What was the depreciation and amortization expense for Benihana in 2020?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
Depreciation and amortization related to property and equipment amounted to $9.9 million and $9.2 million for the years ended December 31, 2021 and 2020, respectively.
Intangible assets consist of the "Kona Grill" trade name and other finite-lived intangible assets that are amortized using the straight-line method over their estimated useful life of 10 to 20 years. As of December 31, 2021 and 2020, the gross carrying amount of the tradename intangible was $17.4 million. As of December 31, 2021 and 2020 the gross carrying amount of the other finite-lived intangible assets were $0.1 million and $0 million, respectively. The accumulated amortization of the tradename was $2.0 million and $1.1 million as of December 31, 2021 and 2020, respectively, and the amortization expense was $0.9 million for each of the years ending December 31, 2021 and 2020.
Depreciation and amortization expense increased $0.7 million to $10.8 million for 2021 from $10.1 million for 2020. The increase was primarily related to the opening of an owned STK restaurant in July 2021 and capital expenditures to expand seating capacity and other initiatives to enhance the guest experience.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the depreciation and amortization related to property and equipment was $9.2 million for the year ended December 31, 2020. This figure represents the expense recognized for the wear and tear of Benihana's physical assets, such as buildings, equipment, and furniture, over that year. Depreciation and amortization are accounting methods used to allocate the cost of these assets over their useful lives.
In addition to property and equipment, Benihana also amortizes intangible assets like the Kona Grill trade name. The amortization expense for the Kona Grill trade name was $0.9 million for the year ending December 31, 2020. This expense reflects the systematic reduction in the carrying value of the intangible asset over its useful life, which is estimated to be 10 to 20 years.
Overall, the total depreciation and amortization expense for Benihana in 2020, including both property/equipment and intangible assets, was higher. The FDD states that depreciation and amortization expense increased to $10.8 million for 2021 from $10.1 million for 2020. This increase was primarily related to the opening of an owned STK restaurant in July 2021 and capital expenditures to expand seating capacity and other initiatives to enhance the guest experience. Franchisees should consider these expenses when evaluating the overall financial performance and profitability of a Benihana franchise.