Benihana Inc. Reports Results for Fiscal Second Quarter 2012

Seventh Consecutive Quarter of Company-Wide Comparable Sales Growth
Continued Momentum of Operational Strategy Results in Restaurant Segment Income from Operations Increase of 32% to $6.2 Million

MIAMI, Nov. 16, 2011 /PRNewswire via COMTEX/ -- Benihana Inc. (NASDAQ: BNHN; BNHNA), operator of the nation's largest chain of Japanese theme and sushi restaurants, today reported financial results for its twelve-week fiscal second quarter 2012, ended October 9, 2011.

Highlights for the fiscal second quarter 2012 relative to the year-ago quarter include:

  • Company-wide comparable restaurant sales increased 6.4%, led by the Benihana Teppanyaki concept, which reported 7.7% comparable restaurant sales growth;
  • Total revenues increased 5.6% to $76.2 million from $72.2 million, driven by restaurant sales growth;
  • Net income was $0.8 million, or $0.05 per diluted share, compared to a net loss of $3.3 million or $0.21 per diluted share;
  • Restaurant segment operating income increased 32% to $6.2 million from $4.7 million; and
  • As previously announced, the Company extended its fixed-price beef contract through December 2012.

Richard C. Stockinger, Chairman, President and Chief Executive Officer, said, "We are delighted to report another strong quarter, driven by continued sales momentum. We are particularly pleased that our strategy resulted in a consolidated comparable restaurant sales increase of 6.4% during the quarter, led by a 7.7% increase at our Benihana Teppanyaki restaurants. This represents a tremendous accomplishment in the current consumer environment. Our team's effective financial discipline is ensuring that robust sales results are translating into increased restaurant profitability, with a growth in income from operations of over 32% relative to the year-ago quarter."

Mr. Stockinger added, "We are also very pleased that our sales momentum has continued into the third quarter, as we recently announced a consolidated comparable sales increase of 7.4%, led by a 9.8% increase at our Benihana Teppanyaki restaurants, for the first four-week period of our twelve-week third quarter. Against this positive backdrop, having delivered twenty-two consecutive four-week periods of profitable sales growth, we are now well positioned to pursue new unit growth and are actively working to identify sites for the future development of Benihana and RA Sushi restaurants."

Fiscal Second Quarter 2012 Financial Results

Net income for the second quarter of fiscal 2012 was $0.8 million, or $0.05 per diluted share, compared to a net loss of $3.3 million, or $0.21 per diluted share, in the same quarter of the prior year. Restaurant segment income from operations increased 32.0% to $6.2 million for the second quarter of fiscal 2012 from $4.7 million in the same quarter of the prior year.

Excluding stock-based compensation expenses and certain non-recurring general and administrative expenses in both years, income from operations for the second quarter of fiscal 2012 was $2.0 million, compared to a loss from operations of $0.1 million in the same quarter of the prior year.

For the fiscal second quarter of 2012, total revenues increased 5.6% to $76.2 million from $72.2 million in the same prior year quarter, primarily driven by a 5.6% increase in total restaurant sales.

Company-wide comparable restaurant sales increased 6.4% during the quarter, including increases of 7.7% at Benihana Teppanyaki restaurants, 5.3% at RA Sushi, and 0.6% at Haru. This represented the seventh consecutive quarter of company-wide comparable sales increases. All eight Haru units suffered reduced operating hours or complete closure for one or more days due to the severe weather associated with Hurricane Irene. Comparable sales for Haru, excluding impacted days in both years, increased 2.0%. Benihana Teppanyaki and RA Sushi were not significantly impacted by the severe weather.

During the quarter, Benihana Teppanyaki represented approximately 67% of consolidated restaurant sales, while RA Sushi and Haru accounted for 24% and 9%, respectively. There were a total of 1,147 store-operating weeks in the fiscal second quarter of 2012 compared to 1,160 in the same prior year quarter.

Cost of food and beverage sales for the fiscal second quarter of 2012 totaled $19.2 million, or 25.3% of restaurant sales, compared to $17.5 million, or 24.4% of restaurant sales, in the fiscal second quarter of 2011. The increase as a percentage of restaurant sales resulted from escalating commodity costs that more than offset certain menu pricing increases and shallowing of discounts taken at the beginning of the current fiscal year.

Restaurant operating expenses for the fiscal second quarter of 2012 increased $1.3 million, but decreased 1.9% as a percentage of restaurant sales, compared to the same prior year period. The decrease as a percentage of restaurant sales was due to improved labor efficiencies, primarily related to overtime management, fixed cost leverage on higher sales volumes, and reduced depreciation (primarily due to certain prior year retirements), partially offset by increased occupancy costs.

General and administrative expenses for the fiscal second quarter of 2012 totaled $6.7 million, compared to $10.5 million for the same period in the prior year. The current year quarter included $0.7 million of non-recurring expenses related to the special shareholders' meetings and $0.4 million of stock-based compensation expenses. The prior year quarter included $3.9 million of non-recurring expenses consisting of: $1.4 million related to various financial and operational consulting agreements; $1.1 million of depreciation related to the transition away from the ERP system in connection with the outsourcing of our accounting and payroll functions; $0.9 million of costs incurred to respond to and ultimately settle the proxy contest in connection with our 2010 Annual Shareholders' Meeting; $0.3 million of costs incurred in conjunction with the execution of our accounting and payroll function outsourcing agreement; and $0.2 million for the write-off of abandoned projects. The prior year quarter also included $0.1 million of stock-based compensation expenses.

