8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 15, 2010

P.F. Chang’s China Bistro, Inc.

(Exact name of registrant as specified in its charter)

Delaware	0-25123	86-0815086
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

7676 E. Pinnacle Peak Road, Scottsdale, Arizona	85255
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (480) 888-3000

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On February 17, 2010, P.F. Chang’s China Bistro, Inc. (the “Company”) issued a press release describing selected financial results of the Company for the quarter and year ended January 3, 2010. Also on February 17, 2010, the Company held its Fourth Quarter Earnings Conference Call. The press release and transcript of the Fourth Quarter Earnings Conference Call are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and, in addition to this Report on Form 8-K and pursuant to General Instruction B.2 of Form 8-K, are being furnished, not filed, for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

Item 8.01. Other Events.

On February 15, 2010, Company issued a press release announcing a development and license agreement with Global Restaurant Concepts, Inc., a leading casual dining operator in the Philippines, to develop eight restaurants over the next five years. A copy of the press release is attached hereto as Exhibit 99.3 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.		Description
	99.1	February 17, 2010 Press Release by P.F. Chang’s China Bistro, Inc.
	99.2	Transcript of Fourth Quarter Earnings Conference Call held February 17, 2010
	99.3	February 15, 2010 Press Release by P.F. Chang’s China Bistro, Inc.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	P.F. Chang’s China Bistro, Inc.
Date: February 19, 2010
	/s/ Mark D. Mumford
	Mark D. Mumford
	Chief Financial Officer

EX-99.1

Exhibit 99.1

P.F. Chang’s China Bistro, Inc.

P.F. CHANG’S REPORTS FOURTH QUARTER AND FULL YEAR 2009 RESULTS
Company to Initiate Quarterly Variable Cash Dividend

SCOTTSDALE, ARIZONA, February 17, 2010 — P.F. Chang’s China Bistro, Inc. (NASDAQ: PFCB) today reported financial results for the fourth quarter and fiscal year ended January 3, 2010.

(000 except per share data)	Q4 2009		Q4 2008		% Change			FY 2009		FY 2008		% Change
Revenues	$	326,653	$	294,797		10.8	%	$	1,228,179	$	1,198,124		2.5	%
Income from continuing operations	$	11,980	$	7,489		60.0	%	$	43,676	$	35,017		24.7	%
Net income	$	12,035	$	5,445		121.0	%	$	43,197	$	27,426		57.5	%
Diluted income per share:
Income from continuing operations	$	0.52	$	0.31		67.7	%	$	1.87	$	1.45		29.0	%
Net income	$	0.52	$	0.23		126.1	%	$	1.85	$	1.14		62.3	%
Weighted average shares — diluted		23,045		23,851		-3.4	%		23,413		24,080		-2.8	%

The Company’s fourth quarter and fiscal year 2009 results were comprised of 14 and 53 weeks, respectively, compared to 13 and 52 weeks in the fourth quarter and fiscal year 2008.

Highlights for the fourth quarter of 2009 compared to prior year include:

• Consolidated revenues increased 10.8% to $326.7 million

• Comparable store sales declined 5.2% at the Bistro and increased 3.0% at Pei Wei

• Restaurant operating income margin increased 100 basis points to 12.7%

• Income from continuing operations increased 60.0% to $12.0 million

• Net income increased 121.0%⁽¹⁾ to $12.0 million

• Income from continuing operations per diluted share increased 67.7% to $0.52

• Net income per diluted share increased 126.1%⁽¹⁾ to $0.52

Highlights for fiscal 2009 compared to prior year include:

• Consolidated revenues increased 2.5% to $1,228.2 million

• Comparable store sales declined 6.7% at the Bistro and increased 0.1% at Pei Wei

• Restaurant operating income margin increased 80 basis points to 12.2%

• Income from continuing operations increased 24.7% to $43.7 million

• Net income increased 57.5%⁽¹⁾ to $43.2 million

• Income from continuing operations per diluted share increased 29.0% to $1.87

• Net income per diluted share increased 62.3%⁽¹⁾ to $1.85

(1) Prior year net income includes a loss from discontinued operations related to the fiscal 2008 closure of 10 underperforming Pei Wei restaurants, comprised primarily of $2.7 million in pretax lease termination and severance charges recognized in the fourth quarter of 2008 and $10.2 million in pretax asset impairment, lease termination and severance charges recognized during fiscal 2008.

Fourth quarter comparable store sales

For the 14 weeks ended January 3, 2010, comparable store sales decreased 5.2% at the Bistro due to a reduction in overall guest traffic combined with a slight decline in average check, reflecting the net impact of menu mix changes. Comparable store sales at the Bistro decreased 6.2%, 5.2%, and 4.3% in October, November and December, respectively.

For the 14 weeks ended January 3, 2010, comparable store sales increased 3.0% at Pei Wei due to an increase in overall guest traffic partially offset by a slight decline in average check, reflecting the net impact of menu mix changes. Comparable store sales at Pei Wei increased 3.0%, 3.7%, and 2.4% in October, November and December, respectively.

Comparable store sales for the fourth quarter of fiscal 2009 reflect results from the 14 week operating period in the current year compared to the same 14 week operating period in the prior year. Comparable store sales for December 2009 reflect results from the 5 week operating period in the current year compared to the same 5 week operating period in the prior year.

2010 Expectations

The Company anticipates that fiscal 2010 consolidated revenues will be flat compared to fiscal 2009. This is based on expectations of slightly lower average weekly sales at both concepts during fiscal 2010 and the impact of a 52-week fiscal year in fiscal 2010 (versus 53 weeks in fiscal 2009), offset by the benefit of a full year of revenues for restaurants that opened during fiscal 2009 combined with revenues from six to ten anticipated new restaurant openings during fiscal 2010.

Despite the impact of slightly lower anticipated average weekly sales, the Company expects restaurant operating margins for fiscal 2010 to be consistent with fiscal 2009, primarily due to expectations of favorable cost of sales offsetting the anticipated impact of deleverage of certain fixed operating costs and higher planned marketing spend.

The Company expects to open three to five new Bistro restaurants and three to five new Pei Wei restaurants during fiscal 2010. As a result, the Company anticipates slightly lower preopening expenses for fiscal 2010.

The Company also plans to fully repay its outstanding credit line borrowings of $40 million and repurchase approximately $40 million in common shares under its current $100 million share repurchase authorization during fiscal 2010.

Overall, the Company expects consolidated diluted earnings per share to approximate $2.00 for fiscal 2010.

Initiation of quarterly dividend

Based on the Company’s desire to consistently return excess cash flow to its shareholders, the Board of Directors has approved the initiation of a quarterly variable cash dividend commencing with the first quarter of 2010. The amount of the cash dividend will be computed based on 45% of the Company’s quarterly net income and is expected to total approximately $0.90 per share relating to fiscal 2010.

Page 2 of 10

Financial Reporting Dates in Fiscal 2010

The Company plans to announce quarterly financial results and hold conference calls to discuss its results for the first three quarters of fiscal 2010 as outlined below. The earnings press releases will be issued at approximately 7:00 am ET and the conference calls will follow at 1:00 pm ET on the same day. Dates and times could be subject to change.

	Earnings Release and
Quarter Ending	Conference Call Dates
April 4, 2010	April 28, 2010
July 4, 2010	July 28, 2010
October 3, 2010	October 27, 2010

Conference call information

The Company is hosting a conference call today at 12:00 pm ET in which management will provide further details on the fourth quarter results and the fiscal 2010 outlook. A webcast of the call can be accessed through the company’s website at http://www.pfcb.com.

Definitions

The following definitions apply to these terms as used throughout this release:

Income from continuing operations refers to Income from continuing operations, net of tax, attributable to PFCB common stockholders

Net income refers to Net income attributable to PFCB common stockholders

Comparable store sales changes include company-operated restaurants and represent the change in period-over-period sales for the comparable restaurant base. A restaurant becomes comparable in its eighteenth month of operation.

About the Company

P.F. Chang’s China Bistro, Inc. owns and operates two restaurant concepts in the Asian niche. P.F. Chang’s China Bistro features a blend of high-quality, Chinese-inspired cuisine and American hospitality in a sophisticated, contemporary bistro setting. Pei Wei Asian Diner offers a modest menu of freshly prepared pan-Asian cuisine in a relaxed, warm environment offering attentive counter service and take-out flexibility.

Note with respect to non-GAAP financial measures contained within Supplemental Financial Information

In addition to using GAAP results in evaluating the Company’s business, management measures restaurant operating income to assess the performance of its existing restaurant concepts. Restaurant operating income includes all ongoing costs related to operating the Company’s restaurants but excludes preopening expenses and partner investment expense. Because preopening and partner investment expenses are associated with expansion of the Company’s business and vary in timing and magnitude, they make an accurate assessment of the health of its ongoing operations more difficult and are therefore excluded. Additionally, general and administrative expenses are only included in the Company’s consolidated financial presentation as these costs relate to support of both restaurant businesses and are generally not specifically identifiable to individual restaurant operations. As the Company’s expansion is funded entirely from its ongoing restaurant operations, restaurant operating income is a consideration of management when determining whether and when to open additional restaurants. The non-GAAP financial information presented herein should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Please see the non-GAAP to GAAP reconciliation at the bottom of pages 6 through 8 of this press release for a reconciliation of restaurant operating income to the most directly comparable GAAP measure, income from operations.

Page 3 of 10

Note with respect to forward looking statements

The statements contained in this press release that are not purely historical, including the Company’s estimates of its earnings, revenues and anticipated new restaurants are forward-looking statements. The accuracy of these forward-looking statements may be affected by certain risks and uncertainties, including, but not limited to, failure of the Company’s existing or new restaurants to achieve expected results; changes in general economic and political conditions that affect consumer spending; changes in government legislation that may increase labor costs; the dependency on sales concentrated in certain geographic areas or generated by corporate spending; intense competition in the restaurant industry; Global Brand Development initiatives that may impact our brand; damage to our brands or reputation; litigation; adverse public or medical opinions about the health effects of consuming our products; failure to comply with governmental regulations; changes in food costs; the inability to retain key personnel; the Company’s ability to successfully expand its operations; federal and state tax rules could negatively impact results of operations and financial position; fluctuating insurance requirements and costs; marketing programs may not be successful; potential labor shortages that may delay planned openings; the inability to develop and construct restaurants within projected budgets and time periods; seasonality of the Company’s business and other risks described in the Company’s recent SEC filings.

