 2010. Heading into the year, we had hoped to see
the beginnings of an economic improvement. While the overall recovery remains somewhat tepid in
2010, we did see some positive signs in our restaurants. Both of our concepts achieved positive
traffic for the full-year, which is something we havent seen in quite a
while. Despite the weather, which really hurt our traffic in the last three weeks, comps were
positive at both Bistro and Pei Wei during the fourth quarter, and positive ticket trends continued
in both concepts.
Lets talk about margins. At 19.7%, Bistros Q4 cash operating margins were up sequentially and
year-over-year, which is notable given that 2009 had an extra week. Pei Wei cash operating margins
were down to 14.8%. Thats primarily due to a timing shift in marketing expense, related to our Q4
limited time offer. Those dollars were spent in Q4 this year, versus Q3 of last year.
Consolidated G&A for Q4 was down, in actual dollars and percentage of sales. The big factor there
was lower share-based compensation expense. Performance unit expense was actually a credit in Q4 of
roughly $200,000, versus $1 million in expense in Q4 last year, due to an award modification for
one of the CEOs. Our fourth quarter EPS of $0.64, beat our expectations. For the most part, thats
due to a handful of discrete items that lowered our anticipated tax rate, and added about $0.07 to
$0.08 to our Q4 EPS. Without this tax benefit, our full-year EPS would have been about $1.95,
consistent with our previous EPS guidance.
We ended 2010 with a cash balance of $71 million, up 13% from last year. We used that cash to
invest in long-term growth for the business, and gave shareholders tangible returns in the form of
dividends and share repurchases. Cash flow from operations was $122 million, and we spent a total
of $37 million in CapEx, resulting in free cash flow of $85 million for the year. We used $41
million to repurchase just over 900,000 shares under our current buyback program. In addition, we
paid over $14 million in cash dividends.
Looking to 2011, our thoughts havent changed much, since we provided preliminary guidance back in
October. We are assuming a slightly better economic environment, and estimate consolidated revenue
growth of 3% to 4% for the year, slightly positive comps at both of our concepts likely in the 1%
to 2% range, and a slightly higher revenue contribution from global brands.
So far this year, despite the weather disruptions, our comps are up about 1%, at both concepts. We
expect 2011 EPS in the range of $2.15 to $2.20, an increase of about 10%. Restaurant cash operating
margins should be favorable in 2011, primarily driven by lapping of cost related to the roll out of
the Bistro happy hour in Q1 of last year, as well as higher contributions from global brands.
We do expect to see inflationary cost pressure throughout most of our income statement. Our
commodities basket will increase due to price pressure, as well as higher delivery cost costs. In
addition, higher wage rates and healthcare costs will add pressure to our labor line. We will also
see pressure on the operating expense line, due to rising oil prices. As oil prices go up, it will
affect our energy costs as well as supplies, which are primarily resin-based. To offset some of
these pressures, we took a small menu price increase at Pei Wei this month. And we anticipate
taking menu price at the Bistro this year as well.
On our G&A line, well see pressure from higher share based compensation expense, as performance
unit awards vest at the end of this year. If those awards vest today, it would pay out at the
maximum value, which implies an incremental $0.13 of pressure in 2011. We expect our 2011 tax rate
to increase to around 30%, as we wont have the benefit of the favorable discrete items we had in
2010. Our anticipated new unit development plans are fairly modest. We expect to open three to five
new Bistro restaurants. While we would like to allocate more capital to the Bistro brand, the macro
development landscape continues to provide only limited opportunities.
At Pei Wei, we continue to expect 25 or 30 new restaurant openings over the next two years. Our
thoughts on this have not changed. The reason we have provided a two-year range, is because we knew
it would be difficult to predict the exact timing of new development, as we restarted our Pei Wei
development pipeline. We recently hired a new Vice President of Pei Wei real estate, and continue
to evaluate both our internal resources, and external broker networks supporting Pei Wei
development. In addition, in order to expand the universe of potential sites, we are currently
evaluating changes to our Pei Wei store design.
Given all this, combined with the typical timing shifts we encounter in real estate construction,
while we had previously thought that 10 to 12 of the new Pei Wei openings would fall into 2011, we
now see six to eight openings this year. All this means is that we anticpate a few more of our 25
to 30 new stores to open in 2012. Additionally, we are very pleased with our Bistro international
presence, and expect our partners to open seven to ten new restaurants, including the first Bistro
openings in Puerto Rico and the Philippines.
Our number one priority for capital is investing in the long-term growth of this business. We will
return excess cash flow to our shareholders. First, in the form of cash dividends, and then through
share repurchases. We should generate about $80 million or $90 million in free cash flow, with cash
from operations in the range of $130 million to $140 million. And CapEx spend of approximately $45
million to $50 million. We will use just over $20 million for cash dividend payments, which are
variable based on 45% of our quarterly net income. And we also expect to use approximately $60
million for share repurchases during 2011.
And finally, as you probably read, Lane Cardwell is joining the Company as President of our Bistro
concept. Lane brings us a wealth of experience, and we look forward to combining his long-range
strategic thinking, with our already strong Bistro operational leadership. With that, lets open
the call up for questions.
QUESTION AND ANSWER
Operator
(Operator Instructions).
Our first question today comes from Jeff Bernstein with Barclays. That line is now open.
Our first question today comes from Jeff Bernstein with Barclays. That line is now open.
Jeffery Bernstein Barclays Capital Analyst
Great. Thank you very much. Two questions, one specific to Pei Wei. Thank you for the color on the
acceleration on what appears to a deceleration in growth this year, but an acceleration next year.
Just wondering whether we can get some more color on recent brand learnings. You mentioned
something about real estate availability and perhaps its a little bit more challenging near term.
You also mentioned a change of design, so just looking for a little bit more around Pei Wei. And
then, I just had a separate question on commodities. You talked directionally about inflation. Just
wondering if we can get some more granularity. One, on just what exactly is secured, or what
percent is secured, and at what level, year-over-year? And just as important, I guess, the portion
that is not secured, what are you assuming youre going to able to get that product at, whether it
will be current levels, or perhaps easing from here? Thank you.
