10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the Fiscal Year Ended March 30, 2008
or,
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission File No. 0-26396

Benihana Inc.
(Exact name of registrant as specified in its charter)
Delaware	65-0538630
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

8685 Northwest 53rd Terrace, Miami, Florida	33166
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code:	(305) 593-0770
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:

Title of Each Class	Name of Exchange on Which Registered
Common Stock, par value $.10 per share	NASDAQ Global Market
Class A Common Stock, par value $.10 per share	NASDAQ Global Market
Preferred Share Purchase Right	Not Applicable

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o	No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o	No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes x	No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer x	Non-accelerated filer o	Smaller reporting company o
		(do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes o	No x

As of May 31, 2008, 6,139,464 shares of Common Stock and 9,139,936 shares of Class A Common Stock were outstanding. As of October 12, 2007, the aggregate market value of common equity held by non-affiliates was $237,101,000 based on the closing price of the Common Stock and Class A Common Stock on such date.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Annual Report to Stockholders for the year ended March 30, 2008 are incorporated by reference in Parts I and II.

Portions of the Registrant’s Proxy Statement for the 2008 Annual Meeting are incorporated by reference in Part III.

BENIHANA INC. AND SUBSIDIARIES

INDEX TO FORM 10-K

			PAGE
PART I
	Item 1.	Business		1
	Item 1A.	Risk Factors		8
	Item 1B.	Unresolved Staff Comments		12
	Item 2.	Properties		12
	Item 3.	Legal Proceedings		13
	Item 4.	Submission of Matters to a Vote of Security Holders		14
PART II
	Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity		15
	Item 6.	Selected Financial Data		15
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risks		15
	Item 8.	Financial Statements and Supplementary Data		15
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		15
	Item 9A.	Controls and Procedures		15
	Item 9B.	Other Information		15
PART III
	Item 10.	Directors, Executive Officers and Corporate Governance		15
	Item 11.	Executive Compensation		16
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		16
	Item 13.	Certain Relationships and Related Transactions and Director Independence		16
	Item 14.	Principal Accountant Fees and Services		16
PART IV
	Item 15.	Exhibits and Financial Statement Schedules		16
	Signatures			20
	Exhibit 10.34	Employment Agreement between Joel A. Schwartz and the Company
	Exhibit 13.01	Portions of Annual Report to Stockholders for the Year Ended March 30, 2008
	Exhibit 21.01	Subsidiaries
	Exhibit 23.01	Consent of Deloitte & Touch LLP, Independent Registered Public Accounting Firm
	Exhibit 31.01	Chief Executive Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	Exhibit 31.02	Chief Financial Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	Exhibit 32.01	Chief Executive Officer’s Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	Exhibit 32.02	Chief Financial Officer’s Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

PART I

Item 1. Business

General

Benihana Inc. and its predecessor companies have operated “Benihana” teppanyaki-style Japanese restaurants in the United States for over 40 years, and we believe we are the largest operator of teppanyaki-style restaurants in the country. Benihana Inc. is a Delaware corporation formed on December 6, 1994. Our core concept, the traditional Benihana restaurant, offers teppanyaki-style Japanese cooking in which fresh steak, chicken and seafood are prepared by a chef on a steel teppan grill at the center of the customers’ table. Our Haru concept offers an extensive menu of traditional Japanese and Japanese fusion dishes in a modern, urban atmosphere as well as take-out and delivery services. Our RA Sushi concept offers sushi and a full menu of Pacific-Rim dishes in a high-energy environment featuring upbeat design elements and contemporary music. Additionally, a significant component of RA Sushi’s revenues is derived from beverage sales.

At May 31, 2008, we:

• own and operate 60 Benihana teppanyaki-style Japanese dinnerhouse restaurants, including one restaurant under the name Samurai;

• franchise 19 additional Benihana restaurants;

• own and operate 9 Haru restaurants; and

• own and operate 19 RA Sushi restaurants.

We own the related United States trademarks and service marks to the names “Benihana,” “Benihana of Tokyo” and the “red flower” symbol, and we have the exclusive rights to own, develop and license Benihana and Benihana Grill restaurants in the United States, Central and South America and the islands of the Caribbean. We also own the United States trademarks and worldwide development rights to the names “Haru” and “RA.”

Sales by our owned restaurants were approximately $295.2 million for the fiscal year ended March 30, 2008, as compared to approximately $271.1 million for the prior fiscal year. Our net income for the fiscal year ended March 30, 2008 was approximately $12.8 million, as compared to approximately $14.5 million for the prior fiscal year.

For information concerning our financial condition, results of operations and related financial data, including selected data for our operating segments, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Financial Statements and Supplementary Data.”

We have a 52/53-week fiscal year. Our fiscal year ends on the Sunday within the dates of March 26 through April 1. Fiscal years 2008 and 2006 consisted of 52 weeks, while fiscal year 2007 consisted of 53 weeks. Our business is not highly seasonal although we do have more diners coming to our restaurants for special holidays such as Mother’s Day, Valentine’s Day and New Year’s Eve. Mother’s Day falls in our first fiscal quarter, New Year’s Eve in the third fiscal quarter and Valentine’s Day in the fourth fiscal quarter of each year.

Our principal executive offices are located at 8685 Northwest 53^rd Terrace, Miami, Florida 33166 (telephone number 305-593-0770), and our corporate website address is http://www.benihana.com. We make our electronic filings with the Securities and Exchange Commission (“SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports, if any, available on the corporate website free of charge as soon as practicable after filing with or furnishing to the SEC. These reports are also available at www.sec.gov.

Strategy

The critical elements of our growth strategy are as follows:

Selectively Pursue Restaurant Growth. We believe that each of our three concepts has broad appeal and, as a result, we have significant opportunities to selectively expand our business. We plan to continue to capitalize on our broad customer appeal and strong brand recognition within the casual dining segment by opening new restaurants and selectively acquiring existing Asian-theme restaurants in major U.S. markets. In fiscal 2008, we opened three Benihana restaurants, two Haru restaurants and five RA Sushi restaurants. Additionally, in fiscal 2008, one new franchised location was opened, and a franchised restaurant was closed. During fiscal 2008, we did close two Benihana restaurants located in Chicago, IL and Turtle Creek, TX. We are currently developing two restaurants, as replacements for these closed locations, in the same general markets.

Design Initiative. To date, we have opened four locations using the new prototype design, which was first implemented in fiscal 2007. Our prototype is to be used at our new Benihana restaurants to improve unit-level economics while shortening construction time and improving decor. Elements of the new design are also being incorporated into certain existing Benihana restaurants that we are renovating.

Maintain Strong Restaurant Unit Economics. Our experienced management team intends to maintain and improve, where necessary, attractive restaurant unit profit margins through sustained sales growth and effective cost controls.

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Continue To Build Brand Awareness And Customer Loyalty. We will continue to provide marketing and promotional support to sustain and grow our reputation for distinctive value, quality food and customer satisfaction.

Provide Strong Management Support. Our senior management team is experienced in developing and operating distinctive, high-volume casual dining establishments.

The Benihana Concept

The Benihana concept offers casual dining in a distinctive Japanese atmosphere enhanced by the unique entertainment provided by our highly-skilled Benihana chefs who prepare fresh steak, chicken and seafood on a teppan grill, in traditional Japanese style, at the center of the customers’ table. Most of our Benihana restaurants are open for both lunch and dinner and have a limited menu, offering a full course meal generally consisting of an appetizer, soup, salad, tea, rice, vegetables, an entrée of steak, seafood or chicken (or any combination thereof) and a dessert. Sushi is offered at all of our traditional restaurants at either separate sushi bars, lounges or at the teppan grills, and we believe that Benihana is the largest coast-to-coast restaurant chain highlighting sushi as a part of an Asian theme.

Specific menu items may be different in the various restaurants depending upon the local geographic market. The servings prepared at the teppan tables are portion controlled to provide consistency in quantities served to each customer. Alcoholic and non-alcoholic beverages, including specialty mixed drinks, wine, beer and soft drinks are available. Beverage sales in both the lounges and dining rooms account for approximately 17% of total sales. The average check size per person was $27.63 in fiscal 2008.

Each of our teppan tables generally seats eight customers. The chef is assisted in the meal service by a waitress or waiter who takes beverage and food orders. A dinnertime meal takes approximately one hour and thirty minutes.

Of the 60 Benihana restaurants we operate as of May 31, 2008:

• 45 are located in freestanding, special use restaurant buildings usually on leased lands;

• 6 are located in shopping centers; and

• 9 are located in office or hotel building complexes.

The freestanding restaurants were built to our specifications as to size, style and interior and exterior decor using an overall Japanese design theme. The other locations were adapted to the Benihana interior decor. The freestanding, traditional Benihana restaurant units, which are generally one story buildings, average approximately 8,000 square feet and are constructed on a land parcel of approximately 1.25 to 1.50 acres. Benihana restaurants located in shopping centers, office buildings and hotels are of similar size but differ somewhat in appearance from location to location in order to conform to the appearance of the buildings in which they are located or limitations imposed by landlords or municipalities. A typical Benihana restaurant has 18 teppanyaki-style tables and seats from 86 to 178 customers in the dining rooms and 8 to 120 customers in the bar, lounge and sushi bar areas. Currently, Benihana restaurants under development conform to our new prototype design, which was first implemented during fiscal 2007 at our Miramar, FL location. The prototype Benihana restaurant approximates 7,000 square feet and allows for alternative design options in layout and number of tables. Additionally, as part of an ongoing rejuvenation program, we are incorporating certain elements of our new prototype design at locations being renovated, where possible.

