What was the total operating lease cost for Benihana as of December 31, 2022, in thousands of dollars?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
idated balance sheets.
As of December 31, 2022, the estimated deferred license revenue to be recognized in the future related to performance obligations that are unsatisfied as of December 31,2022 were as follows for each year ending (in thousands):
| 2023 | $ 78 |
|---|---|
| 2024 | 45 |
| 2025 | 44 |
| 2026 | 37 |
| 2027 | 34 |
| Thereafter | 59 |
| Total future estimated deferred license revenue | $ 297 |
Note 9 – Leases
The components of lease expense for the period were as follows (in thousands):
| December 31, 2022 | December 31, 2021 | ||
|---|---|---|---|
| Lea |
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the operating lease cost as of December 31, 2022, was $14,587. This figure represents the cost associated with leasing properties or equipment used in Benihana's operations, where the lease does not transfer ownership to Benihana by the end of the lease term.
For a prospective Benihana franchisee, understanding the operating lease costs is crucial because it reflects a significant ongoing expense. These costs can impact the profitability of the franchise, especially considering that restaurant locations are often leased rather than owned. The length of these leases, as indicated by the weighted average remaining lease term of 13 years for operating leases, suggests a long-term commitment that franchisees must consider.
Furthermore, the FDD also lists other lease-related costs, such as variable lease costs and short-term lease costs, which totaled $11,373 and $945 respectively as of December 31, 2022. These additional costs, along with the operating lease cost, contribute to the total lease cost of $26,989 for the same period. Franchisees should carefully evaluate all these lease-related expenses to assess the financial viability of their Benihana franchise.