8-K

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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) April 26, 2006

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 (see General Instruction A.2. below):

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))

TABLE OF CONTENTS

	Item 2.02. Results of Operations and Financial Condition
	Item 9.01. Financial Statements and Exhibits
SIGNATURES
Index to Exhibit
EX-99.1
Ex-99.2

Section 2 – Financial Information

Item 2.02. Results of Operations and Financial Condition.

On April 26, 2006, P.F. Chang’s China Bistro, Inc. (the “Company”) issued a press release describing selected financial results of the Company for the quarter ended April 2, 2006. Also on April 26, 2006, the Company held its Q1 Earnings Conference Call. The press release and transcript of the Q1 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.

Section 9 – Financial Statements and Exhibits.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits.

Exhibit No.		Description
	99.1	April 26, 2006 Press Release by P.F. Chang’s China Bistro, Inc.
	99.2	Transcript of Earnings Conference Call held April 26, 2006

2

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: April 27, 2006
	/s/ Mark Mumford
	Mark Mumford
	Chief Financial Officer

3

Index to Exhibit

Exhibit No.		Description
	99.1	April 26, 2006 Press Release by P.F. Chang’s China Bistro, Inc.
	99.2	Transcript of Earnings Conference Call held April 26, 2006

4

EX-99.1

Exhibit 99.1

P.F. Chang’s China Bistro, Inc.

P.F. CHANG’S EARNS $0.36 PER SHARE

SCOTTSDALE, Arizona, April 26, 2006 – P.F. Chang’s China Bistro, Inc. (NASDAQ:PFCB) today reported earnings of $9.8 million for the first quarter ended April 2, 2006 compared to $10.8 million for the first quarter of the prior year. Earnings per share for the first quarter were $0.36 as compared to $0.40 for the first quarter of the prior year.

(000 except per share data)	1Q06		1Q05
Revenues	$	228,613	$	194,214
Net Income	$	9,813	$	10,826
Diluted Earnings Per Share	$	0.36	$	0.40
Shares Used in diluted EPS calculation		27,239		26,893

2006 Expectations

Revenue is expected to increase approximately 18% to $954 million in 2006. The primary assumptions underlying this revenue forecast are:

1. New unit development:	Bistro	19 units			340 sales weeks
	Pei Wei	30 units			649 sales weeks
	Taneko	1 unit			16 sales weeks
2. Comp store sales gains:	Bistro		1.8	%
	Pei Wei		0.2	%

3. Reopening Bistro in Metairie, Louisiana with reduced hours of operation.

4. Six-month closure of the Bistro in the Planet Hollywood Hotel and Casino.

Earnings per share are expected to decline in 2006 from the $1.40 earned in 2005 due to equity-based compensation expense. Including anticipated grants in 2006, equity-based compensation expense is expected to approximate $11.1 million in the current year. Given this current estimate of equity-based compensation, earnings per share are expected to be $1.31 in 2006.

The Company is hosting a conference call today at 1:00 pm ET in which management will provide further details on the first quarter results as well as its expectations for the balance of the year. A webcast of the call can be accessed through the company’s website at http://www.pfchangs.com.

Page 1 of 9

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.

Note with respect to nonGAAP financial measures contained within Supplemental Financial Information

In addition to using GAAP results in evaluating our business, management also believes it is useful to measure results on a pro forma basis excluding estimated equity-based compensation. Estimated equity-based compensation, which impacts both labor and G&A costs, is excluded because of the unpredictability of equity based compensation charges. These charges are affected by factors that may change on each grant date, including the Company’s stock price, stock market volatility, expected option term, risk-free interest rates and expected dividends, all of which can create great variability from period to period. The pro forma presentation (which excludes equity based compensation from labor and G&A costs and the related percentages of sales) provides a more easily comparable set of financial performance measures for the Company and highlights the operations of our existing restaurants by eliminating the non-operational volatility of equity-based compensation. This also allows investors, as well as management to focus on the cash generating capacity and performance of our restaurant concepts, both of which are material to our rate of growth and ability to finance that growth from our operations. The non-GAAP pro forma 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 GAAP to non-GAAP reconciliation on page nine of this press release, for a comparison of each non-GAAP measure to the most comparable GAAP measure, as well as a reconciliation of the two measures.

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 revenues, earnings and comparable sales, as well as statements concerning the Company’s development schedule, are forward looking statements. The accuracy of these forward-looking statements may be affected by certain risks and uncertainties, including, but not limited to, the Company’s ability to operate its restaurants profitably; the Company’s ability to hire, train and retain skilled management and other personnel; changes in consumer tastes and trends, and national, regional and local economic and weather conditions; changes in costs related to food, utilities, labor shortages, our ability to develop and construct our restaurants within projected budgets and time periods; the inherent unpredictability of estimating equity-based compensation expense under FAS 123(R); changes to existing accounting rules or differing interpretations to our current accounting practices and other risks described in the Company’s recent SEC filings.

Contact:		P.F. Chang’s China Bistro, Inc.(480) 888-3000
	Media:	Laura Cherry	laurac@pfchangs.com
	Investor:	Bert Vivian	bertv@pfchangs.com

Page 2 of 9

P.F. Chang’s China Bistro, Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

	13 Weeks Ended			13 Weeks Ended
	Apr 2			Apr 3
	2006			2005
Revenues	$	228,613		$	194,214
Cost of sales		63,440			53,982
Labor		76,937			63,528
Operating		34,841			28,250
Occupancy		12,493			10,274
General & administrative		13,252			10,582
Depreciation & amortization		10,355			8,134
Preopening expenses		1,694			1,334
Partner investment expense		200			273
Total costs and expenses		213,212			176,357
Income from operations		15,401			17,857
Interest income, net and other income		492			458
Minority interest		(2,022	)		(2,276	)
Income before provision for income taxes		13,871			16,039
Provision for income taxes		(4,058	)		(5,213	)
Net income	$	9,813		$	10,826
Basic net income per share	$	0.37		$	0.41
Diluted net income per share	$	0.36		$	0.40
Shares used in calculation of basic EPS		26,485			26,117
Shares used in calculation of diluted EPS		27,239			26,893

	Percentage of Revenues
	Apr 2			Apr 3
	2006			2005
Revenues		100.0	%		100.0	%
Cost of sales		27.7	%		27.8	%
Labor		33.7	%		32.7	%
Operating		15.2	%		14.5	%
Occupancy		5.5	%		5.3	%
General & administrative		5.8	%		5.4	%
Depreciation & amortization		4.5	%		4.2	%
Preopening expenses		0.7	%		0.7	%
Partner investment expense		0.1	%		0.1	%
Total costs and expenses		93.3	%		90.8	%
Income from operations		6.7	%		9.2	%
Interest income, net and other income		0.2	%		0.2	%
Minority interest		-0.9	%		-1.2	%
Income before provision for income taxes		6.1	%		8.3	%
Provision for income taxes		-1.8	%		-2.7	%
Net income		4.3	%		5.6	%

     Certain percentage amounts do not sum to total due to rounding.

Page 3 of 9

P.F. Chang’s China Bistro, Inc.

