Benihana Comps Remain Solid

Miami-based Benihana Inc ( ) posted restaurant sales of $28.6 million for the four-week period ending January 1, 2012, up 6.4% from $26.9 million delivered in the year-ago period.

The company’s comparable restaurant sales grew 7.0% in the fourth four-week period of the third quarter of 2012, thus marking the twenty-fourth consecutive four-week period and the eighth back-to-back quarters of growth. The upside in sales was primarily driven by improved comparable restaurant sales at all three restaurant concepts, particularly at Benihana Teppanyaki, which accounts for around 72% of total restaurant sales followed by RA Sushi and Haru, representing growth of 20% and 8%, respectively.

The comparable restaurant sales jumped 7.1% at Benihana Teppanyaki restaurants on the back of higher guest count (up 4.7%) resulting from theBenihana 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 5.9% at RA Sushi and 9.9% at Haru.

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

For the third quarter of 2012, Benihana restaurant sales jumped 5.7% to $76.7 million versus the year-ago level of $72.6 million. Company-wide same-restaurant sales climbed 7.0% 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 8.2% at Benihana Teppanyaki, 4.8% at RA Sushi and 3.6% at Haru for the third quarter. Store operating weeks during the quarter were 1.2% lower than the year-ago period.

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 company is also looking for expansion opportunities by opening new Benihana and RA Sushi restaurants going forward. However, increasing food costs and stiff competition from peers like Domino's Pizza Inc. ( DPZ - Analyst Report ) and Red Robin Gourmet Burgers Inc. ( RRGB - Analyst Report ) will drag profits.

In the recently concluded second quarter of 2012, the company’s total revenue jumped 5.6% year over year to $76.2 million due to restaurant sales growth. Comparable restaurant sales during the quarter rose 6.4%, riding on improved same-store sales growth of 7.7% at Benihana Teppanyaki restaurants, 5.3% at RA Sushi restaurants and 0.6% at Haru restaurants.

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 third quarter and 2012 are pegged at 9 cents and 35 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.