Rick Federico P.F. Changs China Bistro, Inc. Chairman, co-CEO
Hi, Jeff. This is Rick. Let me add a little bit of color around Pei Wei real estate. If you look
historically, at probably 95% of our locations, they are all end cap 3,200 square foot give or take
a little bit, rectangular designs. And what thats allowed us to do, is take advantage of the kind
of real estate that we know we have already been successful in its typically a high frequency
retail center, maybe anchored by a Whole Foods or another grocer, gives people other reasons to
be in the center besides just having a Pei Wei restaurant.
And weve stuck pretty close to that model. Like I said with maybe an exception or two. As we
look into the kind of the future of the real estate development right now over the next couple of
years, there are not as many opportunities that look as prototypical to us, simply because there is
not as much new development going on. And the Bistro suffers a little bit from that as well. So
internally, what we are working on, from an operational perspective, and from a consumer acceptance
perspective, would be some alternative designs that would allow us to take what for us might be
a more unique opportunity to see if in fact, we can take advantage of strong A plus kind of
markets, but in a format that may be a little bit different than what we have done in the past.
Mark Mumford P.F. Changs China Bistro, Inc. CFO
And Jeff, this is Mark. On the commodities outlook, as we sit here today looking at what we know is
going to happen, with what weve contract price, and what we think is going to happen with
everything else, were estimating our commodity basket is going to go up, somewhere in the 3% or 4%
range in 2011. Weve locked up a majority of our proteins, as well as rice for 2011. And that
represents roughly half of anticipated purchases. And the rest of it, is going to pretty much
fluctuate as the market conditions change. In addition, our delivery costs are probably going to go
up somewhat, as we are likely to trip some of the surcharge clauses thats in the contracts.
Produce is going to be a challenge for us in Q1. The good thing about produce, its relatively
short cycle, it is a growing cycle, so hopefully we get through Q1. In Q2, we get some more
normalized type pricing. But even after that, what we are seeing right now and what were hearing
is its probably produce is probably going to be a little bit elevated for us, throughout the
year.
Jeffery Bernstein Barclays Capital Analyst
And you mentioned slight pricing at both brands, is there a guess as to how much you would need to
drive the margins youre talking about?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
Well, it isnt just on the commodity basket. I think as you heard us talk about in our opening
remarks, were going to have a lot of inflationary pressure throughout our P&L. And given the
magnitude of that inflationary cost pressure, we think we are going to need to improve traffic,
find some operational efficiencies, as well as take a little bit of price. Those are really the
three ways that you can offset that pressure.
The best one we like, is increasing traffic. It will get to revenue moving in the right direction.
That seems to cure a lot of ills, its down on the expense line. And we are expecting to see both
concepts deliver positive comps this year. Over the last couple of years you have seen us find some
efficiencies in our operating model. We continue to look for those this year, and I dont have
anything to share with you today, but we will continue to look for those operating efficiencies in
our model. And then finally, the least favored is taking price, but given the magnitude of the
pressures, we think we are going to need to get all three. The good news is, we believe we continue
to have some pricing power in our menu, and we can implement a small menu price increase, without
disrupting traffic too
Jeffery Bernstein Barclays Capital Analyst
Great. Thanks very much.
Operator
Our next question today comes from Destin Tompkins with Morgan Keegan. The line is now open.
Destin Tompkins Morgan Keegan & Co., Inc. Analyst
Hi, Mark. Could you you mentioned the contribution from Global Brands in 2011. Could you maybe
provide a little bit more detail, or quantify how much contribution you are assuming? And maybe,
and a little bit more color, on where kind of the Unilever progress is? And I think you mentioned
in the past, they are pleased with it. Are you still seeing some good growth, and how would you
characterize where you stand with the Unilever partnership at this point?
Rick Federico P.F. Changs China Bistro, Inc. Chairman, co-CEO
Great, Dustin. There is no question that, as we view Global Brands, it is starting to reach that
size and scale where it should be an EPS contributor for us going forward. And for those of you who
may not be aware, Global Brands is really two different businesses under that umbrella. First is
the international franchise business. And the other one is our partnership that we have with
Unilever on the retail product. Due to the success of that retail launch that we had in April this
year with Unilever, and the international franchise expansion opened up the seven restaurants that
we did this year, Global Brands was able to turn a slight profit for us in 2010. They earned $0.01
versus our original forecast of a $0.04 loss.
We expect to continue to see that momentum grow, as we look to the future in 2011, due to the
increase of the royalty rate. As well as, last year, we had nine months of sales on the retail
product, we will have a full-year this year. Well continue to open up more international
franchises. We expect Global Brands to contribute about $0.05 more of EPS in 2011. And once you
cover those fixed costs in the Global Brands business, and they are rather large. But once you
cover those, in the licensing structure that we have set up internationally as well as Unilever, it
allows us to have that high fairly high margin business, that should continue to provide more
and more EPS for us going forward. Overall, we are extremely pleased both with the Unilever
relationship and that retail launch, and the international partnership agreements that we have.
Destin Tompkins Morgan Keegan & Co., Inc. Analyst
Okay. Thank you. And then on the on the G&A with the performance units, I think you mentioned
$0.13 pressure in 2011. Can you kind of just help us figure out how to compare 2011 to maybe a
historical average? Or, I guess, what Im getting at, is trying to figure out maybe what the impact
would be in 2012, and going forward, as that as those plans evolve, kind of the magnitude of
change year-over-year?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
Yes. The pressure in 2011 is about $0.13. So, the performance unit expense in 2010 was $0.11. Right
now in our forecast, and our forecast assumes that that the end of the year, and we pay out at
max. And if we pay out at max, on those performance units, that expense in 2011 is going to go to
about $0.24. So, $0.13 of pressure. After 2011, now we havent we dont have any additional
Board approval for CEO compensation going forward. But if you look historically at what that
long-term incentive compensation was for CEOs. And if you look at a market comparisons of what LTI
is for CEOs, its probably more in the range of $1.5 million $1 million to $1.5 million,
somewhere in that range. But like I said, we dont have any Board approval, so it is difficult for
us to even talk about at this point.
