Benihana Tops on Holiday Sales

| About: Benihana Inc. (BNHN)

Benihana Inc. (NASDAQ:BNHN), the largest U.S. chain of Japanese restaurants, posted restaurant sales of $26.9 million for the four-week period ending January 2, 2011, up 3.4% from $26.0 million in the year-ago period. Results reflect the benefit of holiday season. However, the upside in restaurant sales was lower than 3.7% reported in both the first and second four-week periods of the third quarter of 2011.

The company’s comparable restaurant sales jumped 3.9% for the third four-week period of the third quarter of 2011, representing the eleventh consecutive period of growth. In the first and second four-week periods of the third quarter of 2011, comparable restaurant sales spiked 4.8% and 4.5%, respectively.

Comparable restaurant sales grew 5.6% year over year at Benihana Teppanyaki restaurants, given the traffic gain of 11.4%. However, the upside came in below a respective 8.2% and 8.9% recorded in the first and second four-week periods of the current quarter, as the benefit from Benihana Teppanyaki Renewal Program is slowing down. The company initiated the Program in 2009 to improve the dining experience of the guests at the Benihana Teppanyaki restaurants.

Business conditions are improving at RA Sushi restaurant with comparable restaurant sales inching up 0.5%, compared with declines of 1.3% and 3.7% in the two preceding consecutive periods of third quarter 2011. However, the challenging economic environment led to a comparable restaurant sales decline of 1.4% at Haru, an improvement nevertheless from a 1.8% drop recorded in the second four-week period ending December 5, 2010. In the first four-week period ending November 7, 2010, comparable restaurant sales dipped only 0.2% at Haru.

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

For the twelve-week period, Benihana reported restaurant sales of $72.6 million, up 3.6% year over year, driven by a rise of 4.4% in comparable restaurant sales. At its three restaurant brands, sales grew 7.3% at Benihana Teppanyaki, but were down 1.5% at RA Sushi and 1.1% at Haru.

The Zacks Consensus Sales Estimate for the third quarter of 2011 is $71 million. We however note that in the three four-week periods of the third quarter the company has already generated revenues worth $23.0 million, $22.7 million and $26.9 million, respectively. Additionally, the company is undertaking promotional and marketing initiatives to attract more customers.

The company has a Zacks #3 Rank (short-term Hold recommendation) on the shares. We also reiterate our long-term Neutral rating.

The company’s prime competitors are McCormick & Schmick's Seafood Restaurants Inc. (NASDAQ:MSSR) and P.F. Chang's China Bistro Inc. (NASDAQ:PFCB).

Disclosure: No position