During fiscal year 2008, we opened three new Benihana restaurants in Maple Grove, MN, Chandler, AZ and Dulles, VA. Restaurants in Turtle Creek, TX and Chicago, IL closed during the current fiscal year. We are developing a restaurant in Chicago, IL as a replacement for the restaurant previously located in that city. Additionally, during fiscal 2008, the Memphis, TN location was destroyed by fire, and we are currently rebuilding the restaurant. We are also developing Benihana restaurants to be located in Coral Springs, FL, Orlando, FL, Westwood, MA, Meadowlands, NJ, Columbus, OH, Plymouth Meeting, PA and Plano, TX.

The Haru Concept

The Haru concept offers an extensive menu of distinctive Japanese fusion dishes in a modern, urban atmosphere. In addition to traditional, high quality sushi and sashimi creations, Haru offers raw bar items and Japanese cuisine, including crab dumplings, shrimp tempura and chicken teriyaki. Haru also offers delivery and take-out services, which represent approximately 35% of total sales at the New York, NY locations. The average check size per person was $30.35 in fiscal 2008.

We currently operate seven Haru restaurants in New York City, one in Boston, MA and one in Philadelphia, PA. The Haru restaurants that we operate are located in office or residential buildings and vary in size and decor. We typically seek restaurant locations that are in densely populated metropolitan areas in order to take advantage of Haru’s take-out and delivery business. While there are no additional restaurants currently under development, we continue to evaluate future Haru locations that meet our development guidelines.

The RA Sushi Concept

The RA Sushi concept offers sushi and Pacific-Rim dishes in a fun-filled, high-energy environment. RA Sushi caters to a younger demographic, and we believe that it is highly suitable for a variety of real estate options, including life-style centers, shopping centers and malls, as well as areas with a nightlife component. Beverage sales in both the lounges and dining rooms account for approximately 33% of RA Sushi’s total sales, and the average check size per person was $21.52 for fiscal 2008.

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The 19 RA Sushi restaurants in operation as of May 31, 2008 are located in special-use restaurant buildings on leased land or in shopping or “life style” centers.

All of the restaurants were built to our specifications as to size, style and emphasize a contemporary interior and exterior decor. These restaurants average approximately 5,000 square feet excluding outdoor seating. A typical RA Sushi restaurant seats from 150 to 225 customers in the bar and sushi areas, including outdoor seating.

RA Sushi is our fastest growing concept. Having opened five new RA Sushi restaurants during fiscal 2008 and one RA Sushi restaurant on May 5, 2008, we currently operate nineteen RA Sushi restaurants. We are focused on the continued expansion of this concept and, as of May 31, 2008, have signed leases for and are currently developing another seven RA Sushi restaurants to be located in Chino Hills, CA, Huntington Beach, CA, Orlando, FL, South Miami, FL, Leawood, KS, Westwood, MA and Houston, TX.

Restaurant Operations

Our Benihana restaurants are under the direction of our Executive Vice President-Restaurant Operations and are divided among eleven geographic regions, each managed by a regional manager. Food preparation in the Benihana restaurants is supervised by eight regional chefs. Our Haru restaurants are managed out of New York City under the direction of Haru’s Vice President of Operations, and our RA Sushi restaurants are managed out of Phoenix, AZ under the direction of RA Sushi’s Vice President of Operations.

Each restaurant has a manager and one or more assistant managers responsible for the operation of the restaurant, including personnel matters, local inventory purchasing and maintenance of quality control standards, cleanliness and service.

Strict guidelines, as documented in our restaurant operations manuals, are followed to assure consistently high quality customer service and food quality at each location. Specifications are used for quality and quantity of ingredients, food preparation, maintenance of premises and employee conduct and are incorporated in manuals used by the managers, assistant managers and head chefs. Food and portion sizes are regularly and systematically tested for quality and compliance with our standards. We have entered into non-cancellable supply agreements for the purchase of certain beef and seafood items, in the normal course of business, at fixed prices for up to twelve-month terms. These supply agreements will eliminate volatility in the cost of the commodities over the terms of the agreements. Substantially all commodities are distributed to our Benihana restaurants by a national food service logistics company. Most of the other food products are purchased locally by the individual restaurant managers and senior chefs. Substantially all of our restaurant operating supplies are purchased centrally and distributed to the restaurants from our warehouse or a bonded warehouse.

Our Benihana restaurant chefs are trained in the teppanyaki style of cooking, sushi preparation and in customer service with training programs lasting from eight to twelve weeks. The sushi chefs’ training program lasts up to 24 weeks. A portion of the training is spent working in a restaurant under the direct supervision of an experienced head chef. The program includes training in our method of restaurant operations and in both tableside and kitchen food preparation. Manager training is similar except that the manager trainee is given in-depth exposure to each position in the restaurant. Other categories of employees are trained by the manager and assistant manager at each restaurant unit. Ongoing continuing education programs and seminars are provided to restaurant managers and chefs to improve restaurant quality and implement changes in operating policy or menu listings.

We use various incentive compensation plans pursuant to which key restaurant personnel share in the results of operations at both a local and company-wide level.

Marketing

We utilize television, radio, billboard and print media to promote our restaurants, strengthen our brand identity and maintain high brand name recognition.

In fiscal year 2008, we expended approximately $7.7 million on advertising and other marketing. Advertising programs are tailored to each local market. The Benihana restaurants’ advertising and other marketing are designed to emphasize the inherently fresh aspects of a Benihana meal and the entertainment value of the chef cooking at the customer’s table. The entertainment component of the Benihana method of food preparation and service is emphasized to distinguish Benihana from other restaurant concepts. RA Sushi’s advertising campaigns are geared to young affluent demographics via radio and print media, while Haru focuses on local publications.

Franchising

We have, from time to time, franchised Benihana teppanyaki restaurants to operators in markets in which we consider expansion to be of benefit to the Benihana system. We selectively pursue franchising opportunities, particularly in Central and South America and the islands of the Caribbean, where we own the rights to the Benihana trademarks and system. As of May 31, 2008, we have 19 franchised locations including 11 in the United States and 8 in international markets.

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Franchisees bear all direct costs involved in the development, construction and operation of their restaurants. We provide franchisee support for:

• site selection;

• prototypical architectural plans;

• interior and exterior design and layout;

• training, marketing and sales techniques; and

• opening assistance.

All franchisees are required to operate their restaurants in accordance with Benihana operating standards and specifications, including menu offerings, food quality and preparation.

The current standard franchise agreement provides for payment to us of a non-refundable franchise fee of up to $50,000 per restaurant and royalties up to 6% of gross sales. In fiscal year 2008, revenues from franchising were approximately $1.8 million.

To comply with the terms of the franchise agreements, we are prohibited from opening additional restaurants within certain areas in which our existing franchisees have the exclusive right to open additional restaurants and operate their existing Benihana restaurants. In general, such franchise agreements currently provide for an initial payment to us with respect to each new restaurant opened by a franchisee and continuing royalty payments to us based upon a percentage of a franchisee’s gross sales throughout the term of the franchise.

Trade Names and Service Marks

Benihana is a Japanese word meaning “red flower.” In the United States and certain foreign countries, we own the “Benihana” and “Benihana of Tokyo” brand names and related trademarks and “red flower” symbol, which we believe to be of material importance to our business and are registered in the United States Patent and Trademark Office. We also own the United States trademarks and worldwide development rights to the names “Haru” and “RA” and related trademarks.

Benihana of Tokyo, Inc., a privately held company and our largest stockholder and originator of the Benihana concept, continues to own the rights to the Benihana name and trademarks outside of the United States, Central and South America and the islands of the Caribbean. Benihana of Tokyo, Inc. is also the operator of a Benihana restaurant in Honolulu, Hawaii under an exclusive, royalty-free franchise from us. We have no financial interest in any restaurant operated or franchised by Benihana of Tokyo, Inc.

New Restaurant Site Selection and Development

We believe the locations of our restaurants are critical to our long-term success and, accordingly, we devote significant time and resources to analyzing each prospective site. Each of our three concepts requires a different real estate formula for successful execution. The Benihana concept is successful in free-standing or in-line locations. The prototype was designed to accommodate approximately 7,000 square feet and allows for flexibility in layout and number of tables. The Haru concept is successful in densely populated urban markets and space requirements are somewhat flexible. The RA Sushi concept is successful in urban or suburban shopping malls, retail strip centers and entertainment life-style centers and typically requires 4,500 to 5,500 square feet plus patio seating. In general, we currently prefer to open our restaurants in high profile sites within larger metropolitan areas with dense populations and above-average household incomes. The layout of each restaurant is customized to accommodate different types of buildings and different square footage within the available space. In addition to analyzing demographic information for each prospective site, we consider other factors such as visibility, traffic patterns and general accessibility, the availability of suitable parking and the proximity of residences and shopping areas.

