Benihana Inc. Reports Fiscal Second Quarter 2009 Results

MIAMI--(BUSINESS WIRE)--Benihana Inc. (NASDAQ: BNHNA; BNHN), operator of the nation's largest chain of Japanese theme and sushi restaurants, today reported results for its 12-week fiscal second quarter ended October 12, 2008.

Fiscal Second Quarter 2009 Results

For fiscal second quarter 2009, total revenues increased 4.5% to $70.0 million, compared with $67.0 million in fiscal second quarter 2008. Total restaurant sales increased 4.5% to $69.6 million from $66.6 million in the same quarter of the previous year. On a comparable basis, Company-wide comparable restaurant sales were (6.5%), including (5.1%) at Benihana teppanyaki, (11.4%) at RA Sushi, and (8.0%) at Haru. There were a total of 1,055 store-operating weeks in the second fiscal quarter of 2009 compared to 940 store-operating weeks in the second fiscal quarter of 2008.

"Restaurant sales were negatively impacted by several newsworthy events during the period, although we somewhat limited the associated margin impact through our focus on execution and tighter operational controls. While there is clearly no silver bullet in the face of an unprecedented falloff in consumer confidence, we do have several drivers in place that we believe will help move our business forward. These include our new 'Now That's Special' marketing campaign, which highlights the distinctiveness of the Benihana experience, our anticipation of a slightly more favorable commodity environment beginning in calendar 2009, our realization of greater productivity in the areas of labor and purchasing, and our streamlined corporate infrastructure. Ultimately, we are confident that we have set the right course of action for ourselves in the current environment and will emerge as an even stronger Company when the economy turns around," said Joel A. Schwartz, Chairman and Chief Executive Officer.

During the fiscal second quarter 2009, the Company opened a new RA Sushi restaurant in Chino Hills, CA and reopened a Benihana teppanyaki restaurant in Newport Beach, CA that had been under renovation. In addition, the Company completed the construction of a new Benihana teppanyaki restaurant in Dearborn, MI adjacent to the previous facility, which has since been torn down.

Restaurant operating profit for the fiscal second quarter 2009 was $9.0 million, or 12.9% of restaurant sales, compared to $10.3 million, or 15.4% of restaurant sales a year-ago.

Marketing, general and administrative expenses for the fiscal second quarter 2009 totaled $5.7 million, or 8.3% of restaurant sales, compared to $6.0 million, or 9.1% of restaurant sales in the same period last year. This resulted in income from operations of $3.4 million and $3.8 million, respectively.

Net income for the fiscal second quarter 2009 was $2.0 million, or $0.11 in diluted earnings per share, compared to $2.5 million, or $0.15 in diluted earnings per share in the same quarter last year.

Guidance

As a result of the Company's performance through the first half of the fiscal year, given the continued economic issues affecting consumer discretionary spending, the Company has updated its guidance for fiscal 2009 to the following:

  • Total restaurant sales of $303 million to $308 million, and 4,550 to 4,600 in total restaurant operating weeks (including the effect of 60 to 75 in gross operating weeks that are expected to be lost due to the Benihana teppanyaki renovation and revitalization program, which will be completed in the current fiscal year);

  • The opening of a total of eight restaurants, including four Benihana teppanyaki and four RA Sushi restaurants, of which three RA Sushi restaurants have opened so far. Three RA Sushi restaurants, which were previously scheduled to open during the current fiscal year, have been postponed until early fiscal 2010 due to landlord delays;

  • A total of approximately $0.4 million in accelerated depreciation costs, related to shortening the useful lives for those restaurants affected by the Company's remodeling efforts, which has already been incurred in the first half of the fiscal year;

  • Capital expenditures of approximately $47 million;

  • Additional utilization of the available line of credit, resulting in an outstanding balance of approximately $40 million by the end of fiscal 2009;

  • Diluted earnings per share ranging from $0.40 to $0.45. Diluted common shares outstanding are estimated to be approximately 15.3 million.


Mr. Schwartz continued, "We are doing everything we can to maintain shareholder value and our financial strength, but at the same time, need to reset our near-term expectations in the face of prevailing conditions. The state of our economy and near-term outlook on the consumer has underscored the importance of preserving capital and doing more with less. We are operating with this mindset and are doing everything in our power to manage our business with respect to both the credit markets and restaurant operating environment."

Modification of Senior Revolving Credit Facility

On November 19, 2008, the Company reached an agreement with Wachovia Bank, N.A which modified the terms of its senior revolving credit facility. Under the amended terms, the Company can borrow up to $60 million, provided that $10 million of such commitment is subject to the bank successfully syndicating a portion of the loan or the Company attaining a certain leverage ratio, while easing, for an interim period, the covenant ratios previously defined. Along with these changes, applicable interest rate margins have been redefined, as well. The Company continues to have sufficient capital available to execute its operating and development plans, along with the flexibility necessary in today's economic environment.

Mr. Schwartz concluded, "We believe we have reached an acceptable, mutually beneficial compromise with our lender, which will enable us to fund our business for the foreseeable future on more amenable terms."

