What was the total amount of COVID-19 related costs incurred by Benihana in 2021?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
under dispute with landlords.
Agreement restructuring. Agreement restructuring expense for both 2021 and 2020 was $0.5 million, related to the restructuring of agreements with our management and license partners. We do not expe
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the company incurred significant costs related to the COVID-19 pandemic. In 2021, Benihana's COVID-19 related expenses totaled $5.8 million. These costs primarily covered sanitation, supplies, and safety precautions implemented to prevent the spread of the virus.
For a prospective franchisee, this figure highlights the potential financial impact of unforeseen events like pandemics. While the worst of the COVID-19 pandemic may be over, the FDD indicates that health concerns arising from outbreaks of other diseases or regional/global health pandemics could severely affect Benihana's business. Franchisees should consider the potential for similar disruptions and the associated costs when evaluating the financial viability of a Benihana franchise.
It's important to note that these costs are in addition to other expenses such as general and administrative costs, depreciation and amortization, lease termination expenses, agreement restructuring, and pre-opening expenses. Understanding the breakdown of these expenses can help a franchisee better prepare for potential financial challenges and develop strategies to mitigate their impact. The FDD also states that Benihana has made operational changes to adhere to government requirements on safety and sanitation in its restaurants. However, Benihana cannot guarantee that these changes will be effective in keeping employees and customers safe from COVID-19.