Despite strong sales, Benihana's profits flatten

MIAMI Benihana Inc., operator or franchisor of 59 namesake teppanyaki restaurants and 20 other Japanese eateries, posted flat net income for its fourth quarter and fiscal year ended April 1, as strong sales were offset by higher labor, occupancy and remodeling costs.

For the company's fourth quarter, net income totaled $4.1 million, versus $3.9 million in the year-ago quarter. Per-share profit remained the same at 35 cents, as the fiscal 2007 quarter had about 2.7-percent more shares outstanding than a year earlier, the company reported.

For the full year, net income shifted down slightly to $14.5 million, compared with $14.6 million in fiscal 2006. Annual per-share profit for fiscal 2007 totaled $1.26, versus $1.35 a year ago, also affected by 7.9 percent more average shares outstanding than in the prior year, Benihana said.

The company's top line continued to buck the casual-dining segment's trend of lackluster results, with a total revenue gain of 17 percent to $71.6 million for the fourth quarter, and a gain of 11.1 percent to $271.1 million for the full year.

Systemwide same-store sales rose 5.7 percent, Benihana reported, reflecting gains of 4.7 percent at Benihana, 9.2 percent at RA Sushi and 9.1 percent at Haru. For the full year, systemwide same-store sales jumped 8.5 percent, including increases of 7.4 percent at Benihana, 13.3 percent at RA Sushi and 11 percent at Haru.

Benihana reported that net sales decreased $3.2 million during the fourth quarter because of temporary closures at certain locations undergoing remodeling. Benihana has undertaken a remodel program to update its older units, and through fiscal 2008 it plans to have completed 17 remodels on namesake teppanyaki units.

Beginning in fiscal 2008, the company said, it will no longer provide quarterly earnings expectations, but instead would provide guidance based on annualized targets. For fiscal 2008, Benihana said total restaurant sales would total between $300 million and $305 million. Capital expenditures would total about $60 million. Cost of sales and labor are expected to be slightly more favorable on an annualized basis compared to fiscal 2007, but because of additional infrastructure costs to support new unit development and a larger restaurant portfolio, general and administrative expenses are expected to be higher on an annualized basis compared to fiscal 2007.

The company also plans to open two Benihana restaurants, six RA Sushi units, and two Haru restaurants.