Japanese-themed restaurateur Benihana
Last evening, Benihana released first-quarter results that saw total sales advance 12.6% on a same-store sales increase of 6.4% as it continues to buck a trend of soft comps from casual-dining peers such as Applebee's
Struggling restaurant sales can be boiled down to unfavorable spending trends, such as higher gas prices or a weakening economy, which siphon off dollars that could go to eating out. Additionally, certain restaurant concepts can go stale. Unlike a number of rivals, Benihana is currently bucking both trends.
Management's reasoning is that "the unique nature of our Benihana teppanyaki experience and the popularity of Asian cuisine in general has preserved our positive comparable sales comparisons across all three of our concepts despite strong macro economic headwinds." Overall, it has definitely managed to keep its namesake franchise relevant to consumers, and an aggressive remodeling campaign has freshened up the stores.
Better yet, it has a popular sushi concept called Ra sushi and a Japanese fusion franchise called Haru. Both are in their infancy, with only 14 sushi and seven Haru stores throughout the country. Actually, there are only 59 company-owned Benihana stores, with another 19 operating under franchise agreements. This means plenty of room to expand, but will Benihana grow as popular as Asian-themed operator P.F. Chang's
Management will certainly try. The company recently upped its growth ambitions and will come close to spending double its annual capital expenses this year as it remodels 17 namesake stores and opens two new ones, along with two Haru restaurants and six Ra sushi locations. Judging by the favorable first-quarter sales trends, so far so good, although earnings fell below what analysts were expecting. Benihana also plans to take on debt to fund its expansion efforts, but overall, the company appears to have a good handle on how to balance growth with keeping its concepts fresh to loyal patrons.
Despite the strong quarter, the Motley Fool CAPS community still doubts Benihana's future, offering the company a mere two out of five stars. Think the teppanyaki restaurant chain should boast more stars? Come share your opinion with thousands of other investors. It's free!
Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.