Our new restaurant development model for each of our active concepts typically calls for us to occupy leased space in shopping malls, office complexes, strip centers, entertainment centers and other real estate developments (the “retail lease” development model) in larger metropolitan areas. We have also acquired the land when it is economically justified. While we expect the retail lease development model to continue as our principal approach for opening new restaurant units, we also expect to open more freestanding Benihana restaurants. We generally lease our restaurant locations for primary periods of 15 to 20 years and have renewal options for varying lengths of time. Our rent structures vary from lease to lease, but generally provide for the payment of both minimum base rent and contingent rent, such as percentage rent based on restaurant sales and rent increases based on changes in the consumer price index. We are also responsible for our proportionate share of common area maintenance (CAM), insurance, property tax and other occupancy-related expenses under our leases. Many of our leases provide for maximum allowable annual percentage or fixed dollar increases for CAM and insurance expenses to enable us to better predict and control future variable lease costs. We expend cash for leasehold improvements and furnishings, fixtures and equipment to build out leased premises. We own all of the equipment in our restaurants and currently plan to do so in the future.

Due to the uniquely flexible and customized nature of our Benihana restaurant operations and the complex design, construction and preopening processes for each new location, our lease negotiation and restaurant development timeframes vary for each restaurant. The development and opening process generally ranges from twelve to eighteen months after lease signing and depends largely upon the availability of the leased space we intend to occupy and is often subject to matters that result in delays outside of our control, usually the permitting process, turnover of the premises from the landlord and mandates of local governmental building authorities. The number and timing of new restaurants actually opened during any given period, and their associated contribution, will depend on a number of factors, including but not limited to, the identification and availability of suitable locations and leases, the timing of the delivery of the leased premises to us from our landlords so that we can commence our build-out construction activities, the ability of our landlords and us to timely obtain all necessary governmental licenses and permits to construct and operate our restaurants, disputes experienced by our landlords or our outside contractors, any unforeseen engineering or environmental problems with the leased premises, weather conditions that interfere with the construction process, our ability to successfully manage the design, construction and preopening processes for each restaurant, the availability of suitable restaurant management and hourly employees and general economic conditions. While we manage those factors within our control, we have experienced unforeseen delays in restaurant openings from time to time in the past and will likely experience such delays in the future.

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We have developed a prototype Benihana teppanyaki restaurant to improve the unit-level economics while shortening construction time and improving decor. The new design reflects the cutting edge of contemporary dining and entertainment and places the customer at the center of the Benihana experience through the visual impact of the exterior, a vibrant waiting area and a more dramatic stage for our legendary Benihana chefs. The restaurant in Miramar, FL, which opened during June 2006, was the first company-owned restaurant to feature the new prototype design. The restaurants in Maple Grove, MN, Chandler, AZ and Dulles, VA also feature the prototype design.

While the prototype design standardizes the look and feel, as well as the operational efficiency, of the Benihana operations, it does provide certain flexibility to accommodate specific market conditions.

Renovation of Existing Restaurants

Under a renovation program commenced during 2005, we are also using many of the design elements of the new prototype to refurbish our mature Benihana restaurant units.

During fiscal 2006, management made a strategic decision to accelerate the renovation and revitalization program. We are committed to revitalizing our 40-plus year old Benihana teppanyaki concept for a new generation. The new design reflects the cutting edge of contemporary dining and entertainment and places the customer at the center of the Benihana experience through the visual impact of the exterior, a vibrant waiting area and a more dramatic stage setting for our legendary Benihana chefs. We plan to refurbish an aggregate 24 of our mature Benihana restaurants. By transforming these 24 mature Benihana teppanyaki units, we are opportunistically building a stronger foundation for our core brand amid a growing American appetite for Asian cuisine. During fiscal 2006, our restaurant in Short Hills, NJ was the first Benihana restaurant to be retrofitted with the new design elements. During fiscal 2007, our Memphis, TN, Cleveland, OH, Indianapolis, IN and Anaheim, CA restaurants re-opened after similar renovations were completed. During fiscal 2008, our Fort Lauderdale, FL, Miami Beach, FL, Burlingame, CA, Torrance, CA, San Diego, CA, Sacramento, CA, Bethesda, MD, New York City, NY, Cherry Hill, NJ, Tucson, AZ and Dallas, TX restaurants re-opened after similar renovations were completed.

At the end of fiscal 2008, restaurants closed and undergoing major renovations included the Houston, TX, Denver, CO, Cupertino, CA and Newport Beach, CA locations. These locations, as well as four more renovations scheduled to commence in fiscal 2009, are expected to be completed by the end of January 2009.

Renovations currently require on average, between $2.0 million and $2.3 million in capital expenditures per unit. The cost to remodel each unit is directly dependent on the scope of work to be performed at each location. Management is continuously reviewing the extent of work to be performed at these sites. The scope of work may be impacted by the age of the location, current condition of the location as well as local permitting requirements. The scope of work will vary by location. Some locations will undergo a limited remodel, while others will undergo a complete renovation and a major facility upgrade of its HVAC, electrical and plumbing systems. Management believes the long-term benefits of the revitalization initiative far outweigh the costs. The renovation of our older Benihana teppanyaki units is necessary to ensure the continued relevance of the Benihana brand, and the program will enhance our leadership position as the premier choice for Japanese-style dining.

Restaurant Opening Costs for New Restaurants

Restaurant opening costs include incremental out-of-pocket costs, which are directly related to the openings of new restaurants and are not capitalizable and an amortization of rentals under lease agreements for accounting purposes. Restaurant opening costs include costs to recruit and train an average of 50-100 hourly restaurant employees and management personnel, wages, travel and lodging costs for our opening training team and other support employees, costs for practice service activities, restaurant supplies and straight-line minimum base rent during the restaurant preopening period. Restaurant opening costs will vary from location to location depending on a number of factors, including the proximity to our existing restaurants, the size and physical layout of each location, the cost of travel and lodging for different metropolitan areas and the extent of unexpected delays, if any, in obtaining final licenses and permits to open the restaurants, which may also be dependent upon our landlords obtaining their licenses and permits as well as completing their construction activities for the restaurant units. Restaurant opening costs will fluctuate from period to period, based on the number and timing of restaurant openings and the specific restaurant opening costs incurred for each restaurant unit. These fluctuations could be significant. We expense restaurant opening costs as incurred.

Employees

At May 31, 2008, we employed approximately 5,700 people, of which approximately 100 were corporate personnel and the balance were restaurant employees. Most employees, except restaurant and corporate management personnel, are paid on an hourly basis. We also employ some restaurant personnel on a part-time basis to provide the services necessary during the peak periods of restaurant operations. We believe our relationship with our employees is good.

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Executive Officers

Joel A. Schwartz, age 67, serves as our Chairman of the Board and Chief Executive Officer.
Juan C. Garcia, age 44, serves as President and Chief Operating Officer.
Taka Yoshimoto, age 62, serves as Executive Vice President-Operations and Director.
Jose I. Ortega, age 36, serves as Vice President-Finance and Chief Financial Officer.

Competition

The casual dining segment of the restaurant industry is intensely competitive with respect to price, service, location and the type and quality of food. Each of our restaurants competes directly or indirectly with locally owned restaurants as well as regional and national chains, and several of our significant competitors are much larger or more diversified and have substantially greater resources than we do. It is also anticipated that growth in the industry will result in continuing competition for available restaurant sites as well as continued competition in attracting and retaining qualified management-level operating personnel. We believe that our competitive position is enhanced by offering quality food selections at an appropriate price with the unique entertainment provided by our chefs in an attractive, relaxed atmosphere.

Government Regulation

Each of our restaurants is subject to licensing and regulation by health, sanitation, safety standards, the fire department and alcoholic beverage control as well as other authorities in the state or municipality where it is located. Difficulties or failure in obtaining the required licensing or requisite approvals could result in delays or cancellations in the opening of new restaurants, and termination of the liquor license would adversely affect the revenues for the restaurant. While we have not yet experienced any material difficulties in obtaining and maintaining necessary governmental approvals, the failure to obtain or retain, or a delay in obtaining, food and liquor licenses or any other governmental approvals could have a material adverse effect on our operating results. Changes in federal and state environmental regulations have not had a material effect on our operations, but more stringent and varied local government requirements with respect to zoning, land use and environmental factors could delay construction of new restaurants and materially affect our existing restaurant operations.

We are also subject to federal and state regulations regarding franchise offering and sales. Such laws impose registration and disclosure requirements on franchisors in the offer and sale of franchises or impose substantive standards on the relationship between franchisee and franchisor.

The Americans with Disabilities Act, which prohibits discrimination on the basis of disability in public accommodations and employment, mandates accessibility standards for individuals with physical disabilities and increases the cost of construction of new restaurants and of remodeling older restaurants.

We are subject to “dram-shop” statutes in most of the states where we operate restaurants, which generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages. We carry liquor liability coverage as part of our existing comprehensive general liability insurance that we believe is consistent with coverage carried by other entities in the restaurant industry of similar size and scope of operations. Even though we are covered by general liability insurance, a settlement or judgment against us under a “dram-shop” statute in excess of our liability coverage could have a material adverse effect on our operations.

