The company entered into a $350 million senior secured term loan facility and a $40 million revolving credit facility to finance the Benihana acquisition. It issued preferred stock and warrants, raising $150 million from HPC III Kaizen LP and $10 million from HPS Investors. The company repurchased 0.7 million shares for $3.2 million in 2024 under its authorized buyback program, which was increased by $5 million in March 2024. No dividends were declared or paid, as earnings are retained to finance growth.

Future Outlook: The company intends to finance operations and expansion through cash from operations, landlord construction allowances, and borrowings under its credit agreement. It plans to open five to seven new venues in 2025 and continue leveraging system-wide efficiencies as its footprint grows. The company aims to maintain a disciplined approach to site selection and capital expenditures, limiting the number of owned venues under construction to four at any time.

Challenges and Risks: The company operates in a highly competitive restaurant and hospitality industry, facing intense competition from both national and regional chains, as well as independently owned restaurants. This competition is based on factors such as price, quality of service, location, and type of food offered. The company’s success depends on its ability to anticipate and respond to changing consumer preferences and industry trends.

Economic conditions and competition pose significant risks to the company. The business is dependent on discretionary spending patterns, business travel, and general economic conditions. Economic disruptions, such as recessions or high unemployment, could adversely affect consumer spending and, consequently, the company’s revenues. Additionally, the company is sensitive to regional economic trends, especially in cities where it operates multiple venues.

Health and safety concerns, such as outbreaks of flu viruses or other diseases, could severely impact the business by reducing guest traffic and affecting staffing and supply chains. The company also faces risks related to food safety, as any failure to protect food supplies or adhere to safety standards could result in food-borne illnesses, damaging the brand and financial performance.

Labor and supply chain challenges include potential changes to wage, immigration, and labor laws, which could increase costs. The company relies on a significant number of hourly employees, and changes in minimum wage laws could substantially increase labor costs. Additionally, the company depends on frequent deliveries of food and supplies, making it vulnerable to shortages, interruptions, and price fluctuations.

The company’s strategy and operations are subject to risks associated with opening new restaurants and attracting new F&B hospitality service opportunities. Unsuccessful implementation of these initiatives could negatively impact operations. The company also faces risks related to its reliance on licensees and franchisees, as their failure to operate effectively could adversely affect cash flows and brand reputation.

The acquisition of Safflower Holdings Corp. introduces additional risks, including potential unknown liabilities and difficulties in integration. The company’s financial health is also impacted by its debt financing arrangement and preferred stock, which could limit operational flexibility and increase vulnerability to economic conditions.