Supplemental Financial Information — Pro Forma Forecast

				53 weeks																		Forecast															YOY
	2003			2004			1Q05			2Q05			3Q05			4Q05			2005			1Q06A			2Q06			3Q06			4Q06			2006			Change
Units		130			168			170			182			193			208			208			214			222			241			259			259
Sales weeks		5,749			7,931			2,190			2,273			2,438			2,596			9,497			2,751			2,816			3,002			3,275			11,844			24.7	%
AWS		93,915			89,136			88,682			87,134			83,285			82,371			85,201			83,102			81,078			78,842			79,479			80,539			-5.5	%
Sales		539,917			706,941			194,214			198,056			203,049			213,834			809,153			228,613			228,316			236,685			260,295			953,909			17.9	%
per FDS	$	20.57		$	26.60		$	7.22		$	7.34		$	7.50		$	7.90		$	29.97		$	8.39		$	8.38		$	8.69		$	9.56		$	35.02
Operating costs
COS		152,788			200,736			53,982			54,493			56,010			60,149			224,634			63,440			63,225			65,005			71,081			262,752
Labor		176,428			233,325			63,528			64,765			67,836			70,114			266,243			76,593			74,722			77,952			85,863			315,130
Operating		73,660			99,528			28,250			29,505			31,490			33,002			122,247			34,841			34,495			36,098			38,032			143,466
Occupancy		28,914			37,693			10,274			10,767			11,182			10,570			42,793			12,493			12,548			13,029			14,386			52,456
Minority interest		7,887			10,078			2,276			2,176			1,974			1,801			8,227			2,022			2,039			2,195			2,474			8,730
G&A		28,692			34,662			10,582			10,495			9,759			10,281			41,117			11,406			12,006			12,407			13,008			48,827
Restaurant cash operating income		71,548			90,919			25,322			25,855			24,798			27,917			103,892			27,818			29,281			29,998			35,451			122,548			18.0	%
Development costs
Preopening		8,790			7,995			1,334			2,496			2,712			2,703			9,245			1,694			2,732			4,859			3,445			12,730			37.7	%
Partner investment expense		4,196			17,671			273			1,581			1,472			1,474			4,800			200			891			2,499			2,394			5,984			24.7	%
Other expenses
Depreciation & amortization		21,817			29,155			8,134			8,519			9,258			11,039			36,950			10,355			10,554			10,897			11,560			43,367			17.4	%
Equity-based compensation		—			—			—			—			—			—			—			2,190			2,429			3,222			3,222			11,063
Interest (income) expense		(466	)		(612	)		(458	)		(447	)		(530	)		(406	)		(1,841	)		(492	)		(440	)		(485	)		(480	)		(1,897	)		3.0	%
Tax provision		12,425			10,657			5,213			4,454			3,447			3,828			16,942			4,058			4,066			2,792			4,746			15,661			-7.6	%
Net income		24,786			26,053			10,826			9,252			8,439			9,279			37,796			9,813			9,049			6,215			10,564			35,640			-5.7	%
per FDS	$	0.94		$	0.98		$	0.40		$	0.34		$	0.31		$	0.34		$	1.40		$	0.36		$	0.33		$	0.23		$	0.39		$	1.31			-6.5	%
Fully diluted shares (FDS)		26,250			26,575			26,893			26,977			27,073			27,058			27,000			27,239			27,239			27,239			27,239			27,239			0.9	%
Sales		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
COS		28.3	%		28.4	%		27.8	%		27.5	%		27.6	%		28.1	%		27.8	%		27.7	%		27.7	%		27.5	%		27.3	%		27.5	%
Labor		32.7	%		33.0	%		32.7	%		32.7	%		33.4	%		32.8	%		32.9	%		33.5	%		32.7	%		32.9	%		33.0	%		33.0	%
Operating		13.6	%		14.1	%		14.5	%		14.9	%		15.5	%		15.4	%		15.1	%		15.2	%		15.1	%		15.3	%		14.6	%		15.0	%
Occupancy		5.4	%		5.3	%		5.3	%		5.4	%		5.5	%		4.9	%		5.3	%		5.5	%		5.5	%		5.5	%		5.5	%		5.5	%
Minority interest		1.5	%		1.4	%		1.2	%		1.1	%		1.0	%		0.8	%		1.0	%		0.9	%		0.9	%		0.9	%		1.0	%		0.9	%
G&A		5.3	%		4.9	%		5.4	%		5.3	%		4.8	%		4.8	%		5.1	%		5.0	%		5.3	%		5.2	%		5.0	%		5.1	%
Restaurant cash operating income		13.3	%		12.9	%		13.0	%		13.1	%		12.2	%		13.1	%		12.8	%		12.2	%		12.8	%		12.7	%		13.6	%		12.8	%
Preopening		1.6	%		1.1	%		0.7	%		1.3	%		1.3	%		1.3	%		1.1	%		0.7	%		1.2	%		2.1	%		1.3	%		1.3	%
Partner investment expense		0.8	%		2.5	%		0.1	%		0.8	%		0.7	%		0.7	%		0.6	%		0.1	%		0.4	%		1.1	%		0.9	%		0.6	%
Depreciation & amortization		4.0	%		4.1	%		4.2	%		4.3	%		4.6	%		5.2	%		4.6	%		4.5	%		4.6	%		4.6	%		4.4	%		4.5	%
Equity-based compensation		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		1.0	%		1.1	%		1.4	%		1.2	%		1.2	%
Interest (income) expense		-0.1	%		-0.1	%		-0.2	%		-0.2	%		-0.3	%		-0.2	%		-0.2	%		-0.2	%		-0.2	%		-0.2	%		-0.2	%		-0.2	%
Tax provision		2.3	%		1.5	%		2.7	%		2.2	%		1.7	%		1.8	%		2.1	%		1.8	%		1.8	%		1.2	%		1.8	%		1.6	%
Net income		4.6	%		3.7	%		5.6	%		4.7	%		4.2	%		4.3	%		4.7	%		4.3	%		4.0	%		2.6	%		4.1	%		3.7	%

Page 4 of 9

Shared Services

Supplemental Financial Information — Pro Forma Forecast

		53 weeks																Forecast
	2003	2004	1Q05			2Q05			3Q05			4Q05			2005			1Q06A			2Q06			3Q06			4Q06			2006
Units
Sales weeks
AWS
Comp sales change
Sales
per FDS
Operating costs
COS
Labor
Operating
Occupancy
Minority interest
G&A (inc. in concepts for ‘03 & ‘04)				4,895			4,906			4,384			4,513			18,698			4,631			5,002			5,265			5,780			20,677
Restaurant cash operating income				(4,895	)		(4,906	)		(4,384	)		(4,513	)		(18,698	)		(4,631	)		(5,002	)		(5,265	)		(5,780	)		(20,677	)
Development costs
Preopening
Partner investment expense
Other expenses
Depreciation & amortization				149			142			263			326			880			280			294			290			290			1,154
Equity-based compensation																			988			1,194			1,602			1,602			5,386
Interest (income) expense				(343	)		(420	)		(381	)		(431	)		(1,575	)		(489	)		(440	)		(485	)		(480	)		(1,894	)
Tax provision				(1,528	)		(1,504	)		(1,237	)		(1,303	)		(5,572	)		(1,677	)		(1,875	)		(2,068	)		(2,229	)		(7,850	)
Net income				(3,173	)		(3,124	)		(3,029	)		(3,105	)		(12,431	)		(3,733	)		(4,174	)		(4,604	)		(4,962	)		(17,473	)
per FDS			$	(0.12	)	$	(0.12	)	$	(0.11	)	$	(0.11	)	$	(0.46	)	$	(0.14	)	$	(0.15	)	$	(0.17	)	$	(0.18	)	$	(0.64	)
Fully diluted shares (FDS)				26,893			26,977			27,073			27,058			27,000			27,239			27,239			27,239			27,239			27,239