Various federal and state labor laws govern our operations and our relationships with our employees, including such matters as minimum wages, breaks, overtime, fringe benefits, safety, working conditions and work authorization requirements. Significant increases in minimum wages, changes in statutes regarding paid or unpaid leaves of absence, mandated health benefits or increased tax reporting and assessment or payment requirements related to our employees who receive gratuities all could be detrimental to the profitability of our operations. Various proposals that would require employers to provide health insurance for all of their employees are considered from time-to-time in Congress and various individual states. The imposition of any requirement that we provide health insurance to all employees could have an adverse effect on our results of operations and financial position, as well as the restaurant industry in general. Our suppliers may also be affected by higher minimum wage and benefit standards, which could result in higher costs for goods and services supplied to us. While we carry employment practices insurance, a settlement or judgment against us in excess of our coverage limitations could have a material adverse effect on our results of operations, liquidity, financial position or business.

We have a significant number of hourly restaurant employees that receive tip income. We have elected to voluntarily participate in a Tip Rate Alternative Commitment (“TRAC”) agreement with the Internal Revenue Service. By complying with the educational and other requirements of the TRAC agreement, we reduce the likelihood of potential employer-only FICA assessments for unreported or underreported tips.

Management Information Systems

We provide restaurant managers with centralized financial and management control systems through use of data processing information systems and prescribed reporting procedures. We have also upgraded our point-of-sale and time and attendance systems.

Each restaurant transmits sales, purchasing, payroll and other operational data to our principal executive office on a weekly and four-week period basis. This data is used to record sales, product, labor and other costs and to prepare periodic financial and management reports. We believe that our centralized accounting, payroll and human resources and information systems improve our ability to control and manage our operations efficiently.

6

Forward Looking Statements

This report contains various “forward-looking statements,” which represent our expectations or beliefs concerning future events, including unit growth, future capital expenditures and other operating information. A number of factors could, either individually or in combination, cause actual results to differ materially from those included in the forward-looking statements, including changes in consumer dining preferences, fluctuations in commodity prices, availability of qualified employees, changes in the general economy, industry cyclicality, and in consumer disposable income, competition within the restaurant industry, availability of suitable restaurant locations or acquisition opportunities, harsh weather conditions in areas in which we and our franchisees operate restaurants or plan to build new restaurants, acceptance of our concepts in new locations, changes in governmental laws and regulations affecting labor rates, employee benefits and franchising, ability to complete new restaurant construction and obtain governmental permits on a reasonably timely basis, the possibility of an adverse outcome in our dispute with the former Minority Stockholders of Haru Holding Corp., unstable economic conditions in foreign countries where we franchise restaurants and other factors that we cannot presently foresee.

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Item 1A. Risk Factors

Failure of our restaurants to achieve expected results could have a negative impact on our revenues and performance results.

Performance results currently achieved by our restaurants may not be indicative of longer-term performance or the potential market acceptance of restaurants in new locations. We cannot be assured that new restaurants that we open will have similar operating results as existing restaurants. New restaurants take several months to reach expected operating levels due to inefficiencies typically associated with new restaurants, including lack of market awareness, inability to hire sufficient staff and other factors. The failure of our existing or new restaurants to perform as predicted could negatively impact our revenues and results of operations.

The inability to construct new restaurants and remodel existing restaurants within projected budgets and time periods will adversely affect our business and financial condition.

Many factors may affect the costs associated with construction of new restaurants and remodeling of existing restaurants, including:

• landlord delays;

• labor disputes;

• shortages of materials and skilled labor;

• weather interference;

• unforeseen engineering problems;

• environmental problems;

• construction or zoning problems;

• local government regulations;

• modifications in design to the size and scope of the projects; and

• other unanticipated increases in costs, any of which could give rise to delays or cost overruns.

If we are not able to develop additional restaurants within anticipated budgets or time periods, our business, financial condition, results of operations or cash flows will be adversely affected.

Failure to expand our operations could adversely affect our business, financial condition, results of operations and cash flows.

Critical to our future success is our ability to profitably expand our operations. Our ability to expand profitably will depend on a number of factors, including:

• identification and availability of suitable locations;

• competition for restaurant sites;

• negotiation of favorable lease arrangements;

• timely development of commercial, residential, street or highway construction near our restaurants;

• management of the costs of construction and development of new restaurants;

• securing required governmental approvals and permits;

• recruitment of qualified operating personnel, particularly managers and chefs;

• competition in new markets; and

• general economic conditions.

The opening of additional restaurants in the future will depend in part upon our ability to generate sufficient funds from operations or to obtain sufficient equity or debt financing on favorable terms to support our expansion. We may not be able to open our planned new operations on a timely basis, if at all, and, if opened, these restaurants may not be operated profitably. We have experienced, and expect to continue to experience, delays in restaurant openings from time to time. Delays or failures in opening planned new restaurants could have an adverse effect on our business, financial condition, results of operations or cash flows.

Changes in general economic and political conditions affect consumer spending and may harm our revenues and operating results.

Our country’s economic condition affects our customers’ levels of discretionary spending. A decrease in discretionary spending due to decreases in consumer confidence in the economy, as well as a decrease in disposable income due to inflationary pressures, could impact the frequency with which our customers choose to dine out or the amount they spend on meals while dining out, thereby decreasing our revenues and operating results.

Increases in the minimum wage may have a material adverse effect on our business and financial results.

Many of our employees are subject to various minimum wage requirements. Many restaurants are located in states where the minimum wage was recently increased, with further increases in other states going into effect during fiscal 2009. There likely will be additional increases implemented in jurisdictions in which we operate or seek to operate. Additionally, the United States Congress enacted an increase in the federal minimum wage to be implemented in three stages: from $5.15 to $5.85 on July 24, 2007; from $5.85 to $6.55 on July 24, 2008; and from $6.55 to $7.25 July 24, 2009. State and federal minimum wage increases may have a material adverse effect on our business, financial condition, results of operations or cash flows.

8

Changes in food costs could negatively impact our revenues and results of operations.

Our profitability is dependent in part on our ability to anticipate and react to changes in food costs. Any increase in distribution and commodity costs could cause our food costs to fluctuate. Additional factors beyond our control through our supply chain, including energy costs, adverse weather conditions and governmental regulation may affect our food costs. We may not be able to anticipate and react to changing food costs through our purchasing practices and menu price adjustments in the future and failure to do so could negatively impact our revenues and results of operations.

Intense competition in the restaurant industry could prevent us from increasing or sustaining our revenues and profitability.

The restaurant industry is intensely competitive with respect to food quality, price-value relationships, ambiance, service and location and many restaurants compete with us at each of our locations. There are a number of well-established competitors with substantially greater financial, marketing, personnel and other resources than ours, and many of our competitors are well established in the markets where we have restaurants or where we intend to locate restaurants. Additionally, other companies may develop restaurants that operate with similar concepts.

Any inability to successfully compete with the other restaurants in our markets will prevent us from increasing or sustaining our revenues and profitability and will result in a material adverse effect on our business, financial condition, results of operations or cash flows. We may also need to modify or refine elements of our restaurant system to evolve our concepts in order to compete with popular new restaurant formats or concepts that may develop in the future. There can be no assurance that we will be successful in implementing these modifications or that these modifications will not reduce our profitability.

Fluctuations in operating results may cause profitability to decline.

Our operating results may fluctuate significantly as a result of a variety of factors, including:

• general economic conditions;

• consumer confidence in the economy;

• changes in consumer preferences;

• competitive factors;

• weather conditions;

• timing of new restaurant openings and related expenses;

• timing and duration of temporary restaurant closures;

• changes in governmental regulations;

• revenues contributed by new restaurants; and

• increases or decreases in comparable restaurant revenues.

We typically incur the most significant portion of restaurant opening expenses associated with a given restaurant within the three months immediately preceding and the month of the opening of the restaurant. Our experience to date has been that labor and operating costs associated with a newly opened restaurant for the first several months of operation are materially greater than what can be expected after that time, both in aggregate dollars and as a percentage of revenues. Accordingly, the volume and timing of new restaurant openings has had, and is expected to continue to have, a meaningful impact on restaurant opening expenses as well as labor and operating costs.

Our inability to find a sufficient number of qualified teppanyaki and sushi chefs could negatively impact our expansion plans.

The success of our growth strategy is dependant on hiring and training a sufficient number of qualified teppanyaki and sushi chefs. The teppanyaki chefs are the centerpiece of the experience at the Benihana restaurants where customers go to be entertained by the chef’s performance at their table. Sushi chefs must possess the skills necessary for artfully preparing fresh sushi at each of our three concepts. Our inability to identify and hire a sufficient number of qualified individuals for these positions will have a direct negative impact on our ability to open new restaurant units.

Our inability to retain key personnel could negatively impact our business.

Our success will continue to be highly dependent on retaining key operating officers and employees. We must continue to attract, retain and motivate a sufficient number of qualified management and operating personnel, including regional managers, general managers and executive and sushi chefs to keep pace with our expansion schedule. Individuals of this caliber may be in short supply and such a shortage may limit our ability to effectively penetrate new markets. Additionally, the ability of these key personnel to maintain consistency in the quality and atmosphere of our restaurants is a critical factor in our success. Any failure to do so may harm our reputation and result in a loss of business.

Failure to comply with governmental regulations could harm our business and our reputation.

