For Benihana's STK restaurants, what revenue is excluded from the Same Store Sales (SSS) calculation?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
Same Store Sales ("SSS"). SSS represents total food and beverage sales at domestic owned and managed restaurants opened for at least a full 18-month period at the beginning of each quarter, which removes the impact of new restaurant openings in comparing the operations of existing restaurants. For STK SSS, this measure includes total revenue from our owned and managed domestic STK locations, excluding revenues from our owned STK restaurant located in the W Hotel in Los Angeles, California due to the impact of the F&B hospitality management agreement with the hotel. Revenues from locations where we do not directly control the event sales force are excluded from this measure. We have presented four-year comparable sales to illustrate how sales at our restaurant base before the COVID-19 pandemic compare to sales post COVID-19 restrictions.
Our comparable restaurant base for STK SSS consisted of twelve domestic restaurants for the year ended December 31, 2023. For Kona Grill SSS, 24 domestic restaurants are included in the comparable restaurant base. STK and Kona Grill SSS decreased 3.0% and 2.2%, respectively for 2023 compared to the prior year. On a four-year basis, STK SSS increased 64.1% while Kona Grill SSS increased 23.6%.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the Same Store Sales (SSS) calculation for STK restaurants excludes specific revenue streams to provide a more accurate comparison of existing restaurant performance. The SSS calculation includes total revenue from owned and managed STK locations. However, revenue from the STK restaurant located in the W Hotel in Los Angeles, California, is excluded due to the impact of the F&B hospitality management agreement with the hotel. Additionally, revenues from locations where Benihana does not directly control the event sales force are also excluded from the SSS calculation.
This exclusion is significant for prospective franchisees because it provides a clearer picture of the performance of STK restaurants under typical operating conditions. By removing the impact of the W Hotel location's unique management agreement and locations where Benihana lacks direct control over event sales, the SSS metric reflects the performance of restaurants operating under the standard Benihana model. This allows franchisees to better assess the potential revenue they might expect from a standard STK restaurant.
The FDD indicates that the comparable restaurant base for STK SSS consisted of twelve domestic restaurants for the year ended December 31, 2023. Understanding what is included and excluded from the SSS calculation is crucial for evaluating the financial performance metrics presented by Benihana. Franchisees should pay close attention to these exclusions when reviewing the financial performance representations to ensure they are making informed decisions based on comparable operational models.
In summary, the exclusion of revenue from the W Hotel location and locations without direct control of the event sales force in the STK SSS calculation aims to provide a more standardized and representative measure of same-store sales performance for potential Benihana franchisees.