Page 5 of 9

Concept: P.F. Chang’s China Bistro

Supplemental Financial Information — Pro Forma Forecast

				53 weeks																		Forecast															YOY
	2003			2004			1Q05			2Q05			3Q05			4Q05			2005			1Q06A			2Q06			3Q06			4Q06			2006			Change
Units		97			115			116			121			125			131			131			133			134			143			151			151
Sales weeks		4,494			5,613			1,492			1,531			1,594			1,649			6,266			1,720			1,728			1,788			1,939			7,175			14.5	%
AWS		108,280			108,938			109,637			108,699			105,779			107,092			107,757			108,677			106,934			105,571			106,845			106,988			-0.7	%
Comp sales change		5.1	%		3.0	%		2.9	%		1.9	%		-0.8	%		1.0	%		1.2	%		1.3	%		1.7	%		2.6	%		1.5	%		1.8	%
Sales		486,609			611,468			163,579			166,418			168,612			176,595			675,204			186,924			184,782			188,761			207,172			767,639			13.7	%
per FDS	$	18.54		$	23.01		$	6.08		$	6.17		$	6.23		$	6.53		$	25.01		$	6.86		$	6.78		$	6.93		$	7.61		$	28.18
Operating costs
COS		136,983			173,128			45,317			45,726			46,359			49,671			187,073			51,771			51,035			51,758			56,483			211,047
Labor		158,497			201,352			53,601			54,250			55,947			57,328			221,126			62,308			59,933			61,824			68,209			252,273
Operating		66,044			85,073			23,599			24,298			25,654			26,648			100,199			27,897			26,968			28,204			29,629			112,698
Occupancy		25,533			31,896			8,465			8,883			9,102			8,250			34,700			9,859			9,745			9,952			10,965			40,520
Minority interest		7,360			9,177			1,935			1,881			1,723			1,579			7,118			1,733			1,713			1,750			1,921			7,117
G&A		24,767			28,555			4,086			3,816			3,667			3,943			15,512			4,386			4,565			4,565			4,670			18,185
Restaurant cash operating income		67,425			82,287			26,576			27,564			26,160			29,176			109,476			28,970			30,824			30,709			35,296			125,799			14.9	%
Development costs
Preopening		7,026			5,852			965			1,544			1,651			1,868			6,028			1,066			1,491			3,369			2,340			8,266			37.1	%
Partner investment expense		3,941			15,075			208			1,126			1,303			889			3,526			426			436			1,744			1,744			4,350			23.4	%
Other expenses
Depreciation & amortization		19,414			24,778			6,679			7,033			7,462			8,919			30,093			8,096			8,282			8,396			8,808			33,582			11.6	%
Equity-based compensation																							1,075			1,101			1,451			1,451			5,079
Interest (income) expense		(461	)		(612	)		(115	)		(20	)		(146	)		30			(251	)		—												—
Tax provision		12,523			10,797			6,123			5,811			4,608			5,148			21,690			5,432			6,049			4,882			6,495			22,859			5.4	%
Net income		24,982			26,397			12,716			12,070			11,282			12,322			48,390			12,875			13,464			10,867			14,457			51,663			6.8	%
per FDS	$	0.95		$	0.99		$	0.47		$	0.45		$	0.42		$	0.46		$	1.79		$	0.47		$	0.49		$	0.40		$	0.53		$	1.90
Fully diluted shares (FDS)		26,250			26,575			26,893			26,977			27,073			27,058			27,000			27,239			27,239			27,239			27,239			27,239
Sales		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
COS		28.2	%		28.3	%		27.7	%		27.5	%		27.5	%		28.1	%		27.7	%		27.7	%		27.6	%		27.4	%		27.3	%		27.5	%
Labor		32.6	%		32.9	%		32.8	%		32.6	%		33.2	%		32.5	%		32.7	%		33.3	%		32.4	%		32.8	%		32.9	%		32.9	%
Operating		13.6	%		13.9	%		14.4	%		14.6	%		15.2	%		15.1	%		14.8	%		14.9	%		14.6	%		14.9	%		14.3	%		14.7	%
Occupancy		5.2	%		5.2	%		5.2	%		5.3	%		5.4	%		4.7	%		5.1	%		5.3	%		5.3	%		5.3	%		5.3	%		5.3	%
Minority interest		1.5	%		1.5	%		1.2	%		1.1	%		1.0	%		0.9	%		1.1	%		0.9	%		0.9	%		0.9	%		0.9	%		0.9	%
G&A		5.1	%		4.7	%		2.5	%		2.3	%		2.2	%		2.2	%		2.3	%		2.3	%		2.5	%		2.4	%		2.3	%		2.4	%
Restaurant cash operating income		13.9	%		13.5	%		16.2	%		16.6	%		15.5	%		16.5	%		16.2	%		15.5	%		16.7	%		16.3	%		17.0	%		16.4	%
Preopening		1.4	%		1.0	%		0.6	%		0.9	%		1.0	%		1.1	%		0.9	%		0.6	%		0.8	%		1.8	%		1.1	%		1.1	%
Partner investment expense		0.8	%		2.5	%		0.1	%		0.7	%		0.8	%		0.5	%		0.5	%		0.2	%		0.2	%		0.9	%		0.8	%		0.6	%
Depreciation & amortization		4.0	%		4.1	%		4.1	%		4.2	%		4.4	%		5.1	%		4.5	%		4.3	%		4.5	%		4.4	%		4.3	%		4.4	%
Equity-based compensation		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.6	%		0.6	%		0.8	%		0.7	%		0.7	%
Interest (income) expense		-0.1	%		-0.1	%		-0.1	%		0.0	%		-0.1	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Tax provision		2.6	%		1.8	%		3.7	%		3.5	%		2.7	%		2.9	%		3.2	%		2.9	%		3.3	%		2.6	%		3.1	%		3.0	%
Net income		5.1	%		4.3	%		7.8	%		7.3	%		6.7	%		7.0	%		7.2	%		6.9	%		7.3	%		5.8	%		7.0	%		6.7	%

Page 6 of 9

Concept: Pei Wei Asian Diner

Supplemental Financial Information — Pro Forma Forecast

				53 weeks																		Forecast															YOY
	2003			2004			1Q05			2Q05			3Q05			4Q05			2005			1Q06A			2Q06			3Q06			4Q06			2006			Change
Units		33			53			54			61			68			77			77			81			88			97			107			107
Sales weeks		1,255			2,318			698			742			844			947			3,231			1,031			1,088			1,211			1,323			4,653			44.0	%
AWS		42,476			41,188			43,888			42,639			40,802			39,323			41,457			40,435			40,013			39,388			39,416			39,774			-4.1	%
Comp sales change		0.3	%		2.0	%		6.0	%		6.3	%		2.8	%		1.9	%		4.0	%		-2.0	%		-1.6	%		1.4	%		2.4	%		0.2	%
Sales		53,308			95,473			30,635			31,638			34,437			37,239			133,949			41,689			43,534			47,699			52,148			185,070			38.2	%
per FDS	$	2.03		$	3.59		$	1.14		$	1.17		$	1.27		$	1.38		$	4.96		$	1.53		$	1.60		$	1.75		$	1.91		$	6.79
Operating costs
COS		15,805			27,608			8,665			8,767			9,651			10,478			37,561			11,669			12,190			13,166			14,286			51,311
Labor		17,931			31,973			9,927			10,515			11,889			12,786			45,117			14,285			14,789			16,029			17,304			62,407
Operating		7,616			14,455			4,651			5,207			5,836			6,354			22,048			6,944			7,527			7,844			8,220			30,535
Occupancy		3,381			5,797			1,809			1,884			2,080			2,320			8,093			2,634			2,803			3,061			3,356			11,854
Minority interest		527			901			341			295			251			222			1,109			289			326			445			553			1,613
G&A		3,925			6,107			1,601			1,773			1,708			1,825			6,907			2,194			2,230			2,320			2,356			9,100
Restaurant cash operating income		4,123			8,632			3,641			3,197			3,022			3,254			13,114			3,674			3,669			4,834			6,073			18,250			39.2	%
Development costs Preopening		1,764			2,143			369			952			1,061			835			3,217			603			1,175			1,232			1,090			4,100			27.4	%
Partner investment expense		255			2,596			65			455			169			585			1,274			(226	)		455			585			650			1,464			14.9	%
Other expenses Depreciation & amortization		2,403			4,377			1,306			1,344			1,533			1,794			5,977			1,979			1,979			2,193			2,410			8,561			43.2	%
Equity-based compensation																							105			110			145			145			506
Interest (income) expense		(5	)					—			(7	)		(3	)		(5	)		(15	)		(3	)											(3	)
Tax provision		(98	)		(141	)		618			147			76			(17	)		824			377			(16	)		210			551			1,123			36.3	%
Net income		(196	)		(343	)		1,283			306			186			62			1,837			839			(35	)		468			1,227			2,499			36.0	%
per FDS	$	(0.01	)	$	(0.01	)	$	0.05		$	0.01		$	0.01		$	0.00		$	0.07		$	0.03		$	(0.00	)	$	0.02		$	0.05		$	0.09
Fully diluted shares (FDS)		26,250			26,575			26,893			26,977			27,073			27,058			27,000			27,239			27,239			27,239			27,239			27,239
Sales		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
COS		29.6	%		28.9	%		28.3	%		27.7	%		28.0	%		28.1	%		28.0	%		28.0	%		28.0	%		27.6	%		27.4	%		27.7	%
Labor		33.6	%		33.5	%		32.4	%		33.2	%		34.5	%		34.3	%		33.7	%		34.3	%		34.0	%		33.6	%		33.2	%		33.7	%
Operating		14.3	%		15.1	%		15.2	%		16.5	%		16.9	%		17.1	%		16.5	%		16.7	%		17.3	%		16.4	%		15.8	%		16.5	%
Occupancy		6.3	%		6.1	%		5.9	%		6.0	%		6.0	%		6.2	%		6.0	%		6.3	%		6.4	%		6.4	%		6.4	%		6.4	%
Minority interest		1.0	%		0.9	%		1.1	%		0.9	%		0.7	%		0.6	%		0.8	%		0.7	%		0.7	%		0.9	%		1.1	%		0.9	%
G&A		7.4	%		6.4	%		5.2	%		5.6	%		5.0	%		4.9	%		5.2	%		5.3	%		5.1	%		4.9	%		4.5	%		4.9	%
Restaurant cash operating income		7.7	%		9.0	%		11.9	%		10.1	%		8.8	%		8.7	%		9.8	%		8.8	%		8.4	%		10.1	%		11.6	%		9.9	%
Preopening		3.3	%		2.2	%		1.2	%		3.0	%		3.1	%		2.2	%		2.4	%		1.4	%		2.7	%		2.6	%		2.1	%		2.2	%
Partner investment expense		0.5	%		2.7	%		0.2	%		1.4	%		0.5	%		1.6	%		1.0	%		-0.5	%		1.0	%		1.2	%		1.2	%		0.8	%
Depreciation & amortization		4.5	%		4.6	%		4.3	%		4.2	%		4.5	%		4.8	%		4.5	%		4.7	%		4.5	%		4.6	%		4.6	%		4.6	%
Equity-based compensation		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.3	%		0.3	%		0.3	%		0.3	%		0.3	%
Interest (income) expense		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Tax provision		-0.2	%		-0.1	%		2.0	%		0.5	%		0.2	%		0.0	%		0.6	%		0.9	%		0.0	%		0.4	%		1.1	%		0.6	%
Net income		-0.4	%		-0.4	%		4.2	%		1.0	%		0.5	%		0.2	%		1.4	%		2.0	%		-0.1	%		1.0	%		2.4	%		1.4	%

