As more restaurant chains strive to position their brands on grocery store shelves, sales of P.F. Chang’s China Bistro Inc. frozen retail items climbed 117 percent to $14.5 million in September, according to an analyst.
That jump was seen in the four-week period ended Oct. 3 compared with the prior four weeks, said John Glass, a securities analyst with Morgan Stanley, citing figures from Information Resources Inc. IRI tracks scanner data on consumer retail packaged goods.
“This brings total scanner sales for [the third quarter at P.F. Chang's] to $28.5 million versus $13 million in [the second quarter] and suggests annualized retail sales of more than $110 million, depending on how much initial trial converts into repeat purchase,” Glass said.
Glass said any reasons for the surge were unclear, and also noted that IRI data does not capture sales from retail behemoth Walmart.
“Prior to its launch in April,” Glass noted, “we had originally forecasted the [P.F. Chang’s Global Brands] frozen business could reach $100 million in sales within three years, but this data suggests it should already eclipse that threshold on its current run rate.”
This past spring, P.F. Chang’s, which owns the casual-dining namesake brand and the fast-casual Pei Wei Asian Diner, joined such other casual operators as California Pizza Kitchen, The Cheesecake Factory, Hooters, Margaritaville, Phillip’s Seafood, Uno Chicago Grill, Romano’s Macaroni Grill, T.G.I. Friday’s and Tony Roma’s in providing a retail-shelf option.
Grocery shelves also have seen a growing number of fast-casual and treats items from such companies as Boston Market, Carvel, Friendly’s and Panera Bread.
California Pizza Kitchen’s line of frozen pizzas, now produced through Nestlé, has earned the company tens of millions of dollars in licensing revenues. Sold at 22,000 U.S. groceries, CPK’s frozen items generated $159.8 million in sales for 2009, which in turn created $7.7 million in fees for the gourmet pizza chain.
The consumers’ appetites for prepared and ready-to-eat meals from groceries are expected to grow from the current $13 billion a year, according to a recent Marketwatch.com report. Market research firm Packaged Facts expects that figure to rise by more than 7 percent in 2010 as consumers continue to watch spending and do more dining in their homes.
Glass foresees packaged goods giving a boost to P.F. Chang’s bottom line even more so next year. “The royalties for frozen food should increase significantly as retail sales growth continues,” he said, “and the royalty rate automatically escalates next year.”
Contact Ron Ruggless at [email protected].