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Restaurant Industry News
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Wednesday January 7th, 2009 |
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Benihana Inc. Reports Fiscal Second Quarter 2009 Results
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For fiscal second quarter 2009, total revenues increased 4.5% to $70.0 million, compared with $67.0 million in fiscal second quarter 2008. |
Fiscal Second Quarter 2009 Results
For fiscal second quarter 2009, total revenues increased 4.5% to $70.0 million, compared with $67.0 million in fiscal second quarter 2008. Total restaurant sales increased 4.5% to $69.6 million from $66.6 million in the same quarter of the previous year. On a comparable basis, Company-wide comparable restaurant sales were (6.5%), including (5.1%) at Benihana teppanyaki, (11.4%) at RA Sushi, and (8.0%) at Haru. There were a total of 1,055 store-operating weeks in the second fiscal quarter of 2009 compared to 940 store-operating weeks in the second fiscal quarter of 2008.
'Restaurant sales were negatively impacted by several newsworthy events during the period, although we somewhat limited the associated margin impact through our focus on execution and tighter operational controls. While there is clearly no silver bullet in the face of an unprecedented falloff in consumer confidence, we do have several drivers in place that we believe will help move our business forward. These include our new 'Now That's Special' marketing campaign, which highlights the distinctiveness of the Benihana experience, our anticipation of a slightly more favorable commodity environment beginning in calendar 2009, our realization of greater productivity in the areas of labor and purchasing, and our streamlined corporate infrastructure. Ultimately, we are confident that we have set the right course of action for ourselves in the current environment and will emerge as an even stronger Company when the economy turns around,' said Joel A. Schwartz, Chairman and Chief Executive Officer.
During the fiscal second quarter 2009, the Company opened a new RA Sushi restaurant in Chino Hills, CA and reopened a Benihana teppanyaki restaurant in Newport Beach, CA that had been under renovation. In addition, the Company completed the construction of a new Benihana teppanyaki restaurant in Dearborn, MI adjacent to the previous facility, which has since been torn down.
Restaurant operating profit for the fiscal second quarter 2009 was $9.0 million, or 12.9% of restaurant sales, compared to $10.3 million, or 15.4% of restaurant sales a year-ago.
Marketing, general and administrative expenses for the fiscal second quarter 2009 totaled $5.7 million, or 8.3% of restaurant sales, compared to $6.0 million, or 9.1% of restaurant sales in the same period last year. This resulted in income from operations of $3.4 million and $3.8 million, respectively.
Net income for the fiscal second quarter 2009 was $2.0 million, or $0.11 in diluted earnings per share, compared to $2.5 million, or $0.15 in diluted earnings per share in the same quarter last year.
Guidance
As a result of the Company's performance through the first half of the fiscal year, given the continued economic issues affecting consumer discretionary spending, the Company has updated its guidance for fiscal 2009 to the following:
Total restaurant sales of $303 million to $308 million, and 4,550 to 4,600 in total restaurant operating weeks (including the effect of 60 to 75 in gross operating weeks that are expected to be lost due to the Benihana teppanyaki renovation and revitalization program, which will be completed in the current fiscal year),
The opening of a total of eight restaurants, including four Benihana teppanyaki and four RA Sushi restaurants, of which three RA Sushi restaurants have opened so far. Three RA Sushi restaurants, which were previously scheduled to open during the current fiscal year, have been postponed until early fiscal 2010 due to landlord delays,
A total of approximately $0.4 million in accelerated depreciation costs, related to shortening the useful lives for those restaurants affected by the Company's remodeling efforts, which has already been incurred in the first half of the fiscal year,
Capital expenditures of approximately $47 million,
Additional utilization of the available line of credit, resulting in an outstanding balance of approximately $40 million by the end of fiscal 2009,
Diluted earnings per share ranging from $0.40 to $0.45. Diluted common shares outstanding are estimated to be approximately 15.3 million.
Mr. Schwartz continued, 'We are doing everything we can to maintain shareholder value and our financial strength, but at the same time, need to reset our near-term expectations in the face of prevailing conditions. The state of our economy and near-term outlook on the consumer has underscored the importance of preserving capital and doing more with less. We are operating with this mindset and are doing everything in our power to manage our business with respect to both the credit markets and restaurant operating environment.'
Modification of Senior Revolving Credit Facility
On November 19, 2008, the Company reached an agreement with Wachovia Bank, N.A which modified the terms of its senior revolving credit facility. Under the amended terms, the Company can borrow up to $60 million, provided that $10 million of such commitment is subject to the bank successfully syndicating a portion of the loan or the Company attaining a certain leverage ratio, while easing, for an interim period, the covenant ratios previously defined. Along with these changes, applicable interest rate margins have been redefined, as well. The Company continues to have sufficient capital available to execute its operating and development plans, along with the flexibility necessary in today's economic environment.
Mr. Schwartz concluded, 'We believe we have reached an acceptable, mutually beneficial compromise with our lender, which will enable us to fund our business for the foreseeable future on more amenable terms.'
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