Recurring general and administrative expenses were $5.5 million for the fiscal second quarter of 2012, a decrease of $0.9 million or 1.6% when expressed as a percentage of total revenues, compared to the same prior year quarter.

Income from operations improved to $0.9 million for the fiscal second quarter of 2012 from a loss of $4.0 million for the same period in the prior year. Interest expense was slightly higher at $0.1 million for the current year quarter, compared to a credit of $0.1 million for the prior year quarter, as a result of the reversal of interest previously accrued in connection with certain litigation in which we subsequently prevailed.

The income tax benefit was $0.1 million for the fiscal second quarter of 2012 (an effective rate of negative 14.3%), compared to $0.9 million for the same period in the prior year (an effective rate of 22.7%). The effective rate is impacted by the amount of tax credits relative to taxable income.

Net income for the fiscal second quarter of 2012 was $0.8 million, or $0.05 per diluted share, compared to a net loss of $3.3 million, or $0.21 per diluted share, for the same period in the prior year. Additionally, net income reflected a 9.3% increase in the diluted share count in the current year period.

Net income for the seven periods comprising the first two fiscal quarters of 2012 was $2.4 million, or $0.15 per diluted share, compared to a net loss of $2.0 million, or $0.13 per diluted share, for the same period in the prior year.

Capital expenditures were $3.9 million for the first two fiscal quarters of 2012, compared to $3.5 million for the same period in the prior year. We expect full-year capital expenditures to be approximately $14.6 million as we complete the significant remodeling of certain units during the second half of the fiscal year.

Commodities Update

As previously announced, the Company has extended its fixed-price beef procurement contract through December 2012. Beef prices were previously locked in through April 2012, and the extension provides for slightly lower weighted-average pricing throughout the remaining contract period. The Company now has over 55% of its market basket of non-beverage commodities subject to fixed-price contract arrangements through at least April 2012, with beef being the single largest commodity exposure at approximately 22% of non-beverage food cost.

Fiscal Second Quarter 2012 Earnings Conference Call Details

The conference call will be hosted today, Wednesday, November 16, 2011, at 10:00 AM ET.

To listen to the call by phone, please dial 866-804-6928 within the U.S., or 857-350-1674 outside the U.S. When prompted, enter the participant passcode: 49139498.

The conference call will be webcast live through the Investor Relations page of the Company's website: www.benihana.com/about. A replay of the call will be available on the website through November 16, 2012.

About Benihana

Headquartered in Miami, Benihana Inc. (NASDAQ GS: BNHN, BNHNA) is the nation's leading operator of Japanese theme and sushi restaurants with 96 Company-owned restaurants nationwide, including 63 Benihana restaurants, 25 RA Sushi restaurants and eight Haru restaurants. In addition, 18 franchised Benihana restaurants are operating in the United States, Latin America and the Caribbean. To learn more about Benihana Inc. and its three restaurant concepts, please view the corporate video at www.benihana.com/about/video.

Safe Harbor Statement

Except for the historical matters contained herein, statements in this press release are forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements involve risks and uncertainties that may affect the business and prospects of Benihana, including, without limitation: risks related to Benihana's business strategy, including the Renewal Program and marketing programs; risks related to Benihana's ability to operate successfully in the current challenging economic environment; risks related to Benihana's efforts to strengthen its Benihana Teppanyaki concept and build its RA Sushi and Haru brands; and other risks and uncertainties that may cause results to differ materially from those set forth in the forward-looking statements. Past performance may not be indicative of future results. Although Benihana believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, there can be no assurance that its expectations will be realized. In addition to the risks and uncertainties set forth above, investors should consider the risks and uncertainties discussed in Benihana's filings with the Securities and Exchange Commission, including, without limitation, the risks and uncertainties discussed under the heading "Risk Factors" in such filings. Benihana does not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events.

Benihana Inc. and Subsidiaries

Comparable Sales by Concept

(In thousands)

 
 

Three Periods Ended

     
 

October 9,

 

October 10,

 

Percent

 
 

2011

 

2010

 

Change

 

Comparable restaurant sales by concept:

         

Teppanyaki

$ 50,378

 

$ 46,770

 

7.7%

 

RA Sushi

18,046

 

17,138

 

5.3%

 

Haru

7,203

 

7,162

 

0.6%

 

Total comparable restaurant sales

$ 75,627

 

$ 71,070

 

6.4%

 
             
             
             
 

Seven Periods Ended

     
 

October 9,

 

October 10,

 

Percentage

 
 

2011

 

2010

 

Change

 

Comparable restaurant sales by concept:

         

Teppanyaki

$ 121,087

 

$ 111,890

 

8.2%

 

RA Sushi

43,356

 

41,867

 

3.6%

 

Haru

17,146

 

