It was just six years ago that Centerbridge Partners bought P.F. Chang for $1.1 billion. At the time, the restaurant chain was said to be fighting to recover from ill-timed price increases. Apparently, passing on the higher costs of labor and food to their customers led to declining sales in 2011. With the sale, they went private, hoping it would give the restaurant more flexibility in an attempt to increase traffic.
Now, in the face of extreme competition and a heavy debt burden of $680 million, the chain is once again on the market. It’s speculated that part of the motivation may be the bonds that will be due in 2020—ones that the chain may be having trouble refinancing.
For those interested, the brand currently consists of 300 units with a little less than 100 abroad in 23 countries such as Brazil, Chile, Germany, Egypt, Kuwait, Lebanon, Mexico, Saudi Arabia, South Korea and the United Arab Emirates, to name a few.
According to Centerbridge, several possible buyers are apparently behind the scenes. And with good reason. In 2017, the average unit in the U.S. experienced over $4 million in sales and the chain realized $1.2 billion in revenue worldwide.
At the same time that P.F. Chang appears to be on the market, it is expanding in overseas markets. The first China based P.F. Chang has opened in Shanghai, China, leaving many wondering if an American Chinese restaurant can make the grade in a country that specializes in Peking Duck and Shrimp Dumplings. Can Chinese American food make it in China? One good marketing strategy they’ve adopted is changing P.F. Chang’s China Bistro to P.F. Chang’s American Bistro, enabling it to market itself as American Cuisine.
According to Business Insider, the top three dishes are Chang’s chicken, lettuce wraps, and dynamite shrimp. They are hoping that their “fresh, made from scratch” food philosophy will resonate with the sophisticated Chinese consumer. In fact, P.F. Chang’s CEO believes that China can overtake the U.S. in terms of sales.
Axios quoted one of the customers attending the soft opening:
“I don’t think this is Chinese food…I think it’s what Americans think Chinese food should taste like.”—Zhang Xue
However, for those that are drawn to the upper echelon in Chinese cuisine, P.F. Chang is not so far off the beaten track. In fact, many in the business believe that this might just be where Chinese cuisine is heading.
Unfortunately, timing could not be worse. With the current administration’s looming trade war with China, any business just entering the country should be prepared for stormy seas and turbulent tides.
Despite this potential obstacle, P.F. Chang still plans to open at least six more restaurants in the U.S. and 12 or more restaurants abroad in 2018.
A Little History
The first P.F. Chang opened in Arizona in 1993. It was a dual effort by Paul Fleming (P.F.), owner of Ruth’s Chris Steakhouse, and Philip Chiang (Chang). But the beginning of this fresh and inspired Chinese bistro really began in the 1960s with Cecilia Chiang, mother of Philip Chiang, and owner of the San Francisco restaurant, The Mandarin. Here is where the U.S. was first introduced to fresh, authentic, Chinese cuisine.
Despite the many changes the business has sustained, it has held true to its first mission: simple, from scratch recipes that offer incredible and unique flavors. They have termed it the “Farm to Wok” approach.
We hope that whoever chooses to “captain the ship” on its remaining voyage chooses to stay true to the principals that first inspired its creation: the fresh cuisine that has made this restaurant so memorable.