Does Benihana guarantee that its operational policy and training changes will protect employees and customers from COVID-19?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
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 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.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, while Benihana has made operational changes to adhere to government requirements for safety and sanitation in its restaurants, it cannot guarantee that these changes will completely protect employees and customers from COVID-19. The FDD acknowledges that the COVID-19 pandemic has had a significant effect on Benihana's restaurant traffic, business, financial condition, and results of operations. The document also states that the continued spread of the virus and the measures taken by governments or by Benihana in response could adversely impact the business, financial condition, and results of operations.
This lack of guarantee highlights the unpredictable nature of the pandemic and its potential impact on Benihana's operations. Prospective franchisees should understand that despite the safety measures implemented, there is still a risk of COVID-19 affecting their business. This could include reduced customer willingness to dine out, potential staff shortages due to illness, and further operational disruptions caused by government regulations or company policies implemented in response to the pandemic.
The FDD also mentions that health concerns arising from outbreaks of flu viruses or other diseases, or regional or global health pandemics, could severely affect Benihana's business. The company incurred COVID-19 related costs of $2.5 million and $5.8 million in 2022 and 2021, respectively. These costs primarily covered sanitation, supplies, and safety precautions taken to prevent the spread of COVID-19.
Given this information, prospective franchisees should carefully consider the potential financial and operational risks associated with the ongoing pandemic and other health-related concerns. It would be prudent to discuss with Benihana what specific support and resources they provide to franchisees in managing these risks and adapting to changing circumstances.