What costs are included in Benihana's pre-opening expenses for owned or managed STK restaurants?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
ciation and amortization.* Depreciation and amortization expense consists principally of charges related to the depreciation of fixed assets including leasehold improvements, equipment and furniture and fixtures and the amortization of the intangible assets related to the Kona Grill tradename.
Pre-opening expenses. Pre-opening expenses consist of costs incurred prior to opening an owned or managed STK restaurant at either a leased or F&B location. Pre-opening expenses are comprised principally of manager salaries and relocation costs, employee payroll, training costs for new employees and lease costs incurred prior to opening. Pre-opening expenses have varied from location to location depending on a number of factors, including the proximity of our existing restaurants; the amount of rent expensed during the construction and in-restaurant training periods; the size and physical layout of each location; the number of management and hourly employees required to operate each restaurant; the relative difficulty of the restaurant staffing process;
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, pre-opening expenses for owned or managed STK restaurants consist primarily of several key costs. These include manager salaries and any associated relocation costs necessary to get the management team in place. Employee payroll is also a significant component, covering the wages of the staff hired to operate the restaurant. Training costs for new employees are included to ensure that the staff is properly prepared to deliver the Benihana experience. Finally, lease costs incurred prior to the restaurant's opening are factored into these pre-opening expenses. These expenses apply to STK restaurants located in leased spaces or F&B locations.
These pre-opening expenses can vary significantly from one location to another. Factors influencing these costs include the proximity of the new restaurant to existing Benihana locations, which can affect logistical and management support needs. The amount of rent expensed during the construction and in-restaurant training periods also plays a role, as longer construction times or extended training periods can increase these costs. The size and physical layout of the restaurant impact staffing and preparation needs, while the number of management and hourly employees required to operate the restaurant directly affects payroll expenses. The difficulty of the restaurant staffing process, which can vary depending on the local labor market, also influences costs.
Additional factors that contribute to the variability of pre-opening expenses include the cost of travel and lodging for employees and trainers, which can differ based on the metropolitan area. The timing of the restaurant opening can also affect expenses, as seasonal factors or promotional opportunities may require adjustments to staffing and marketing efforts. Unexpected delays in obtaining necessary licenses and permits can further increase costs, as these delays can prolong the pre-opening phase and lead to additional expenses. These considerations are important for prospective franchisees to understand, as they highlight the potential for significant variation in the initial investment required to open a Benihana restaurant.