Benihana Sustains Growth Momentum

Miami-based Benihana Inc (BNHN - Snapshot Report) posted restaurant sales of $24.2 million for the four-week period ending October 9, 2011, up 5.1% from $23.1 million delivered in the year-ago period. 

The company’s comparable restaurant sales grew 6.5% in the fourth four-week period of the second quarter of 2012, thus marking the twenty-first consecutive four week period and the seventh consecutive quarter of growth.

The upside in sales was primarily driven by improved comparable restaurant sales at both Benihana Teppanyaki and RA Sushi restaurants and higher traffic growth across all three restaurant concepts.

The comparable restaurant sales jumped 8.2% at Benihana Teppanyaki restaurants on the back of higher guest count (up 6.5%) resulting from the Benihana Teppanyaki Renewal Program. The company initiated the program in 2009 to enhance the dining experience of the guests at Benihana Teppanyaki restaurants. Moreover, same-store sales during the period leaped 4.9% at RA Sushi, but inched down 0.4% at Haru.

Store operating weeks during the period were 1.0% lower than the year-ago period.

For the second quarter of 2012, Benihana restaurant sales jumped 5.6% to $75.8 million versus the year-ago level of $71.8 million. Company-wide same-restaurant sales spiked 6.8% driven by improved comparable restaurant sales across all three restaurant concepts due to higher traffic.

By concepts, same-restaurant sales grew 7.7% at Benihana Teppanyaki, 5.3% at RA Sushi and 0.6% at Haru. Store operating weeks during the quarter were 1.1% lower than the year-ago period.

The company experienced higher sales in all the four-week periods of the quarter, but the upside was spoiled to some extent by Hurricane Irene, which impacted the second four-week period sales of 12 restaurants.

The leading operator of Japanese restaurants in the U.S generates 99.5% of its revenues from restaurant sales (67% from Benihana Teppanyaki, 24% from RA Sushi and 9% from Haru) and the remaining 0.5% from franchise fees and royalties.

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. The company is also undertaking several promotional and marketing initiatives to attract more customers.

The Zacks Consensus Estimates have not budged in the last 30 days, implying that the analysts expect the company to report in line results.

We reiterate our long-term Neutral recommendation on the stock. Its prime competitors are McCormick & Schmick's Seafood Restaurants Inc. (MSSR) and P.F. Chang's China Bistro Inc. (PFCB - Snapshot Report).

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