How were pre-opening costs handled for Benihana company-owned restaurants?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
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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, pre-opening costs for company-owned restaurants are expensed as incurred before the restaurant opens for business. In 2023, these costs totaled $8.9 million, and in 2022, they were $5.5 million.
These pre-opening expenses include manager salaries and relocation costs, employee payroll, training costs for new employees, and lease costs incurred before opening. The actual amount can vary significantly depending on factors such as the proximity of existing restaurants, rent during construction and training, the size and layout of the location, staffing needs, the difficulty of hiring, travel and lodging costs, the timing of the opening, and any unexpected delays in obtaining licenses and permits.
For prospective Benihana franchisees, this information highlights the importance of carefully budgeting for pre-opening expenses. While franchisees will operate independently, understanding how Benihana manages these costs in its company-owned locations can provide a benchmark for their own financial planning. The variability in these costs also underscores the need for a detailed and location-specific assessment during the initial planning phase.