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TWST: Tell us how you view the health of the restaurant industry today and the outlook for the fundamentals over the next six months.

Mr. Hickok: Industry fundamentals have not been this positive in about 10 years, to the best of my recollection. We are particularly confident about the earnings prospects and stability of the group, and we have been very bullish about the price appreciation potential for these stocks for a while. We made comments at the very end of February, which we wanted to project to the Street about this point. Our caveat was that we might be early and that we needed the technology sector to soften, but our message was very simple.
The irony was that in spite of very strong fundamentals, the valuations had never been lower. Our conclusion was that if there was any softening in the technology sector, the restaurant sector was going to be a solid place to put money, and at minimum, a defensive place to invest. We are not prescient, but as it turns out, just about two or three weeks later we had the softening of tech that we needed. And since mid-March, the restaurant sector has significantly outperformed the market. The macro environment has never been as favorable as it is right now. We expect to have very solid, if not spectacular earnings coming out of the segment defining restaurant companies in the fourth quarter and in the first quarter.

TWST: Why has P.F. Chang’s (Nasdaq:PFCB) been so successful?

Mr. Hickok: For the same reasons, really, that the rest are. They have a very good concept in an underserved market, run by a very experienced and professional management team that understands how to deliver a very positive customer experience.

TWST: And what’s the growth plan there?

Mr. Hickok: The growth plan for P.F. Chang’s is to open about 13 to 15 units per year.

TWST: Is that reasonable in your mind?

Mr. Hickok: Absolutely. They’ve done a great job of managing expansion so far. They get a great look at prime real estate because it’s an attractive and distinctive concept, especially for new development, but it works well in old developments too. The landlord community is a small community when you get right down to it, and landlords like to have distinctive concepts. They like to have a The Cheesecake Factory (Nasdaq:CAKE) as a tenant. They like to have P.F. Chang’s. They like to have BUCA (Nasdaq:BUCA). These concepts add value to their projects.

TWST: What should investors do with P.F. Chang's at the current price? Is this a stock to buy today?

Mr. Hickok: Can you buy P.F. Chang's today? Of course you can. You should recognize, however, that after a stock has run a great deal, it seems prudent that you may have a little longer time horizon in order to realize an acceptable return.