What are the reportable operating segments that Benihana uses to evaluate its business?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
The Company has identified its reportable operating segments as follows:
- STK. The STK segment consists of the results of operations from STK restaurant locations, competing in the full-service dining industry, as well as management, license and incentive fee revenue generated from the STK brand and pre-opening expenses associated with new restaurants.
- Kona Grill. The Kona Grill segment includes the results of operations of Kona Grill restaurant locations and pre-opening expenses associated with new restaurants.
- ONE Hospitality. The ONE Hospitality segment is composed of the management, license and incentive fee revenue and results of operations generated from the Company's other brands and venue concepts, not including STK or Kona Grill, which include Bao Yum, Heliot, Hideout, Radio and Rivershore Bar & Grill. Additionally, this segment includes the results of operations generated from F&B hospitality management agreements with hotels, casinos and other high-end locations.
- Corporate. The Corporate segment consists of the following: general and administrative costs, stock-based compensation, lease termination expenses, transaction costs, COVID-19 related expenses and other income and expenses. This segment also includes STK Meat Market, an ecommerce platform that offers signature steak cuts nationwide, and revenue generated from gift card programs. The Corporate segment's total assets primarily include cash and cash equivalents, the Kona Grill tradename, and deferred tax assets.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the company uses four reportable operating segments to evaluate its business. These segments provide a breakdown of the company's diverse operations, allowing for a more detailed analysis of financial performance.
The first segment is STK, which includes the results of operations from STK restaurant locations. This segment also accounts for management, license, and incentive fee revenue generated from the STK brand, as well as pre-opening expenses for new STK restaurants. The second segment is Kona Grill, which focuses on the results of operations from Kona Grill restaurant locations, including pre-opening expenses for new restaurants.
The third segment is ONE Hospitality, which includes revenue and results from other brands and venue concepts, excluding STK and Kona Grill. These brands include Bao Yum, Heliot, Hideout, Radio, and Rivershore Bar & Grill. This segment also incorporates revenue from food and beverage hospitality management agreements with hotels, casinos, and other high-end locations. The fourth segment is Corporate, which covers general and administrative costs, stock-based compensation, lease termination expenses, transaction costs, COVID-19 related expenses, and other income and expenses. This segment also includes STK Meat Market, an e-commerce platform, and revenue from gift card programs.
Understanding these segments is crucial for prospective franchisees as it provides insight into how Benihana assesses the performance of its various business units. This information can help franchisees understand the financial drivers of the company and how their individual franchise might contribute to the overall performance of a specific segment.