Contacts:

Investor:	Allison Schulder	(480) 888-3000	allison.schulder@pfcb.com
Media:	Pete Marino	(312) 339-8833	pmarino@digcommunications.com
	Dig Communications

Page 4 of 10

P.F. Chang’s China Bistro, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

	14 Weeks			13 Weeks			53 Weeks			52 Weeks
	Ended			Ended			Ended			Ended
	January 3,			December 28,			January 3,			December 28,
	2010			2008			2010			2008
Revenues	$	326,653		$	294,797		$	1,228,179		$	1,198,124
Costs and expenses:
Cost of sales		87,328			79,600			326,421			325,630
Labor		107,052			95,500			401,583			396,911
Operating		53,476			49,339			203,859			198,967
Occupancy		18,288			17,402			70,635			69,809
General and administrative		22,004			21,687			82,749			77,488
Depreciation and amortization		18,303			17,956			74,429			68,711
Preopening expense		1,420			2,311			3,919			8,457
Partner investment expense		(92	)		(364	)		(629	)		(354	)
Total costs and expenses		307,779			283,431			1,162,966			1,145,619
Income from operations		18,874			11,366			65,213			52,505
Interest and other income (expense), net		(345	)		(584	)		(1,637	)		(3,362	)
Income from continuing operations before taxes		18,529			10,782			63,576			49,143
Provision for income taxes		(5,954	)		(2,919	)		(18,492	)		(12,193	)
Income from continuing operations, net of tax		12,575			7,863			45,084			36,950
Loss from discontinued operations, net of tax		55			(2,044	)		(479	)		(7,591	)
Net income		12,630			5,819			44,605			29,359
Less: Net income attributable to noncontrolling interests		595			374			1,408			1,933
Net income attributable to PFCB	$	12,035		$	5,445		$	43,197		$	27,426
Basic income per share:
Income from continuing operations attributable to PFCB common stockholders	$	0.53		$	0.32		$	1.90		$	1.47
Loss from discontinued operations, net of tax, attributable to PFCB common stockholders		0.00			(0.09	)		(0.02	)		(0.32	)
Net income attributable to PFCB common stockholders	$	0.53		$	0.23		$	1.88		$	1.15
Diluted income per share:
Income from continuing operations attributable to PFCB common stockholders	$	0.52		$	0.31		$	1.87		$	1.45
Loss from discontinued operations, net of tax, attributable to PFCB common stockholders		0.00			(0.08	)		(0.02	)		(0.31	)
Net income attributable to PFCB common stockholders	$	0.52		$	0.23		$	1.85		$	1.14
Weighted average shares used in computation:
Basic		22,633			23,623			22,986			23,776
Diluted		23,045			23,851			23,413			24,080
Amounts attributable to PFCB:
Income from continuing operations, net of tax	$	11,980		$	7,489		$	43,676		$	35,017
Loss from discontinued operations, net of tax		55			(2,044	)		(479	)		(7,591	)
Net income attributable to PFCB	$	12,035		$	5,445		$	43,197		$	27,426

Page 5 of 10

P.F. Chang’s China Bistro, Inc.
Supplemental Financial Information

	2007			1Q08			2Q08			3Q08			4Q08			2008			1Q09			2Q09			3Q09			4Q09			2009
Units		306			322			331			337			348			348			350			351			356			363			363
Sales weeks		14,443			4,122			4,256			4,328			4,464			17,170			4,531			4,563			4,604			5,058			18,756
AWS		75,067			74,216			70,849			68,363			66,039			69,780			68,382			66,044			63,060			64,581			65,482
Revenues (1)		1,084,193			305,917			301,533			295,877			294,797			1,198,124			309,837			301,360			290,329			326,653			1,228,179
Operating costs
Cost of sales		297,242			83,530			82,132			80,368			79,600			325,630			83,072			79,657			76,364			87,328			326,421
Labor		364,074			103,381			99,971			98,059			95,500			396,911			100,707			98,111			95,713			107,052			401,583
Operating		172,147			48,061			49,366			52,201			49,339			198,967			50,691			48,809			50,883			53,476			203,859
Occupancy		62,164			17,626			17,511			17,270			17,402			69,809			17,378			17,403			17,566			18,288			70,635
Net income attributable to noncontrolling interests		4,169			705			487			367			374			1,933			370			288			155			595			1,408
Depreciation & amortization		55,988			16,370			17,150			17,235			17,956			68,711			18,496			18,575			19,055			18,303			74,429
Restaurant operating income		128,409			36,244			34,916			30,377			34,626			136,163			39,123			38,517			30,593			41,611			149,844
Development costs
Preopening expenses		14,310			2,819			1,808			1,519			2,311			8,457			488			461			1,550			1,420			3,919
Partner investment expense		(2,012	)		411			(500	)		99			(364	)		(354	)		(464	)		(91	)		18			(92	)		(629	)
Other expenses
General and administrative (2)		66,968			18,521			19,128			18,152			21,687			77,488			19,814			20,523			20,408			22,004			82,749
Interest and other (income) expense, net		100			934			949			895			584			3,362			940			437			(85	)		345			1,637
Provision for income taxes		12,420			3,581			3,636			2,057			2,919			12,193			4,953			5,108			2,477			5,954			18,492
Income from continuing operations		36,623			9,978			9,895			7,655			7,489			35,017			13,392			12,079			6,225			11,980			43,676
Loss from discontinued operations, net of tax		(4,560	)		(329	)		(525	)		(4,693	)		(2,044	)		(7,591	)		(43	)		(474	)		(17	)		55			(479	)
Net income attributable to PFCB		32,063			9,649			9,370			2,962			5,445			27,426			13,349			11,605			6,208			12,035			43,197
Income from continuing operations per FDS	$	1.41		$	0.41		$	0.41		$	0.32		$	0.31		$	1.45		$	0.56		$	0.51		$	0.27		$	0.52		$	1.87
Fully diluted shares (FDS)		25,899			24,295			24,247			23,927			23,851			24,080			23,795			23,526			23,285			23,045			23,413
Revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		27.4	%		27.3	%		27.2	%		27.2	%		27.0	%		27.2	%		26.8	%		26.4	%		26.3	%		26.7	%		26.6	%
Labor		33.6	%		33.8	%		33.2	%		33.1	%		32.4	%		33.1	%		32.5	%		32.6	%		33.0	%		32.8	%		32.7	%
Operating		15.9	%		15.7	%		16.4	%		17.6	%		16.7	%		16.6	%		16.4	%		16.2	%		17.5	%		16.4	%		16.6	%
Occupancy		5.7	%		5.8	%		5.8	%		5.8	%		5.9	%		5.8	%		5.6	%		5.8	%		6.1	%		5.6	%		5.8	%
Net income attributable to noncontrolling interests		0.4	%		0.2	%		0.2	%		0.1	%		0.1	%		0.2	%		0.1	%		0.1	%		0.1	%		0.2	%		0.1	%
Depreciation & amortization		5.2	%		5.4	%		5.7	%		5.8	%		6.1	%		5.7	%		6.0	%		6.2	%		6.6	%		5.6	%		6.1	%
Restaurant operating income		11.8	%		11.8	%		11.6	%		10.3	%		11.7	%		11.4	%		12.6	%		12.8	%		10.5	%		12.7	%		12.2	%
Preopening expenses		1.3	%		0.9	%		0.6	%		0.5	%		0.8	%		0.7	%		0.2	%		0.2	%		0.5	%		0.4	%		0.3	%
Partner investment expense		(0.2	%)		0.1	%		(0.2	%)		0.0	%		(0.1	%)		(0.0	%)		(0.1	%)		(0.0	%)		0.0	%		(0.0	%)		(0.1	%)
General and administrative (2)		6.2	%		6.1	%		6.3	%		6.1	%		7.4	%		6.5	%		6.4	%		6.8	%		7.0	%		6.7	%		6.7	%
Interest and other (income) expense, net		0.0	%		0.3	%		0.3	%		0.3	%		0.2	%		0.3	%		0.3	%		0.1	%		(0.0	%)		0.1	%		0.1	%
Provision for income taxes		1.1	%		1.2	%		1.2	%		0.7	%		1.0	%		1.0	%		1.6	%		1.7	%		0.9	%		1.8	%		1.5	%
Income from continuing operations		3.4	%		3.3	%		3.3	%		2.6	%		2.5	%		2.9	%		4.3	%		4.0	%		2.1	%		3.7	%		3.6	%
Loss from discontinued operations, net of tax		(0.4	%)		(0.1	%)		(0.2	%)		(1.6	%)		(0.7	%)		(0.6	%)		(0.0	%)		(0.2	%)		(0.0	%)		0.0	%		(0.0	%)
Net income attributable to PFCB		3.0	%		3.2	%		3.1	%		1.0	%		1.8	%		2.3	%		4.3	%		3.9	%		2.1	%		3.7	%		3.5	%
Reconciliation of Non-GAAP Financial Information to GAAP measures:
Restaurant operating income		128,409			36,244			34,916			30,377			34,626			136,163			39,123			38,517			30,593			41,611			149,844
Add: Net income attributable to noncontrolling interests		4,169			705			487			367			374			1,933			370			288			155			595			1,408
Less: General and administrative (2)		(66,968	)		(18,521	)		(19,128	)		(18,152	)		(21,687	)		(77,488	)		(19,814	)		(20,523	)		(20,408	)		(22,004	)		(82,749	)
Less: Preopening expenses		(14,310	)		(2,819	)		(1,808	)		(1,519	)		(2,311	)		(8,457	)		(488	)		(461	)		(1,550	)		(1,420	)		(3,919	)
Less: Partner investment expense		2,012			(411	)		500			(99	)		364			354			464			91			(18	)		92			629
Income from operations		53,312			15,198			14,967			10,974			11,366			52,505			19,655			17,912			8,772			18,874			65,213

