P.F. Chang’s Expands as Economy Contracts

P.F. Chang’s spreading to Mexico

Soon, residents in Mexico will be able to partake in the imitation Chinese tradition that is P.F. Chang’s. The American restaurant chain is expanding, and it struck a deal with Latin American restaurant operator Alsea SAB to open 30 restaurants in Mexico in the next 10 years.

In this economy?

Everyone knows that sales in the restaurant industry have taken a brutal beating since the start of the recession. Dining out was the first thing to go for many cash-strapped individuals and families. Slate.com:

Restaurants are the top category in which U.S. consumers said they are most likely to cut back, according to a recent Boston Consulting Group survey.

It’s a no-brainer that preparing your own food at home is much less expensive than going out to eat. Clipping coupons and checking for sale items at the grocery store can help you save even more and keep you from needing a payday loan to pay for groceries.

So how is P.F. Chang’s doing so much business that it has the capital to expand?

Hard work pays off?

According to Daniel Gross at Slate.com, P.F. Chang’s “same-store sales fell a bit but profits produced at its 350 outlets rose 38 percent from the first quarter of 2008.” Gross also has a theory about how and why P.F. Chang’s is doing well amid economic chaos:

“The company has avoided wholesale restructuring and panicky discounting. … Rather, it simply has worked hard at doing a better job running things. Co-CEO Rick Federico says that in early 2008, when traffic first softened, management went through ‘all elements of our business that don’t touch our guests or our product’ in a search for efficiencies,” Gross writes.

Restaurant expansion

Here are some details on the Mexico expansion of P.F. Chang’s, which also owns Pei Wei Asian Diner. From the Associated Press:

Restaurant chain P.F. Chang’s China Bistro Inc. said Monday it is expanding to Mexico, with the first location to open in Mexico City in the fourth quarter.

The company will develop 30 restaurants in Mexico over the next decade via a license agreement with Alsea SAB de CV, an operator of fast-food and casual restaurants in Mexico.

The P.F. Chang’s difference

As Gross from Slate points out, P.F. Chang’s didn’t make its fortune off of people seeking authentic Chinese cuisine. Gross uses a musical analogy to explain P.F. Chang’s business philosophy as he sees it:

Just as saxophonist Kenny G provides jazz for people who don’t really like authentic jazz, P.F. Chang’s peddles Chinese food to diners who might not cotton to authentic Sichuan fare.

Gross also chronicles the beginnings of P.F. Chang’s successful ride to economic stability:

P.F. Chang’s rode the trading-up boom of this past decade, opening stores in tony malls and economic hot zones and becoming the first Chinese-food chain to reach $1 billion in revenue.

Let’s not get carried away

P.F. Chang’s hasn’t been totally immune to the economic downturn. It scaled back the number of stores it plans to open this year from about 20 down to eight. It introduced $7.95 lunch specials and three-course dinner deals.

Its expansion into Mexico will be slow but steady. P.F. Chang’s provides a good example of how good business decisions and small changes can amount to big success.