What were the lease termination expenses for Benihana in 2021?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
spitality, | | | | | Inc. | | |
(1) These expenses are being shown as a percentage of owned restaurant net revenue.
The following table presents a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA for the periods indicated (in thousands):
| For the year ended December 31, | ||||
|---|---|---|---|---|
| 2021 | 2020 | |||
| Net income (loss) attributable to The ONE Group Hospitality, Inc. | $ | 31,348 | $ | (12,825) |
| Net income (loss) attributable to noncontrolling interest | 600 | (798) | ||
| Net income (loss) | 31,948 | (13,623) | ||
| Interest expense, net of interest income | 3,780 | 5,329 | ||
| Provision (benefit) for income taxes | 1,586 | (5,400) | ||
| Depreciation and amortization | 10,790 | 10,114 | ||
| EBITDA | 48,104 | (3,580) | ||
| COVID-19 related expenses | 5,821 | 5,492 | ||
| Transaction costs (1) | 160 | 1,109 | ||
| Stock-based compensation | 3,618 | 1,773 | ||
| Lease termination expense (2) | 1,912 | 3,315 | ||
| Agreement restructuring expense | 503 | 452 | ||
| Pre-opening expenses | 1,037 | 178 | ||
| Non-cash rent (3) | (32) | 300 | ||
| Gain on CARES Act L |
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, lease termination expenses for 2021 were $1.912 million. These expenses are defined as costs linked to closed, abandoned, or disputed locations, as well as disputed leases.
For a prospective Benihana franchisee, this figure indicates the potential financial impact of closing or abandoning a location. Lease termination expenses can arise from various circumstances, such as underperforming locations, disputes with landlords, or strategic decisions to exit certain markets. These costs can include penalties for early lease termination, legal fees, and expenses related to vacating and restoring the premises.
It's important to note that lease termination expenses can vary significantly depending on the specific terms of the lease agreement, the reasons for termination, and the negotiations with the landlord. Franchisees should carefully review their lease agreements and understand the potential financial implications of early termination. Understanding these potential costs is crucial for franchisees to assess the financial risks associated with operating a Benihana franchise and to make informed decisions about location selection and lease negotiations.