Note:	Consolidated results include the impact of Shared Services and Other as well as the Bistro and Pei Wei concepts
(1)	Consolidated revenues include revenues related to the Bistro and Pei Wei concepts as well as Global Brand Development initiatives
(2)	Consolidated general and administrative expenses includes the costs of supporting the Company, including all concepts

Page 6 of 10

Concept: P.F. Chang’s China Bistro
Supplemental Financial Information

	2007			1Q08			2Q08			3Q08			4Q08			2008			1Q09			2Q09			3Q09			4Q09			2009
Units		172			177			182			182			189			189			190			190			192			197			197
Sales weeks		8,289			2,275			2,330			2,355			2,413			9,373			2,458			2,470			2,486			2,736			10,150
AWS		102,486			103,763			99,502			96,139			93,427			98,127			95,661			91,958			87,324			89,884			91,161
Revenues (1)		849,743			236,089			231,972			226,443			225,459			919,963			235,141			227,144			217,093			245,943			925,321
Operating costs
Cost of sales		232,578			64,410			62,999			61,430			61,072			249,911			62,963			59,749			56,624			65,480			244,816
Labor		282,919			79,318			76,153			74,387			72,109			301,967			76,051			73,286			71,216			80,222			300,775
Operating		131,863			36,324			36,603			38,556			37,600			149,083			36,973			36,373			37,487			40,050			150,883
Occupancy		47,059			12,981			12,730			12,536			12,423			50,670			12,441			12,412			12,390			12,943			50,186
Net income attributable to noncontrolling interests		3,351			497			370			271			223			1,361			179			145			104			110			538
Depreciation & amortization		42,294			12,265			12,794			12,771			13,261			51,091			13,728			13,646			13,900			13,247			54,521
Restaurant operating income		109,679			30,294			30,323			26,492			28,771			115,880			32,806			31,533			25,372			33,891			123,602
Revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		27.4	%		27.3	%		27.2	%		27.1	%		27.1	%		27.2	%		26.8	%		26.3	%		26.1	%		26.6	%		26.5	%
Labor		33.3	%		33.6	%		32.8	%		32.9	%		32.0	%		32.8	%		32.3	%		32.3	%		32.8	%		32.6	%		32.5	%
Operating		15.5	%		15.4	%		15.8	%		17.0	%		16.7	%		16.2	%		15.7	%		16.0	%		17.3	%		16.3	%		16.3	%
Occupancy		5.5	%		5.5	%		5.5	%		5.5	%		5.5	%		5.5	%		5.3	%		5.5	%		5.7	%		5.3	%		5.4	%
Net income attributable to noncontrolling interests		0.4	%		0.2	%		0.2	%		0.1	%		0.1	%		0.1	%		0.1	%		0.1	%		0.0	%		0.0	%		0.1	%
Depreciation & amortization		5.0	%		5.2	%		5.5	%		5.6	%		5.9	%		5.6	%		5.8	%		6.0	%		6.4	%		5.4	%		5.9	%
Restaurant operating income		12.9	%		12.8	%		13.1	%		11.7	%		12.7	%		12.6	%		14.0	%		13.9	%		11.7	%		13.8	%		13.4	%
Reconciliation of Non-GAAP Financial Information to GAAP measures:
Restaurant operating income		109,679			30,294			30,323			26,492			28,771			115,880			32,806			31,533			25,372			33,891			123,602
Add: Net income attributable to noncontrolling interests		3,351			497			370			271			223			1,361			179			145			104			110			538
Less: Preopening expenses		(9,012	)		(1,729	)		(1,271	)		(732	)		(1,945	)		(5,677	)		(294	)		(280	)		(1,004	)		(1,257	)		(2,835	)
Less: Partner investment expense		3,358			245			500			103			218			1,066			148			20			—			68			236
Income from operations		107,376			29,307			29,922			26,134			27,267			112,630			32,839			31,418			24,472			32,812			121,541

Note: General and administrative expenses are reflected in the Company’s consolidated results

Page 7 of 10

Concept: Pei Wei Asian Diner ^(A)
Supplemental Financial Information

	2007			1Q08			2Q08			3Q08			4Q08			2008			1Q09			2Q09			3Q09			4Q09			2009
Units		134			145			149			155			159			159			160			161			164			166			166
Sales weeks		6,154			1,847			1,926			1,973			2,051			7,797			2,073			2,093			2,118			2,322			8,606
AWS		38,095			37,806			36,117			35,192			33,806			35,675			36,011			35,459			34,578			34,701			35,171
Revenues		234,450			69,828			69,561			69,434			69,338			278,161			74,696			74,216			73,236			80,576			302,724
Operating costs
Cost of sales		64,664			19,120			19,133			18,938			18,528			75,719			20,109			19,908			19,740			21,848			81,605
Labor		81,155			24,063			23,818			23,672			23,391			94,944			24,656			24,825			24,497			26,830			100,808
Operating		40,284			11,737			12,763			13,645			11,739			49,884			13,718			12,436			13,396			13,426			52,976
Occupancy		15,105			4,645			4,781			4,734			4,979			19,139			4,937			4,991			5,176			5,345			20,449
Net income attributable to noncontrolling interests		818			208			117			96			151			572			191			143			51			485			870
Depreciation & amortization		12,278			3,774			3,995			4,119			4,270			16,158			4,350			4,440			4,647			4,666			18,103
Restaurant operating income		20,146			6,281			4,954			4,230			6,280			21,745			6,735			7,473			5,729			7,976			27,913
Revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		27.6	%		27.4	%		27.5	%		27.3	%		26.7	%		27.2	%		26.9	%		26.8	%		27.0	%		27.1	%		27.0	%
Labor		34.6	%		34.5	%		34.2	%		34.1	%		33.7	%		34.1	%		33.0	%		33.4	%		33.4	%		33.3	%		33.3	%
Operating		17.2	%		16.8	%		18.3	%		19.7	%		16.9	%		17.9	%		18.4	%		16.8	%		18.3	%		16.7	%		17.5	%
Occupancy		6.4	%		6.7	%		6.9	%		6.8	%		7.2	%		6.9	%		6.6	%		6.7	%		7.1	%		6.6	%		6.8	%
Net income attributable to noncontrolling interests		0.3	%		0.3	%		0.2	%		0.1	%		0.2	%		0.2	%		0.3	%		0.2	%		0.1	%		0.6	%		0.3	%
Depreciation & amortization		5.2	%		5.4	%		5.7	%		5.9	%		6.2	%		5.8	%		5.8	%		6.0	%		6.3	%		5.8	%		6.0	%
Restaurant operating income		8.6	%		9.0	%		7.1	%		6.1	%		9.1	%		7.8	%		9.0	%		10.1	%		7.8	%		9.9	%		9.2	%
Reconciliation of Non-GAAP Financial Information to GAAP measures:
Restaurant operating income		20,146			6,281			4,954			4,230			6,280			21,745			6,735			7,473			5,729			7,976			27,913
Add: Net income attributable to noncontrolling interests		818			208			117			96			151			572			191			143			51			485			870
Less: Preopening expenses		(5,298	)		(1,090	)		(537	)		(787	)		(366	)		(2,780	)		(194	)		(181	)		(546	)		(163	)		(1,084	)
Less: Partner investment expense		(1,346	)		(656	)		—			(202	)		146			(712	)		316			71			(18	)		24			393
Income from operations		14,320			4,743			4,534			3,337			6,211			18,825			7,048			7,506			5,216			8,322			28,092

Note:	General and administrative expenses are reflected in the Company’s consolidated results
(A)	All current and historical operating results related to closed Pei Wei restaurants are reflected within discontinued operations for all periods presented.

Page 8 of 10

P.F. Chang’s China Bistro

Supplemental Sales Information (Company Owned)

Year of Unit Opening (1)

	Pre-2002			2002			2003			2004			2005			2006			2007			2008			2009		Total
Units		64			14			18			18			18			20			20			17			8		197
Sales (000)
1Q09		90,049			17,380			23,552			18,967			19,752			22,320			23,344			19,653			118		235,135
2Q09		86,490			16,225			22,655			18,623			18,993			21,760			22,750			18,177			1,464		227,137
3Q09		81,993			15,296			21,744			18,361			17,980			20,414			21,743			16,698			2,858		217,087
4Q09		91,525			17,205			23,963			19,588			19,928			22,773			23,889			18,340			8,712		245,923
2009		350,057			66,106			91,914			75,539			76,653			87,267			91,726			72,868			13,152		925,282
Average Weekly Sales (AWS)
1Q09		108,231			95,496			100,651			81,054			84,412			85,846			89,784			88,928			118,392		95,661
2Q09		103,955			89,147			96,814			79,587			81,165			83,691			87,501			82,249			112,615		91,958
3Q09		98,550			84,045			92,922			78,467			76,838			78,517			83,625			75,556			98,552		87,324
4Q09		102,148			87,781			95,091			77,728			79,079			81,331			85,320			77,059			96,795		89,884
2009		103,201			89,092			96,346			79,181			80,349			82,327			86,534			80,875			98,887		91,161
Year-Over-Year Change in AWS (2)(4)
1Q09		-6.6	%		-5.1	%		-6.4	%		-6.5	%		-6.5	%		-6.2	%		-13.5	%		-20.0	%		—		-7.4	%
2Q09		-6.3	%		-6.6	%		-7.1	%		-6.5	%		-6.6	%		-5.7	%		-9.4	%		-15.3	%		—		-7.1	%
3Q09		-8.4	%		-8.1	%		-7.6	%		-8.3	%		-7.0	%		-8.0	%		-10.1	%		-16.4	%		—		-8.7	%
4Q09		-5.8	%		-5.7	%		-4.1	%		-4.7	%		-5.5	%		-4.2	%		-3.7	%		-15.1	%		—		-5.8	%
2009		-6.8	%		-6.3	%		-6.3	%		-6.5	%		-6.4	%		-6.0	%		-9.3	%		-15.9	%		—		-7.2	%
Year-Over-Year Change Comparable Store Sales (3)(4)
Units		64			14			18			18			18			20			20			10			—		182
1Q09		-6.6	%		-5.1	%		-6.4	%		-6.5	%		-6.5	%		-6.2	%		-10.4	%		—			—		-6.6	%
2Q09		-6.3	%		-6.6	%		-7.1	%		-6.5	%		-6.6	%		-5.7	%		-9.4	%		-5.8	%		—		-6.8	%
3Q09		-8.9	%		-8.1	%		-7.6	%		-8.3	%		-7.0	%		-8.0	%		-10.1	%		-8.4	%		—		-8.5	%
4Q09		-5.8	%		-5.7	%		-4.1	%		-4.7	%		-5.5	%		-4.2	%		-3.7	%		-6.4	%		—		-5.2	%
2009		-6.9	%		-6.3	%		-6.3	%		-6.5	%		-6.4	%		-6.0	%		-8.2	%		-7.1	%		—		-6.7	%

(1)	Includes all restaurants opened in the period indicated.
(2)	A unit is included in the year-over-year change in AWS in the thirteenth month of operation.
(3)	A unit becomes comparable in the eighteenth month of operation.
(4)	Comparable store sales for the fourth quarter of fiscal 2009 reflect results from the 14 week operating period in the current year compared to the same 14 week operating period in the prior year.

