What was the total amount of depreciation and amortization expenses for Benihana in 2020?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
net income to EBITDA and Adjusted EBITDA and for a reconciliation of operating income (loss) to Restaurant Operating Profit.
Results of Operations
The following table sets forth certain statements of operations data for the periods indicated (in thousands):
| For the year ended December 31, | ||||
|---|---|---|---|---|
| 2021 | 2020 | |||
| Revenues: | ||||
| Owned restaurant net revenue | $ | 264,404 | $ | 136,618 |
| Management, license and incentive fee revenue | 12,774 | 5,325 | ||
| Total revenues | 277,178 | 141,943 | ||
| Cost and expenses: | ||||
| Owned operating expenses: | ||||
| Owned restaurant cost of sales | 67,468 | 34,024 | ||
| Owned restaurant operating expenses | 144,529 | 87,042 | ||
| Total owned operating expenses | 211,997 | 121,066 | ||
| General and administrative (including stock-based compensation of $3,618 | ||||
| and $1,773 for the years ended December | 25,573 | 13,922 | ||
| 31, | ||||
| 2021 and 2020, respectively) | ||||
| Depreciation and amortization | 10,790 | 10,114 | ||
| COVID-19 related expenses | 5,821 | 5,492 | ||
| Transaction costs | 160 | 1,109 | ||
| Lease termination expenses | 1,912 | 3,315 | ||
| Agreement restructuring expenses | 503 | 452 | ||
| Pre-opening expenses | 1,037 | 178 | ||
| Other income, net | — | (11) | ||
| Total costs and expenses | 257,793 | 155,637 | ||
| Operating income (loss) | 19,385 | (13,694) | ||
| Other (income) expenses, net: | ||||
| Interest expense, net of interest income | 3,780 | 5,329 | ||
| Loss on early debt extinguishment | 600 | — | ||
| Gain on CARES Act Loan Forgiveness | (18,529) | — | ||
| Total other (income) expenses, net | (14,149) | 5,329 | ||
| Income (loss) before provision (benefit) for income taxes | 33,534 | (19,023) | ||
| Provis |
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the total depreciation and amortization expenses for the year ending December 31, 2020, amounted to $10.114 million. This figure encompasses the reduction in value of Benihana's tangible assets (depreciation) and intangible assets (amortization) over that period. These expenses are a reflection of the wear and tear on assets like buildings, equipment, and the usage of intangible assets such as trademarks or patents.
For a prospective Benihana franchisee, understanding depreciation and amortization is crucial for assessing the long-term financial health of the business. These non-cash expenses impact the net income and profitability of the franchise. While they don't represent immediate cash outlays, they reflect the consumption of assets that will eventually need replacement or renewal, which will require capital expenditure.
It's also important to note that the FDD mentions that depreciation and amortization related to property and equipment amounted to $9.2 million for the year ended December 31, 2020, in one section, while another section states the total depreciation and amortization was $10.114 million for the same period. This discrepancy could be due to the inclusion of other intangible assets or different accounting treatments in the consolidated financial statements. A potential franchisee should seek clarification from Benihana regarding this difference to gain a clearer understanding of the underlying accounting practices and the true cost of asset consumption.
Furthermore, the FDD indicates that computers, equipment, furniture, and fixtures are depreciated over their useful lives, ranging from three to fifteen years, while leasehold improvements are depreciated over the shorter of their estimated useful lives or the remaining term of the associated lease. Intangible assets like the "Kona Grill" trade name are amortized using the straight-line method over their estimated useful life of 10 years. Understanding these depreciation methods and timelines is essential for projecting future capital expenditure needs and managing the franchise's financial performance effectively.