What was the operating income (loss) for Benihana in 2020?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
| 2021 2020 Revenues: Owned restaurant net revenue 95.4 % 96.2 % Management, license and incentive fee revenue 4.6 % 3.8 % Total revenues 100.0 % 100.0 % Cost and expenses: Owned operating expenses: Owned restaurant cost of sales (1) 25.5 % 24.9 % Owned restaurant operating expenses (1) 54.7 % 63.7 % Total owned operating expenses (1) 80.2 % 88.6 % General and administrative (including stock-based compensation of 1.3% and 1.2% for the years ended December 31, 2021 and 2020, respectively) 9.2 % 9.8 % Depreciation and amortization 3.9 % 7.1 % COVID-19 related expenses 2.1 % 3.9 % Transaction costs 0.1 % 0.8 % Lease termination expenses 0.7 % 2.3 % Agreement restructuring expenses 0.2 % 0.3 % Pre-opening expenses 0.4 % 0.1 % Other income, net —% —% Total costs and expenses 93.0 % 109.6 % Operating income (loss) 7.0 % (9.6)% Other (income) expenses, net: Interest expense, net of interest income 1.4 % 3.8 % Loss on early debt extinguishment 0.2 % —% Gain on CARES Act Loan Forgiveness (6.7)% —% Total other (income) expenses, net (5.1)% 3.8 % Income (loss) before provision (benefit) for income taxes 12.1 % (13.4)% Provision (benefit) for income taxes 0.6 % (3.8)% Net income (loss) 11.5 % (9.6)% Less: net income (loss) attributable to noncontrolling interest 0.2 % (0.6)% 11.3 % (9.0)% | For the year ended December 31, |
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Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the operating income (loss) for the year ended December 31, 2020, was (9.6)%. This indicates that Benihana's operating expenses exceeded its revenues, resulting in an operating loss.
Specifically, Benihana's total revenues are represented as 100.0%, while total costs and expenses amounted to 109.6% in 2020. This difference led to the operating loss of (9.6)%. Factors contributing to this loss included owned restaurant cost of sales at 24.9%, owned restaurant operating expenses at 63.7%, general and administrative expenses at 9.8%, depreciation and amortization at 7.1%, and COVID-19 related expenses at 3.9%.
For a prospective franchisee, this historical operating loss highlights the potential financial challenges Benihana faced during that period, particularly due to the impact of COVID-19. While the 2021 figures show a recovery with an operating income of 7.0%, it's important to consider the factors that influenced the 2020 loss and how Benihana has adapted its operations to mitigate similar risks in the future. Understanding these financial dynamics is crucial for assessing the potential profitability and stability of a Benihana franchise.