Destin Tompkins Morgan Keegan & Co., Inc. Analyst
Great. Thank you so much.
Operator
Our next question today comes from Larry Miller with RBC. That line is now open.
Lawrence Miller RBC Capital Markets Analyst
Yes, thanks. First a clarification. Mark, when you say in the press release approximately 10%
growth, are you using a $1.95 as the base?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
Yes, we are using $1.95 as a base. If you back out that tax benefit on the discrete items, at the
end of Q3 we said, we were going to earn a $1.95. If you back that out, in the guidance that we
gave you in Q3, thats pretty much where we are at.
Lawrence Miller RBC Capital Markets Analyst
Okay, thanks. And then I had some questions on price. I think if Im not correct you took
some price in the fourth quarter. Id love to get your sense, on how the consumer receptivity to
that. And then also, just if you can reconcile for me your comment that you have some pricing
power, yet in the last year or two, you have been doing a lot of value-oriented programs, two for
40, and the Happy Hour, how do I reconcile those two things? And then maybe you can just give us a
ex-post view of how the first year of Happy Hour went? What worked well, and maybe what could
be improved? Thanks.
Mark Mumford P.F. Changs China Bistro, Inc. CFO
The we the Q4 price was very minimal. We really didnt have a whole lot of price that we
took. In trying to evaluate that, with all the winter storms that were happening, as far as a
traffic perspective, the weeks that we didnt have winter storm effects, we did not see any
degradation in our traffic. So we dont believe the small price that we took, had any impact on our
traffic.
Rick Federico P.F. Changs China Bistro, Inc. Chairman, co-CEO
Let me this is Rick. Let me play a little bit with the value equation, and the Happy Hour
question. As we think about Ill speak cant say this word specifically. There we go,
about the Bistro. And really, our focus is in a couple of areas, and Happy Hour dovetails into
that. And its really around value, and combining value and innovation. And so when you think about
some of the early, sort of value drivers that we put in place a couple of years ago, the
environment was a little bit more distressed at that point in time, so the Changs for Two was a
good way for us to continue to deliver a high quality P.F. Changs experience, and give them a full
experience, in a way that was predictable from the guest perspective. Because what we get, as far
as the most consistent feedback, in terms of appreciation for the Changs for Two, is the fact that
they come in knowing what theyre going to spend. So as we think about sort of new product
innovation, value is still going to be an important component of that strategy, but its kind of
its more of a dumbbell.
If we can continue to drive new product innovation that delivers high value to the guest, or
programs like Changs for Two, well continue to do that. And some of that will be offset by the
fact that simply, we do think we have got some pricing power in many of our core items, because
they are craveable from a guest perspective. Under that same sort of banner of value and innovation
that the Happy Hour progress, we have been very encouraged by. You recall this time last year,
again we rolled Happy Hour, which was predominantly a discount of our more popular items. And as we
reviewed the impact that that was having in the business, both during Happy Hour as well as what we
might have been pulling either from early dinner or late lunch, we shifted strategies and worked on
the development of items that could only be delivered during that three oclock to six oclock. So
the Triple Happiness Happy Hour was really the development of some new Dim Sum items, some
Street Fare, and some discounts on drinks.
And again, the intent was to try and give the guest another reason to come to P. F. Changs,
without internally cannibalizing, whether it be a lunch experience or a dinner experience. That is
now, the whole triple happiness Happy Hour has been fully rolled out, and fully collateralized just
in the Phoenix market place. The majority of that menu is now in place, in the balance of the
markets where we can where we can actually have a Happy Hour. So the next step will be to fully
collateralize the with a little bit of marketing support, and some internal promotion support,
the Triple Happiness, and that will happen through the first half of this year.
Lawrence Miller RBC Capital Markets Analyst
Thanks, guys.
Operator
Our next question today comes from Joe Buckley with Banc of America Merrill Lynch. That line is now
open.
Joe Buckley xxx (Firm deleted) Analyst
Thank you. Mark, you can you go through the timing of the share-based compensation, how that will
show up quarter-to-quarter? And maybe comment if Burts pending retirement changed that equation at
all, or changes that equation at all going forward?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
Yes, I will hit Berts first. Bert dropped his cap, from $12.50, down from $9.00. So if overall, if
everything [topped] out at the cap, that would be a reduction of $2.1 million on that from the
performance units. As we look at how that expense is going to hit in Q4, and were making estimates
Monte Carlo valuation is what we have to go by we ended the year below where we thought we
were going to on Ricks. I think last time we talked to you, we thought that the valuation would
come in at around $9.00, and it actually came in at $8.30. So we have more of a hill to climb. We
didnt get as much expense actually booked in 2010, as we thought we would.
So we have a larger hill to climb in 2011. But that $8.30 has to go to $12.50. Berts is at $6.40,
and it has to go to $9.00. So the pressure youre going to see youre not going to see a whole
lot of pressure in Q1. Youre going to see about $0.03 of pressure in Q2, Q3 not a whole lot of
pressure, and then a ton of pressure in Q4. And the reason for that, as we modify Berts award
and Ricks actually came down from where we were in Q3 we ended up with a credit in Q4. So were
anticipating about $0.08 of pressure in Q4 of next year related to the performance units, if, and
once again, I got to put that caveat out there, if it remains at cap.
Joe Buckley xxx (Firm deleted) Analyst
Okay. When you said about $0.03 in the second quarter, and $0.08 in the fourth quarter, that is
year-over-year increments that youre ?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
Yes, that is incremental pressure in 2010.
Joe Buckley xxx (Firm deleted) Analyst
Okay. And then, a question again, another question on the Happy Hour, just from an execution
standpoint, is everything sort of the way you wanted to be at this point? And can you talk a little
bit about maybe the contribution Happy Hour made to the same-store sales performance in 2010?
