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P.F. Chang’s Thinks China Has Big Appetite for Its ‘American Bistros’

Diners eat at a P. F. Chang`s Bistro in the U.S. in January 2007. Photo: IC
Diners eat at a P. F. Chang`s Bistro in the U.S. in January 2007. Photo: IC

After serving U.S. diners for over two decades, Asian-themed restaurant chain P.F. Chang’s has opened its first location in the country that inspired its dishes.

The first Chinese store has been open in Shanghai for roughly two weeks. P.F. Chang’s CEO Michael Osanloo told Caixin on Friday that 70% of the diners were locals and 10% were expatriates.

The Shanghai restaurant is marketing itself as an “American Bistro,” while in the U.S. it has been sold as a “China Bistro.”

In order to appeal to Chinese consumers’ tastes, the company has introduced new offerings such as its own version of Peking duck, as well as an interactive menu through which customers can watch videos of dishes being cooked by scanning a QR code.

P.F. Chang’s is likely to open another four or five restaurants in Shanghai over the next two years, and will consider entering other major Chinese cities such as Beijing and Guangzhou, Osanloo said.

As a previously Nasdaq-listed company that was privatized in 2012, Osanloo said it would be “very reasonable” for P.F. Chang’s to return to the stock market in the next couple of years.

Caixin spoke with Osanloo by telephone about the cultural differences between the American and Chinese markets and the company’s future plans. The following are excerpts from the interview.

Caixin: How long did it take P.F. Chang’s to actually decide to go to Shanghai?

Osanloo: We have been looking at potentially going into China for at least two years. We’ve spent a lot of time talking to Chinese consumers and other guests in Asia to think about how we would position the brand. We studied it for a while. We found a great partner, Autogrill, and Shanghai is one of the most cosmopolitan cities in the world.

How are Chinese customers different?

In the United States and most of the world, we will position with the “farm to wok” philosophy, which means everything we cook is made to order and from scratch. But in China, basically, everything is made from fresh, so the thing that they love the most is the fact that we are an American bistro. We use very high quality ingredients, no MSG, no gluten, and we have American-style portions.

But there are some flavor profiles that are really more universal than people realized. Interestingly, the top two dishes (in the Shanghai eatery) — Chang’s chicken and lettuce wraps — are also the top two dishes in America. It is a little surprising to me, but we’ll see how it goes for a longer term.

How has the Shanghai restaurant been doing so far?

The guests that came are interesting, because probably 70% are locals, 20% tourists and 10% expats. It has slowed down a little bit but we are not concerned about that. We were the first restaurant to open in a new mall that isn’t officially open.

On the Dianping website, China’s version of Yelp where people can rate and review restaurants, P.F. Chang’s got an 8 out of 10 for food, 8.9 for the environment and 8.7 for service. How do you like the rating?

I am not familiar at all with the ratings on that website. I don’t know how to compare them. I think honestly those scores are pretty good for a brand-new restaurant. Normally when you open a brand-new restaurant, you always have some troubles because people are learning a lot of new things. In the States when we open new restaurants, basically it takes six to eight weeks to really get good at what we are doing.

Have you met any troubles when operating the China store?

We buy a lot of ingredients from China, and have them shipped to the U.S. There are some ingredients that we couldn’t get the same quality in China. The Chinese suppliers only export their products so that they can make more money. We had to actually go to some exporters and get the products on their way out of the country to get back into Shanghai.

Did the company employ local Chinese chefs or relocate your staff?

We found across our system 14 team members who speak either Mandarin or Cantonese and have some Chinese ancestry. We sent them to Shanghai and they are still there and have been training the local people.

Will the chain explore more locations in China and other places around the world?

Our current partner has exclusive rights within Shanghai. But I think one day we might be bigger in China than the United States. I’d like to probably get to five or six in Shanghai in the next two years, but the first step is to make sure this restaurant in Shanghai is as good as it can be.

At the appropriate time, we will expand to other cities. I think our list would be the top 10 cities that everybody else will be looking at, Beijing, Guangzhou… The top 10 cities in China have a consumer base of more than 150 million people, a really great market.

This year, we are building in Pakistan, Germany and Japan.

P.F. Chang’s was once listed on the Nasdaq and was privatized in 2012. Is there a chance that the company will return to the stock market?

There is always a chance. Our partners have owned the company for almost six years. I think it is very reasonable to think about an exit for the private equity firms in the next couple of years.

Contact reporter Coco Feng (renkefeng@caixin.com)

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