Page 9 of 10

Pei Wei Asian Diner

Supplemental Sales Information

Year of Unit Opening (1)

	Pre-2002			2002			2003			2004			2005			2006			2007			2008			2009		Total
Units		5			11			17			19			23			27			32			25			7		166
Sales (000)
1Q09		2,690			5,502			8,729			10,036			10,874			12,762			13,386			10,374			298		74,651
2Q09		2,597			5,312			8,464			9,816			10,832			12,681			13,437			10,171			906		74,216
3Q09		2,451			5,057			8,211			9,602			10,602			12,573			13,161			9,733			1,846		73,236
4Q09		2,741			5,589			8,938			10,129			11,453			13,539			14,195			10,563			3,429		80,576
2009		10,479			21,460			34,342			39,583			43,761			51,555			54,179			40,841			6,479		302,679
Average Weekly Sales (AWS)
1Q09		41,380			38,474			39,498			40,632			36,367			36,359			32,179			31,920			49,652		36,011
2Q09		39,958			37,150			38,300			39,739			36,226			36,129			32,300			31,296			34,858		35,459
3Q09		37,709			35,365			37,155			38,875			35,457			35,820			31,637			29,947			36,199		34,578
4Q09		39,156			36,290			37,555			38,078			35,568			35,819			31,685			30,182			35,720		34,701
2009		39,543			36,810			38,115			39,307			35,899			36,028			31,945			30,824			36,198		35,171
Year-Over-Year Change in AWS (2)(4)
1Q09		-4.5	%		-3.9	%		-2.4	%		-2.3	%		-2.1	%		-0.3	%		-3.6	%		-22.7	%		—		-3.6	%
2Q09		-3.3	%		-1.5	%		-1.2	%		-1.5	%		1.0	%		2.1	%		0.9	%		-11.8	%		—		-1.0	%
3Q09		-5.0	%		-4.1	%		-2.1	%		-0.8	%		0.8	%		3.0	%		0.4	%		-8.8	%		—		-1.1	%
4Q09		3.2	%		1.7	%		1.9	%		-1.0	%		3.2	%		5.7	%		4.9	%		-4.7	%		—		2.0	%
2009		-2.4	%		-1.9	%		-0.9	%		-1.4	%		0.7	%		2.6	%		0.6	%		-10.0	%		—		-0.9	%
Year-Over-Year Change Comparable Store Sales (3)(4)
Units		5			11			17			19			23			27			32			17			—		151
1Q09		-4.5	%		-3.9	%		-2.4	%		-2.3	%		-2.1	%		-0.3	%		-2.9	%		—			—		-2.2	%
2Q09		-3.3	%		-1.5	%		-1.2	%		-1.5	%		1.0	%		2.1	%		0.9	%		-10.6	%		—		-0.1	%
3Q09		-5.0	%		-4.1	%		-2.1	%		-0.8	%		0.8	%		3.0	%		0.4	%		-8.0	%		—		-0.7	%
4Q09		3.2	%		1.7	%		1.9	%		-1.0	%		3.2	%		5.7	%		4.9	%		1.8	%		—		3.0	%
2009		-2.4	%		-1.9	%		-0.9	%		-1.4	%		0.7	%		2.6	%		1.0	%		-3.2	%		—		0.1	%

(1)	Includes all restaurants opened in the period indicated.
(2)	A unit is included in the year-over-year change in AWS in the thirteenth month of operation.
(3)	A unit becomes comparable in the eighteenth month of operation.
(4)	Comparable store sales for the fourth quarter of fiscal 2009 reflect results from the 14 week operating period in the current year compared to the same 14 week operating period in the prior year.

Page 10 of 10

EX-99.2

Exhibit 99.2

Final Transcript

Conference Call Transcript
PFCB — Q4 2009 P.F. Chang’s China Bistro, Inc. Earnings Conference Call
Event Date/Time: Feb. 17. 2010 / 12:00PM ET

CORPORATE PARTICIPANTS

Robert Vivian
P.F. Chang’s China Bistro, Inc. — Co-CEO

Mark Mumford
P.F. Chang’s China Bistro, Inc. — CFO

Rick Federico
P.F. Chang’s China Bistro, Inc. — Chairman and Co-CEO

CONFERENCE CALL PARTICIPANTS

Rachel Schacter
Oppenheimer — Analyst

Destin Tompkins
Morgan Keegan — Analyst

Sharon Zackfia
William Blair — Analyst

Steven Barlow
Banc of America — Analyst

Jeff Farmer
Jefferies & Co — Analyst

Tom Forte
Telsey Advisory Group — Analyst

John Dravisdot
KeyBanc Capital Markets — Analyst

Jon Comp
Robert W Baird — Analyst

John Glass
Morgan Stanley — Analyst

Bart Glenn
DA Davidson — Analyst

Joshua Long
Stephens — Analyst

Karen Haltest
Credit Suisse — Analyst

Rob Weiler
Piper Jaffray — Analyst

Mitch Speiser
Buckingham Research — Analyst

Steven Kron
Goldman Sachs — Analyst

Jeffrey Bernstein
Barclays Capital — Analyst

PRESENTATION

Operator

Good afternoon, and welcome to PF Chang’s China Bistro fourth quarter 2009 earnings release conference call. Your lines have been placed on listen-only until the question and answer session of the conference. (Operator Instructions). Today’s call is being recorded. If you have any objections, you may disconnect at this time.

I would now like to turn the call over to Mr. Bert Vivian, Co-Chief Executive Officer. You may go ahead, sir.

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

Thank you, Crystal. Good morning, everyone. Thank you for joining us today. Rick Federico, our Chairman and Co-CEO, and Mark Mumford, our CFO, are with me today, and we will be available in just a few minutes for your questions.

A number of our comments today will be forward-looking in nature, and as such will involve 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 intend on filing our 10-K later today.

Our fourth quarter results exceeded our expectations due to higher than anticipated revenues, as well as a continuation of the operational focus that both of our concept teams exhibited throughout 2009. As our press release details, our comp sales trends improved sequentially at the Bistro, and were positive at Pei Wei throughout the quarter. Traffic trends were actually better than the comp numbers would indicate due to lower check averages.

We benefited from an extra week in our 2009 fiscal year. While an extra week is always nice, it is the timing of that extra week, namely the week between Christmas and New Year’s, that is critical. To that point, Bistro average weekly sales for the entire fourth quarter was approximately $90,000, which included the extra week that produced average weekly sales of roughly $119,000. Other than better than expected revenues, there is really not anything else in the fourth quarter that needs to be highlighted, so let’s talk about the current year.

Our thoughts for this year have not changed over the past few months. The Bistro should see improving comp trends versus 2009, however, we still expect negative comp sales for the entire year. Pei Wei should see positive comps, again in 2010. You add those two together, and we will have roughly flat total revenues.

A slight decline in cost of sales will offset a slight increase in labor and marketing spend, which should lead us to restaurant margins that are roughly comparable to 2009. We will pick up a few basis points in pre-opening expenses, interest expense, and possibly in G&A, which we anticipate will end up rendering slightly better pre-tax margins for the year. Our tax rate, which was up in 2009, will continue to rise in 2010. If all goes according to plan, we expect earnings per share to be around $2 this year.

Our development plans are fairly modest. We expect three to five new restaurant openings at both the Bistro and Pei Wei. We will loan capital for the funding of two True Food Kitchens in 2010. In addition, our international partners, on their own dime mind you, will add four, maybe five new Bistros in 2010. Coupled with maintenance spending, this development plan implies total capital expenditures and loan proceeds of roughly $40 million.

Our Company has reached a point where we believe we will produce free cash flow on a consistent basis. Beginning in 2010, we are going to augment our share repurchase efforts with a quarterly variable dividend. We have chosen to fix our dividend pay out ratio at 45% of net income. With a fixed pay out mechanism, our dividend will vary by quarter with our actual results. So if our net income increases over the next few years, our shareholders will automatically participate in that earnings growth. The converse is also true. If for some reason our earnings decline, the dividend paid to our shareholders will reflect that lower level of earnings.

At year-end, we had a cash balance of roughly $63 million. If we’re right about our earnings projection for this year, we will generate about $130 million of cash flow. Assuming we want to maintain a cash balance of $40 million to $50 million, that leaves us with about $140 million to spend this year. As I mentioned before, $40 million will be reinvested in our business. Another $40 million will go to repay our credit facility. About $20 million will be paid in dividends, which leaves us with roughly $40 million in prospective share repurchase activity.

With that, Crystal, let’s go ahead and open up the call for questions.

2

QUESTION AND ANSWER

Operator

Thank you. (Operator Instructions). Our first question comes from Matt Difrisco with Oppenheimer. Your line is open.

Rachel Schacter — Oppenheimer — Analyst

Yes, hi, thanks, this is Rachel Schacter in for Matt Difrisco. Your D & A was lower sequentially this quarter and didn’t grow by very much in absolute dollars. Can you go into some more detail on what drove this, and should we expect this to continue or will it return to normal growth?