Page 7 of 9

Concept: Taneko Japanese Tavern

Supplemental Financial Information — Pro Forma Forecast

								Forecast
		1Q06A			2Q06			3Q06			4Q06			2006
Units									1			1			1
Sales weeks									3			13			16
AWS									75			75			75
Comp sales change
Sales									225			975			1,200
per FDS		$	—		$	—		$	0.01		$	0.04		$	0.04
Operating costs
COS									81			312			394
Labor									100			351			450
Operating									50			183			233
Occupancy									16			65			81
Minority interest
G&A	G&A expenses incurred in 2005 are shown under Shared Services		195			210			257			202			865
Restaurant cash operating income			(195	)		(210	)		(280	)		(138	)		(823	)
Development costs
Preopening			25			66			258			15			364
Partner investment expense									170						170
Other expenses
Depreciation & amortization									17			52			70
Equity-based compensation			22			23			23			23			91
Interest (income) expense
Tax provision			(74	)		(93	)		(232	)		(71	)		(470	)
Net income			(168	)		(206	)		(516	)		(158	)		(1,049	)
per FDS		$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.01	)	$	(0.04	)
Fully diluted shares (FDS)			27,239			27,239			27,239			27,239			27,239
Sales									100.0	%		100.0	%		100.0	%
COS									36.2	%		32.0	%		32.8	%
Labor									44.2	%		36.0	%		37.5	%
Operating									22.4	%		18.8	%		19.4	%
Occupancy									7.2	%		6.7	%		6.8	%
Minority interest									0.0	%		0.0	%		0.0	%
G&A									114.4	%		20.8	%		72.1	%
Restaurant cash operating income									-124.4	%		-14.2	%		-68.6	%
Preopening									114.7	%		1.6	%		30.4	%
Partner investment expense									75.6	%		0.0	%		14.2	%
Depreciation & amortization									7.7	%		5.4	%		5.8	%
Equity-based compensation									10.3	%		2.4	%		7.6	%
Interest (income) expense									0.0	%		0.0	%		0.0	%
Tax provision									-103.1	%		-7.3	%		-39.1	%
Net income									-229.5	%		-16.2	%		-87.4	%

Page 8 of 9

P.F. Chang’s China Bistro, Inc.

Supplemental Financial Information — Reconciliation of Pro Forma Forecast to GAAP Forecast

			Pro Forma Forecast													Adjustments															GAAP Forecast
	1Q06A			2Q06			3Q06			4Q06			2006			1Q06A			2Q06			3Q06			4Q06			2006			1Q06A			2Q06			3Q06			4Q06			2006
Sales		228,613			228,316			236,685			260,295			953,909																		228,613			228,316			236,685			260,295			953,909
per FDS	$	8.39		$	8.38		$	8.69		$	9.56		$	35.02																	$	8.39		$	8.38		$	8.69		$	9.56		$	35.02
Operating costs
COS		63,440			63,225			65,005			71,081			262,752																		63,440			63,225			65,005			71,081			262,752
Labor		76,593			74,722			77,952			85,863			315,130			344			350			350			350			1,394			76,937			75,072			78,302			86,213			316,524
Operating		34,841			34,495			36,098			38,032			143,466																		34,841			34,495			36,098			38,032			143,466
Occupancy		12,493			12,548			13,029			14,386			52,456																		12,493			12,548			13,029			14,386			52,456
Minority interest		2,022			2,039			2,195			2,474			8,730																		2,022			2,039			2,195			2,474			8,730
G&A		11,406			12,006			12,407			13,008			48,827			1,846			2,079			2,872			2,872			9,669			13,252			14,085			15,279			15,880			58,496
Restaurant cash operating income		27,818			29,281			29,998			35,451			122,548			(2,190	)		(2,429	)		(3,222	)		(3,222	)		(11,063	)		25,628			26,852			26,776			32,229			111,485
Development costs Preopening		1,694			2,732			4,859			3,445			12,730																		1,694			2,732			4,859			3,445			12,730
Partner investment expense		200			891			2,499			2,394			5,984																		200			891			2,499			2,394			5,984
Other expenses
Depreciation & amortization		10,355			10,554			10,897			11,560			43,367																		10,355			10,554			10,897			11,560			43,367
Equity-based compensation		2,190			2,429			3,222			3,222			11,063			(2,190	)		(2,429	)		(3,222	)		(3,222	)		(11,063	)		—			—			—			—			—
Interest (income) expense		(492	)		(440	)		(485	)		(480	)		(1,897	)																	(492	)		(440	)		(485	)		(480	)		(1,897	)
Tax provision		4,058			4,066			2,792			4,746			15,661																		4,058			4,066			2,792			4,746			15,661
Net income		9,813			9,049			6,215			10,564			35,640			—			—			—			—			—			9,813			9,049			6,215			10,564			35,640
per FDS	$	0.36		$	0.33		$	0.23		$	0.39		$	1.31																	$	0.36		$	0.33		$	0.23		$	0.39		$	1.31
Fully diluted shares (FDS)		27,239			27,239			27,239			27,239			27,239																		27,239			27,239			27,239			27,239			27,239
Sales		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%																	100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
COS		27.7	%		27.7	%		27.5	%		27.3	%		27.5	%																	27.7	%		27.7	%		27.5	%		27.3	%		27.5	%
Labor		33.5	%		32.7	%		32.9	%		33.0	%		33.0	%																	33.7	%		32.9	%		33.1	%		33.1	%		33.2	%
Operating		15.2	%		15.1	%		15.3	%		14.6	%		15.0	%																	15.2	%		15.1	%		15.3	%		14.6	%		15.0	%
Occupancy		5.5	%		5.5	%		5.5	%		5.5	%		5.5	%																	5.5	%		5.5	%		5.5	%		5.5	%		5.5	%
Minority interest		0.9	%		0.9	%		0.9	%		1.0	%		0.9	%																	0.9	%		0.9	%		0.9	%		1.0	%		0.9	%
G&A		5.0	%		5.3	%		5.2	%		5.0	%		5.1	%																	5.8	%		6.2	%		6.5	%		6.1	%		6.1	%
Restaurant cash operating income		12.2	%		12.8	%		12.7	%		13.6	%		12.8	%																	11.2	%		11.8	%		11.3	%		12.4	%		11.7	%
Preopening		0.7	%		1.2	%		2.1	%		1.3	%		1.3	%																	0.7	%		1.2	%		2.1	%		1.3	%		1.3	%
Partner investment expense		0.1	%		0.4	%		1.1	%		0.9	%		0.6	%																	0.1	%		0.4	%		1.1	%		0.9	%		0.6	%
Depreciation & amortization		4.5	%		4.6	%		4.6	%		4.4	%		4.5	%																	4.5	%		4.6	%		4.6	%		4.4	%		4.5	%
Equity-based compensation		1.0	%		1.1	%		1.4	%		1.2	%		1.2	%																	0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
Interest (income) expense		-0.2	%		-0.2	%		-0.2	%		-0.2	%		-0.2	%																	-0.2	%		-0.2	%		-0.2	%		-0.2	%		-0.2	%
Tax provision		1.8	%		1.8	%		1.2	%		1.8	%		1.6	%																	1.8	%		1.8	%		1.2	%		1.8	%		1.6	%
Net income		4.3	%		4.0	%		2.6	%		4.1	%		3.7	%																	4.3	%		4.0	%		2.6	%		4.1	%		3.7	%