We are subject to regulation by federal agencies and regulation by state and local health, sanitation, building, zoning, safety, fire and other departments relating to the development and operation of restaurants. These regulations include matters relating to:

• the environment;

• building construction;

• zoning requirements;

• the preparation and sale of food and alcoholic beverages; and

• employment.

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Our facilities are licensed and subject to regulation under state and local fire, health and safety codes. The construction and remodeling of restaurants will be subject to compliance with applicable zoning, land use and environmental regulations. We may not be able to obtain necessary licenses or other approvals on a cost-effective and timely basis in order to construct and develop restaurants in the future.

Various federal and state labor laws govern our operations and our relationship with our employees, minimum wage, overtime, working conditions, fringe benefit and work authorization requirements. In particular, we are subject to federal immigration regulations. Given the location of many of our restaurants, even if we operate those restaurants in strict compliance with federal immigration requirements, our employees may not all meet federal work authorization or residency requirements, which could lead to disruptions in our work force.

Our business can be adversely affected by negative publicity resulting from complaints or litigation alleging poor food quality, food-borne illness or other health concerns or operating issues stemming from one or a limited number of restaurants. Unfavorable publicity could negatively impact public perception of our brand.

We are required to comply with the alcohol licensing requirements of the federal government, states and municipalities where our restaurants are located. Alcoholic beverage control regulations require applications to state authorities and, in certain locations, county and municipal authorities for a license and permit to sell alcoholic beverages. Typically, licenses must be renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations relate to numerous aspects of the daily operations of the restaurants, including minimum age of guests and employees, hours of operation, advertising, wholesale purchasing, inventory control and handling and storage and dispensing of alcoholic beverages. If we fail to comply with federal, state or local regulations, our licenses may be revoked and we may be forced to terminate the sale of alcoholic beverages at one or more of our restaurants.

The federal Americans with Disabilities Act (“the ADA”) prohibits discrimination on the basis of disability in public accommodations and employment. We are required to comply with the ADA and regulations relating to accommodating the needs of disabled persons in connection with the construction of new facilities and with significant renovations of existing facilities.

Failure to comply with these and other regulations could negatively impact our business and our reputation.

Future changes in financial accounting standards may cause adverse unexpected operating results and affect our reported results of operations.

Changes in accounting standards can have a significant effect on our reported results and may affect our reporting of transactions completed before the change is effective. New pronouncements and varying interpretations of pronouncements have occurred and may occur in the future.

Changes to existing rules or differing interpretations with respect to our current practices may adversely affect our reported financial results.

Implementing our growth and renovation strategies may strain our management resources and negatively impact our competitive position.

Our growth and renovation strategies may strain our management, financial and other resources. We must maintain a high level of quality and service at our existing and future restaurants, continue to enhance our operational, financial and management capabilities and locate, hire, train and retain experienced and dedicated operating personnel, particularly restaurant managers and chefs. We may not be able to effectively manage these and other factors necessary to permit us to achieve our expansion objectives and any failure to do so could negatively impact our competitive position.

Potential labor shortages may delay planned openings or damage customer relations.

Our success will continue to be dependent on our ability to attract and retain a sufficient number of qualified employees, including restaurant managers, chefs, kitchen staff and wait staff to keep pace with our expansion schedule. Qualified individuals needed to fill these positions may be in short supply in certain areas. Our inability to recruit and retain qualified individuals may delay the planned openings of new restaurants while high employee turnover in existing restaurants may negatively impact customer service and customer relations resulting in an adverse effect on our revenues or results of operations.

10

Rising insurance costs could negatively impact profitability.

The cost of insurance (workers compensation insurance, general liability insurance, property insurance, health insurance and directors and officers liability insurance) has risen significantly over the past few years and is expected to continue to increase. These increases, as well as potential state legislation requirements for employers to provide health insurance to employees, could have a negative impact on our profitability if we are not able to negate the effect of such increases with plan modifications and cost control measures or by continuing to improve our operating efficiencies. We self-insure a substantial portion of our workers compensation and health care costs and unfavorable changes in trends could also have a negative impact on our profitability.

Litigation could have a material adverse effect on our business.

We may be the subject of complaints or litigation from guests alleging illness, injury or other concerns related to visits to our restaurants. We may be adversely affected by publicity resulting from such allegations regardless of whether such allegations are valid or whether we are liable. We may be subject to complaints or allegations from current, former or prospective employees. We may also be subject to complaints or allegations from our shareholders. A lawsuit or claim could result in an adverse decision against us that could have a materially adverse effect on our business. Additionally, the costs and expense of defending ourselves against lawsuits or claims, regardless of merit, could have an adverse impact on our profitability.

While we carry general liability insurance, we may still be subject to a judgment in excess of our insurance coverage and we may not be able to obtain or continue to maintain such insurance coverage at reasonable costs, or at all.

We are involved in legal proceedings, including, but not limited to the following matters:

We are in a dispute with the former holders of the balance of Haru’s equity (the “Minority Stockholders”) concerning the amount owed by us to the former Minority Stockholders in payment for shares in the subsidiary which the former Minority Stockholders elected to sell to us.

We filed a complaint in the action, Benihana Monterey Corporation v. Nara Benihana Monterey, Inc., et al, , in connection with a default on a Promissory Note in the amount of $375,000 signed by one of our franchisees and a Personal Guaranty signed by the owner of such franchise. 

Additionally, we were served with a complaint in the action, National Cable Communications, LLC v. The Romann Group and Benihana Inc., where the plaintiff alleges that we are jointly and severally liable with our co-defendant, the Romann Group, for unpaid payments relating to spot cable advertisements allegedly purchased by Romann Group on our behalf and placed by plaintiff. The Romann Group served its answer in this action denying our cross claims and asserted counterclaims against the plaintiff and cross-claims against us for unspecified damages.

The results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on our financial position and results of operations.

Compliance with existing and new regulations of corporate governance and public disclosure may result in additional expenses.

Compliance with changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations and NASDAQ Stock Market rules has required an increased amount of management attention and external resources. We are committed to maintaining high standards of corporate governance and public disclosure. This investment required to comply with these changing regulations may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

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Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

Of the 88 restaurants in operation at May 31, 2008, 13 are located on owned real estate and 75 are leased pursuant to land or land and building leases, which require either a specific monthly rental or a minimum rent and additional rent based upon a percentage of gross sales. In addition, there are eight Benihana restaurants and seven RA Sushi restaurants under development. The freestanding, traditional Benihana restaurant units, which are generally one story buildings, are on average between approximately 7,000 and 8,000 square feet. Benihana restaurants located in shopping centers, office buildings and hotels are of similar size but differ somewhat in appearance from location to location in order to conform to the appearance of the buildings in which they are located or limitations imposed by landlords or municipalities. The RA Sushi and Haru restaurant units average approximately 5,000 square feet, which excludes outdoor seating.

We lease approximately 16,300 square feet of space for our general administrative offices in Miami, FL at an annual rental of approximately $304,000 and 8,000 square feet for a warehouse in Miami, FL at an annual rental of approximately $40,000. The leases expire on November 30, 2013 and October 31, 2008, respectively.

We are actively pursuing new locations suitable for development as restaurant units for each of our concepts. Generally, these leases are “triple net” leases which pass increases in property operating expenses, such as real estate taxes and utilities, through to us as tenant. Expiration of these leases, including renewal options, occurs at various dates through calendar year 2034.

The following table sets forth the locations, by state, of our Company-owned restaurants as of May 31, 2008:

	Benihana	RA Sushi	Haru	Total
Alaska	1	—	—	1
Arizona	3	6	—	9
Califonia	14	4	—	18
Colorado	2	—	—	2
District of Columbia	1	—	—	1
Florida	7	2	—	9
Georgia	3	—	—	3
Illinois	3	3	—	6
Indiana	1	—	—	1
Maryland	1	1	—	2
Massachusetts	—	—	1	1
Michigan	3	—	—	3
Minnesota	2	—	—	2
Nevada	—	1	—	1
New Jersey	2	—	—	2
New York	3	—	7	10
Ohio	3	—	—	3
Oregon	1	—	—	1
Pennsylvania	1	—	1	2
Tennessee	1	—	—	1
Texas	6	2	—	8
Utah	1	—	—	1
Virginia	1	—	—	1
Total	60	19	9	88

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The following table sets forth the locations, by state, of our restaurants under development as of May 31, 2008:

	Under development
	Benihana	RA Sushi	Total
Califonia	—	2	2
Florida	2	2	4
Illinois	1	—	1
Kansas	—	1	1
Massachusetts	1	1	2
New Jersey	1	—	1
Ohio	1	—	1
Pennsylvania	1	—	1
Texas	1	1	2
Total	8	7	15

Item 3. Legal Proceedings

Haru Minority Stockholders Litigation

In December 1999, we completed the acquisition of 80% of the equity of Haru Holding Corp. (“Haru”). The acquisition was accounted for using the purchase method of accounting. Pursuant to the purchase agreement, at any time during the period from July 1, 2005 through September 30, 2005, the holders of the balance of Haru’s equity (the “Minority Stockholders”) had a one-time option to sell their remaining shares to us (the “put option”). The exercise price under the put option was to be calculated as four and one-half (4½) times Haru’s consolidated cash flow for the fiscal year ended March 27, 2005 less the amount of Haru’s debt (as that term is defined in the purchase agreement) at the date of the computation.