Mark Mumford — P.F. Chang’s China Bistro, Inc. — CFO

This is Mark. During Q4 we discovered that we had not properly adjusted the asset lines for the Falls location, which is in Miami. Where we had gone in and we had done an extensive remodel, almost to the extent of a new build. In fact, the restaurant was closed for a few months. We were depreciating the assets over the remaining initial lease term, three years instead of 15 years, which is the 10 year new lease term plus a first five year option. We corrected that in Q4.

The periods that were affected by the extra depreciation were in this fiscal year, so the year-to-date number is correct. In addition, we also noted that the amortization of intangibles related to the buyouts for a handful of locations weren’t correct, so we also made that true up as well. We saw a slight benefit during the quarter from some fully depreciated assets like plateware, but we expect depreciation expense for 2010 to actually be up a little bit compared to 2009. If you start 2010 similar to where Q3 was, and work from there, you’ll probably be pretty close.

Rachel Schacter — Oppenheimer — Analyst

Okay, thanks very much.

Operator

Our next question comes from Destin Tompkins with Morgan Keegan.

Destin Tompkins — Morgan Keegan — Analyst

Thank you. Bert, in the past you’ve given us some, I guess directional color on the current business as it relates to your forecast, and I was just wondering if you could update us at both concepts, how sales are trending especially given some of the harsh weather that we’ve had in parts of the country.

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

Well, Destin, what we’ve seen is a pattern we’ve seen historically. When people can’t get out of their house, we don’t sell a whole lot of Chinese food, so yes, we’ve been impacted by the weather. We are impacted by weather every year. This one has been a little tougher so far than in years past, so it’s difficult to really draw any conclusions from the traffic that we’ve seen through the first, oh, six weeks or so. When we haven’t been weather impacted, we have seen a continuation in the improvement in our sales trends at both concepts, but again we’ve had starts and stops with respect to mother nature, so it’s tough. I would just caution everyone that as we look at our first quarter, we are off to a little bit slower start than perhaps we would have liked due to the weather. We’ll see how the back half of the quarter turns out.

Destin Tompkins — Morgan Keegan — Analyst

And on that topic, Bert, the extra week you mentioned the high volume nature of that extra week, and it sounds like that would come at the expense of Q1. Is that the right way to look at that?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

You know, Destin, it’s funny. There’s a lot of conversation with respect to how much this extra week helps or hurts us. It obviously helps us. What I would suggest to anyone who’s looking at this and building models and such, to the extent you think it helped us in the fourth quarter I would take it out of the first quarter. Your thoughts with respect to what the first quarter was going to be.

It is additive, and again, it’s not so much the extra week, it’s really the timing of that extra week. It’s during a very busy time of year for us, and obviously as I mentioned we did a fair amount of business that week. What I would say again, as we look at the first quarter of this year, we expected, because of the shift in the New Year’s holiday into 2009, we expected that the first quarter on a year-over-year basis was going to be a negative comparison with 2009, so 2010 will be less than 2009. We expected that coming into the quarter. Again, weather is not helping us right now, so I would just ask everyone to take that into their thoughts.

Destin Tompkins — Morgan Keegan — Analyst

And then lastly, Bert, maybe you or Rick, whoever wants to answer this question, but you mentioned in the press release a higher marketing spend, and it sounds like in the past you guys have struggled maybe to spend all of the marketing dollars that you had budgeted. Do you see 2010 being different, and if so, how do you see those marketing dollars being spent?

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Rick Federico — P.F. Chang’s China Bistro, Inc. — Chairman and Co-CEO

Destin, this is Rick. I think if you look back into last year, we started the year expecting we would spend somewhere give or take around 1% at the Bistro, a little bit north of 1% at Pei Wei. As we look into 2010, we’re targeting basically the same numbers. We didn’t spend it all in 2009, and I’ll speak about the Bistro first, primarily because we just had not completed all of the work necessary in order to message against the initiatives in the brand. So as we got into the back half of the year, we had a couple of what we viewed as sort of set up and important research projects, one around menu platforms and the types of things that the guests might be looking for PF Changs to develop as we go forward.

The second was a detailed guest experience evaluation to see the types of things that guests really enjoyed about the restaurants, and the things that they again expected us to do in the future. So as we built those, we are now in the process of creating both products and other platforms that we think can be better supported by messaging, and if you roll backwards a little bit and you think about, it’s probably a couple years ago when we introduced The Grill. The Grill was introduced basically by putting the grill into the restaurant and changing our menu. There was not a whole lot of external messaging that was applied to that. It was, if you found it, you found it, and if you liked it you continued to order it.

As we make modifications to our business going forward, we’re going to be more thoughtful in terms of how we support that and how we kick it off with a variety of messages that could include a combination of online and could include social, billboards, radio and public relations activities.

For Pei Wei, we’re actually a little further along in that process. As you’ve seen, they’ve adopted a strategy of food focused LTO type activities, and they have tested now through three different rollouts, a variety of combinations of those same tactics, and have actually had some very positive results in terms of their ability to drive the introduction and the acceptance of new products in the restaurant. So we’ll continue basically with the same strategy this year, we just introduced the vietnamese caramel chicken about a week ago, and that’s gone exceptionally well. We’ll have one more product rollout in the back half of the year that, again, will have a similar tactic.

Destin Tompkins — Morgan Keegan — Analyst

Great. Thank you.

Operator

Our next question comes from Sharon Zackfia from William Blair.

Sharon Zackfia — William Blair — Analyst

Hi, good morning. I guess I wanted to follow-up a little bit on the calendar shift because you have a lot going on in the first quarter, so you lost New Year’s Eve in the first quarter, and I think you also have Easter in the first quarter of this year, which I think is a penalty as well. I know you don’t want to get into a quarterly cadence kind of game, but all told, does that make it a little bit more difficult in March as well or how should we think about that?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

Yes, Sharon, I don’t want to get into a quarterly game, but yes, you’re correct.

Sharon Zackfia — William Blair — Analyst

Okay.

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

Again, I would just recommend to everyone, we think that a $2 number is a good number for the year. It won’t come in four equal steps. We think the second half will be better than the first half, and if you dial that back I think the first quarter will probably be the low water mark.

Sharon Zackfia — William Blair — Analyst

Okay. Separately, on the average check that you’ve seen throughout the Bistro and Pei Wei in 2009, if I’m not mistaken, I think that was a mix shift towards chicken and maybe some beverages in there as well. Are you seeing any signs of that starting to neutralize or how should we think about that in 2010?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

In terms of our thought with respect to 2010, we’re not necessarily baking anything into our plans that involve product mix shift, so I’m not so sure that I would spend a whole lot of time worrying about that.

Sharon Zackfia — William Blair — Analyst

What am I going to worry about, Bert?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

Oh, my list is long, Sharon. Call me and we can go through it.

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Sharon Zackfia — William Blair — Analyst

Maybe separately, and then I’ll hand over the call to somebody else. Happy hour, I haven’t yet found happy hour in any market that I tend to venture to, but my understanding when you started to test it in Phoenix was that it was pretty positive. Can you kind of give us an update on what that’s doing for the Bistro, and whether you are seeing an incremental lift with the happy hour introduction?

Rick Federico — P.F. Chang’s China Bistro, Inc. — Chairman and Co-CEO

Sharon, this is Rick. Happy hour for us has been part of a broader thought that we’ve got the opportunity to enhance the guest experience and/or increase the value perception that the guest has when they visit our restaurant. And that’s coming from a position, again I mentioned our guest experience survey, it’s actually coming from a position of strength because the consumer gives us very high scores for value and how they value the experience. The challenge is, as we all know that that consumer is changing almost minute to minute, and so the things we have been thinking about and the things we have been working against in trying to continue to enhance that, and to maintain and drive traffic has really been in multiple areas.

One is, we haven’t taken a price increase in the last couple of years. We have had the, sort of a little bit of wind in our sails with regards to some favorable commodity over the last couple of years, so we think that there’s some opportunity to give back a little bit, so some of those are going to come in the form of product enhancement. This past year, about half way through the year, we switched from an Alaskan salmon product to a Norwegian salmon product, and the bottom line is it’s a little bit more expensive but it is significantly better, and we will maintain the price point that we had with the Alaskan product.

We’ve also gone back and evaluated our beverage prices, and we found that that was an area, particularly around our well cocktails. That was an area that the individual restaurants had some control over pricing, and it had gotten away from us a bit, and so we have gone back and reformulated and adjusted all of our well prices to what I would call, I hate to say every day low prices, but they are lower than what they used to be.

We have expanded and are getting ready to roll some significant upgrades to our gluten free menu. You’re all aware of the Chang’s for Two, and we’ll be testing some variations against that, and then we’ve also included the happy hour, which I believe as of last week is, as you know, with liquor laws, some states will allow you to do food. Some places will allow you to do food and alcoholic beverages. Some will let you do it from 3 PM to 6 PM, and others want you to cut it off, and you can’t start until 4 PM, so we had rolled about 120 locations through January, and the balance rolled about a week ago.

Again, very, very early but our research has said that we serve products that people crave. We’ve wanted a balance in our happy hour to have some emphasis around food focus, and so there’s some great parings of some of our most popular and most cravable dishes. It’s clearly part of an opportunity to take a period of the day where traffic is not particularly robust, and to see if we can’t drive some incremental traffic there.

I would say at this point given the time that it’s been in our restaurants, we are seeing more pressure than we’re seeing lift, but it’s really designed to create both longer term protection of the traffic that we have. And if we continue to do the right things around happy hour, we believe that we can generate enough incremental traffic to offset the discounted value of what we’re providing the guest.

Sharon Zackfia — William Blair — Analyst

Okay, thank you.

Operator

Our next question comes from Joe Buckley, Banc of America.

Steven Barlow — Banc of America — Analyst

Hi, it’s actually Steven Barlow for Joe. On the lighter unit openings, I guess at Pei Wei and the Bistro, is there anything to draw from that, or is that more a product of the balance shifting into next year?