Page 9 of 9

EX-99.2

Exhibit 99.2

Final Transcript

Conference Call Transcript

PFCB — Q1 2006 P.F. Chang’s China Bistro, Inc. Earnings Conference Call

Event Date/Time: Apr. 26. 2006 / 1:00PM ET

CORPORATE PARTICIPANTS

Mark Mumford
PF Chang’s China Bistro — CFO

Rick Federico
PF Chang’s China Bistro — Chairman and CEO

Russell Owens
PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

Bert Vivian
PF Chang’s China Bistro — President

Michael Wellborn
PF Chang’s China Bistro — EVP, CAO

CONFERENCE CALL PARTICIPANTS

Ashley Woodruff
Bear, Stearns — Analyst

Steven Kron
Goldman Sachs — Analyst

John Glass
CIBC World Markets — Analyst

Matthew Difrisco
Thomas Weisel Partners — Analyst

Sharon Zackfia
William Blair & Company — Analyst

Jason Whitmer
FTN Midwest Research — Analyst

Justin Tompkins (ph)
Morgan Keegan — Analyst

Paul Westra
SG Cowen & Co — Analyst

Dennis Forst
Keybanc — Analyst

Bryan Elliott
Raymond James – Analyst

PRESENTATION

Operator

Good afternoon, and welcome to P.F. Chang’s China Bistro first quarter 2006 earnings release conference call. [OPERATOR INSTRUCTIONS]

I would now like the turn the call over to Mr. Robert Vivian, President of P.F. Chang’s China Bistro. Thank you, sir. You may begin.

Bert Vivian - PF Chang’s China Bistro — President

Thank you. Good morning, everyone, and thank you for joining us today with. With me in Scottsdale is Russell Owens, President of Pei Wei Asian Diner, Mike Wellborn, our Chief Administrative Officer, and Mark Mumford, our shiny new Chief Financial Officer. In addition, Rick Federico , our Chairman and CEO is joining telephonically from California.

Earlier this morning we released our first quarter earnings as well as our updated view on the remainder of the year. GAAP earnings came in at $0.36 versus $0.40 last year. The two quarters are not comparable due to equity compensation expense and lease accounting charges that are included in the current quarter and not reflected in last year’s results. Our cash flow from operations, net of minority interest distributions, amounted to $16.5 million in the quarter. On a trailing twelve-month basis, net cash flow from ops amounted to roughly $108 million. Our total capital expenditures for the quarter were $17.4 million. At quarter end, cash and marketable securities totaled just under $63 million, with total debt amounting to $6.3 million: we will be filing our 10-Q later today.

The remainder of our commentary is forward-looking in nature and will focus on those areas where we have modified our thoughts with respect to the balance of 2006. Out of respect for everyone’s time, I will not highlight every little variance or change from our very detailed forecast that is included in our press release. For anyone that would like to grind through each and every line item, please give me a shout after the call and I will be more than happy to transfer your call over to Mark.

Okay, going against our usual grain we’re going to tackle a few cost items first before we spend some time on the revenue equation. First of all, a minor housekeeping item that explains our G&A variance in the first quarter, at both concepts we had reclassified the salaries of our multi-unit trainers and chefs from our labor line to our G&A line in recognition of their supervisory status rather than single unit status. In our forecast these salaries were reflected in our labor line. This reclassification resulted in our G&A being higher than our forecast at both concepts in the first quarter.

At the Bistro we missed our first quarter labor forecast by about 100 basis points. Taking our G&A reclassification into consideration, we were actually off about 120 basis points. Wage rate pressure was the culprit, and it more than offset a slight pick up in labor efficiency as well as our February price increase. Hourly labor at the Bistro constitutes about two-thirds of our restaurant labor expense. Our top five hourly positions saw wage increases in the first quarter that range from 2.5% to 5%. A portion of this wage pressure is a function of state mandated minimum wage increases that we’ve all seen over the past year or two.

In addition, we are also beginning to see wage pressure due to a tightening in the labor market. Unfortunately, we do not believe that either one of these trends is going to dissipate in the near term. Consequently, the Bistro is increasing its labor burden for the balance of 2006 to the tune of about 50 basis points.

Pei Wei has the same labor issues, but also one additional variable. Lower than anticipated sales at a handful of restaurants that opened in new markets in late 2005. While these restaurants have improved from their opening volumes, they are still below our internal expectations and accordingly are not generating the type of efficiency we expect from a labor standpoint. All told, Pei Wei is increasing its labor costs by 20 basis points for 2006.

Fortunately it appears that cost of sales will be a little better than we originally anticipated, due primarily to a continued softness in the poultry market. Our protein positions are secured for 2006. We still remain cautious about produce, particularly in light of the heavy rainfall that has soaked California recently, so we are anticipating a little bit of pressure in produce during the second quarter. Taking all of this into consideration, we have adjusted our cost of sales forecast down about 30 basis points at the Bistro, and 20 basis points at Pei Wei for the balance of the year. From a restaurant operations standpoint, those are the big hitters. Our perspective thoughts with respect to the other line items have not materially changed.

Now let’s move on to the revenue side of our business. In total, revenues increased about 18% over last year, and we came within 0.1% of our first quarter forecast. The Bistro’s business was within a whisper of our expectations. Fortunately we fell on the positive side by about $400,000. We nailed our first quarter development plan of a single unit and actually reopened our Metairie restaurant

ahead of schedule, although it did cost us more than anticipated which is why reopening estimates got a little out of whack versus our forecast. Our development schedule at the Bistro remains on track. We continue to expect to deliver about 340 restaurant sales weeks this year by opening 19 or possibly 20 Bistros. While we are becoming increasingly anxious regarding the impact of higher gasoline prices on our guests, we have not made any material changes to our Bistro revenue forecast for the year.

Pei Wei fell shy of their first quarter revenue expectations by about $700,000. The majority of this shortfall relates to the performance of six high volume restaurants, primarily in the Phoenix and Dallas markets. Beginning in the third quarter of last year, we added six new Pei Wei restaurants within those existing trade areas, consistent with our strategy of intentional cannibalization of high volume locations as we increase our market penetration.

We expected a reduction in average weekly sales in the existing locations of approximately 5%. We actually experienced a 15% reduction in the first quarter. That 10% variance is approximately $6,000 per week, per restaurant, amounting to an additional $500,000 sales reduction in our first quarter. Thus, we were right about the direction. We were just wrong on the magnitude. That’s the bad news.

The good news is the six cannibalized restaurants continued to deliver sales in excess of $50,000 per week. More over, we successfully invested about $4.8 million of additional capital in new business that is are currently averaging over $46,000 per week in revenues and will produce great returns for us over the next 10 to 15 years without damaging our existing return profile in two of our older markets. Based on our first quarter experience, we have adjusted our Pei Wei sales forecast to reflect current sales trends in these six cannibalized restaurants.

