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Benihana Comps Continue to Grow

Zacks Equity Research

Miami-based Benihana Inc (:BNHN) continued its impressive run by posting restaurant sales of $91.9 million for the fourth quarter of 2012, up 12.9% from $81.4 million in the year-ago period. The upside in sales was primarily driven by improved comparable restaurant sales at all three restaurant concepts and one extra week of operation.

The company’s comparable restaurant sales grew 4.8% in the fourth quarter of 2012, thus marking the 27th consecutive four-week period and the ninth back-to-back quarters of growth.

By restaurant concepts, the comparable restaurant sales jumped 6.0% at Benihana Teppanyaki restaurants (accounts 68% of total restaurant sales) attributable to higher traffic (up 5.9%), resulting from the Benihana Teppanyaki Renewal Program. Based on solid performance, Benihana Teppanyaki brand also succeeded in gaining the top position in Knapp-Track comparable sales survey for calendar year 2011. Moreover, same-store sales during the quarter jumped 2.1% at RA Sushi (accounts for 23% of total sales) and 2.4% at Haru (accounts for 9% of total sales).

Including the additional week of operation, store operating weeks during the quarter rose 6.4% from the year-ago quarter.

For fiscal 2012, Benihana restaurant sales leaped 7.5% to $350.4 million versus the year-ago level of $325.9 million. Company-wide same-restaurant sales climbed 6.0%, benefiting from consistent comps growth across all three restaurant concepts due to higher traffic.

The leading operator of Japanese restaurants in the U.S. witnessed same-restaurant sales growth of 7.6% at Benihana Teppanyaki, 3.4% at RA Sushi and 0.9% at Haru for fiscal 2012. Store operating weeks during 2012 were 0.7% higher than the previous year, benefiting from an additional week of operation, partially offset by some unit closures.

Despite the challenging economic conditions and cautious consumer spending, the company continues to achieve comps growth and we expect the same trend to continue going forward. Benihana continues to focus on enhancing guest experience, operating efficiency, promotions and marketing initiatives to attract more customers.

The company is also looking for expansion opportunities by opening new Benihana and RA Sushi restaurants going forward. However, food costs pressure and stiff competition from peers like Domino's Pizza Inc. (DPZ) and Red Robin Gourmet Burgers Inc. (RRGB) remain concerns.

The Zacks Consensus Estimates have not budged in the last 30 days, implying that the analysts expect the company to report in-line results. The Zacks Consensus Estimates for the fourth quarter and 2012 are pegged at 15 cents and 34 cents per share, respectively. 

Benihana currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.

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