What is the estimated range for real estate improvements (excluding purchase of real estate) for a Benihana franchise?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
| TYPE OF EXPENDITURE | AMOUNT | METHOD OF PAYMENT | WHEN DUE | TO WHOM PAYMENT IS TO BE MADE |
|---|---|---|---|---|
| Initial Franchise Fee | $40,000 | Lump Sum | At signing of franchise agreement | Us |
| Travel and Living Expenses while Training | $25,000 to $100,000 | As incurred | During Training | Airlines, hotels, and restaurants |
| Real Estate Improvements (Excluding Purchase Real Estate) | $2,500,000 to $4,500,000 (Note 1) | (Note 1) | (Note 1) | (Note 1) |
| Equipment, Furniture & Fixtures | $500,000 to $700,000 (Note 2) | Lump Sum | Prior to Opening | Vendors |
| Opening Inventory | $40,000 to $60,000 (Note 3) | Lump Sum | Prior to Opening | Vendors |
| Liquor License | $200 to $300,000 (Note 4) | Lump Sum | Prior to Opening | State Liquor Authority and/or owner of License |
| Insurance | $50,000 (Note 5) | Lump Sum | Prior to Opening | Insurance carrier |
| Additional Funds | $250,000 to $500,000 (Note 6) | As Incurred | As Incurred | Employees, utilities, suppliers |
| TOTAL MINIMUM | $3,405,200 to $6,250,000 (Note 7) |
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 21–28)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the estimated cost for real estate improvements, excluding the purchase of real estate, ranges from $2,500,000 to $4,500,000 for a typical freestanding restaurant building. This estimate covers the design and construction expenses. The document also notes that the cost of purchasing the real estate itself is separate and can range from $1,400,000 to $2,000,000.
For a Concession Model Benihana Restaurant, which is typically located in a retail shopping or entertainment district, the real estate and improvements costs range from $176,000 to $415,000. These costs include architectural plans, permits, and construction or buildout expenses required to adapt the premises for use as a Benihana Restaurant. The FDD notes that Benihana has limited experience with the Concession Model, and the cost estimates are based on limited information.
Prospective franchisees should note that these figures exclude the cost of purchasing the real estate. If leasing, the costs will depend on the lease terms, and rent can vary significantly based on location. Landlords may require a fixed base rent plus a percentage of gross sales, typically between 5% and 8%. The costs for improvements can also vary based on the age, condition, and former use of the premises. It is important for potential franchisees to conduct thorough market research and consult with business advisors to develop a detailed business plan and financial projections before investing in a Benihana franchise.