What was the amount of stock-based compensation included in general and administrative expenses for Benihana in 2023?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
| | | |
| Interest expense, net of interest income | 2.1% | 0.7% | | | Total other expenses, net | 2.1% | 0.7% | | | Income before provision for income taxes | 0.7% | 4.5% | | | (Benefit) provision for income taxes | (0.5)% | 0.3% | | | Net income | 1.2% | 4.2% | | | Less: net loss attributable to noncontrolling interest | (0.2)% | (0.1)% | | | Net income attributable to The ONE Group Hospitality, | 1.4% | 4.3% | | | Inc. | | | |
(1) These expenses are being shown as a percentage of owned restaurant net revenue.
The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods indicated (in thousands):
| For the year ended December 31, | ||||
|---|---|---|---|---|
| 2023 | 2022 | |||
| Net income attributable to The ONE Group Hospitality, | $ | 4,718 | $ | 13,534 |
| Inc. | ||||
| Net loss attributable to noncontrolling interest | (692) | (215) | ||
| Net income | 4,026 | 13,319 | ||
| Interest expense, net of interest income | 7,028 |
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the total stock-based compensation cost included in general and administrative expenses for 2023 was $5.032 million. This figure is part of the broader general and administrative costs, which also include items like salaries, rent, and utilities. Stock-based compensation represents the cost allocated to stock options and similar equity grants provided to employees and executives.
For a prospective Benihana franchisee, understanding stock-based compensation is important because it reflects part of the overall overhead and operating expenses of the company. While franchisees are not directly involved in these compensation decisions, they contribute to the revenue that supports these expenses. Monitoring these costs can provide insight into the financial management and profitability of Benihana.
The FDD also provides a comparison to the previous year, 2022, when stock-based compensation was $3.985 million. This increase from 2022 to 2023 could be due to various factors, such as new equity grants, vesting of existing grants, or changes in the company's stock price. The FDD further breaks down the stock-based compensation, noting that $0.5 million in 2023 was for unrestricted stock granted to directors, compared to $0.3 million in 2022. Additionally, $0.7 million in 2023 was attributed to market condition-based restricted stock units, compared to $0.2 million in 2022.
This level of detail in the FDD helps potential franchisees assess the financial health and management practices of Benihana. While stock-based compensation is a non-cash expense, it reflects the company's commitment to incentivizing its employees and executives, which can indirectly impact the performance and success of the franchise system.