Benihana Inc. (BNHN) the largest U.S. chain of Japanese restaurants, posted restaurant sales of $23.1 million for the four-week period ending October 10, 2010, up 4.6% from $22.0 million in the year-ago period.  Results reflect the benefits of the Benihana Teppanyaki Renewal Program, which the company initiated in 2009 to improve the dining experience of the guests at the Benihana Teppanyaki restaurants.

The company’s comparable restaurant sales grew 5.7% for the period, representing the eighth consecutive period of growth. The comparable restaurant sales jumped 8.7% at Benihana Teppanyaki restaurants, given the traffic gain of 10%. In the first and second four-week periods of second quarter of 2011, restaurant sales spiked up 7.3% and 7.8%, respectively.

Business conditions are improving as same store-sales were up 0.9% at RA Sushi restaurant, compared with declines of 1.2% and 2.2% in the first and second four-week periods, respectively.  However, due to a challenging economic environment, same store-sales fell 0.6% at Haru, but less than 2.1% drop recorded in the second four-week period ending September 12, 2010. In the first four-week period ending August 15, 2010, same store-sales decreased only 0.6% at Haru.

For the twelve-week period, Benihana reported restaurant sales of $71.8 million, up 4.1% year over year, driven by a rise of 4.7% in comparable restaurant sales. Based on its three restaurant brands, sales grew 7.9% at Benihana Teppanyaki, but were down 0.9% at RA Sushi and 1.0% at Haru.

The Miami-based company generates 99.5% of its revenues from restaurant sales (65% from Benihana Teppanyaki, 25% RA Sushi and 10% Haru) and 0.5% from franchisee fees and royalty.

The Zacks Consensus Sales Estimate for the second quarter of 2011 is $71 million. We expect the company to exceed the estimate as in the three four-week periods of second quarter 2011; its restaurants have already generated revenues of $25.2 million, $23.5 million and $23.1 million, respectively.

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

Benihana operates 97 restaurants, including 63 Benihana teppanyaki restaurants, 25 RA Sushi Bar restaurants and 9 Haru sushi restaurants. Additionally, the company has 20 franchised Benihana teppanyaki restaurants, which are operating in the U.S., Latin America and the Caribbean.

 
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