On July 1, 2005, the Minority Stockholders exercised the put option.

We believe that the proper application of the put option price formula would result in a payment to the former Minority Stockholders of approximately $3.7 million. We have offered to pay such amount to the former Minority Stockholders and recorded a $3.7 million liability with respect thereto.

On August 25, 2006, the former Minority Stockholders sued us. The suit (which was filed in the Supreme Court of the State of New York, County of New York, but has been removed to the United States District Court for the Southern District of New York) seeks an award of $10.7 million, based on the former Minority Stockholders’ own calculation of the put option price formula and actions allegedly taken by us to reduce the value of the put option.

On December, 19, 2007, the Court dismissed all of the claims against us, except for the breach of fiduciary duty and breach of contract claims. On January 25, 2008, we filed our Answer and Affirmative Defenses to the Amended Complaint. The Court has set a discovery deadline of July 25, 2008.

We believe that we have correctly calculated the put option price and that the claims of the former Minority Stockholders are without merit. However, there can be no assurance as to the outcome of this litigation.

Other Litigation

On May 17, 2007, Benihana Monterey Corporation, a subsidiary of ours, filed a complaint in the action, Benihana Monterey Corporation v. Nara Benihana Monterey, Inc., et al, , pending in the Superior Court of California, County of Monterey. The action was commenced against various defendants in connection with a default on a Promissory Note in the amount of $375,000 signed by one of our franchisees and a Personal Guaranty signed by the owner of such franchise. We are seeking $375,000 plus interest and costs and have attached certain of the defendants’ assets by way of an Attachment Order. The franchisee filed a counter-claim alleging certain misrepresentations by us, and in March of 2008, the Court dismissed the counter-claim. We have obtained judgment against the defendant for approximately $500,000, including the repayment of $375,000 Promissory Note, interest and other costs. We have served the defendant with an order regarding examination of the defendant’s assets and have filed a subpoena requiring the defendant and the defendant’s entities to produce substantial documents. We have evaluated the collectibility of the outstanding balance of the Promissory Note, and during fiscal 2008, established a $400,000 reserve for the estimated portion of the Promissory Note that may not be collectible.

On August 3, 2007, we were served with a complaint in the action, National Cable Communications, LLC v. The Romann Group and Benihana Inc., pending in the Supreme Court of the State of New York. In this action, plaintiff alleges that we are jointly and severally liable with our co-defendant, the Romann Group, for unpaid payments relating to spot cable advertisements allegedly purchased by Romann Group on our behalf and placed by plaintiff. Plaintiff’s complaint demands judgment of approximately $570,000 plus interest, costs and disbursements. We have answered the complaint, denying liability with respect to the plaintiff’s claims and have asserted cross-claims against the Romann Group. The Romann Group served its answer in this action denying our cross claims and asserted counterclaims against the plaintiff and cross-claims against us for unspecified damages. We believe that both the plaintiff’s and the Romann Group’s cross-claims are without merit and will vigorously defend against the claims.

We are not subject to any other significant pending legal proceedings, other than ordinary routine claims incidental to our business.

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Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders during the fourth quarter of fiscal year 2008.

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PART II

Item 5. Market for the Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities

Certain information required by this Item is incorporated herein by reference from the information under the caption “Common Stock Information” contained in the Company’s 2008 Annual Report to Shareholders.

Item 6. Selected Financial Data

The information required by this Item is incorporated herein by reference from the information under the caption “Selected Financial Data” contained in the Company’s 2008 Annual Report to Shareholders.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information required by this Item is incorporated herein by reference from the information under the caption “Management’s Discussion and Analysis” contained in the Company’s 2008 Annual Report to Shareholders.

Item 7A. Quantitative and Qualitative Disclosures About Market Risks

The information required by this Item is incorporated herein by reference from the information under the caption “Quantitative and Qualitative Disclosures about Market Risks” contained in the Company’s 2008 Annual Report to Shareholders.

Item 8. Financial Statements and Supplementary Data

The information required by this Item is incorporated herein by reference from the information under the caption “Consolidated Financial Statements” contained in the Company’s 2008 Annual Report to Shareholders.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the date of such evaluation.

Internal Control Over Financial Reporting

Management’s report on our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) and the related report of our independent public accounting firm are included in our 2008 Annual Report under the caption “Managements’ Report on Internal Control over Financial Reporting” and “Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting,” respectively, and are incorporated by reference.

Changes in Internal Control over Financial Reporting

There has been no significant change in our internal control over financial reporting in connection with the evaluation required by paragraph (d) of Rule 13a-15 of the Exchange Act that occurred during the fourth quarter of our fiscal year ended March 30, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this Item is incorporated herein by reference from the information under the caption “Election of Directors” contained in the Company’s Proxy Statement for its 2008 Annual Meeting of Stockholders (the “Company’s Proxy Statement”).

15

We have adopted a written code of business conduct and ethics that applies to our Chief Executive Officer, Chief Financial Officer and all of our officers and directors and can be found on our website, which is located at www.benihana.com. We intend to make all required disclosures concerning any amendments to, or waivers from, our code of business conduct and ethics on our website.

Item 11. Executive Compensation

The information required by this Item is incorporated herein by reference from the information under the caption “Executive Compensation” contained in the Company’s Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required in part by this Item is incorporated herein by reference from the information under the caption “Security Ownership of Certain Beneficial Owners of Management” contained in the Company’s Proxy Statement.

The following sets forth certain information, as of March 30, 2008, with respect to our equity compensation plans, under which our securities may be issued:

Equity Compensation Plan Information

Plan category	Number of securities to be issued upon exercise of outstanding options warrants and rights		Weighted average exercise price of outstanding options warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders		1,520,713	$	9.92		410,700
Equity compensation plans not approved by security holders		8,625		5.23		—
Total		1,529,338		9.90		410,700

Item 13. Certain Relationships and Related Transactions and Director Independence

The information required by this Item is incorporated herein by reference from the information under the caption “Certain Relationships and Related Transactions” contained in the Company’s Proxy Statement.

Item 14. Principal Accountant Fees and Services

The information required by this item is incorporated herein by reference from the information under the caption “Principal Accountant Fees and Services” contained in the Company’s Proxy Statement.

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a)	1.	Financial Statements:
		The following consolidated financial statements of the Company and its subsidiaries, which are set forth on pages 18 through 38 of the Company’s 2008 Annual Report to Shareholders included herein as Exhibit 13.01, are incorporated herein by reference as part of this report.
		Consolidated Statements of Earnings for the years ended March 30, 2008, April 1, 2007 and March 26, 2006.
		Consolidated Balance Sheets as of March 30, 2008 and April 1, 2007.
		Consolidated Statements of Stockholders’ Equity for the years ended March 30, 2008, April 1, 2007 and March 26, 2006.
		Consolidated Statements of Cash Flows for the years ended March 30, 2008, April 1, 2007 and March 26, 2006.
		Notes to Consolidated Financial Statements.
		Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements.
		Management’s Report on Internal Control Over Financial Reporting.
		Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting.

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2.	Financial Statement Schedules:
	None
3.	Exhibits:
	2.01	Amended and Restated Agreement and Plan of Reorganization dated as of December 29, 1994 and amended as of March 17, 1995 among BNC, BOT, the Company and BNC Merger Corp. Incorporated by reference to Exhibit 2.01 to the Company’s Registration Statement on Form S-4, Registration No. 33-88295, made effective March 23, 1995 (the “S-4”).
	3.01	Certificate of Incorporation of the Company. Incorporated by reference to Exhibit 3.01 to the S-4 and to Exhibit 1 on Form 8-A dated February 12, 1997.
	3.02	By-Laws of the Company. Incorporated by reference to Exhibit 3.02 to the S-4.
	3.03	Amendment No. 1 to the By-Laws of the Company. Incorporated by reference to Exhibit 3.02 to Form 8-K filed November 21, 2007.
	4.01	Certificate of Designation of Rights, Preferences and Terms for the Series A Convertible Preferred Stock of the Company. Incorporated by reference to Exhibit 4.01 to the Company’s Current Report on Form 8-K dated May 15, 1995.
	4.02	Form of Certificate representing shares of the Company’s Common Stock. Incorporated by reference to Exhibit 4.02 to the S-4.
	4.03	Form of Certificate representing shares of the Company’s Class A Common Stock. Incorporated by reference to Exhibit 4.03 to the S-4.
	10.01	License Agreement, dated as of May 15, 1995 between BNC and BOT. Incorporated by reference to Exhibit 10.01 to the S-4.
	10.02	Directors’ Stock Option Plan. Incorporated by reference to Exhibit 10.08 to the S-4.
	10.03	1996 Class A Stock Option Plan. Incorporated by reference to Exhibit A to Benihana Inc. Proxy Statement for its Annual Meeting of Stockholders held on July 19, 1996.
	10.04	1997 Class A Stock Option Plan. Incorporated by reference to Exhibit A to Benihana Inc. Proxy Statement for its Annual Meeting of Stockholders held on August 27, 1998 (the “1998 Proxy Statement”).
	10.05	Amended and Restated Directors’ Stock Option Plan. Incorporated by reference to Exhibit B to the 1998 Proxy Statement.
	10.06	2000 Employees’ Class A Common Stock Option Plan. Incorporated by reference to Exhibit A to Benihana Inc. Proxy Statement for its Annual Meeting of Stockholders held on August 3, 2000.
	10.07	2003 Directors’ Stock Option plan. Incorporated by reference to Exhibit A to Benihana Inc. Proxy Statement for its Annual Meeting of Stockholders held on August 21, 2003.
	10.08	Stockholders Agreement dated as of December 6, 1999 by and among Haru Holding Corp., BNC, Mei Ping Matsumura and the Estate of Arthur Cutler. Incorporated by reference to Exhibit 10.10 to the Company’s Registration Statement on Form S-2, Registration Number 333-68946.
	10.09	Benihana Incentive Compensation Plan. Incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1996.
	10.10	Employment Agreement dated April 1, 2001 between Joel A. Schwartz and the Company.
	10.11	Employment Agreement dated April 1, 2001 between Taka Yoshimoto and the Company. Incorporated by reference to Exhibit 10.12 of the 2001 10-K.