Rick Federico — P.F. Chang’s China Bistro, Inc. — Chairman and Co-CEO

I think it’s, again this is Rick. It’s a combination of a couple of things. If you think about Pei Wei and you back up as little as 18 months ago, we were on these calls going, we are slowing or stopping growth while we work our way through project evolution and some of the other challenges that the brand was facing. So we basically put a complete stop on any new Pei Wei development. We finished what we had in the pipeline. So in 2010, what you’re seeing is a reflection of no real estate selection activity going on in most of 2009.

The Bistro on the other side of the coin, was really a function of a couple of other sort of macro challenges. We continue to look aggressively for as many A plus Bistro locations as we can find. Our challenge has been that many of the developers, as a result of decreased consumer activity and a lot of growth slowing in the retail sector, they basically stopped doing the kinds of development that were most attractive to us. So we had projects that were slated to happen in late 2009 and into 2010 that never got funded and never got developed. And I would expect we will continue to see some pressure at the Bistro around when developers return to funding projects, I think we’ll see a return to more normal Bistro growth.

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With Pei Wei, we have gone, as a result of some of the successes that the brand has been experiencing over the last six months, and Bert mentioned it was on the last call or probably the call before, we have turned the real estate pipeline back on. We’ve re-engaged with our external real estate experts, as well as shifted the focus of our internal real estate and development teams to go find sites in some very specific markets, but we won’t see the benefit of that activity until 2011.

Operator

Our next question comes from Jeff Farmer, Jefferies & Company.

Jeff Farmer — Jefferies & Co — Analyst

Great, thanks. In essence following up on that question, I’m just curious as it relates to the strategies that are driving Pei Wei same-store sales recovery, what lessons if any are there for the Bistro.

Rick Federico — P.F. Chang’s China Bistro, Inc. — Chairman and Co-CEO

I’m sorry, you’ll have to try that one again. I lost the beginning part of it.

Jeff Farmer — Jefferies & Co — Analyst

No problem. Again as it relates to the strategies that are driving Pei Wei same-store sales recovery, what lessons if there are any for the Bistro?

Rick Federico — P.F. Chang’s China Bistro, Inc. — Chairman and Co-CEO

I would point to a couple of things. I think Pei Wei has been very good at introducing new, interesting and exciting products with very solid messaging and sort of promotion behind it, and have a pipeline of new products that’s in place that we can roll against. And I think the tactic of introduction of new ideas to the Bistro brand is a tactic that could be successful, but the methodology of how you get there in terms of how you message against it, will probably be very different just given the penetration and the density. I think, again, they are so uniquely different within their positions in the marketplace, it’s really difficult to say, if it worked at Pei Wei, all you got to do is sort of cut and paste and move it over to the Bistro. And so I would be reluctant to point directly at some of their activities because they both have unique challenges, and they don’t necessarily cross between the concepts.

Jeff Farmer — Jefferies & Co — Analyst

Okay, that is fair, and as it relates to the Pei Wei class of ‘09 delivered some pretty big volumes, it looks like they were about 20% higher than ‘07 and ‘08. I realize it’s only seven units but can you talk about things like site selection, what you think is really driving that material improvement in the AWS for Pei Wei?

Rick Federico — P.F. Chang’s China Bistro, Inc. — Chairman and Co-CEO

Yes, I think again, if you go back to when we were sitting around talking about Pei Wei and their unique set of challenges, real estate was one of them. And if you just sort of followed the growth curve accelerating from, and I’ll get these numbers wrong, but from 15 to 20 to 30 to 35, we made a few mistakes along the way, and we let some of the economics of, the base economics of the deals, meaning rent per square foot, drive some of the real estate decisions in a way that maybe wasn’t the best long term decision.

So part of the 2009 class was again backing up a shift in our real estate strategy. It was a shift in our approval process, and one of the things that we did when we made the decision to basically slow the pace of growth at Pei Wei while we worked through evolution, we went back and scrubbed those eight or nine restaurants with that new set of eyes and found them to the level that we had made the necessary adjustments, and actually felt very good about the prospects of those stores. So I think what we’re seeing is the benefit of some learning in the earlier classes of stores, as well as an improved real estate selection process.

Jeff Farmer — Jefferies & Co — Analyst

Okay, so it sounds like that’s sustainable, and just the last question for me, Rick, you touched on this but with commodities, I think the last guidance had been slightly favorable in 2010 excluding produce. Is there any update on that outlook?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

This is Bert. No update at this point. We still believe the same thing, to the extent that Rick mentioned a couple things that we will continue to give back to our guests, again that’s going to offset some of those price savings, if you will, on our contracts, but that’s what we’ve always done historically. We’ll continue to do it this year. We believe that there’s an opportunity to again, maintain our margins, if you will, and still give more back to the guest and that’s what we intend to do.

Jeff Farmer — Jefferies & Co — Analyst

Alright, thank you.

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

You bet.

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Operator

Our next question comes from Tom Forte, Telsey Advisory Group.

Tom Forte — Telsey Advisory Group — Analyst

Great, thanks. I wanted to ask a couple of questions. First, Bert, you talked a fair amount about the business, travel and entertainment spending, and the effect that’s had on same-store sales. Are you seeing an improving trend there?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

Well, I’ve talked a little bit about that in the past, but the improvement that you’ve seen, really in the fourth quarter and what you haven’t seen yet in the first quarter, I think dovetails with the hiccup that, if you were seeing what’s going on in the airline business or in the hotel business, again, I think we’re seeing improving trends at our business that are moving at least somewhat in lock step with those trends in those other businesses.

Tom Forte — Telsey Advisory Group — Analyst

And then during the quarter, you had talked about sales trends in Texas, was hoping you can give us some thoughts on what sales trends are like in California, Arizona, and other important markets.

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

I’m probably not going to get that specific. I had a momentary lapse when I talked about Texas, and maybe after the first quarter I’ll do that again but not right now.

Tom Forte — Telsey Advisory Group — Analyst

All right, thank you very much.

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

You bet.

Operator

Our next question comes from Brad Ludington, KeyBanc Capital Markets.

John Dravisdot — KeyBanc Capital Markets — Analyst

Hi, this is actually [John Dravisdot] calling in for Brad today. I had a question on the LTO, the caramel chicken LTO, it looks like that price point came in a bit higher than some of your normal menu items at Pei Wei, at least in our market. Is there some specific strategy around that?

Rick Federico — P.F. Chang’s China Bistro, Inc. — Chairman and Co-CEO

Actually if you compare it to our other LTO, the price point on the caramel chicken would be the same as the other, I’ll call them platter chicken dishes, so if you were ordering a Pei Wei spicy chicken, it would be priced the same as the caramel chicken. Now if you compare it to the last LTO, which was the Japanese Chili Beef Ramen, that was a bowl dish and it was priced as a bowl dish, so it would have been about a dollar less expensive than the caramel chicken.

John Dravisdot — KeyBanc Capital Markets — Analyst

Okay, and then it looks like this is the first quarter where we’ve seen global brand development initiative revenue hit the income statement. Is that accurate, and also, can you provide us with any sort of guidance on what that line is going to look like in 2010?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

When you ask is that accurate, you mean is it the first time we’ve seen revenue?

John Dravisdot — KeyBanc Capital Markets — Analyst

Yes.

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

Yes, I mean, yes. Essentially the activity, we’ve had activity in the past, it’s been very minor. It’s now beginning to raise to a point where it’s no longer a rounding error, so you’re beginning to see it, and obviously our expectation is that will grow in the future.

John Dravisdot — KeyBanc Capital Markets — Analyst

And should we think of that as just franchise royalty revenue that pretty much goes straight to the bottom line?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

Well, yes. There are obviously some support costs associated with our global brand development team, but yes, there’s a fairly good margin on that activity.

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John Dravisdot — KeyBanc Capital Markets — Analyst

All right, thank you.

Operator

Our next question comes from Jonathan Comp, Robert W Baird. Your line is open.

Jon Comp — Robert W Baird — Analyst

Hi, thanks, it’s Jon Comp calling for David Tarantino. Just one more quick question related to the one time depreciation benefits that you saw in Q4. Can you quantify the actual dollar amounts associated with those?

Mark Mumford — P.F. Chang’s China Bistro, Inc. — CFO

Yes, it’s somewhere in the neighborhood between $600,000 and $700,000. Between both the depreciation and the amortization adjustments or catch ups that we made.

Jon Comp — Robert W Baird — Analyst

Okay, thanks, and then a bit of a larger picture question related to margin. Looking back at 2009, you achieved pretty impressive leverage on fairly negative comps, but your guidance for 2010 assumes virtually no margin expansion on much less negative comps, so are there any specific pressures that you’re trying to point to or are you just exercising conservatism for the year?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

I think, this is Bert. I think we’ve talked for some time that the activity that went on, and actually 2008 and 2009 was Yeoman activity on the part of our operations team. I don’t think that we’re going to see that same level of pick up, particularly in a soft sales environment. I think if you take a look historically, for example, at the Bistro and at peak margin levels at the Bistro, we’re not that far from where we were back in days when we had a little bit better sales environment. So I think that if sales got better, then there’s obviously an opportunity for a little bit of leverage, but I don’t think at this point that we’re seeing anything that would indicate that we’re going to see business trends, in either one of our business, get to a point where you’re going to see significant leverage.

Mark Mumford — P.F. Chang’s China Bistro, Inc. — CFO

And this is Mark. I’ll add on to that. We do have, Rick talked about some tail winds. We have some winds coming at our face as well. We talked a little bit about marketing spend, that incremental marketing spend puts pressure on the operating expenses, about 50 basis points at Pei Wei, 20 basis points at the Bistro. In addition on the labor side, we had minimum wage increases midway through this year, so you’ll have a full year in 2010, so that will continue to put pressure on the labor line.

Jon Comp — Robert W Baird — Analyst

Okay, thanks for that color, and then just last question, and sorry if I missed this but did you quantify the actual tax rate that you’re expecting in 2010?

