MIAMI Benihana Inc. swung to a loss in its fiscal second quarter on lower same-store sales and costs associated with its brand renewal program, which includes restaurant remodels and menu changes at its flagship teppanyaki chain.
The company noted that its weak results led to a break in its credit agreement with Wachovia, and that the two companies have agreed on new terms. Wachovia waived Benihana’s noncompliance, and part of the new terms included reduced borrowings of $40.5 million through July 2011. Benihana previously had a line of credit totaling $60 million.
“The decline in sales, its impact on operating margins and incremental cost increases associated with the renewal program negatively impacted our results, and we failed to meet the leverage ratio required under our credit agreement with Wachovia,” said Richard C. Stockinger, Benihana’s chief executive.
Stockinger said the company had hired a new chief operating officer, Chris Ames, to help manage costs and improve operating procedures.
Benihana also noted that it has withdrawn any earnings guidance for its fiscal year 2010 because of “the continuing uncertainty in the current economic environment.”
The parent company to Japanese-themed and sushi restaurants reported a net loss of $839,000, or 7 cents per share, in the second quarter ended Oct. 11, compared with a profit of nearly $2 million, or 11 cents a share, in the same quarter last year.
Latest quarter revenue fell 0.9 percent to $69.3 million. Same-store sales fell 9.9 percent companywide, slipping 12.2 percent at Benihana teppanyaki, 0.2 percent at RA Sushi and 14.3 percent at Haru, the company said.
Benihana’s corporate restaurants include 64 teppanyaki units, 25 RA Sushis and nine Haru restaurants in the United States. It also has 22 franchised Benihana restaurants in the United States, Latin America and the Caribbean.
Contact Ron Ruggless at [email protected].