17,301

 

-0.9%

 

Total restaurant sales

$ 181,589

 

$ 171,058

 

6.2%

 
             
           

Benihana Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings

(Unaudited)

(In thousands)

 
 

Three Periods Ended

 
 

October 9,

   

October 10,

   
 

2011

   

2010

   
             

Revenues:

           

Restaurant sales

$ 75,826

99.5%

 

$ 71,817

99.5%

 

Franchise fees and royalties

415

0.5%

 

373

0.5%

 

Total revenues

76,241

100.0%

 

72,190

100.0%

 
             
             

Restaurant Expenses:

           

Cost of food and beverage sales

19,177

25.2%

 

17,504

24.2%

 

Restaurant operating expenses

49,467

64.9%

 

48,190

66.8%

 

Restaurant opening costs

-

0.0%

 

-

0.0%

 

General and administrative expenses

6,689

8.8%

 

10,504

14.6%

 

Total operating expenses

75,333

98.8%

 

76,198

105.6%

 
             

Income (Loss) from operations

908

1.2%

 

(4,008)

-5.6%

 

Interest expense, net

96

0.1%

 

(124)

-0.2%

 
             

Income (Loss) before income taxes

812

1.1%

 

(3,884)

-5.4%

 

Income tax expense (benefit)

(116)

-0.2%

 

(882)

-1.2%

 
             

Net Income (Loss)

928

1.2%

 

(3,002)

-4.2%

 

Less: Accretion of preferred stock issuance costs and

           

preferred stock dividends

151

   

250

   
             

Net income (loss) attributable to common stockholders

$ 777

   

$ (3,252)

   
             

Earnings (Loss) Per Share

           

Basic earnings (loss) per common share

$ 0.05

   

$ (0.21)

   

Diluted earnings (loss) per common share

$ 0.05

   

$ (0.21)

   
             

Weighted Average Shares Outstanding

           

Basic

16,852

   

15,422

   

Diluted

16,882

   

15,422

   
             
           

Benihana Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings

(Unaudited)

(In thousands)

 
 

Seven Periods Ended

 
 

October 9,

   

October 10,

   
 

2011

   

2010

   
             

Revenues:

           

Restaurant sales

$ 181,789

99.5%

 

$ 172,044

99.5%

 

Franchise fees and royalties

996

0.5%

 

915

0.5%

 

Total revenues

182,785

100.0%

 

172,959

100.0%

 
             
             

Restaurant Expenses:

           

Cost of food and beverage sales

45,473

24.9%

 

42,099

24.3%

 

Restaurant operating expenses

116,185

63.6%

 

112,428

65.0%

 

Restaurant opening costs

-

0.0%

 

8

0.0%

 

General and administrative expenses

17,855

9.8%

 

19,901

11.5%

 

Total operating expenses

179,513

98.2%

 

174,436

100.9%

 
             

Income (Loss) from operations

3,272

1.8%

 

(1,477)

-0.9%

 

Interest expense, net

256

0.1%

 

273

0.2%

 
             

Income (Loss) before income taxes

3,016

1.7%

 

(1,750)

-1.0%

 

Income tax expense (benefit)

139

0.1%

 

(357)

-0.2%

 
             

Net Income (Loss)

2,877

1.6%

 

(1,393)

-0.8%

 

Less: Accretion of preferred stock issuance costs and

           

preferred stock dividends

440

   

583

   
             

Net income (loss) attributable to common stockholders

$ 2,437

   

$ (1,976)

   
             

Earnings (Loss) Per Share

           

Basic earnings (loss) per common share

$ 0.15

   

$ (0.13)

   

Diluted earnings (loss) per common share

$ 0.15

   

$ (0.13)

   
             

Weighted Average Shares Outstanding

           

Basic

16,550

   

15,451

   

Diluted

16,592

   

15,451

   
             
           

Benihana Inc. and Subsidiaries

Condensed Consolidated Balance Sheet Data

(Unaudited)

(In thousands)

 
 

October 9,

March 27,

 
 

2011

2011

 

Assets

     

Current Assets:

     

Cash and cash equivalents

$ 6,346

$ 4,038

 

Other current assets

12,736

11,133

 

Total current assets

19,082

15,171

 
       

Property and equipment, net

177,515

182,992

 

Goodwill

6,896

6,896

 

Deferred income tax asset, net and other long term assets

16,294

15,823

 

Total assets

$ 219,787

$ 220,882

 
       

Liabilities, Convertible Preferred Stock and Stockholders' Equity

     

Current Liabilities:

     

Other current liabilities

33,227

33,467

 

Total current liabilities

33,227

33,467

 
       

Borrowings under line of credit

-

5689

 

Long term liabilities

15,594

15,293

 

Total liabilities

48,821

54,449

 
       

Convertible preferred stock

-

19,710

 
       

Stockholders' Equity

     

Total stockholders' equity

170,966

146,723

 

Total liabilities, convertible preferred stock and stockholders' equity

$ 219,787

$ 220,882

 
       
     

Contact
Jeremy Fielding / Anntal Silver
Kekst and Company
(212) 521-4800

SOURCE Benihana Inc.

###

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