Mark Mumford — P.F. Chang’s China Bistro, Inc. — CFO

The tax rate for 2010 is probably going to be about 31%, and if you recall, in Q3, we told you our tax rate we were anticipating 28.5%. The majority of that increase is due to our over-achievement of income before tax, roughly about $5 million, which means the TIB credit has less of an impact. The TIB credit is mostly correlated to the Bistro revenue, and so without any, Bistro revenue came in about where we thought, so without any additional TIB credit, that increased our tax rate for the year to 29.75%. Going forward, as Pei Wei becomes a bigger piece or contributor to our income, and the international and Unilever pieces pick up, none of those have TIB credits associated with them, so you should expect our tax rate to continue to increase.

Jon Comp — Robert W Baird — Analyst

Okay, great. Thank you.

Operator

Our next question comes from John Glass with Morgan Stanley.

John Glass — Morgan Stanley — Analyst

Hi, thanks very much. Can you talk a little bit about that frozen food business and maybe how, where we are in the schedule, what you think the earnings contribution potential could be or at least how we size it. And I also think there was spending against that initiative maybe in ‘09 in the P&L, and maybe what the differential is in that spending versus 2010 for the start up cost?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

I’m sorry, John. On this end it got a little garbled as you started the question, and I couldn’t catch up, so would you mind repeating that please?

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John Glass — Morgan Stanley — Analyst

Yes, I’m talking about the frozen food business with Unilever, and if there was a way you can size that for us for 2010 and the earnings contribution, and you also I think began some of that in 2009, the set up costs and what the differential between those costs are in ‘09 and the benefits or some of the reduced costs in 2010 would be.

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

We’ve got a really bad connection with you, I’m sorry. I think you were asking about our partnership with Unilever, so I’ll probably just talk about that and I won’t say much because nothing has happened there. We expect that the product will be introduced in 2010, and there’s obviously nothing in ‘09 with respect to Unilever in that program. Yes, we hope that there’s something in 2010, and that’s about as much as I can say.

Operator

Our next question comes from Bart Glenn with DA Davidson.

Bart Glenn — DA Davidson — Analyst

Thank you, I was just curious, thanks for the commentary regarding the happy hour, but was wondering if could you share anything else regarding how you get out the message to customers, and equally importantly, people who aren’t users of the concept regarding how strong the value proposition is at the Bistro, thank you.

Rick Federico — P.F. Chang’s China Bistro, Inc. — Chairman and Co-CEO

This particular, the launch of happy hour was supported predominantly through online and public relations activities. We did not do any overt messaging along the lines of billboards or radio or those types of traffic generators, but it is part of the consideration as we do build the balance of the marketing plans for the back half of the year. Happy hour could be one of the items that we would target as a specific initiative.

Bart Glenn — DA Davidson — Analyst

So in other words, just stay tuned but there should be more on the way as the year progresses?

Rick Federico — P.F. Chang’s China Bistro, Inc. — Chairman and Co-CEO

There will be more on the way, whether we choose to focus specifically on happy hour remains to be seen.

Bart Glenn — DA Davidson — Analyst

Thank you.

Operator

Our next question comes from Greg Ruedy with Stephens.

Joshua Long — Stephens — Analyst

Hi, how are you doing? It’s Joshua Long in for Greg. I had a question on the Pei Wei side, it looks like there was some really strong fixed cost leverage with the plus three comp, but there was about 40 bips inflation on the cost of sales line, is that something related to the promotional strategy going on that you talked about the food focused LTOs?

Mark Mumford — P.F. Chang’s China Bistro, Inc. — CFO

Are you referring to the Bistro?

Joshua Long — Stephens — Analyst

Oh, sorry, on the Pei Wei side.

Mark Mumford — P.F. Chang’s China Bistro, Inc. — CFO

Well, Pei Wei cost of sales looks like it’s about 10 basis points.

Joshua Long — Stephens — Analyst

Year-over-year in 4Q?

Mark Mumford — P.F. Chang’s China Bistro, Inc. — CFO

Oh, year-over-year.

Joshua Long — Stephens — Analyst

Yes, sorry.

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Mark Mumford — P.F. Chang’s China Bistro, Inc. — CFO

About 30 basis points, and let me just real quickly, if you look at both the Bistro and Pei Wei, you saw some pressure in Q4. The majority of that pressure is coming from the produce as we hit some Acts of God clauses, we had some rains and freezes and so forth that drove up that cost, so that’s the primary pressure that we saw in Q4 for both concepts.

Joshua Long — Stephens — Analyst

Okay, thank you, and then as we start to see sequential traffic lift at the Bistro, how should we think about the different levels or break points for needing to add back some of the labor?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

This is Bert. We’re not expecting to have to add back to labor, per se. Obviously if we begin to experience heightened traffic levels, you may have to add some additional hours for your servers and such, but there’s no major milestone, if you will, that says when we reach a certain point we have to add a ton of labor back in. We don’t expect that happening at all.

Joshua Long — Stephens — Analyst

Okay, thank you.

Operator

Our next question comes from Keith Siegner with Credit Suisse.

Karen Haltest — Credit Suisse — Analyst

Hi, this is actually Karen [Haltest] for Keith Siegner. Two quick questions. Last quarter you mentioned that you were including some TV support around regional classics at the Bistro as part of your marketing strategy, and if you could just give us an update if that’s still part of the strategy going forward, and maybe anything that would help quantify the successes of that last quarter. And then also do you have any update on your high level outlook for pricing for the year?

Rick Federico — P.F. Chang’s China Bistro, Inc. — Chairman and Co-CEO

On a pricing front, we don’t have any plans as we sit here today to increase prices in either brand, but as always we’ll hold that in our back pocket and should we change our opinion we’ll let you know at that point in time.

As far as the regional classics go, that was an opportunity for us to test a couple of things. One was the introduction of a product that has the type of product quality and presentation that people have come to expect from PF Changs, but we were able to actually price it a little bit more aggressively and created a separate section of the menu. If I was giving that initiative an A, B, or C, I think it was probably a solid C.

We did support that with a couple of test markets of television with some short TV spots and we saw what I would call somewhat spotty results, in a couple of markets we saw some very focused increases in sales around those products, and in others probably not as much. So it was a, I think a decent learning experience in terms of how we might attack these types of things in the future.

One of the things we will do as sort of the next level of testing how these products might be received, is we’ll take them off of a focused section of the menu and we will embed them in their respective categories. So the Mandarin chicken will go in with chicken, and the beef dish will go in with beef, and the pork will go in with the pork dishes, and we’ll see if that shifts the mix in any direction.

Karen Haltest — Credit Suisse — Analyst

Great. Thank you, and one other quick question. Also last quarter I think you had said, kind of a long term run rate for potential Bistro unit growth was about 8 to 12 units a year. Should we take the lower unit growth in 2009, or 2010, as an indication of that number as also coming down or not?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

No, this is Bert. The front end of that comment of 8 to 12 Bistros, was that we were going to see lower activity in 2010, but I don’t think anyone’s expectation was more than, again, three to five for this year. Again, when things return back to a more normal state in the development world, we would expect the pace of growth at the Bistro to be somewhere, again in a normal year, somewhere in the 8 to 12 range, but again, we will see if that happens in the next year or so.

Karen Haltest — Credit Suisse — Analyst

Great. Thank you very much.

Operator

Our next question comes from Nicole Miller Regan with Piper Jaffray.

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Rob Weiler — Piper Jaffray — Analyst

Hello, this is Rob Weiler actually in for Nicole Miller. First, I believe you guys had a comment regarding the second half of 2010 being a little bit better, stronger than the first half of 2010, I’m assuming that’s regarding same-store sales. Can you point to what the catalyst would be for that second half improvement?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

I was talking about earnings.

Rob Weiler — Piper Jaffray — Analyst

Oh, just purely on earnings?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

Yes.

Rob Weiler — Piper Jaffray — Analyst

Okay, and then second question I had here was, is there anything else going on on the labor line beside lapping the minimum wage increase, or in other words, is it going to be more or less flat in the second half since we’re going to be lapping it?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

I think we expect to see pressure on the labor line throughout the year. We’re going to see higher costs on an hourly basis from the minimum wage increases. It always costs more to attract and retain the best people. Every year we expect to pay more for our folks. I think our team’s done a great job of managing their labor throughout the course of the last two years, but we expect every year and I don’t think 2010 is going to be any different, where we’re going to see a little bit of pressure on that line.

Rob Weiler — Piper Jaffray — Analyst

Okay, and then my last question is on the share repurchase, I know there’s $100 million authorization. How much is available right now? Is it about $90 million left on that?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

We have $100 million authorization, and there’s $100 million left right now.

Rob Weiler — Piper Jaffray — Analyst

Okay, thank you very much.

Operator

Our next question comes from Mitch Speiser, Buckingham Research.

Mitch Speiser — Buckingham Research — Analyst

Thanks very much. First off, just talking about the Bistro and margins above 19%, somewhat near the peak, you’ve done a good job with cost cutting. I think you mentioned flattish margins for 2010, but if sales comps go positive you expect some or a little leverage. I guess my question is, why wouldn’t you expect more leverage on a positive comp? I know you have labor cost increases, but I would think given the lean cost structure that if comps were to go positive, I would think there would be significant leverage.

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

Mitch, I didn’t quantify how much leverage we thought we would see, nor will I, so I really can’t respond to your question.

Mitch Speiser — Buckingham Research — Analyst

Okay, so you’re just commenting that if sales go positive, you should see leverage but as for a little bit or a lot, that remains to be seen?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

That remains to be seen.

Mitch Speiser — Buckingham Research — Analyst

Okay, thanks. Moving along, just on the broad earnings guidance you gave us, kind of quarterly, you said $2 for the year. I think you said first quarter the low point, just back of the envelope, $2 for the year, $0.50 per quarter gets you to $2. Were you implying that the first quarter would be under $0.50 per share, if you can comment on that?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

Mitch, I think what I said was $2 for the year. You could not slice the apple into four pieces and get $0.50 a quarter. The second half will be stronger than the first half. If you look at just the first half, first quarter, for all of the reasons we articulated earlier, will be the lower, will be the low point. I don’t think we’re going to go any farther than that.