Conference Call Today

The Company will hold a conference call to discuss its fiscal second quarter 2009 results today at 5:00 PM ET. The conference call can be accessed live over the phone by dialing 1-888-256-9132, or for international callers, 1-913-312-1455. A replay will be available one hour after the call through November 27, 2008 and can be accessed by dialing 1-888-203-1112, or for international callers, 1-719-457-0820; the conference ID is 4913343. The call will also be webcast live from the investor relations portion of the Company's website at www.benihana.com.

About Benihana

Benihana Inc. (Nasdaq: BNHNA - News) (Nasdaq: BNHN - News) operates 90 restaurants nationwide, including 60 Benihana teppanyaki restaurants, nine Haru sushi restaurants, and twenty-one RA Sushi Bar restaurants. Under development at present are fourteen restaurants -- eight Benihana teppanyaki restaurants and six RA Sushi restaurants. In addition, 19 franchised Benihana teppanyaki restaurants are operating in the U.S., Latin America and the Caribbean.

To learn more about the Company and its three Japanese theme and sushi restaurant concepts, please view the corporate video at www.benihana.com/about/video


Benihana Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
(Unaudited)

(in thousands except per share data)
Three Periods Ended
12-Oct-08 14-Oct-07 $Change %Change
Revenues
Restaurant sales $69,575 $66,586 $2,989 4.5%
Franchise fees and royalties 405 383 22 5.7%
Total revenues 69,980 66,969 3,011 4.5%

Costs and Expenses
Cost of food and beverage sales 16,899 15,663 1,236 7.9%
Restaurant operating expenses 43,720 40,668 3,052 7.5%
Restaurant opening costs 248 752 (504) -67.0%
Marketing, general and
administrative expenses 5,747 6,040 (293) -4.9%
Total operating expenses 66,614 63,123 3,491 5.5%

Income from operations 3,366 3,846 (480) -12.5%
Interest (expense) income, net (334) 86 (420) -488.4%

Income before income taxes 3,032 3,932 (900) -22.9%
Income tax provision 1,061 1,423 (362) -25.4%

Net income 1,971 2,509 (538) -21.4%
Less: accretion of issuance costs
and preferred stock dividends 251 250 1 0.4%

Net income attributable to
common stockholders $1,720 $2,259 $(539) -23.9%

Earnings Per Share
Basic earnings per common share $0.11 $0.15 $(0.04) 26.7%
Diluted earnings per common share $0.11 $0.15 $(0.04) 26.7%

Weighted Average Shares Outstanding
Basic 15,290 15,222 68 0.4%
Diluted 15,306 17,156 (1,850) -10.8%

Benihana Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
(Unaudited)

(in thousands except per share data)
Seven Periods Ended
12-Oct-08 14-Oct-07 $Change %Change
Revenues
Restaurant sales $163,500 $155,955 $7,545 4.8%
Franchise fees and royalties 940 949 (9) -0.9%
Total revenues 164,440 156,904 7,536 4.8%

Costs and Expenses
Cost of food and beverage sales 39,499 36,698 2,801 7.6%
Restaurant operating expenses 102,640 93,265 9,375 10.1%
Restaurant opening costs 983 1,461 (478) -32.7%
Marketing, general and
administrative expenses 14,523 15,066 (543) -3.6%
Total operating expenses 157,645 146,490 11,155 7.6%

Income from operations 6,795 10,414 (3,619) -34.8%
Interest (expense) income, net (390) 111 (501) -451.4%

Income before income taxes 6,405 10,525 (4,120) -39.1%
Income tax provision 2,242 3,810 (1,568) -41.2%

Net income 4,163 6,715 (2,552) -38.0%
Less: accretion of issuance costs
and preferred stock dividends 585 584 1 0.2%

Net income attributable to
common stockholders $3,578 $6,131 $(2,553) -41.6%

Earnings Per Share
Basic earnings per common share $0.23 $0.41 $(0.18) 43.9%
Diluted earnings per common share $0.23 $0.39 $(0.16) 41.0%

Weighted Average Shares Outstanding
Basic 15,284 15,103 181 1.2%
Diluted 15,342 17,095 (1,753) -10.3%

Benihana Inc. and Subsidiaries
Sales by Concept
(Unaudited)

(in thousands)
Three Periods Ended
12-Oct-08 14-Oct-07 $Change %Change
Total restaurant sales by concept:
Benihana $46,413 $48,971 $(2,558) -5.2%
Haru 8,742 7,509 1,233 16.4%
RA Sushi 14,420 10,106 4,314 42.7%
Total restaurant sales $69,575 $66,586 $2,989 4.5%


Comparable restaurant sales by concept:
Benihana $44,251 $46,651 $(2,400) -5.1%
Haru 6,907 7,509 (602) -8.0%
RA Sushi 8,885 10,028 (1,143) -11.4%
Total comparable restaurant sales $60,043 $64,188 $(4,145) -6.5%

Benihana Inc. and Subsidiaries
Sales by Concept
(Unaudited)