In addition, in the second, third and fourth quarter of this year, we will be opening a total of five new restaurants in existing markets that will have some level of impact on comp sales. We believe that our current forecast contemplates the impact of this additional capacity. By focusing on existing markets as well as new markets, Pei Wei’s development strategy will at times sacrifice short term comp store sales leverage for market growth and penetration. Ultimately, we believe this strategy will produce the best returns on a larger invested capital base.

We have not changed our thoughts with respect to Pei Wei development nor have we altered our expectations as it relates to the potential of the Pei Wei brand. We continue to expect that Pei Wei will produce roughly 650 new restaurant sales weeks in 2006, a capacity increase of 44% from 2005. In total, we have reduced Pei Wei’s 2006 revenue target by $3.6 million from $188.7 million to $185.1 million.

That covers the major operational changes that we have made to our forecast. In our last conference call, we mentioned there was one piece missing from our estimate of equity based compensation, which was our estimate for 2006 grant activity. At this point our best guess is that will translate to an additional $1.9 million charge in 2006. Consequently, our full charge for equity compensation this year should be around $11.1 million or $0.28 per share. In summary, from a GAAP perspective, we have lowered our forecasted earnings $0.08 from $1.39 to $1.31. $0.05 of that change relates to equity based compensation with the other $0.03 due to operational modifications.

Finally, a couple dates for your calendar. On Thursday, July 6, we anticipate releasing second quarter revenues to be followed by our earnings conference call on Wednesday, July 26. With that, we will open up the call for questions.

QUESTION AND ANSWER

Operator

[OPERATOR INSTRUCTIONS]. Our first question is from Ashley Woodruff and please state your company name.

Ashley Woodruff - Bear, Stearns — Analyst

Bear Stearns. Russell, could you talk a little bit more about the new Pei Weis that opened in the fourth quarter in new markets that were disappointing? You said you have seen some improvement in the first quarter but not as much as you had hoped. Can you point to any specific reason that you to explain why they were softer? Was it real estate, was it marketing around the stores? Any color you could give?

Russell Owens - PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

Okay. First of all, we have seen those stores trending up the way we would like to see them. They are running still below our expectations because they started out well below our expectations. I don’t know that there is any one thing I can pointed to. We don’t typically do any marketing. We didn’t in this group of stores either.

Minneapolis has started slow for us. North Carolina has started slow for us. Again, those restaurants in the first quarter were running — average weekly sales were up about 20% over what they opened at which is good and consistent with our trends. They just started at a much lower level, so they’re still in a level below our expectations. This year we will open a couple more in the Minneapolis area, and two to three more in North Carolina, and we would hope to see as we gain market awareness and penetration the overall growth in sales accelerate. Some sites are better than other sites from a real estate perspective. I don’t have any reason at this point to believe we got bad sites out there, and I am optimistic about those markets.

Ashley Woodruff - Bear, Stearns — Analyst

Thanks, and since they’ve opened have you done any marketing now after they did open slower than you expected? Did you do any couponing or anything around them?

Russell Owens - PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

We have done one direct mail drop to one location, but we haven’t done anything broad based or anything in the other restaurants. Typically the first thing we do when stores open slow is make sure we’re going to execute operationally at the highest level we can. When we’re comfortable we’re there, then we start contemplating some marketing, and I would suspect in the back half of the year we will do that, do some local marketing in the stores as we again penetrate the market deeper and gain a little seasoning in the market operation.

Ashley Woodruff - Bear, Stearns — Analyst

Okay. Thanks.

Operator

Thank you. Our next question is from Steven Kron, and please state your company name.

Steven Kron - Goldman Sachs — Analyst

Thanks. Goldman Sachs. A couple questions first on the Bistro. On the assumptions for comp sales on a go forward basis seems pretty in line with kind of where your menu price currently stands I think. First, if you can confirm that and talk about pricing, but I guess this the context of what we seen across the broader industry as far as traffic pressures, I am just trying to gauge, you know, how comfortable you are with traffic levels that I think by your estimation here seem to be flattish?

Bert Vivian - PF Chang’s China Bistro — President

Sure, Steven. Again, we haven’t really changed our view from a revenue standpoint for 2006. When we laid out this forecast for everybody a couple months ago, we mentioned that basically our comp sales increased that we’re looking at really is all pricing. There was very little traffic if any in our forecast. That view hasn’t changed. As I mentioned in my comments that we certainly don’t have a crystal ball that’s better than anybody else’s.

As we look on the horizon, and as I filled up my car many morning, there is no doubt that rising interest rate environment and higher gas prices has to come from somewhere, so we’re a little anxious about that, but we haven’t seen anything yet that would make us change our thoughts with respect to our forecast. I don’t know if that gives you great comfort, but we’re in the same boat as everyone else trying to figure out what’s going to happen to the consumer this year, and clearly it looks like the manufacturing side of the U.S. is catching steam, and the consumer may be slowing down, about the I think we’re going to find out over the next few months.

Steven Kron - Goldman Sachs — Analyst

Just on that note, berth, is there any color thus far in April that’s worth noting?

Bert Vivian - PF Chang’s China Bistro — President

Nothing worth noting. We now have a forecast again for the second quarter at the Bistro. We’re thinking we’re going to be from a comp sales perspective we’re looking at a number that’s not too dissimilar from the first quarter. Again, it remains to be seen as we move into the May, June time frame what transpires.

Steven Kron - Goldman Sachs — Analyst

One last question on Pei Wei. You mentioned the five new Pei Wei’s opening in existing markets for the period, and first of all if you could comment what markets those might be, and you mentioned that you kind of factored it into your assumptions. Are you factoring in a 5% cannibalization or more like a 15?

Russell Owens - PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

Somewhere in between. We’ve gone back and reviewed our cannibalization estimate and is obviously become a little more conservative or hopefully more accurate. We’re not factoring in 15. They are in a variety of markets, Albuquerque, New Mexico, Dallas, Texas, Phoenix, Arizona, usual markets.

Steven Kron - Goldman Sachs — Analyst

Spread evenly across vintage classes?

Russell Owens - PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

I couldn’t answer that. I haven’t even looked at them in class.

Steven Kron - Goldman Sachs — Analyst

Okay. Thank you.

Operator

Next question is from John Glass and please state your company name.

John Glass - CIBC World Markets — Analyst

Sure. It is CIBC. I just wanted to go back to Pei Wei as well and maybe reconcile your statement bes higher than expected cannibalization in those markets or the fact that you really haven’t changed your opinion about the potential of the concept. Does it change your opinion about anything, though? Does it change it about the frequency of use or the density of stores in a certain market? Any kind of conclusion you draw from this?

Russell Owens - PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

Not yet. I will go back to our original strategy of penetrating these markets deeply and trying to have restaurants that operate in what we would term the sweet spot of $45 and$ 55,000 a week in sales and in reference to the original restaurant at Casa Ploma that was doing north of $70,000 in sales in 2001 and we put two restaurant ns that trade area, knocked it down to about 60,000 a week in sales. Two years later it is doing north of $70,000 a week of sales again and we’re in the process of bringing that down again.

When it quits coming back, we’ll quit penetrating, and the good news is it will hopefully be in the sweet spot in the sales volume at that point in time, but nothing is really at this stage is premature in my opinion to sort of rethink penetration, ultimate penetration levels, universe size and those kinds of things. I think we hit these stores a little harder than we thought we would hit them and hopefully they will bounce back to the same level, and if not we’ll adjust accordingly.

Bert Vivian - PF Chang’s China Bistro — President

John, one thing that — and again, it may not help with your question, but one of the things that we’ve done with respect to analyzing the impact at Pei Wei is we’ve attributed everything to cannibalization. That may not be the case. There could be general conditions in the market for example that may just be a weaker market in Dallas or Phoenix that may be impacting that. We simply said, you know what, we know we went in and added capacity. Therefore we’re attributing this to cannibalization. That may not quite be the case, so you have to be careful about drawing too many conclusions from a couple data points.

John Glass - CIBC World Markets — Analyst

That was helpful. Just one enterprise question. It seems like you’ve got two competing issues, higher labor costs and then the sensitivity around the consumer, and therefore pricing, so which do you think you would do? Which are you more sensitive to? Do you want to protect margins throughout the year with pricing or would you rather drive the traffic in the sacrifice margins in the near term?

