P.F. Chang’s China Bistro to go private in $1.1 billion deal

BIZMOLOGY — P.F. Chang’s China Bistro has agreed to be acquired by New York-based investment firm Centerbridge. The proposed deal, reportedly worth about $1.1 billion, will result in P.F. Chang’s going private. The casual dining company owns and operates more than 200 P.F. Chang’s China Bistros and the 170-unit Pei Wei Asian Diner and Asian Market.

The chain’s bistro restaurants offer stylish dining areas, display kitchens, and narrative murals based on ancient Chinese designs. Pei Wei locations offer a more limited menu with an emphasis on carry-out service. The company’s flagship chain is designed to appeal to suburban tastes while still promoting itself as an ethnic dining experience.

P.F. Chang’s focus on Asian cuisine helps the company set itself apart from other banners in a crowded casual dining segment dominated by Chili’s (owned by Brinker International), the Olive Garden (Darden Restaurants), and Applebee’s. With no franchise operators, P.F. Chang’s incurs higher operating costs than some of its competitors but it also has a higher degree of control over food and service quality at its restaurants. (The company does have a small number of licensed outlets in select international markets.)

The chain relies heavily on its locations in Texas, California, Florida, and Arizona, which account for roughly half of total revenue. With the stagnant economy hurting average guest traffic in P.F. Chang’s most profitable regions, the company has shifted its priorities in recent years from rapid expansion to cost control and improving sales. P.F. Chang’s only opened three of its full-service eateries during 2011 after only opening four full-service locations in 2010. The company has started looking outside of the US for growth, with deals in place to open locations in Mexico and the Middle East this year.

P.F. Chang’s has tried to expand its brand identity beyond the dining room and into the kitchen. The company inked a licensing deal with Unilever in 2009 to create a branded line of frozen food items. Similar deals have put restaurant brands such as California Pizza Kitchen and T.G.I. Friday’s (owned by Carlson Restaurants Worldwide) in the frozen food aisle.

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Photo by Mike McCormick used under Creative Commons License.

Michael McLellan

Michael McLellan covers the business of restaurants, marketing, media, technology, sports, and more for D&B and Hoover's. He is a graduate of the University of Texas at Austin's Radio-Television-Film program. Follow him on Twitter.

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