(in thousands)
Seven Periods Ended
12-Oct-08 14-Oct-07 $Change %Change

Total restaurant sales by concept:
Benihana $110,646 $114,485 $(3,839) -3.4%
Haru 20,631 17,914 2,717 15.2%
RA Sushi 32,223 23,556 8,667 36.8%
Total restaurant sales $163,500 $155,955 $7,545 4.8%


Comparable restaurant sales by concept:
Benihana $101,812 $106,245 $(4,433) -4.2%
Haru 16,514 17,914 (1,400) -7.8%
RA Sushi 21,116 23,478 (2,362) -10.1%
Total comparable restaurant sales $139,442 $147,637 $(8,195) -5.6%

Benihana Inc. and Subsidiaries
Restaurant Operating Profit
(Unaudited)

(in thousands)
Three Periods Ended
12-Oct-08 14-Oct-07 $Change %Change
Restaurant sales $69,575 $66,586 $2,989 4.5%
Cost of food & beverage sales 16,899 15,663 1,236 7.9%
Gross profit 52,676 50,923 1,753 3.4%

Restaurant operating expenses:
Labor and related costs 24,039 22,922 1,117 4.9%
Restaurant supplies 1,684 1,501 183 12.2%
Credit card discounts 1,343 1,274 69 5.4%
Utilities 2,472 1,945 527 27.1%
Occupancy costs 4,412 3,899 513 13.2%
Depreciation and amortization 4,020 3,837 183 4.8%
Other restaurant operating expenses 5,750 5,290 460 8.7%
Total restaurant operating expenses 43,720 40,668 3,052 7.5%

Restaurant operating profit $8,956 $10,255 $(1,299) -12.7%

Benihana Inc. and Subsidiaries
Restaurant Operating Profit
(Unaudited)

(in thousands)
Seven Periods Ended
12-Oct-08 14-Oct-07 $Change %Change

Restaurant sales $163,500 $155,955 $7,545 4.8%
Cost of food & beverage sales 39,499 36,698 2,801 7.6%
Gross profit 124,001 119,257 4,744 4.0%

Restaurant operating expenses:
Labor and related costs 57,645 52,787 4,858 9.2%
Restaurant supplies 3,979 3,537 442 12.5%
Credit card discounts 3,138 2,927 211 7.2%
Utilities 5,199 4,192 1,007 24.0%
Occupancy costs 10,223 9,360 863 9.2%
Depreciation and amortization 9,601 8,738 863 9.9%
Other restaurant operating expenses 12,855 11,724 1,131 9.6%
Total restaurant operating expenses 102,640 93,265 9,375 10.1%

Restaurant operating profit $21,361 $25,992 $(4,631) -17.8%


Benihana Inc. and Subsidiaries
Restaurant Operating Margins
(Unaudited)

Three Periods Ended
12-Oct-08 14-Oct-07

Restaurant sales 100.00% 100.00%
Cost of food and beverage sales 24.29% 23.52%
Gross profit margin 75.71% 76.48%

Restaurant operating expenses:
Labor and related costs 34.55% 34.42%
Restaurant supplies 2.42% 2.25%
Credit card discounts 1.93% 1.91%
Utilities 3.55% 2.92%
Occupancy costs 6.34% 5.86%
Depreciation and amortization 5.78% 5.76%
Other restaurant operating expenses 8.26% 7.94%
Total restaurant operating expenses 62.84% 61.08%

Restaurant operating profit margin 12.87% 15.40%

Benihana Inc. and Subsidiaries
Restaurant Operating Margins
(Unaudited)

Seven Periods Ended
12-Oct-08 14-Oct-07

Restaurant sales 100.00% 100.00%
Cost of food and beverage sales 24.16% 23.53%
Gross profit margin 75.84% 76.47%

Restaurant operating expenses:
Labor and related costs 35.26% 33.85%
Restaurant supplies 2.43% 2.27%
Credit card discounts 1.92% 1.88%
Utilities 3.18% 2.69%
Occupancy costs 6.25% 6.00%
Depreciation and amortization 5.87% 5.60%
Other restaurant operating expenses 7.86% 7.52%
Total restaurant operating expenses 62.78% 59.80%

Restaurant operating profit margin 13.06% 16.67%

Benihana Inc. and Subsidiaries
Balance Sheet Data
(Unaudited)

(in thousands)
12-Oct-08 30-Mar-08
Assets
Cash and cash equivalents $1,636 $1,718
Other current assets 15,110 17,897
Total current assets 16,746 19,615

Property and equipment, net 203,491 184,176
Goodwill 29,900 29,900
Other assets 9,585 7,963
$259,722 $241,654

Liabilities and Stockholders' Equity
Other current liabilities $38,322 $35,102
Total current liabilities 38,322 35,102

Long-term debt--bank 27,382 17,422
Other liabilities 12,922 12,065
Total liabilities 78,626 64,589

Convertible preferred stock 19,495 19,449
Total stockholders' equity 161,601 157,616
$259,722 $241,654

###

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