RIT Financial Management Association

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R?I?T Financial Management Association
Prepared by Luis Gutierrez
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Background Information

• Basic Details
• Sector Services
• Industry Restaurants
• Full-time Employees 21,800
• Owns
• PF Changs China Bistro
• Pei Wei Asian Diner
• Taneko Japanese Tavern
• The P.F. Chang's experience is a unique
  combination of Chinese cuisine, attentive
  service, wine, and tempting desserts all served
  in a stylish, high-energy bistro.
• -PF Changs China Bistro

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One-Year Activity
Yahoo! Finance PFCB Chart
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What Happened?

• Feb 15, 2006
• PF Changs China Bistro, Inc. Issues FY 2006
  Guidance Below Analysts Estimates
• EPS in 2005 was 1.40
• According to Reuters Estimates, analysts on
  average were expecting the Company to report full
  year revenue of 975 million and earnings per
  share of 1.68. Reuters
• Instead, revenues are expected to increase only
  to 957 million for 2006
• July 6, 2006
• PFCB announced lower EPS for 2nd Quarter of 2006
  (0.29-0.31) and some estimate were around 0.33
  for that period.
• July 26, 2006
• PFCB lowered EPS for fiscal year 2006 to 1.12
  while some analysts expected around an EPS of
  1.25 for the year.
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  PFCB News Feed

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Whats Happened Since Then?

• July 31, 2006
• PFCB has completed a deal to open 2nd Hawaiian
  restaurant in a newly
• renovated shopping center.
• September 12, 2006
• First PFCB in Hawaii opens up for business with
  plans of at least one more to be built.
• Next Taneko Japanese Tavern to open in
  Scottsdale, Arizona
• Will they be successful in Hawaii? How about
  Taneko Japanese Tavern? We need more PFCB
  Analyst coverage.

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Taneko Japanese Tavern

• ...a Japanese tavern that uses natural, organic
  seasonal ingredients and highlights the diverse
  cooking styles of Japan. The restaurant will use
  a wood-fired oven and grill as the centerpiece of
  the menu that will complement traditional
  tempura, sashimi, soups, stews, noodles, rice,
  salads and desserts. Similar to izakayas, Japans
  own local taverns and pubs, Taneko Tavern will
  offer an extensive variety of food, beer, wine,
  sake and drinks served in a comfortable
  atmosphere.
• -TravelVideo
• Scheduled to open in mid-September 2006 in
  Scottsdale, Arizona
• Taneko Japanese Tavern

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Current Financial Figures
PFCB PFCB Summary for P.F. CHANG'S CHINA -
Yahoo! Finance Beta 0.9 P/E 28.39 Return on
Equity 12.2 Debt Ratio 20.9 Current Ratio
1.02 Market-Cap 1.01 billion No Dividend
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Financial Employee History
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Competitive Landscape
McDonalds
Wendys
OSI Restaurant
Partners Darden Restaurants Brinker
International Inc. Applebees International
Inc. Benihana Inc.

Yahoo! Charts
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Comparisons
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Risks

• PFCB and Pei Wei Asian Diner are currently
  experiencing lackluster same store sales.
• Labor costs pressures (up 3.8 in 2nd Quarter)
• PFCB has been losing incremental traffic from
  middle class consumers.
• Pei Wei is plague by unit development delays,
  lower new store volumes, cannibalization of
  sales, and recent labor cost pressures.
• Still yet to determine success of Hawaiian
  restaurants.

Sources Wall Street Strategies, Bear Stearns, JP
Morgan analyst reports
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Buy, Sell, or Hold?

• Recommendation - Hold
• Potential major success in Hawaii and 2 more
  restaurants to be launched. We need more time to
  see how well they develop in Hawaii.
• Taneko Japanese Tavern is an interesting
  experiment that allows them to diversify amongst
  different consumers.
• Revenues are stable.

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Questions?

• Are there other critical factors to address?
• Sell recommendation?
• Discuss.

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