What actions might jurisdictions take that could adversely affect Benihana restaurants during a health crisis?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
The United States and other countries have experienced, or may experience in the future, outbreaks of viruses, such as coronavirus, norovirus, Avian Flu or "SARS," H1N1 or "swine flu," or other diseases such as bovine spongiform encephalopathy, commonly known as "mad cow disease." If a virus is transmitted by human contact, our employees or customers may become infected, or may choose, or be advised, to avoid gathering in public places, any of which may adversely affect the guest traffic at our restaurants and the ability to adequately staff our restaurants, receive deliveries on a timely basis or perform functions at the corporate level. We also may be adversely affected if jurisdictions in which we have restaurants impose mandatory closures, seek voluntary closures or impose restrictions on operations. Even if such measures are not implemented and a virus or other disease does not spread significantly, the perceived risk of infection or significant health risk may adversely affect our business.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, health crises can significantly impact the restaurant's operations. During outbreaks of viruses or diseases, jurisdictions where Benihana restaurants are located may take actions that could adversely affect the business. These actions include imposing mandatory closures, seeking voluntary closures, or placing restrictions on restaurant operations.
These measures can directly impact Benihana's ability to operate normally. Mandatory closures would force restaurants to cease operations entirely, resulting in a complete loss of revenue during that period. Voluntary closures, while not legally required, could be strongly encouraged by local authorities, potentially leading to similar revenue losses if Benihana chooses to comply. Restrictions on operations, such as limiting the number of customers allowed in the restaurant or imposing strict sanitation protocols, could reduce guest traffic and increase operating costs.
Even if jurisdictions do not implement mandatory measures, the perceived risk of infection or significant health risk associated with a virus or disease outbreak can still adversely affect Benihana's business. Customers may choose to avoid gathering in public places, leading to a decline in guest traffic. Additionally, the ability to adequately staff restaurants and receive timely deliveries could be compromised if employees become infected or are advised to stay home. These factors highlight the potential for health crises to disrupt Benihana's operations and financial performance, regardless of whether government-mandated measures are in place.