Bert Vivian - PF Chang’s China Bistro — President

I don’t think our view point really changed too much on this, John. The truth of the matter is and the guests really don’t care if our costs are up. They just care about great food and great service. That’s really what our focus is on. We believe if we do the right

things the right way, that we will continue to have a long-term business here, and that’s really what we focus on. We know that there is going to be ups and downs in the economic cycle. We know that the consumer is going to run hot and cold. We can’t do a whole lot about that. We focus on the things that we have some control over. That’s taking care of our employees and taking care of our guests.

John Glass - CIBC World Markets — Analyst

Great. Thank you.

Operator

Thank you. Our next question is from Matthew Difrisco. Please state your company name.

Matthew Difrisco - Thomas Weisel Partners — Analyst

Thomas Weisel Partners. For the Bistro, can you give us a little more detail on the preopening expense over run in Q1? What were the drivers behind that?

Bert Vivian - PF Chang’s China Bistro — President

Only one driver, and that was Metairie Louisiana. We hustled in getting that restaurant open. And we incurred more costs than we thought we were going to incur. We want to do everything we can to get back in that community. We did so. We spent a little bit more money than we thought we were going to, but at the end of the day, that’s okay.

Matthew Difrisco - Thomas Weisel Partners — Analyst

I think it was about 428,000 more than — I would assume some of that over run from what your initial guidance was also that you expect more Q2 stores opening?

Bert Vivian - PF Chang’s China Bistro — President

That may be an error in your assumption.

Matthew Difrisco - Thomas Weisel Partners — Analyst

Okay. I will take that. While we’re going with errors in assumptions I saw something in the G&A line, it looked like the Bistro and Pei Wei G&As don’t add up to what your corporate is. Is there options thing or equity based compensation going on there because 11.406 in the model seems to have an extra 200,000 in cash in there from what the brands each specifically have. If you can address that at the end of the call sometime and lastly, can you give us any detail on where those five stores are, the Pei Weis that you said are coming down the pipeline which have the potential to further cannibalize existing stores?

Russell Owens - PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

Just one second. Dallas. Phoenix, Tulsa and Albuquerque.

Matthew Difrisco - Thomas Weisel Partners — Analyst

Okay. And then I presume just to end the thought on the preopening costs, since you’re not raising the Bistro, there is nothing going on on preopening. Some of your peers have said as the consequence of higher labor costs or tightening labor market they’ve been bringing on people earlier and that’s been driving up preopening costs. You’re not seeing any pressures going forward?

Russell Owens - PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

No new pressures. We felt that for quite some time.

Matthew Difrisco - Thomas Weisel Partners — Analyst

Okay. Thank you.

Russell Owens - PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

You bet.

Operator

Thank you. Our next question is from Sharon Zackfia please state your company name.

Sharon Zackfia - William Blair & Company — Analyst

William Blair. On Pei Wei, the downward revision of the projected sales is that buyer sly due to the fourth quarter openings and where they’re trending or was there some other trend factor there?

Russell Owens - PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

The fourth quarter openings, where they’re trending, the cannibalization in the fourth quarter and the revised view of the 4, five for the balance of the year and in a little bit general market condition.

Bert Vivian - PF Chang’s China Bistro — President

Okay. So the revised view for the four or five you’re talking about, that’s the potential cannibalization of those new units in Dallas, Phoenix, Tulsa and Albuquerque.

Russell Owens - PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

Correct.

Sharon Zackfia - William Blair & Company — Analyst

I know you mentioned Minneapolis and North Carolina specifically as market that is might not have opened as strong as you liked, and I understand your marketing approach. Are you thinking differently in terms of how quickly you have to store out a market so that people in Minneapolis know you’re there? I know that they don’t really know you’re there. Is that a potential change going forward?

Russell Owens - PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

I don’t know that our thinking hasn’t changed. Our ability to execute against our thinking hopefully is getting better. Part of the reason we got a couple stores in North Carolina opened in the back half of last year and the next two or three don’t open until the third quarter this year is challenges in our real estate pipeline, most of which are legacies from last year and hopefully we’re getting better at that.

We’re really not — we’ve always tried to get as many as we can get in a market as soon as possible without putting too much pressure on our ability to open and execute the restaurants. I think sometimes when we miss that goal by leaving them out there is one or two restaurants for a period of time you see the consequences in sales.

Sharon Zackfia - William Blair & Company — Analyst

Are Minneapolis and North Carolina the only kind of problem markets at this point?

Russell Owens - PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

Yes, I would say so. I can’t think of anything else.

Sharon Zackfia - William Blair & Company — Analyst

And have you changed your plans to take price at Pei Wei? I know you’re lapping some price. I think later this quarter?

Russell Owens - PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

We have a price increase that will basically be in effect by the first of June. We will actually go — we’re lapping a price increase that went into effect last year at the very end of April. We’ll have a four or five-week period where we won’t have any year-over-year pricing, and our pricing this year is going to be about a point higher than our pricing last year which is which was contemplated based on all the stuff we’ve been talking about in terms of wage pressures and is fuel costs and pricing.

Sharon Zackfia - William Blair & Company — Analyst

If I remember correctly, did you take a point and a half last year?

Russell Owens - PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

A point and a half last year.

Sharon Zackfia - William Blair & Company — Analyst

Thank you.

Operator

Our next question is from Jason Whitmer. Please state your company name.

Jason Whitmer - FTN Midwest Research — Analyst

Midwest Research. Wanted to maybe touch base on Pei Wei more from the macro impact there that you experienced in the first few years of the brand or competitive assessment and how you stand today on that and how you’re thinking in your anxiousness as you look through the balance of this year.

Russell Owens - PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

Can you clarify?

Jason Whitmer - FTN Midwest Research — Analyst

I am thinking more in the fast casual arena specifically. Is there any material difference in your macro thinking or the competitive environment specifically within that channel?

Russell Owens - PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

No, not really. I am still very encouraged by it, I am encouraged by the success. Better operators like Panera have been achieving in this. I think we’re training and educating the guests on the benefits of fast casual. I am as bullish as I have ever been.

We don’t really see any new competition in the Asian segment. We’ve always expected there will be. There always has been and continue to be some, but nothing that we can see is coming in directly, and having any sort of impact at all.

Jason Whitmer - FTN Midwest Research — Analyst

And this question has been asked in some form, and I think you actually responded a couple different ways. With what you experienced so far with deeper than expected cannibalization or softer opens in various markets, do you plan to reassess the timing of your openings or the balancing of your openings through the year or within the various clusters within those markets?

Russell Owens - PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

Again, we tried since the middle of last year, we’ve reemphasized, refocused and rearranged how we process real estate, number of teams to try to smooth out the real estate pipeline and the challenges we historically face there, and hopefully that’s to address not just hitting our sales goals but to get the timing better suited for the market penetration goals we have.

We are going to, as we have gotten smarter with the brand and have better training tools and better more seasoned partners in our system, we will be as contemplating going more aggressively in local P.R. and merchandising and advertising and promotions as we open these markets on a go forward basis. We feel better not not trying to open stealthily and silently and see what happens. We’re going to come in at the time of opening with a little more local P.R. and marketing. The only change I would say we’ve done strategically.

Jason Whitmer - FTN Midwest Research — Analyst

Does that imply any incremental investments that have to be put on the table and I realize you reclassified some things within G&A. I am not sure if that’s all pure reclassification or if you plan to be spending more for that brand in particular?

Bert Vivian - PF Chang’s China Bistro — President

Most of that change in our G & A is pure reclass from labor up to G&A. We have raised my G&A estimates a touch versus the original forecast, and that is around bringing on some talent specifically in the marketing and P.R. side of the business.

Jason Whitmer - FTN Midwest Research — Analyst

Great. Thanks.

Operator

Thank you. Our next question is from [Justin Tompkins]. Please state your company name.

Justin Tompkins - Morgan Keegan — Analyst

Morgan Keegan. Bert, you mention you’re a little anxious on the current consumer environment. As we look at recent trends, are you seeing any geographic weakness? We’ve heard a couple companies mention weaker sales in California markets.

