What was the primary reason for the decrease in Benihana's management and license fee revenues in 2023?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
| STK | Kona Grill | ONE Hospitality | Corporate | Total | |
|---|---|---|---|---|---|
| For the year ended December 31, 2023 | |||||
| Total revenues | $ 198,679 | $ 131,716 | $ 1,999 | $ 375 | $ 332,769 |
| Operating income (loss) | 38,890 | 2,189 | 187 | (31,972) | 9,294 |
| Capital asset additions | $ 28,426 | $ 21,450 | $ 123 | $ 3,551 | $ 53,550 |
| As of December 31, 2023 | |||||
| Total assets | $ 153,769 | $ 97,840 | $ 5,868 | $ 59,768 | $ 317,245 |
| For the year ended December 31, 2022 | STK | Kona Grill | ONE Hospitality | Corporate | Total |
| Total revenues | $ 187,402 | $ 126,341 | $ 2,344 | $ 551 | $ 316,638 |
| Operating income (loss) | 40,343 | 7,217 | 1,282 | (32,536) | 16,306 |
| Capital asset additions | $ 19,116 | $ 10,496 | $ 139 | $ 2,878 | $ 32,629 |
| As of December 31, 2022 | |||||
Results of Operations for the Years Ended December 31, 2023 and December 31, 2022
Revenues
Owned restaurant net revenue. Owned restaurant net revenue increased $16
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the primary reason for the decrease in management and license fee revenues in 2023 was the non-renewal of a specific management agreement. The document states that management and license fee revenues decreased by $0.4 million, or 2.4%, from $15.8 million in 2022 to $15.4 million in 2023.
This decrease is significant for prospective franchisees as it highlights the potential volatility in revenue streams tied to management and licensing agreements. The non-renewal of a single agreement can have a noticeable impact on overall revenue, suggesting that these agreements may be subject to change or termination.
For a potential Benihana franchisee, this indicates the importance of understanding the terms and stability of any management or licensing agreements that contribute to the franchise's revenue. It would be prudent to inquire about the typical duration and renewal rates of such agreements, as well as any factors that could lead to their termination. Understanding these dynamics can help a franchisee better assess the financial risks and opportunities associated with the franchise.