Benihana Inc. Reports Fiscal Fourth Quarter & Full Year 2010 Results

Benihana Inc. (NASDAQ: BNHNA)(NASDAQ: BNHN), operator of the nation’s largest chain of Japanese theme and sushi restaurants, today reported results for its 12-week fiscal fourth quarter and full year ended March 28, 2010.

“We are pleased with the financial performance of our RA Sushi and Haru brands as we continue to enjoy comparable restaurant sales improvement and effective management of operating costs.”

• Total restaurant sales increased 5.2% to $77.4 million
• Comparable restaurant sales increased by 1.4%, the first quarter all three concepts (Benihana-branded teppanyaki, RA Sushi and Haru) had positive comparable sales since the fiscal second quarter of 2008
• Income from operations of $2.9 million compared to $1.7 million
• Net income of $1.4 million, or $0.09 in diluted earnings per share, compared to net income of $0.9 million, or $0.06 in diluted earnings per share

• Total restaurant sales increased 2.6% to $311.8 million, the eighteenth consecutive year with a total sales increase
• Income from operations (excluding impairment charges) of $4.6 million compared to $11.6 million in 2009
• Reduced total FY year-end borrowings under the line of credit to $22.4 million from $33.4 million
• Opened one new Benihana teppanyaki restaurant in Orlando, FL
• Closed two Benihana teppanyaki restaurants in Washington, DC and Tucson, AZ
• Opened three new RA Sushi restaurants in Atlanta, GA; Leawood, KS and Houston, TX

Richard C. Stockinger, Chief Executive Officer, said, “We are encouraged with recent trends as reflected in our financial results in the fourth quarter, which included positive Company-wide comparable restaurant sales, effective cost management and earnings growth. We attribute our recent performance in part to improved economic conditions and, the measurable success we have experienced to date with our Renewal Program. The Renewal Program is focused on the Benihana-branded teppanyaki restaurants and includes improving the Benihana teppanyaki guest experience as it relates to value, image, quality, consistency and Japanese culture.

Key elements of the Program include; improvements in the quality of food and beverage without increasing entrée prices, improving service standards, retraining all restaurant personnel, addressing deferred maintenance issues, and implementing a comprehensive purchasing program.

The Renewal Program is intended to have Benihana restaurants stand out and succeed in an environment that remains very competitive and we believe it will continue to provide benefits to our business out into the future as the economy continues to improve and consumer spending increases.”

Mr. Stockinger continued, “As part of our Renewal Program, we have launched several new marketing initiatives, including our Chef’s Table and Kabuki Kids Programs, to create greater awareness for our flagship concept and strengthen guest connectivity. The Chef’s Table is currently comprised of approximately 1,000,000 email addresses and is being utilized for value-based promotions and building brand loyalty, while Kabuki Kids has approximately 100,000 participants and addresses this very important constituency, as children are often the prime drivers in bringing families to Benihana.”

Mr. Stockinger commented, “We are pleased with the financial performance of our RA Sushi and Haru brands as we continue to enjoy comparable restaurant sales improvement and effective management of operating costs.”

Mr. Stockinger concluded, “While successful four-wall execution at existing locations and increasing operating efficiencies will always be our top priorities, we have also made significant progress in reducing our outstanding borrowings under the line of credit as of year-end by more than $11 million. As a result of our increased financial flexibility, we have begun preparations for new restaurant development and are also beginning to evaluate potential complementary acquisitions to our existing portfolio of Japanese theme and sushi restaurants.

Fiscal Fourth Quarter 2010 Results

For fiscal fourth quarter of 2010, total revenues increased 5.1% to $77.8 million, compared to $74.0 million in fiscal fourth quarter of 2009. Total restaurant sales increased 5.2% to $77.4 million in the fourth fiscal quarter of 2010 from $73.6 million in the fourth fiscal quarter of 2009.

On a comparable basis, Company-wide comparable restaurant sales increased 1.4%, including 1.0% at Benihana teppanyaki, 2.1% at RA Sushi, and 2.4% at Haru. This is the first time same store sales have increased since the fiscal second quarter of 2008. During the period, Benihana teppanyaki represented approximately 66% of consolidated restaurant sales, while RA Sushi and Haru accounted for 24% and 10% of consolidated restaurant sales, respectively.

Income from operations for the fiscal fourth quarter of 2010 was $2.9 million, compared to $1.7 million a year-ago.

Cost of food and beverage sales for the fiscal fourth quarter of 2010 totaled $18.8 million, or 24.1% of sales compared to $17.1 million or 23.2% of sales in the same period last year. The increase in cost as a percentage of sales is primarily due to the improving the quality of food offerings associated with implementation of the Renewal Program.

Restaurant operating expenses for the fiscal fourth quarter of 2010 totaled $47.7 million, or 61.3% of sales compared to $45.0 million, or 60.9% of sales in the same period last year. The increase in cost as a percentage of sales is primarily due to expenses associated with implementation of the Renewal Program.

Marketing, general and administrative expenses for the fiscal fourth quarter of 2010 totaled $8.5 million, or 10.9% of sales, compared to $9.7 million, or 13.1% of sales in the same period last year. During the fiscal fourth quarter of 2010, the Company incurred one-time expenses for professional fees, legal fees and severance costs totaling $1.3 million. Also, the Company reduced its marketing expenses, as participation in the Chef’s Table and Kabuki Kids programs expanded and the success of the Company’s Dinner-for-Two promotions was realized. During the fiscal fourth quarter of 2009, the Company incurred a one-time expense of $3.2 million related to the resignation of the former CEO.

Net income for the fiscal fourth quarter of 2010 was $1.4 million, or $0.09 in diluted earnings per share, compared to net income of $0.9 million, or $0.06 in diluted earnings per share in the same quarter last year.

Full Year 2010 Results

Total revenues for the 52-week fiscal year 2010 increased 2.6% to $313.5 million, compared to $305.6 million in the 52-week fiscal year 2009.

For fiscal year 2010, Company-wide comparable restaurant sales decreased (5.8%), including (7.9%) at Benihana teppanyaki, 2.6% at RA Sushi, and (8.3%) at Haru. Benihana teppanyaki represented approximately 67% of consolidated restaurant sales, while RA Sushi and Haru accounted for 22% and 11% of consolidated restaurant sales, respectively.

Income from operations, excluding impairment charges, for the fiscal year 2010 was $4.6 million, compared to $11.6 million a year-ago.

Net loss for the fiscal year 2010 was $8.9 million, or $0.65 in diluted earnings per share, compared to net loss of $6.2 million, or $0.40 in diluted earnings per share in 2009.

About Benihana

Benihana Inc. (NASDAQ: BNHNA; BNHN) operates 97 restaurants nationwide, including 63 Benihana teppanyaki restaurants, nine Haru sushi restaurants, and 25 RA Sushi Bar restaurants. In addition, 22 franchised Benihana teppanyaki restaurants are operating in the U.S., Latin America and the Caribbean.

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