Rick Federico P.F. Changs China Bistro, Inc. Chairman, co-CEO
Well, from an execution standpoint, we are real happy with the with what s going on in the
restaurants, in terms of delivery of product. We have had incredibly positive feedback about the
sort of unique nature of those products, whether it be the Street Fare or the Dim Sum. We think the
successes of those products bode well for maybe some future menu development, whether it be around
lunch, or other day parts, like maybe late night, or depending on the specifics of the location.
With regards to the exact numbers, in terms of what its driving t this point in time, I dont have
that in front of me. And it is probably not something we would be talking about on this call.
Joe Buckley xxx (Firm deleted) Analyst
Okay. Okay, thank you.
Operator
Our next question today comes from David Tarantino with Robert W. Baird. That line is now open.
David Tarantino Robert W. Baird & Company, Inc. Analyst
Hi, just a couple of questions about the comp trends that you had in Q4. First, on the Bistro comp,
it showed a nice acceleration in the average ticket throughout the quarter. And was just wondering
if you could comment on what drove that trend, and whether you think that is sustainable? And then
secondly, on the Pei Wei comps, second quarter in a row, where traffic was slightly negative, and
just wondering kind of overall thoughts, on why you think the traffic has been tracking negative,
when we have seen improvements elsewhere in the fast casual space?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
I will take the first one, on what we are seeing on the ticket, on the Bistro side. Starting in Q2
of this year, we did begin to see a sequential improvement in our large ticket bucket. And we think
that is really what is driving that increase in on the check size. And for us, those large
ticket is anything over $85. And so that might be a minority of our overall tickets, its somewhere
about 6%, it represents a disproportionate weight, when it comes to revenue, its about 20%.
Part of that is going to be on the business spend, and that is starting to come back to us. And we
are starting to see that reflected in our lunch comps, which are positive during the quarter. And
the other is the large party social spend, and you typically see that on the weekend. We began to
see that recovery beginning in Q2. So, the large ticket has a little bit of effect, as those
customers come back, it has a little bit of effect on the traffic, but it carries a
disproportionate weight, when you are looking at the ticket. And so we expect that that trend will
continue, as business continues to improve, and social spend continues to come back to us.
Rick Federico P.F. Changs China Bistro, Inc. Chairman, co-CEO
From a from kind of our thoughts around Pei Wei traffic, if you back up the year prior, in
Q3 of 2010, we were actually lapping some fairly positive marketing campaigns around the LTL. In
2010 Q3, we decided not to not to spend into that we shifted the marketing spend into Q4, so our
expectation would have been, that when we combined Q3 and Q4 of 2010, that we would of seen slight
slight traffic gains, given the shift in the marketing spend and the LTL launch.
The reality was, that we didnt see that, in part because, as part of our trying to become better
at this, we did have a slight shift in our marketing strategy and how we spent into that, in the
fourth quarter. And candidly, it was not as effective as it had been the prior year. In the prior
year, we invested most, if not all of those dollars, into our four core markets. And in 2010, we
decided to reduce the spend in the core markets, and actually increase the spend in some of our
developing and emerging markets, to see if in fact, we could get a little bit larger total lift.
The reality is, we did see a lift in the small and medium-sized markets, but we gave it back, in
kind of a painful way, in our larger and more core markets. So we are taking that learning, and
into the launch that we are right now into the LTL, which is our Korean barbecue. And we have
gone back to a strategy, where were investing more fully in our core markets.
David Tarantino Robert W. Baird & Company, Inc. Analyst
That is helpful. Thank you. And if I could slide one more, and on the quarter-to-date trend you
mentioned, Mark, both comps up 1% so far. Perhaps, could you just let us know, if you think thats
a good indication of the underlying trend, or if that number has been influenced by weather, or
perhaps a calendar shift related to Valentines Day?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
Well, we definitely were impacted by weather. We had a number of stores that were closed, and
Dallas, as that ice storm went through. The weather this year, really happened during the week. It
was a little more severe than the prior year, but we are going up against weather from the prior
year as well. That weather was on the weekend. So the 1% that we are seeing now, thats probably
our best estimate right now thats probably indicative. We said, were going to be up 1% to 2%,
and that puts us in the range. Its difficult to tell, until we get out of all the weather
patterns, and everything thats happening right now, exactly where that is going to fall out.But we
thought we would share with you, how we are trending so far this year.
David Tarantino Robert W. Baird & Company, Inc. Analyst
Great. Thank you very much.
Operator
Our next question today comes from Brad Ludington with KeyBanc Capital Markets. That line is now
open.
Brad Ludington Keybanc Capital Markets Analyst
Thank you. I wanted to just two brief questions on, if you could comment a little bit on the
changes you were talking about, that youre looking at to Pei Weis design? I mean what kind of
different real estate are you looking to get into with those changes? And then also, what the
take-out channel has done over the last quarter or two? It seems like youre pushing that quarter
pretty hard around the Super Bowl, and was wondering if you saw some success with that?
Rick Federico P.F. Changs China Bistro, Inc. Chairman, co-CEO
Our thoughts had not changed on the type of real estate that we would be looking at. It still is
going to be within the high end of our demographic range. But rather than focusing exclusively
on the end cap, which may or may not be available in an existing center, we might have to look at a
center in line. So when you think about a Pei Wei design, if you have been in one, one of the
things that the guest give us a high credit for, is the flexibility and ease of use around
take-out, which is about 40% of their business. And so to facilitate that, we have a separate
take-out area, a separate take-out door, and separate take-out service strategy there.
So one of the things we have got to be able to figure out, is if you are in center line, you dont
have the capacity to have a side door for take-out, how do you affect changes in your take-out
process, that are still consumer friendly? So that is really sort of number one. Number two would
be the positioning of the kitchen in relationship to how we actually service the dining room. We
may have to make some modifications to our kitchen design. Then again, we dont want to jump in
with both feet before we get a couple of those in the ground, and risk the potential of
compromising the guest experience or the product experience.
