What potential impact could COVID-19 have on Benihana's business going forward?
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
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 has had and is expected to continue to have a significant effect on restaurant traffic, business, financial condition, and results of operations. Benihana restaurants were subject to government-mandated operating restrictions, including temporary shutdowns of in-person dining in 2020. Although all venues have reopened, the document states that operations are expected to 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.
Benihana has made operational changes to adhere to government requirements on safety and sanitation in its restaurants. However, there is no guarantee that these changes will be effective in keeping employees and customers safe from COVID-19. The document indicates that COVID-19 may impact the willingness of customers to dine outside of the home. While it is not possible to estimate the full impact that COVID-19 could have on the business going forward, 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.
Costs associated with mitigating the impact of COVID-19 are significant. For example, another restaurant group, The ONE Group Hospitality, Inc., incurred COVID-19 related expenses of $5.8 million and $5.5 million for 2021 and 2020, respectively, composed primarily of sanitation, supplies, and safety precautions taken to prevent the spread of COVID-19. Health concerns arising from outbreaks of flu viruses or other diseases, or regional or global health pandemics, could severely affect Benihana's business. These factors could affect a franchisee's revenue and profits.