What are some of the factors that Benihana identifies as potentially adversely affecting the cost and time associated with the development and construction of their restaurants?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
Our success in growing our business through the opening of new restaurants and F&B hospitality locations is dependent upon a number of factors, including our ability to: cost-effectively operate in markets that we are not familiar with, find suitable license and food and beverage partners, find suitable locations, reach acceptable lease terms, have adequate capital, find acceptable contractors, obtain licenses and permits, manage construction and development costs, recruit and train appropriate staff and properly manage the new venue. Unanticipated costs or delays in the development or construction of future restaurants could impede our ability to open new restaurants timely and cost-effectively, which could have a negative impact on our business, financial condition and results of operations. Specifically, some of the factors that adversely affect the cost and time associated with the development and construction of our restaurants include: labor disputes, shortages of materials or skilled labor, adverse weather conditions, unforeseen engineering problems, environmental problems, construction or zoning problems, local government regulations, modifications in design, and other unanticipated increases in cost.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, several factors could negatively impact the cost and time required to develop and construct a Benihana restaurant. These factors range from logistical and environmental issues to regulatory and economic concerns.
Specifically, Benihana identifies potential issues such as labor disputes, which can halt or slow down construction progress. Shortages of necessary materials or skilled labor can also drive up costs and extend timelines. Adverse weather conditions, unforeseen engineering problems, and environmental issues can further complicate the construction process, leading to delays and increased expenses. Construction or zoning problems and local government regulations can also pose significant hurdles, requiring modifications to the original design and additional costs to ensure compliance.
Modifications in design, potentially due to changing regulations or unforeseen site conditions, can also add to the overall cost and time. Finally, Benihana acknowledges that other unanticipated increases in cost, which are not specifically enumerated, can arise during the development and construction phases. These factors highlight the inherent risks and uncertainties involved in opening a new restaurant location, emphasizing the importance of thorough due diligence and careful planning for prospective franchisees.