The second part was around Super Bowl. One of the things that we have found effective over the past
year or so, through the use of our warrior card, which is our customer loyalty card at the Bistro.
Weve got about approaching 2 million active participants in that program. And as we think about
ways to communicating with our most frequent guests, driving them to use the Bistro at times when
they wouldnt typically think about it, around certain events or certain days. So for example, the
Super Bowl this year, we knew people werent going to be dining in our restaurants, and history
tells us that is one of the slowest days of the year.
But we know people are eating somewhere, so we used our warrior card connections, and through the
e-mail communication, we offered them, I believe it was a 20% discount on all take-out orders. We
saw a significant increase on a year-over-year basis, between Super Bowl last year and Super Bowl
Sunday this year. We saw significant increase in, obviously in take-out. And so, those types of
promotions for our most regular guest take periods of time where the restaurant is frequently not
very busy, and allows us to just to drive a little incremental traffic on those days.
Brad Ludington Keybanc Capital Markets Analyst
Okay. Thank you.
Operator
Our next question today comes from Andy Barish with Jefferies. Your line is now open.
Andy Barish Jefferies & Co. Analyst
Hi, guys. A quick quick question, continuing on the Pei Wei front, on development. As you look
back at kind of emerging, developing markets, the class classes of 2007 through 2009, still
below the system average. Is there a development focus to kind of build out some of those markets,
and get more brand awareness? And does that, does that, in turn, affect your ability to drive
kind of above average comps maybe in those markets, as they come off of lower volumes?
Rick Federico P.F. Changs China Bistro, Inc. Chairman, co-CEO
Andy, there are a couple of things. As we think about, and have always thought about real estate,
we will take our sort of internal targets, and in this case, like we mentioned for Pei Wei, its 25
to 30 over a two year window. But one of the things we are really cautious about, is we are not
going to chase that number. We believe there is going to be 25 or 30 great opportunities for us.
Again, we have got a couple of modifications, we got to make. But the mistake a lot of people in
our business have made overtime, is they find 20 great ones, or 25 great ones. And they go chase
those last five, and they are not as good, as what you would typically expect for the brand.
To some degree with a little bit of that back in 2007 and in 2008, and were committed not to
repeat some of the same mistakes we made back then. However, the part of the strategy has will
be, and continues to be a couple of things. One is, we are going to go fill in the markets where we
think were under penetrated, because we know when we get more density into a marketplace, we can
do a couple of things. We can market against it a little bit. And just the general brand awareness
lift we typically well see kind of all ships rise with that. And I think that will continue to
be part of the strategy. And the second part will be, when we choose to go into new markets, we
will tend to go deeper and faster. So for example, our efforts in Chicago and Philadelphia, and
probably Washington, DC, our markets that we recently penetrated, and we will spend more time and
attention focusing on those, in order to get that density and penetration.
Andy Barish Jefferies & Co. Analyst
Thank you.
Operator
Our next question today comes from John Glass with Morgan Stanley. That line is now open.
John Glass Morgan Stanley Analyst
Thanks. First question is, Mark, can you talk about the pacing of earnings growth throughout the
year, specifically because last years growth was lumpy year-on-year, in terms of growth rates. You
got a, first quarter, a very easy hurdle. Its gets progressively more difficult from a margin
perspective. So, I guess, one is just comment generally on what else will move, besides that G&A
number, what else moves quarter to quarter-to-quarter? And specifically, what are you seeing about
margins post the first-quarter, are you assuming theyre flat to down, and this margin improvement
is all coming in the first quarter? Or does it get does it continue and, but maybe its small
degrees, in later
Mark Mumford P.F. Changs China Bistro, Inc. CFO
John, Q1 is obviously going to be our easiest quarter, and were going to have our largest EPS
growth, as we anniversary the impact of the cost of rolling out the Bistro Happy Hour. So expect to
have the largest EPS in Q1. We are actually going to be down in Q4 probably, compared to this year.
A big piece of that is going to do with the tax rate. And the other quarters, well probably be up
slightly, in Q2, and Q3. As far as margins are concerned, both the Bistro, their margin, the
majority of their margin improvement for the year is going to come in Q1.
Right now, were forecasting them to have slightly up, outside of Q1, the majority of it though,
for the entire year is going to be coming out of Q1. Pei Wei, its pretty even. They are going to
be up, and in addition, we are going to get a little bit of lift for from the greater penetration
of Global Brands revenue, which has really good flow through on operating margin line.
John Glass Morgan Stanley Analyst
Okay. That is very helpful. And then, what do you think your overall basket of inflation is? If
you didnt really talk about what your labor rate inflation is going to be, and you didnt really
talk about energy. So if you want to talk about those specifically, that is fine. But if you take
that, and combine it with food, what do you think your overall rate of inflation, your P&L is, next
year?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
We didnt talk about that. We think we are going to see inflation throughout the majority of P&L
lines And right now, we are evaluating when to take price, how much price to take at the Bistro.
Last, we took price in May, so we have a couple of more months that well have price in at the
Bistro. Our intent is to be able to protect those margins, and be able to offset those inflationary
pressures. And as we talked about earlier, we are looking for operational efficiencies as well,
find some of those, get the top line moving, to be able to some leverage on some of those fixed
costs. So we think its going to take all three, to be able to manage this year.
John Glass Morgan Stanley Analyst
And then just finally, one detail on the food inflation. The three or four you talked about, is
that the same are you assuming for the 50% youve got contracted, is that the rate of inflation
in that? And youre expecting the same, in the non-contract that you are experiencing lower
inflation in your contract, than higher in the non-contract, then it just evens out to be three?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
Right now, its probably about the same. When you look at what we have contracted versus
non-contracted, produce for us right now, is a big wild card of what happens after we get out of
the freeze effects down in Mexico, in [Yuma] in Q1, what happens to that produce pricing. And so
there are still variables. Right now, our best estimate for what we think is going to happen on our
commodity basket is about 3% to 4%.