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10.12	Employment Agreement dated September 1, 2003 between Kevin Aoki and the Company. Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarterly year ended October 12, 2003.
10.13	Employment Agreement dated September 1, 2003 between Juan C. Garcia and the Company. Incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q for the quarterly year ended October 12, 2003.
10.14	Amendment No. 1 dated May 27, 2004 to Employment Agreement dated April 1, 2001 between Joel A. Schwartz and the Company. Incorporated by reference to Exhibit 10.18 to the 2004 10-K.
10.15	Preferred Stock Purchase Agreement between Benihana Inc. and BFC Financial Corporation dated June 8, 2004. Incorporated by reference to Exhibit 10.19 of the 2004 10-K.
10.16	Amendment No. 1 dated October 17, 2005 to Employment Agreement dated September 1, 2003 between Juan C. Garcia and the Company. Incorporated by reference to Exhibit 10.01 to Form 8-K filed October 20, 2005.
10.17	Agreement of Sale dated April 17, 2006 by and among Benihana Lincoln Road Corp., Benihana National Corp., Doraku Lincoln Road LLC and Aoki Group LLC. Incorporated by reference to Exhibit 10.1 to Form 8-K filed April 21, 2006.
10.18	Restrictive Covenant and Agreement not to Disclose Confidential Information dated April 17, 2006 by and between Kevin Aoki and Benihana Inc. Incorporated by reference to Exhibit 10.2 to Form 8-K filed April 21, 2006.
10.19	Employment Agreement dated April 1, 2006 between Taka Yoshimoto and the Company. Incorporated by reference to Exhibit 10.27 of the 2006 10-K.
10.20	Employment Agreement dated August 28, 2006 between Jose I. Ortega and the Company. Incorporated by reference to Exhibit 10.01 to Form 8-K filed August 31, 2006.
10.21	Amendment No. 2 dated August 28, 2006 to Employment Agreement dated September 1, 2003 between Juan C. Garcia and the Company. Incorporated by reference to Exhibit 10.02 to Form 8-K filed August 31, 2006.
10.22	Credit Agreement, dated March 15, 2007, between the Company and its subsidiaries and Wachovia Bank, National Association. Incorporated by reference to Exhibit 10.1 to Form 8-K filed March 16, 2007.
10.23	Promissory Noted dated March 15, 2007 by the Company in favor of Wachovia Bank, National Association. Incorporated by reference to Exhibit 10.2 to Form 8-K filed March 16, 2007.
10.24	Security Agreement, dated March 15, 2007, by and among the Company and its subsidiaries and Wachovia Bank, National Association. Incorporated by reference to Exhibit 10.3 to Form 8-K filed March 16, 2007.
10.25	Pledge Agreement, dated March 15, 2007, by and among the Company and its subsidiaries and Wachovia, National Association. Incorporated by reference to Exhibit 10.4 to Form 8-K filed March 16, 2007.
10.26	Employment Agreement dated June 18, 2007 between Juan C. Garcia and the Company. Incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarterly year ended July 22, 2007.
10.27	Benihana Executive Incentive Compensation Plan. Incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended July 22, 2007.
10.28	Amended and Restated Rights Agreement, dated as of January 31, 2007 between American Stock Transfer & Trust Company and the Company. Incorporated by reference to Exhibit 99.1 to Form 8-K filed February 2, 2007 and Exhibit 99.2 to Form 8-K filed May 21, 2007.
10.29	Amendment, dated as of May 18, 2007, to Amended and Restated Rights Agreement, dated as of January 31, 2007, by and between the Company and American Stock Transfer & Trust Company. Incorporated by reference to Exhibit 99.1 to Form 8-K filed May 21, 2007.

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10.30	2007 Equity Incentive Plan. Incorporated by reference to Exhibit 4.02 to Form S-8 filed April 18, 2008.
10.31	Form of Director Stock Option Agreement under the 2007 Equity Incentive Plan. Incorporated by reference to Exhibit 10.01 to Form S-8 filed April 18, 2008.
10.32	Form of Employee Stock Option Agreement under the 2007 Equity Incentive Plan. Incorporated by reference to Exhibit 10.02 to Form S-8 filed April 18, 2008.
10.33	Form of Employee Restricted Stock Agreement under the Company’s 2007 Equity Incentive Plan. Incorporated by reference to Exhibit 4.03 to Form S-8 filed April 18, 2008.
10.34	Employment Agreement dated March 17, 2008 between Joel A. Schwartz and the Company.
13.01	Portions of Annual Report to Stockholders for the year ended March 30, 2008.
21.01	Subsidiaries
23.01	Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm.
31.01	Chief Executive Officer’s certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.02	Chief Financial Officer’s certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.01	Chief Executive Officer’s certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.02	Chief Financial Officer’s certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: June 13, 2008	BENIHANA INC.
	By: /s/ Joel A. Schwartz
	Joel A. Schwartz, CEO

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on the date indicated above by the following persons on behalf of the registrant and in the capacities indicated.

Signature	Title	Date
/s/ Joel A. Schwartz	Chief Executive Officer and	June 13, 2008
Joel A. Schwartz	Chairman of the Board of Directors (Principal Executive Officer)
/s/ Jose I. Ortega	Vice President of	June 13, 2008
Jose I. Ortega	Finance and Treasurer - Chief Financial Officer (Principal Financial and Accounting Officer)
/s/ John E. Abdo	Director	June 13, 2008
John E. Abdo
/s/ Norman Becker	Director	June 13, 2008
Norman Becker
/s/ J. Ronald Castell	Director	June 13, 2008
J. Ronald Castell
/s/ Lewis Jaffe	Director	June 13, 2008
Lewis Jaffe
/s/ Richard C. Stockinger	Director	June 13, 2008
Richard C. Stockinger
/s/ Robert B. Sturges	Director	June 13, 2008
Robert B. Sturges
/s/ Joseph J. West	Director	June 13, 2008
Joseph J. West
/s/ Taka Yoshimoto	Executive Vice President -	June 13, 2008
Taka Yoshimoto	Restaurant Operations and Director

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EX-10

Exhibit 10.34

2008
AMENDED AND RESTATED EMPLOYMENT AGREEMENT

          AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of the 17 day of March, 2008, by and among BENIHANA INC., a Delaware corporation (the “Company”) and JOEL A. SCHWARTZ (the “Executive”).

          Executive is employed by the Company as its Chairman and Chief Executive Officer. The Company and Executive desire to amend and restate Executive’s employment agreement with the Company dated as of the 1^st day of April, 2001, and as amended to date (the “Existing Agreement”).

          NOW THEREFORE, in consideration of the premises and of the mutual covenants hereinafter set forth, the parties hereto have agreed, and do hereby agree, the Existing Agreement is hereby amended and restated to read in its entirety as follows:

                         1.          EMPLOYMENT TERM

                                                  1.1 The Company will employ Executive in its business and Executive will work for the Company as Chairman and Chief Executive Officer for a term ending on March 31, 2011 unless sooner terminated as provided herein. Executive also agrees to serve as director of the Company and as an officer and director of any subsidiary, if so elected. Employment Period shall mean the term hereof. Executive may terminate this Agreement upon not less than three months prior written notice to the Company in the event that Executive would be required, in order to perform his services hereunder, to move his principal residence from the metropolitan Miami area.

                                                  1.2 The term “Company” as used in this Agreement shall be deemed to include any and all present and future subsidiaries and affiliates of the Company.

                         2.          DUTIES

                                                  2.1 During the Employment Period, Executive shall perform the duties of Chairman and Chief Executive Officer of the Company and such further executive duties consistent with such position as shall, from time to time, be reasonably delegated or assigned to him by the Board of Directors of the Company consistent with Executive’s abilities.

                         3.          DEVOTION OF TIME

                                                  3.1 During the Employment Period, Executive shall expend substantially all of his working time for the Company; shall devote his best efforts, energy and skill to the services of the Company and the promotion of its interests; and shall not take part in activities detrimental to the best interests of the Company.

                         4.          COMPENSATION

                                                  4.1 In respect of services to be performed by Executive during the Employment Period, the Company agrees to pay Executive at the annual rate in effect on the date hereof until March 31, 2008 and at the annual rate of four hundred thousand dollars ($400,000) effective from and after April 1, 2008(“Basic Compensation”), payable in accordance with the Company’s customary payroll practices for executive employees.

