What is Benihana's expectation regarding the continued impact of COVID-19 on its operations?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
e identified as material but may not be the only risks and uncertainties facing us. Our business is subject to general risks and uncertainties that affect many other companies, including overall economic and industry conditions.
Health and Safety
The COVID-19 pandemic has had, and is expected to continue to have, a significant effect on our restaurant traffic and our business, financial condition and results of operations.
The COVID-19 pandemic has significantly affected on our business and results. Restaurants we own and manage have been subject to significant government-mandated operating restrictions, including temporarily shut down of all in-person dining in 2020. Restrictions eased in late 2020 and through 2021. Although all of our venues have reopened, we expect that our operations will continue to be affected by COVID-19, and those effects may be exacerbated by resurgences and the spread of variants of the coronavirus. It remains difficult to predict the full impact of the COVID-19 pandemic on the broader economy and how consumer behavior may change, and whether such change is temporary or permanent.
We have made operational changes to adhere to government requirements on safety and sanitation in our restaurants. However, we cannot guarantee that changes to our operational policies and training will be effective to keep our employees and customers safe from COVID-19. COVID-19 may impact the willingness of customers to dine outside of the home. While it is not possible at this time to estimate the full impact that COVID-19 could have on our business going forward, the continued spread of the virus and the measures taken by governments or by us in response could adversely impact our business, financial condition and results of operations.
Costs associated with mitigating the impact of COVID-19 are significant and will continue in the future.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the COVID-19 pandemic is expected to continue having a significant adverse effect on its operations and financial results. Benihana has taken steps to adapt its business, including increasing sanitation and safety precautions, to ensure a safe environment for guests and employees. The company incurred COVID-19 related expenses of $5.8 million in 2021 and $5.5 million in 2020.
Benihana's ability to maintain normal dining operations is subject to events beyond its control, such as the effectiveness of governmental efforts to halt the spread of COVID-19. The document indicates that all restaurants are currently open for in-person dining. However, Benihana cannot guarantee that its operational changes and training will be effective in keeping employees and customers safe from COVID-19, and the willingness of customers to dine outside of the home may be impacted.
For a prospective franchisee, this means that the effects of the pandemic, including potential resurgences and variants, could continue to affect restaurant traffic and financial performance. Franchisees should be prepared for ongoing costs associated with sanitation, safety measures, and potential operational restrictions. It is important to stay informed about governmental efforts and public health guidelines, as these factors can significantly impact Benihana's business and the franchisee's operations.