What were the reasons for the increase in Benihana's general and administrative costs from 2021 to 2022?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
ly due to product mix management, pricing and operational cost reduction initiatives partially offset by significant commodity price increases.
Owned restaurant operating expenses. Owned restaurant operating expenses increased $30.2 million, or 20.9%, to $174.7 million for 2022 from $144.5 million for 2021. Owned restaurant operating costs as a percentage of owned restaurant net revenue increased 340 basis points from 54.7% in 2021
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, general and administrative costs increased by $3.5 million, or 13.7%, from $25.6 million in 2021 to $29.1 million in 2022. This increase is attributed to several factors.
Firstly, Benihana made additional investments in anticipation of future growth. Secondly, the company experienced increased accounting and legal fees. These increases were partially offset by a decrease in performance-based variable compensation.
Despite the rise in general and administrative costs, these expenses remained at 9.2% of revenues for both 2022 and 2021, indicating that revenue growth kept pace with the increase in these costs. For a prospective franchisee, this suggests that while costs are increasing, they are doing so in line with revenue, which could be a positive sign of growth and investment in the brand.