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Mitch Speiser — Buckingham Research — Analyst

Okay, no, that clarifies, thank you. And moving along, on produce, you mentioned some pressures there in the fourth quarter. Did that continue into the first quarter?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

The pressures that we saw in the fourth quarter were due to Act of God clauses with respect to mother nature. I think you’ve seen what’s happened in the first quarter with respect to mother nature, so I’ll let you draw your own conclusions.

Mitch Speiser — Buckingham Research — Analyst

Got it, thanks, and my last question, just in the press release you mentioned lower average weekly sales for 2010, and that is a collective number, right? Of Bistro and Pei Wei combined? Or is that just the Bistro?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

No, particularly with respect to the Bistro. Again, in 2009, we had that additional week. As we mentioned, that additional week was extremely high volume. So if you simply, mathematically look at average weekly sales in 2010 versus ‘09, we’re going to be at a disadvantage.

Mitch Speiser — Buckingham Research — Analyst

Got it, that’s a system wide number, Pei Wei included?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

Correct.

Mitch Speiser — Buckingham Research — Analyst

Got it. Thank you very much.

Operator

Our next question comes from Steven Kron with Goldman Sachs.

Steven Kron — Goldman Sachs — Analyst

Great, thanks, hi, guys. At this point I just have one follow-up for Bert on the Bistro sales. And if I look back at the fourth quarter, the level of improvement on a sequential basis that you saw, given what you guys had out there, which were some value oriented initiatives, given kind of your locations, which tend to be around those higher end malls, which saw some pretty good traffic in the quarter. I’m just curious, if you think back, why do you think the brand at the Bistro has sort of underperformed both peers that are kind of similarly situated to you but also kind of the industry as a whole. Some of the other peers out there have seen a little bit more of a bigger sequential improvement, so I guess, what is it about the brand right now do you think is not feeling that same traction?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

Well, I guess as a general statement, not everyone has the same geographic disbursion as we do. There are certainly other competitors in the marketplace that are doing a great job, we’ll talk specifically about Cheesecake, and I have said it publicly, I think they’re doing a fabulous job with the introduction of their small plate menu. I think that drove some nice increases actually in their average ticket, and they’ve seen the benefit of that, and we all tip our hat to the systems that they’ve made. I think if you look at the price point, and I’m guessing your comment is with respect to the Bistro.

Steven Kron — Goldman Sachs — Analyst

Yes.

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

If you look at the price point and you look at our competitive set, I don’t think we’re that far off the mark. Now again, from month to month, quarter to quarter, some people are going to do better, some people are going to do worse. I think we’re competing fairly well, again, in this particular macro environment at our price point, I think we’re doing okay.

Now we’re not happy with our overall performance. I think we need to continue to improve our game, and that is obviously our intent. We have not taken any price over the last couple of years, which in the short-term has hurt us from a comp store sales perspective, but I think that over time that will be to our benefit.

So, am I happy with our performance? No. We obviously every year want to increase traffic in our restaurants. Have we trailed other people perhaps? I think at times that’s absolutely a fair statement. If you look at a broad average of casual dining, are we trailing that? Yes, at the Bistro, yes, at Pei Wei, we’re actually ahead of the game, so it’s not an easy answer.

If your question is, are we doing as well as we think we would like to do, no. We obviously want to do better, and all of the initiatives that are in place right now, all of our activity is designed to improve, to continue to enhance the guest experience at both of our concepts, and we’ll see how successful we are as we drive through 2010.

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Steven Kron — Goldman Sachs — Analyst

That’s helpful, thanks, I appreciate the comments.

Operator

Thank you. Our next question comes from Jeffrey Bernstein, Barclays Capital.

Jeffrey Bernstein — Barclays Capital — Analyst

Great. Thank you. A couple of questions, just first, I think Bert you started off by saying that the traffic is better than the comp, which we can appreciate in this environment, I guess you’re seeing a little pressure on the average check. Just wondering if you could talk broadly about the average check, whether you expect to see improvement with the backdrop being that perhaps the industry is now easing up on discounting. Just would love some high level comments on your thoughts around Bistro’s average check. And more broadly speaking, whomever would be best fit to address the question around, are you seeing less discounting across the category, do you think perhaps it caused damage or perhaps we’ve kind of made it through the tough point without really damaging much of the competition or the broader category?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

Well, in terms of our, and I’m not going to get into a conversation about casual dining. We’re not that smart in terms of what’s going to happen broadly across the industry. I will say that with respect to our two brands, I think you will see our average check in 2010 moderate. I don’t think you’ll continue to see the level of decline that you saw in ‘09 versus ‘08.

Jeffrey Bernstein — Barclays Capital — Analyst

Okay, and without getting too much into the category, is that your sense that we’re seeing less discounting or have you not yet seen that, just from peers and whatnot?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

Well, I think that from an outsider’s perspective, and I mean that from my own viewpoint, as I look at the other industry players, I know there’s talk of less discounting. I think there’s momentary lapses away from that table, so to speak. We’ll see how it continues throughout the year. Again, we don’t expect 2010 to be a barn burner from a discretionary income standpoint, and from a business standpoint. We’ll see how it progresses.

There’s a number of ways to discount. Some of them are more obvious than others, and I think that everyone is struggling right now to grow their business. Certainly in ‘09, the size of the casual dining pie was smaller than it’s been in prior years, and so we were all fighting for a smaller piece of the pie. And not surprisingly, what happens is that you begin to discount in order to try and retain some share, if you will.

Again, my guess is is that 2010 will see less of that, but that’s purely a guess on my point, and we’re sitting in February and we’ve got a long way to go in this year, so we’ll see how it plays out.

Jeffrey Bernstein — Barclays Capital — Analyst

Yes, and if I could just add one other in terms of, I think you commented earlier on that not only were the revenues a pleasant surprise to the upside in the quarter, but the operations focus continues throughout the year, and I think you guys get a lot of credit for the cost saving levers that you’ve been able to pull. I’m just wondering as you look to 2010, whether you still see any buckets of meaningful cost saving opportunity, or is this really a year where revenues need to sequentially improve because you’re not willing to make more significant bucket cuts on costs at either of the brands?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

Well, let me clarify a little bit when it comes to cost savings. The term, cuts, comes up all the time. Most of the benefit that we’ve seen at both of our concepts don’t necessarily revolve around cuts, per se. Both of our heads of operations, Rick Tasman at the Bistro and Casey Moreland at Pei Wei, have done a great job of introducing initiatives that allow them to prepare and produce their product more efficiently. That really doesn’t have anything to do with cuts, per se, at least as we think of the definition of that term, so are we working on initiatives that will make us better in 2010? Yes. Will they be the magnitude of what you saw in ‘09 and actually in ‘08? The answer to that is probably no.

So therefore, our guidance to everyone is that, look, we’re going to do everything we can to increase our top line. This year is no different than any year in the sense that it’s much easier to run our business when you have increasing sales. If we are right about the traffic trends this year, which again, we believe we’ll be better than ‘09 but still not robust and still not necessarily healthy when it comes to the Bistro. Pei Wei traffic trends we think are very good, and we expect them to be good this year. So they will have the opportunity because of the traffic and because of the sales that they will generate, they will have the opportunity to have a little bit more leverage from an operational standpoint than the Bistro will, but in both cases we expect improvement.

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And so the guidance that we laid out for everybody includes a little bit of improvement, which gets us to a flat level in the sales environment that we’re predicting.

Jeffrey Bernstein — Barclays Capital — Analyst

And by its nature, if it’s called efficiencies I guess, that’s not something that would have to be reinvested when you reaccelerate the growth?

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

You are absolutely correct.

Jeffrey Bernstein — Barclays Capital — Analyst

Thank you very much for the color.

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

You bet.

Operator

At this time there are no further questions.

Robert Vivian — P.F. Chang’s China Bistro, Inc. — Co-CEO

Crystal, thank you. Thanks everyone for joining us. I think the next time that we’ll be gathering this group together will be on April 28 to report our first quarter earnings. Thanks so much.

Operator

Thank you for joining today’s conference call. All parties may disconnect at this time.

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EX-99.3

Exhibit 99.3

P.F. Chang’s Announces International Expansion in the Philippines

Signs Agreement with Global Restaurant Concepts to Develop P.F. Chang’s Restaurants throughout the Philippines

SCOTTSDALE, Ariz., Feb 15, 2010 (BUSINESS WIRE) — P.F. Chang’s China Bistro, Inc. (NASDAQ: PFCB) today announced a development and license agreement with Global Restaurant Concepts, Inc., a leading casual dining operator in the Philippines, to develop eight restaurants over the next five years. The first location is scheduled to open in Manila in the first quarter of 2011.

“We continue to selectively seek out great partners to help us offer our dining experience to other countries around the world,” said Mike Welborn, President of Global Brand Development for P.F. Chang’s China Bistro, Inc. “We are thrilled about our new relationship with Global Restaurant Concepts and the prospects of expanding P.F. Chang’s with them.”

“We are delighted to bring P.F. Chang’s to the Philippines,” said Archie Rodriguez, President of Global Restaurant Concepts, Inc. “We believe customers in the Philippines will love the quality of the food and high-energy atmosphere that P.F. Chang’s provides to its guests.”

About Global Restaurant Concepts

Global Restaurant Concepts, Inc. was founded in 1997 and operates with the mission to provide its customers with quality food and excellent service. The company is widely regarded as the yardstick of casual dining service and the frontrunner in premium pizza in the Philippines.

About P.F. Chang’s China Bistro, Inc.

P.F. Chang’s China Bistro, Inc. owns and operates two restaurant concepts in the Asian niche. P.F. Chang’s China Bistro features a blend of high-quality, traditional Chinese cuisine and American hospitality in a sophisticated, contemporary bistro setting. Pei Wei Asian Diner offers a modest menu of freshly prepared Asian cuisine in a relaxed, warm environment offering attentive counter service and take-out flexibility.

SOURCE: P.F. Chang’s China Bistro, Inc.

Media Contact:
Dig Communications
Rachel Gillman, 312-577-1759
rgillman@digcommunications.com

or

Investor Contact:
P.F. Chang’s China Bistro, Inc.
Allison Schulder, 480-888-3000
Allison.Schulder@pfcb.com