BNHNA Benihana Inca (MM)

Benihana Inc. (NASDAQ: BNHNA)(NASDAQ: BNHN), operator of the nation’s largest chain of Japanese theme and sushi restaurants, today reported results for its 16-week first fiscal quarter 2011 ended July 18, 2010.

Highlights for the Company's 16-week first fiscal quarter 2011 relative to the 16-week first fiscal quarter 2010 include:

• Total restaurant sales increased 5.0% to $100.2 million from $95.5 million
• Total comparable restaurant sales increased 2.4%
• Income from operations increased 27.8% to $2.5 million from $2.0 million
• Net income increased 47.3% to $1.3 million from $0.8 million, while earnings per diluted share increased 60.0% to $0.08 from $0.05

Richard C. Stockinger, Chief Executive Officer, said, “We are encouraged by our quarterly performance, with solid top-line and operating income growth reflecting the strides we are making under our Renewal Program. Our team is successfully reinvigorating the Benihana teppanyaki brand and experience and enhancing our marketing efforts, while also managing costs effectively. We continue to attract an increasing number of guests at our flagship, and our ongoing execution of the Renewal Plan is expected to drive further sustained improvements in our results.”

Mr. Stockinger concluded, “As a result of the improved performance, we were able to increase our cash position and strengthen our capital structure this quarter. Our cash balance grew by $3.6 million over the 16-week period, after paying down an additional $4.7 million of outstanding debt and depositing $3.8 million related to the previously-disclosed Haru litigation into an escrow account. We remain disciplined in our deployment of capital this year and are currently targeting capital expenditures to a handful of refurbishing projects as part of the Renewal Program while positioning ourselves to further expand our concepts. Even as we evaluate strategic alternatives, we are confident that our ongoing enhancements under the Renewal Plan will help ensure we maximize returns for our shareholders.”

First Fiscal Quarter 2011 Results

For the first fiscal quarter of 2011, total revenues increased 5.0% to $100.8 million from $96.0 million in the first fiscal quarter of 2010. Total restaurant sales increased 5.0% to $100.2 million in the first fiscal quarter of 2011 from $95.5 million in the first fiscal quarter of 2010.

Company-wide comparable restaurant sales increased 2.4%, including 3.3% at Benihana teppanyaki and 2.4% at Haru. Comparable restaurant sales at RA Sushi remained essentially unchanged between periods. During the quarter, Benihana teppanyaki represented approximately 65% of consolidated restaurant sales, while RA Sushi and Haru accounted for 25% and 10% of consolidated restaurant sales, respectively. There were a total of 1,552 store-operating weeks in the first fiscal quarter of 2011 compared to 1,531 store-operating weeks in the first fiscal quarter of 2010.

Income from operations for the first fiscal quarter of 2011 was $2.5 million, compared to $2.0 million for the first fiscal quarter of 2010.

Cost of food and beverage sales for the fiscal first quarter of 2011 totaled $24.6 million, or 24.5% of restaurant sales, compared to $22.4 million, or 23.4% of restaurant sales, in the same period last year. The increase in cost as a percentage of sales is primarily due to improvements in the quality of food offerings associated with implementation of the Renewal Program, as well as various promotions offering Benihana teppanyaki guests a meal for two at a set price.

Restaurant operating expenses for the fiscal first quarter of 2011 totaled $64.2 million, or 64.1% of restaurant sales, compared to $63.4 million, or 66.4% of restaurant sales, in the same period last year, reflecting progress in implementing and executing cost management aspects of the Company’s Renewal Program..

General and administrative expenses for the first fiscal quarter of 2011 totaled $9.4 million, or 9.3% of total revenues, compared to $7.3 million, or 7.6% of total revenues, in the same period last year, with the increase driven by $1.7 million in one-time expenses for financial and professional fees, severance costs, and accelerated depreciation of certain software. During the first fiscal quarter of 2011, corporate salaries increased by $0.5 million compared to the first fiscal quarter of 2010 as a result of the establishment of the regional manager and regional chef structure for Benihana teppanyaki.

Net income for the first fiscal quarter of 2011 was $1.3 million, or $0.08 in diluted earnings per share, compared to net income of $0.8 million, or $0.05 in diluted earnings per share, in the same quarter last year.