Operator
Thank you. Our next question comes from Nicole Miller with Piper Jaffray. The line is now open.
Nicole Miller Regan Piper Jaffray & Co. Analyst
Good afternoon. It was helpful to understand the Global Brands contribution to earnings on the
Unilever license business. In particular, could you talk about how you did that EPS contribution,
in terms of how many SKUs are out there, how many could be out there, and then how many grocery
doors you are in today, and are there any more door opportunities?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
As you heard us talk about in the past, we are fairly penetrated when it comes to our retail
product. We are in 30,000 plus locations. Right now, well continue to evaluate, and look for
abilities to enhance that retail product offering. Our culinary team works alongside the Unilever
team, looking for opportunities and product development. We dont have anything really to share
with you right now, as it relates to that. We will have increased revenue though, simply because we
will have nine months of revenue this year I mean12 months this year versus nine months in 2010,
and we are going to get that increase in royalty.
Nicole Miller Regan Piper Jaffray & Co. Analyst
Thank you.
Operator
Our next question today comes from Sharon Zackfia with William Blair. And that line is now open.
Sharon Zackfia William Blair & Company Analyst
Hi. Good afternoon. I dont know if Bert is a silent partner there or not.
Robert Bert Vivian P.F. Changs China Bistro, Inc. Co-CEO
Im sorry, Sharon, I couldnt hear you.
Sharon Zackfia William Blair & Company Analyst
Im calling from Mexico, (inaudible) from here. Just a quick follow-up on Pei Weis marketing
expenses. I guess, where did you end up for the full-year, as percent of sales? And what do you
think the right marketing spend is for that concept? And then secondarily, if could you quantify
what that shift was, in terms of basis points, from the third quarter into the fourth quarter, that
might be helpful?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
This is Mark, for 2010 the Pei Wei marketing was about 1.3%. We started the year with a forecast
and anticipation of spending about 1.5, so just a little bit less than we anticipated. In 2011, our
anticipation is that we will spend 1.5% of revenue in Pei Wei. The shift going from Q3 to Q4 was
about 140 basis points of incremental pressure, due to that shift.
Sharon Zackfia William Blair & Company Analyst
Okay. And secondarily, on the performance units, I mean if we look out into 2011, or 2012 and
beyond, and I know you talked about this a little bit, what is the right rate of growth for you in
dollars for G&A? Is it a low single digit rate of increase, or how should we think about that?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
On a long-term basis, we would like to find a little bit of leverage, as it relates to G&A. I think
youve heard us talk in the past, that we believe we have infrastructure in place to be able to
grow our business. Now we are adding some strategic positions to growth vehicles, who look at
Pei Wei, weve added the real estate person. Were adding some support in Global Brands, but it s
our intent to be able to leverage that the G&A and that headcount going forward. That should be
a line that we are growing less than our top line.
Sharon Zackfia William Blair & Company Analyst
Okay. Thank you.
Operator
Our next question comes from Bryan Elliott with Raymond. The line is now open.
Bryn Elliott Raymond James Analyst
Thanks. Most of my questions have been asked. But a real quick clarification, Mark, I think you
said weve already taken some price in Q1 at Pei Wei, and wondered if you could give us a sense of
magnitude?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
Yes, we took a little price. Right now, we are not certain. Usually when you take price, consumers
move around the menu a little bit. I think what we said, were expecting comp at both of those
concepts weve about 1% or 2%. A little bit of price, a little bit of traffic, so I think that
the price that we took is within that.
Bryn Elliott Raymond James Analyst
Okay. All right. Thanks.
Operator
The next question today comes from Bart Glenn with D.A. Davidson. The line is now open.
Bart Glenn D.A. Davidson & Co. Analyst
Thank you. With the addition of Lane as the President of the Bistro division, was just curious
from a strategic standpoint, if we should think about maybe increased rate of menu innovation, or
greater tweaks to marketing strategy, just in general, any feedback would be helpful? Thank you.
Robert Bert Vivian P.F. Changs China Bistro, Inc. Co-CEO
Clearly, Lane brings a wealth of experience to our leadership team. And in the past, he has been on
the front end of both marketing and product innovation, design innovation, and a whole variety of
other initiatives that drive our business. If you look into the bucket of strategic tactics that
are already in place the day Lane arrives here, in some part, it will be an acceleration of those
tactics. And come March 1st, well get an opportunity to spend a little bit more time with him. And
the beauty of having Lane join our team, is he brings a historical perspective, having been around
the Company now, for the about last ten years, as well as a very forward thinking individual. So I
think the combination of the two, will make for a fairly seamless transition from the Bistros
perspective.
Bart Glenn D.A. Davidson & Co. Analyst
Thank you.
Operator
Our next question today comes from Keith Siegner with Credit Suisse. Your line is now open.
Karen Haltest Credit Suisse Analyst
This is actually Karen on for Keith today. Just a quick modeling question. How should we be
thinking about the tax rate for 2011? Let me move past some of the one-time items for this year,
and then also, how that might progress through the year?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
The our estimate right now, for tax, is 30%. If you had back out all of the discrete items in
2010, our tax rate was probably about 29%. That 1% increase is due to more of our revenue and
income, coming from [non-tipped] sources in Pei Wei and Global Brands.
Karen Haltest Credit Suisse Analyst
Okay. Great. Thank you.
Operator
Our next question today comes from Matt DiFrisco with Oppenheimer. That line is now open.
Matthew DiFrisco Oppenheimer & Co. Analyst
Thank you. Mark, could you Im sorry if I missed it, but your same-store sales was this time
last year, so for the first 40 days or so of 1Q 2010.
Mark Mumford P.F. Changs China Bistro, Inc. CFO
I dont have that in front of me. I can get you that after the call, Matt.