Bert Vivian - PF Chang’s China Bistro — President

Yeah, Justin. I think we talked potential on the last call about the fact that we’ve seen at least in terms of trend we’ve seen a weakening of activity all along the West Coast that actually began for us late in the third quarter and into the fourth quarter of last year. That hasn’t changed. It is still a little bit soft along the West Coast. Offsetting that as we have actually seen a pick up in the part of the U.S. that was weakest last year, which has been the midwest and kind of into Texas, so net, net, we picked it up and one place and given it back in another.

Justin Tompkins - Morgan Keegan — Analyst

As we looked at — as you look at Q1, can you give us was there much of a holiday shift, the Easter shift? Does that impact the sales at the end of Q1 and as we look at Q2 as well?

Bert Vivian - PF Chang’s China Bistro — President

The Easter bunny comes every year, and what I told our folks was look, I don’t care if it is in March or April, just so long as people come, so we didn’t spend a whole lot of time worrying about whether we lost a body in March and we picked it up in April or vice versa, so I really can’t answer that question specifically.

Justin Tompkins - Morgan Keegan — Analyst

Great. Thanks.

Operator

Thank you. Our next question is from Paul Westra and please state your company name.

Paul Westra - SG Cowen & Co — Analyst

Great. Thank you. Cowen & Co. Good afternoon. If I can get just a little more better clarification on the reclassification of expenses to make it clear, the 80 basis points I think increase if you look at Bistro and Pei Wei, in between both line items, labor and G&A, if the reclassification did not occur would that all have been in the labor line?

Bert Vivian - PF Chang’s China Bistro — President

80 base points. Are you looking at year-over-year?

Paul Westra - SG Cowen & Co — Analyst

The before and after your forecast.

Bert Vivian - PF Chang’s China Bistro — President

The reclassification is relatively minor. We’re talking about a couple hundred thousand dollars at each concept in the first quarter, so again, it was something that all of our supervisory personnel are in G&A. There is a small subset I mentioned the market trainers and market chefs that were still residing up in our labor line. We simply moved it back down and that wasn’t reflected in the forecast.

Paul Westra - SG Cowen & Co — Analyst

Okay. If you look at the G&A, you did take your forecast up both in dollar terms and more on a percentage basis. Can you quantify that or talk to why that occurred?

Bert Vivian - PF Chang’s China Bistro — President

I can say at Pei Wei we took our number up $1 million. $600,000 of that is a reclass and the other $400,000 is for marketing, P.R. and other various things. I don’t think there has been a significant increase other than that reclass through the balance of the year, Paul. We’re adding for that reclass in each quarter. It is not just a one-quarter effect.

Paul Westra - SG Cowen & Co — Analyst

That quantity was on a quarterly basis.

Bert Vivian - PF Chang’s China Bistro — President

It is on a quarterly basis, right.

Paul Westra - SG Cowen & Co — Analyst

That answers it. Great. Still a follow-up question on if you can give maybe a little state of the morale, obviously you did a lot of big effort at the Bistro in particular and the new menu roll out and you talked a little bit about tighter labor market. Can you talk about how maybe some of the turnover statistics are going and just the state of the Bistro in particular?

Bert Vivian - PF Chang’s China Bistro — President

Sure. The state of the Bistro is pretty good. I think that we continue to be very excited about our business. I think our team is excited about our business. We — in terms from a culinary perspective we are as good if not better than we’ve ever been. We’re working on service initiatives now to make sure our guests continue to get great service in our restaurant, but I love the state of the union if you will of the Bistro. Now, clearly we’re knocking around with respect to traffic growth right now, be that as it may, I think that the morale and how people feel about the Bistro is pretty good.

Paul Westra - SG Cowen & Co — Analyst

Great. Thank you.

Bert Vivian - PF Chang’s China Bistro — President

You bet.

Operator

Thank you. Our next question is from Dennis Forst and please state your company name.

Dennis Forst - Keybanc — Analyst

Keybanc. I wanted to ask about margins at the Pei Wei division. It just seems over the last five years or so the Bistro consistently had a what I would call a cash store margin of around 19%, and somewhere 9, 10% of overhead so that it throws off about 10% of profit. Pei Wei is obviously smaller and growing. Has yet to throw off any margin and and is running more like a cash margin at the store of only about 15%. When are we going to see some leverage on that and see that number move up closer to the numbers that we are used to at the Bistro?

Bert Vivian - PF Chang’s China Bistro — President

Dennis, this is Bert. I think we’ve been consistent since the inception of Pei Wei in stating that even at maturity, Pei Wei is going to run 2 to 300 basis points at the unit level below the Bistro, and it is really just a function of volume. The Bistro volumes are somewhere between 5.5 and $6 million on average. Pei Wei is doing much, much less in terms of volume, a little over $2 million.

Dennis Forst - Keybanc — Analyst

Sure. When will we start seeing some leverage, then, below the line so that the profit contribution gets up at least to the mid single digits instead of hovering around zero?

Bert Vivian - PF Chang’s China Bistro — President

Well, I think that will certainly — our expectation is that is going to come, Dennis. There is clearly when you’re growing a system as Russell is, to the tune of about 45% this year, there is a penalty for growth. And we’re working our way through that, Pei Wei is profitable. That profitability will continue to increase. I think that Russell has taken the correct stance from a G&A perspective and gotten his team ready for what we believe to be some very exciting growth in the future, not unlike the Bistro, by the way in the early years. If you look at our G&A back then, you would say that is some heavy G&A for a little bitty concept.

We did that because we wanted to get ahead of the game. I think Russell has done the same thing. We are very pleased with the progress thus far, clearly that we have some short term bumps in the road here, but in terms of the long-term view on Pei Wei, that hasn’t changed one iota from our standpoint. We think it is going to be a great business.

Dennis Forst - Keybanc — Analyst

Can we expect in ‘07 to see a little leverage in the G&A and depreciation? Certainly we’re already seeing some on the preopening as you get a bigger base of stores. What about G&A and depreciation?

Bert Vivian - PF Chang’s China Bistro — President

There is no question from a G&A perspective, this year their capacity is growing at a 44% rate to the extent we haven’t talked about the growth for next year, I would guess the G&A is going to grow at a lesser rate than sales for Pei Wei, so, yes, there will be leverage and leverage —

Dennis Forst - Keybanc — Analyst

Good enough. Thank you.

Operator

[OPERATOR INSTRUCTIONS] Our next question is from Matthew Difrisco. Please state your company name.

Matthew Difrisco - Thomas Weisel Partners — Analyst

Still Thomas Weisel. Just trying to get our update I guess on your opinion and your priority for use of cash. I think you have said sometimes if the price is right you would get in the market and buy and crenel the stock has come back a little bit in today’s market. What are those levels and is are we close to those now for share repurchase?

Bert Vivian - PF Chang’s China Bistro — President

That’s a conversation that happens at the board level, and since you haven’t read anything from us, I would assume that there is no news to tell.

Matthew Difrisco - Thomas Weisel Partners — Analyst

Okay.

Bert Vivian - PF Chang’s China Bistro — President

You bet.

Operator

Our next question is from Bryan Elliott. Please state your company name.

Bryan Elliott - Raymond James — Analyst

Raymond James. A number of questions in case a made a calculation error, but that was meant for levity. Let me clarify one thing. I think, either you or Russell mentioned while the Minneapolis and North Carolina stores opened up at levels below plan, the build, sequential build has been in the 20% range which is consistent with history and with plan. Did I hear that correctly?

Russell Owens - PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

Yes, you did. It is still below level.

Bryan Elliott - Raymond James — Analyst

Which doesn’t close the gap relative to plan but would seem to indicate a normal type of trial and conversion of trial into usage, et cetera, would it not?

Russell Owens - PF Chang’s China Bistro — EVP, President Pei Wei’s China Diner

You’re correct, Brian.

Bryan Elliott - Raymond James — Analyst

All right. That’s all I have. Thank you.

Operator

At this time I show no further questions. I would now like the turn the call back to Mr. Robert Vivian.

Bert Vivian - PF Chang’s China Bistro — President

Thank you very much, ladies and gentlemen. We appreciate your interest in our company, and we will be talking to you again in just a few short months. Thank you.

Operator

This concludes today’s conference. You may disconnect at this time.