What contributed to the increase in Benihana's depreciation and amortization expense in 2022?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
o 58.1% for 2022 primarily due to higher average wage and operating costs.
General and administrative. General and administrative costs increased $3.5 million, or 13.7% to $29.1 million for 2022 from $25.6 million for 2021. The increase was attributable to additional investments required ahead of
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, depreciation and amortization expenses increased in 2022. Specifically, these expenses rose by $1.3 million, reaching $12.1 million, compared to $10.8 million in 2021. This increase is primarily attributed to the opening of two owned STK restaurants during the second half of 2022, as well as capital expenditures aimed at enhancing the guest experience.
For a prospective Benihana franchisee, this information highlights the impact of new restaurant openings and ongoing investments on the company's financial statements. The opening of new locations typically requires significant capital investment, which then leads to increased depreciation and amortization expenses as these assets are used over time. This suggests that Benihana is actively investing in its brand and infrastructure, which could be a positive sign for future growth and profitability.
It's important to note that these expenses are non-cash charges, meaning they don't directly impact Benihana's cash flow. However, they do reduce the company's reported net income. Franchisees should consider these factors when evaluating Benihana's financial performance and potential return on investment. Understanding the drivers behind depreciation and amortization expenses can provide valuable insights into the company's growth strategy and capital management practices.