Matthew DiFrisco Oppenheimer & Co. Analyst
Okay, I am just curious if either brand was different than what trended different (inaudible)
than what it was for the full 90 days. And then Valentines benefit, I think some of your peers
have said is that it could be anywhere from 1% or 2% in the first 45 days. Did you see a similar
type benefit?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
We think the calendar shift overall for 2011 benefits us, and certainly Valentines Day falling on
Monday did help us. In addition, we will see the Fourth of July, and Halloween also moved to Monday
this year, so calendar of Mondays. Christmas and New Year will fall on Sunday this year, versus
Saturday last year, so that will help us. Overall, we think the calendar lines up well for us in
2011. So, yes, Valentines helped us a little bit being on Monday.
Matthew DiFrisco Oppenheimer & Co. Analyst
Okay. Im just trying to wonder I guess, the guidance to get to hold 1% or grow above and
beyond 1% comp, are you looking at easier compares from a year ago? I can get that off-line though.
And then, just in your guidance, you mentioned some wage pressure, and not only commodity pressure.
Do you have in there a presumption that the minimum wage for tipped employees will be going up on
the federal level from the current low of $2.13, because I guess, Texas would be the biggest one,
to have an implication for you guys.
Mark Mumford P.F. Changs China Bistro, Inc. CFO
Right now, our expectations on whats going to happen for 2011, the biggest increase in minimum
wage for us, is going to be in Florida. Well also see a little bit of pressure in Arizona, and
Colorado, and Ohio.
Matthew DiFrisco Oppenheimer & Co. Analyst
Okay. So that would be incremental then, if the federal wage for tipped employees went up to $2.13,
you dont have that factored into your guidance?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
No, we dont.
Matthew DiFrisco Oppenheimer & Co. Analyst
Thank you.
Operator
Our next question today comes from Peter Saleh with the Telsey Advisory Group. That line is now
Peter Saleh Telsey Advisory Group Analyst
Great, thanks. I was just hoping you guys could comment on some of the regional trends, California
and Texas. And then, just where do we stand on True Foods?
Robert Bert Vivian P.F. Changs China Bistro, Inc. Co-CEO
Hi, Peter. This is Bert. I will talk a little bit about True Foods. Things are progressing well
there. In the fourth quarter of last year, they opened their third restaurant back here in
Scottsdale. The first restaurant was in Scottsdale, the second one was in Newport Beach. And the
third again, opened in the fourth quarter of last year in Scottsdale. All three restaurants are
doing very well. I think the [Box] restaurant team is doing a great job there, and were certainly
pleased with what we have seen thus far. The fourth unit will be opening up, probably in the May
time frame, out in Santa Monica. And there will be a fifth site this year, later in the year, but
we have not talked about that location just yet. So everything is going as we had hoped, and I
think as they would have hoped. And I think that we have talked in the past about a potential
timeline, in terms of our decision, whether or not we remain a lender, or actually become an equity
participant. At some point in time this year, Im sure our Board is going to have that conversation
and I dont think we have seen anything yet, that would make me think otherwise. As far as
geography, its really a weather report, where we saw weather, we didnt have positive comps in Q4.
So stores on the East Coast were primarily negative, all the rains on the West Coast turned
California back to negative during the quarter at the Bistro. Pei Wei, when you look at their
penetration, Arizona, Florida, and Texas represent 60% of their business, and that was positive fro
them during the quarter. So they did have some blips due to weather, but overall, they had some
pretty positive trends.
Peter Saleh Telsey Advisory Group Analyst
Great. Thank you.
Operator
Our next question today comes from Howard Penney with Hedgeye Risk Management.
Howard Penney Hedgeye Risk Management Analyst
Thanks very much. Actually your weather report was part of my question. But can you maybe go
through the pricing power in the menu, and do you implement it regionally, given sort of the those
issues that you see regionally. And then I just wanted to thank Bert for all his color commentary
on the industry trends over the last few years. It has been very entertaining. Thanks.
Robert Bert Vivian P.F. Changs China Bistro, Inc. Co-CEO
Well I hope it was enlightening, more than entertaining, Howard, but I appreciate that.
(Laughter).
Mark Mumford P.F. Changs China Bistro, Inc. CFO
As far as the pricing power in the menu, we think if we continue to do a great job of executing the
brands we offer a differentiated product offering out there. So if we do a great job, we think
that lends ourselves the ability to be able to take a little bit of price. The customer experience
is really based upon the ambience, the service, as well as the food. And each day as we open up
those restaurants, our job is to do a fantastic job on all three of those fronts. And if we do
that, its certainly, from a price value perspective, it gives us an opportunity to be able to take
price.
Robert Bert Vivian P.F. Changs China Bistro, Inc. Co-CEO
Hi, Howard, this is Bert. One other piece of the puzzle there, and I think someone earlier, in part
of the question kind of mentioned it, was that over the last few years, theres been a fair
amount of discounting on the fringe at the Bistro. And part of taking price, may be clipping off
some of that discounting. So theres a couple of ways you can get to it, some which the customer
will see on the menu, and some which they wont
Howard Penney Hedgeye Risk Management Analyst
Thank you.
Operator
Our next question today comes from Greg Ruedy with Stephens. That line is now open.
Greg Ruedy Stephens Inc. Analyst
Thanks. You have been realizing frequency in the higher ticket occasions, but for 2011 what I am
wondering is what you have baked into your Bistro same-stores sales forecast for traffic gains,
from say, the aspirational lower ticket guest?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
From the lower ticket guest?
Greg Ruedy Stephens Inc. Analyst
Correct?
Robert Bert Vivian P.F. Changs China Bistro, Inc. Co-CEO
Hi, Greg, this is Bert. I would love to tell you that we are going to share all the intimate
details of our forecast with you, but we are not. Clearly, we want to see growth across the
spectrum of ticket prices. Some of that we are going to get from the the upper end. We do expect
that as the margin the environment is going to be better this year. So but we think we will
see growth across the ticket spectrum. Rick mentioned earlier, about the Happy Hour initiative, and
the modifications that weve made there. The fact is, if the same number of guests come in this
year, and participate in our Happy Hour versus last year, you are going to see ticket growth,
because we are not discounting our existing items. It is actually new items. So, thats again,
theres lots of ways to get to the ticket puzzle. That is probably as much detail, as we are going
to give you.
