What was the weighted average discount rate for Benihana's operating leases as of December 31, 2022?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
to performance obligations that are unsatisfied as of December 31, 2023 were as follows for each year ending (in thousands):
| 2024 | $ 44 |
|---|---|
| 2025 | 44 |
| 2026 | 37 |
| 2027 | 34 |
| 2028 | 34 |
(2) Deferred gift card revenue and advance party deposits on goods and services yet to be provided are included in deferred gift card revenue and other on the consolidated balance sheets.
(3) Konavore rewards program is included in accrued expenses on the consolidated balance sheets.
Total future estimated deferred license revenue $ 218
F-18
Note 8 – Leases
The components of lease expense for the period were as follows
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the weighted average discount rate for operating leases as of December 31, 2022, was 8.40%. This rate reflects the average interest rate used to discount the future lease payments back to their present value for operating leases.
For a prospective Benihana franchisee, understanding the discount rate is crucial because it affects how the lease liabilities are valued on the balance sheet. A higher discount rate would result in a lower present value of lease liabilities, while a lower rate would increase the present value. This valuation impacts the franchisee's financial statements and key financial ratios.
The FDD also provides the weighted average remaining lease term for operating leases, which was 13 years as of December 31, 2022. This information, combined with the discount rate, gives a more complete picture of Benihana's lease obligations and their financial impact. Franchisees should consider these factors when evaluating the overall financial health and lease commitments of the business.