Safe Harbor Statement

Except for the historical matters contained herein, statements in this press release are forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements involve risks and uncertainties that may affect the business and prospects of the Company, including, without limitation, the risk that the Company’s Renewal Program and the Company’s enhanced marketing efforts and cost management initiatives may not be successful or have a positive impact on the Company’s business and financial condition, the risk that the Company may change its plans with respect to its capital expenditures or that the Company’s capital expenditures may otherwise increase beyond the level currently anticipated by the Company, the risk that the Company will not be successful in maximizing returns for its shareholders, and other risks and uncertainties that may cause results to differ materially from those set forth in the forward-looking statements. In addition to the risks and uncertainties set forth above, investors should consider the risks and uncertainties discussed in the Company’s filings with the Securities and Exchange Commission, including, without limitation, the risks and uncertainties discussed under the heading “Risk Factors” in such filings.

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, 20 franchised Benihana teppanyaki restaurants are operating in the U.S., Latin America and the Caribbean.

To learn more about the Company and its three Japanese theme and sushi restaurant concepts, please view the corporate video at www.benihana.com/about/video.

                       

Benihana Inc. and Subsidiaries

Sales by Concept

(Unaudited)

(In thousands)

  Four Periods Ended July 18,       July 19, Percentage 2010 2009 change Total restaurant sales by concept: Teppanyaki $ 65,119 $ 63,224 3.0 % RA Sushi 24,727 22,107 11.9 % Haru   10,381   10,134 2.4 % Total restaurant sales $ 100,227 $ 95,465 5.0 %         Four Periods Ended July 18,     July 19, Percentage 2010 2009 change Comparable restaurant sales by concept: Teppanyaki $ 64,307 $ 62,263 3.3 % RA Sushi 22,077 22,107 -0.1 % Haru   10,381   10,134 2.4 % Total comparable restaurant sales $ 96,765 $ 94,504 2.4 %  

Benihana Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings

(Unaudited)

(In thousands)

  Four Periods Ended July 18,     July 19,       2010       2009       Revenues: Restaurant sales $ 100,227 99.5 % $ 95,465 99.5 % Franchise fees and royalties     542     0.5 %     507     0.5 % Total revenues     100,769     100.0 %     95,972     100.0 %     Restaurant Expenses: Cost of food and beverage sales 24,595 24.4 % 22,358 23.3 % Restaurant operating expenses 64,238 63.7 % 63,401 66.1 % Restaurant opening costs 8 0.0 % 903 0.9 % General and administrative expenses     9,397     9.3 %     7,330     7.6 % Total operating expenses 98,238 97.5 % 93,992 97.9 %   Income from operations 2,531 2.5 % 1,980 2.1 % Interest expense, net     (397 )   -0.4 %     (397 )   -0.4 %   Income before income taxes 2,134 2.1 % 1,583 1.6 % Income tax provision     525     0.5 %     491     0.5 %   Net Income 1,609 1,092 1.1 % Less: Accretion of preferred stock issuance costs and preferred stock dividends     333           333         Net income attributable to common stockholders   $ 1,276     1.3 %   $ 759     0.8 %   Earnings Per Share Basic earnings per common share $ 0.08 $ 0.05 Diluted earnings per common share   $ 0.08         $ 0.05         Weighted Average Shares Outstanding Basic 15,441 15,352 Diluted     15,459           15,374          

Benihana Inc. and Subsidiaries

Condensed Balance Sheet Data

(Unaudited)

(In thousands)

  July 18, March 28,     2010   2010 Assets Cash and cash equivalents $ 6,101 $ 2,558 Other current assets     13,218     13,149 Total current assets 19,319 15,707   Property and equipment, net 190,094 194,261 Goodwill 6,896 6,896 Other assets, net     16,106     17,226 Total assets   $ 232,415   $ 234,090   Liabilities, Convertible Preferred Stock and Stockholders’ Equity Current Liabilities: Borrowings under line of credit $ 17,693 $ 22,410 Other current liabilities     34,487     32,979 Total current liabilities 52,180 55,389   Other long term liabilities     15,322     15,234 Total liabilities     67,502     70,623   Convertible preferred stock     19,650     19,623   Stockholders’ Equity Total stockholders’ equity     145,263     143,716 Total liabilities, convertible preferred stock and stockholders' equity   $ 232,415   $ 233,962