Greg Ruedy Stephens Inc. Analyst
All right. Just housekeeping, alcohol mix at the Bistro, where is it at today, and how does that
compare versus last year?
Robert Bert Vivian P.F. Changs China Bistro, Inc. Co-CEO
Down a little bit, this is Bert, down a little bit. Its about, in terms of total sales, you are in
the 15% to 16% range. If you back out to-go, obviously, it is a little bit higher, that in terms of
for dine-in sales. We have been in a declining mode, in terms of alcohol sales, for the past five,
six, seven years. And Im guessing, that is probably not going to change too much. The Happy Hour
initiative has certainly stalled, if you will, the decline. If you looked at it on a pure unit
basis, we actually sold more units in 2010 than we did in 2009, but we also took some price
decreases. Again, to the extent that any of that price adjusts a little bit, you will see a little
tick up, in terms of sales there.
Greg Ruedy Stephens Inc. Analyst
I appreciate it. Thank you.
Robert Bert Vivian P.F. Changs China Bistro, Inc. Co-CEO
You bet.
Operator
Our next question today comes from John Ivankoe with JPMorgan. That line is now open.
John Ivankoe JPMorgan Chase & Co. Analyst
Thank you. Just a real quick one for me. At firstly, given that you are obviously, meaningfully
free cash flow positive Company, what do you think of the normal expected cash run rate is for your
business, after youre generating cash, CapEx dividends, stock buyback, I mean, what is the amount
you need to feel comfortable?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
The kind of cash that we would like to see kept on our balance sheet is somewhere in that $40
million to $50 million range.
John Ivankoe JPMorgan Chase & Co. Analyst
And is this year, is it fair to assume that it will be higher than that, and does the cash settle
executive comp, or the cash CEO comp, and is that something that will therefore drop in 2012?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
We will pay that in Q1 of 2012. We should grow our cash a little bit, if our expectations on our
forecast come to reality, we will grow our cash a ittle bit this year.
John Ivankoe JPMorgan Chase & Co. Analyst
And that does kind of get back to the question is, you started, I forget the number, north of $70
million this year, if your target is kind of 40 to 50, it seems like your stock buyback assumption
seems to be fairly conservative at this point. Are you planning on perhaps increased CapEx in
fiscal 2012, to not give a higher number?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
We will see a little bit of our first use of cash is investing back into our business. With the
Pei Wei development, we will invest a little bit more, and hopefully find some additional Bistro
sites to invest in as well. We dont have additional buyback authorization right now, so even if we
wanted to increase that, now we would have to go to the Board to get additional authorization.
John Ivankoe JPMorgan Chase & Co. Analyst
Okay. Thank you. That is it for me.
Operator
Our next question today comes from Mitch Speiser with Buckingham Research. That line is now open.
Mitchell Speiser Buckingham Research Analyst
Great. Thanks very much. First on the Bistro, I think someone mentioned that some pricing was taken
in the fourth quarter. Can you tell us how much, and is that the price do you plan to take more
pricing at the Bistro in 2011, or was that fourth-quarter price increase it?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
The price increase we changed a little bit on the menu. We really didnt have much impact on
price or the ticket. So thats we changed a few of the menu items, but it or the menu
pricing, but it was not material at all. We took price last year in May. We are currently
evaluating when to take price of this year and how much, so we will have an additional price menu
increase in 2011 this year.
Mitchell Speiser Buckingham Research Analyst
Okay. Last quarter, you told us lunch at the Bistro, during the week, I believe, comps up four.
Can you give us an update on that number in the fourth quarter, and if you can give any comments on
weekend dinner, if comps are positive or not, that would be helpful.
Mark Mumford P.F. Changs China Bistro, Inc. CFO
From a day part perspective, early in 2010 we have seen stronger traffic during the week, than we
did in the weekend. And as we moved into the second half of the year, the weekend caught up with
the weekday. So last couple of quarters they have been fairly even, both up slightly. And then, as
far as lunch and dinner, lunch was up slightly for us in the quarter, and dinner was down slightly
as well.
Mitchell Speiser Buckingham Research Analyst
Okay. And lastly, as I looked at your supplemental sales, and I think this trend has continued, but
just havent asked you about it, Just the class of 2008, seems pretty soft on an average weekly
sales basis at the Bistro and Pei Wei. Can you just comment on that year, is there anything unusual
with those openings in those years? And is there any risk you might want to close a couple of those
stores that were opened in that year?
Mark Mumford P.F. Changs China Bistro, Inc. CFO
I will speak to the Bistro first. There are a handful of sites at the in the Bistro, where we
had put some locations where we were anticipating to see stronger residential development, and that
didnt happen. A good example of that is here in Arizona, in [Goodyear], we put a site out there.
There is more coyotes probably around than people, so we were expecting to see some development.
That didnt happen. In addition, we went into smaller markets, in the class of 2008. And so you
just would expect to have we put in smaller stores, we invested lots in those stores.
We dont need as much revenue, to be able to get the return. And so, they are just smaller
footprint stores. So that is what you are seeing at the Bistro. And I, as far as Pei Wei, I think
Rick kind of touched on that, 2007, 2008, we probably made some real estate decisions, trying to
get to a number and we have a handful of stores in there, that arent performing that great, but
we do an impairment analysis each quarter. There arent any stores in there, that right now were
(inaudible) close.
Mitchell Speiser Buckingham Research Analyst
Thank you.
Operator
At this time, I have no further questions in queue.
Mark Mumford P.F. Changs China Bistro, Inc. CFO
Okay, great. Thanks for joining us today. Lets see, the next time let me see if I got that here
- -the next time we talk to you will be on April 27th. Thanks for joining us.
Operator
That concludes todays conference. Thank you for your participation.