Benihana Inc. (BNHN) reported earnings of 10 cents per share in first quarter 2012, which missed the Zacks Consensus Estimate of 14 cents, but were 25% higher than the year-ago quarter earnings of 8 cents.
However, the leading operator of Japanese restaurants in the U.S posted a 5.7% year-over-year increase in total revenue to $106.5 million. Total revenue benefited from improved comparable restaurant sales at both Benihana Teppanyaki and RA Sushi restaurants.
Quarter Performance
The comparable restaurant sales jumped 6.0%, riding on higher same-store sales at Benihana Teppanyaki restaurants (up 8.6%). The upside in comps was attributable to higher guest count arising from the Benihana Teppanyaki Renewal Program. Moreover, same-store sales also improved 2.4% at RA Sushi restaurants, attributable to higher traffic.
However, due to construction scaffolding outside two Haru restaurants, same-store sales plummeted 1.9% at Haru.
The Miami-based Japanese restaurant company drives 99.5% of its revenues from restaurant sales and 0.5% from franchisee fees and royalty. Restaurant sales increased 5.7% to $106.0 million in the reported quarter, while franchisee fees and royalty sales were up 7.2% year over year to $0.6 million.
Cost of food and beverage sales spiked 30 basis points (bps) year over year to 24.7% due to higher food cost. General and administrative expenses expanded 120 bps to 10.5%. However, restaurant operating expenses fell 110 bps to 62.6%, due to improved cost and labor management.
Operating income during the quarter was $2.4 million versus $2.5 million in the year-ago quarter. Operating margin contracted 30 bps to 2.2%.
Financial Position
As of July 17, 2011, Benihana had cash and cash equivalents of $4.0 million compared with $2.6 million as of March 28, 2010. At the end of the reported quarter, total current assets were $16.9 million and stockholders' equity was $157.4 million.
Our Take
The company has been successful in driving traffic at Benihana Teppanyaki restaurants and continues to focus on enhanced guest experience, operating efficiency, promotions and marketing initiatives like Hook up and Access to attract customers at RA Sushi and Haru, respectively. Benihana has also started the second quarter of 2011 on a positive note as the comps for the first four-week period grew 6.1%.
The Zacks Consensus Estimates have not budged in the last 60 days, implying an absence of catalysts in the near term. The Zacks Consensus Estimates for 2011 and 2012 are pegged at 30 cents and 46 cents per share, respectively.
One of Benihana’s primary competitors, Domino's Pizza Inc. (DPZ) reported second quarter 2011 earnings of 40 cents per share, which outpaced the Zacks Consensus Estimate by 4 cents due to higher international royalty revenues, international expansion and lower interest expense.
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