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                                                  4.2 The Basic Compensation shall be increased by an amount established by reference to the “Consumer Price Index for Urban Wage Earners and Clerical Workers, New York, New York- Northern New Jersey area published by the Bureau of Labor Statistics of the United States Department of Labor (the “Consumer Price Index”). The base period shall be the month ended December 31, 2007 (the “Base Period”). If the Consumer Price Index for the month of December in any year, commencing in 2008, is greater than the Consumer Price Index for the Base Period, Basic Compensation shall be increased, commencing on April 1 of the next following year, to the amount obtained by multiplying Basic Compensation by a fraction, the numerator of which is the Consumer Price Index for the month of December of the year in which such determination is being made and the denominator of which is the Consumer Price Index for the Base Period.

                                                  4.3 Executive shall also be entitled to participate in the Benihana Executive Incentive Compensation Plan (as from time to time amended and in accordance with the terms thereof) and to such additional increments and bonuses as shall be determined from time to time by the Board of Directors of the Company or its Compensation Committee. Any such additional, discretionary bonuses shall be paid to Executive within two and one-half months after the end of the fiscal year or other period with respect to which they are paid.

                                                  4.4 If during the term hereof Executive owns any options to purchase securities of the Company which securities are publicly traded and which options were granted to him in connection with his service as an employee, officer or director of the Company, Executive shall have the right at any time within twelve months following the date of any “Change in Control”, as defined in Section 7.1 to cause the Company to repurchase such options from him (but only to the extent that such options are then exercisable by him in accordance with their terms) at a purchase price equal to the difference between (i) the closing price of the appropriate security of the Company (if traded on the New York or American Stock Exchange or quoted in the NASDAQ National Market) or the average between the closing bid and asked prices (if traded on the over-the-counter market) on the date immediately prior to the date on which Executive exercises such right and (ii) the exercise price of such option; provided however, that in no fiscal year of the Company shall the aggregate purchase price of such options exceed five percent (5%) of the total stockholders equity (net worth) of the Company as shown on its audited financial statements for the fiscal year immediately preceding the year in which such right is exercised. Such right shall be exercised by Executive giving the Company written notice thereof and the purchase and sale shall be consummated not more than ten (10) business days after receipt by the Company of the notice of exercise. The Company shall withhold all applicable withholding taxes from any amounts due to Executive under this Section 4.4.

                                                  4.5 Upon any termination of this Agreement or Executive’s employment hereunder, Executive shall be entitled to be paid only (i) any earned but unpaid Basic Compensation due to Executive at the time of such termination, (ii) any amounts due to him under (and in accordance with the terms of) any employee benefit or bonus plans in which he was a participant, and (iii) the amounts, if any, payable to him pursuant to the terms of Sections 6 through 9 below, and such payments are in lieu of any severance or similar payments which may be provided by the Company from time to time. Executive shall not be entitled to receive any other or additional compensation of any kind. Notwithstanding anything to the contrary contained therein, Executive’s right to receive any payments provided for under Sections 6.2 through 9 shall be conditioned upon and subject to Executive’s execution and delivery to the Company (not later than 30 days after any termination of his employment under such Sections) of a general release, substantially in the form of that attached hereto as Exhibit A.

                         5.          USE OF AUTOMOBILE; REIMBURSEMENT OF EXPENSES

                                                  5.1 During the Employment Period, the Company shall pay directly, or reimburse Executive, for all other reasonable and necessary expenses (other than the automobile expenses described in Section 5.2) and disbursements incurred by him for and on behalf of the Company in the performance of his duties during the Employment Period upon submission of vouchers or other evidence thereof in accordance with the Company’s usual policies of expense reimbursement.

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                                                  5.2 In addition to the reimbursement described in Section 5.1, during the Employment Period, Executive shall receive an allowance of $300 per month for automobile expenses, including lease costs or purchase price, gasoline and oil and garaging.

                         6.          DISABILITY OR DEATH

                                                  6.1 If, during the Employment Period, Executive shall die, this Agreement shall terminate upon such death and the Company shall pay to such person or persons as Executive shall from time to time designate in writing as the beneficiary of such payment, or, in the absence of such designation, to Executive’s estate(“Beneficiary”) the amount of Three Hundred and Fifty Thousand ($350,000) Dollars less the amount of any insurance on Executive’s life which has been purchased by the Company for payment to the Beneficiary. Such payment shall be made in a lump sum within ninety (90) days after the death of Executive.

                                                  6.2 If, during the Employment Period, Executive suffers a “Disability,” this Agreement shall terminate as of the date on which the Executive is determined by the Board of Directors of the Company (in good faith and after consultation with and in reliance upon the advice of appropriate medical experts) to have a Disability (a “Section 6.2 Termination”), and the Retirement Benefit provided for in Section 9 below shall be paid to the Executive in accordance with its terms. “Disability” shall mean any medically determinable physical or mental impairment which is reasonably likely to result in the death of Executive or the inability of Executive, for a continuous period of more than twelve (12) months, to perform substantially all of his regular duties and carry out substantially all of his responsibilities hereunder. The Company shall have the right to have Executive examined by a competent doctor for purposes of determining any physical or mental impairment Executive may have suffered.

                                                  6.3 The obligations of the Company to pay the Retirement Benefit provided for in Section 9 may be satisfied, in whole or in part, by payments to Executive under disability insurance provided by the Company, and under laws providing disability benefits for employees. Any such payments received by Executive after the expiration of the Term of this Agreement shall be credited against and serve to reduce the payments provided for under Section 9 in the direct order of their maturity, and any such payments received by Executive during the Term of this Agreement shall be credited against and serve to reduce any Basic Compensation due to Executive hereunder.

                         7.          CHANGE IN CONTROL

                                                  7.1 In the event at any time during the Employment Period, a majority of the Board of Directors is composed of persons who are not “Continuing Directors”, as hereinafter defined, which event is defined to mean a “Change in Control”, Executive shall have the option, to be exercised by written notice to the Company, to resign as an employee and terminate this Agreement, effective as of such date specified in the notice of exercise and upon such termination (a “Section 7.1 Termination”)to receive payment (as provided below) of a sum equal to the product of (A) the Basic Compensation in effect on the date of such termination multiplied (B) by the number of years (both full and partial) remaining in the term hereof had such termination not occurred. The payment calculated in accordance with the provisions of the preceding sentence is defined as the “Severance Payment.” The Severance Payment shall be paid to Executive in sixty (60) equal consecutive monthly installments, commencing on the first day of the month following the month in which the Section 7.1 Termination occurred. Notwithstanding any thing to the contrary contained above, in the event that at the time of the Section 7.1 Termination (i) the Company has securities that are publicly traded on an “established securities exchange”, and (ii) Executive is a “specified employee” of the Company (in each case, as such quoted terms are defined in Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) or rules and regulations issued thereunder), the Company shall delay the payment of the first six installments of the Severance Payment due to Executive under this Section 7.1 to the date that is six months plus one day (the “Delayed Payment Date”) after the Section 7.1 Termination, it being understood that any payment so delayed shall be paid to Executive in a lump sum and without interest on the Delayed Payment Date; provided, however, that such payment shall be so delayed only to the extent necessary to prevent any accelerated or additional tax under Section 409A of the Code. The Severance Payment shall constitute liquidated damages and not a penalty, and Executive shall not be obligated to seek employment to mitigate his damages; nor shall any compensation Executive receives from any party subsequent to such Termination be an offset to the amount of such payment. The Severance Payment is in addition to and not in lieu of any Retirement Benefit to which Executive is entitled under the provisions of Section 9 below.

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                                                  7.2 “Continuing Directors” shall mean (i) the directors of the Company at the close of business on the date hereof, and (ii) any person who was or is recommended to (A) succeed a Continuing Director or (B) becomes a director as a result of an increase in the size of the Board, in each case, by a majority of the Continuing Directors then on the Board.

                                                  7.3 In the event that payments to Executive under this Section 7, plus payments made under Section 9 on account of a Change in Control, plus any other payments or other benefits made by the Company to Executive on account of a Change in Control would, in the opinion of tax counsel selected by the Company and reasonably acceptable to Executive (“Tax Counsel”), be subject, in whole or in part, to the excise tax (the “Excise Tax”) imposed by Section 4999 of the Code, as determined as provided below, the total amount of such payments shall be reduced until no portion of such payments would be subject to the Excise Tax. For the purpose of this provision, (i) only the portion of such payments which in the opinion of Tax Counsel constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code shall be taken into account and (ii) such payments shall be reduced only to the extent necessary so that such payments would not be subject to the Excise Tax, in the opinion of Tax Counsel.

                         8.          TERMINATION OF EMPLOYMENT WITHOUT CAUSE

                                                  8.1 Upon any termination of Executive’s employment (i) by the Company without “Cause” as hereafter defined, or (ii) by Executive for “Good Reason” as hereinafter defined(each, a “Section 8 Termination”), Executive shall be entitled to receive an amount equal to the Severance Payment (the “Section 8 Severance Payment”).

                                                  8.2 The Section 8 Severance Payment shall be paid to Executive not later than 45 days after the Section 8 Termination; provided, however, that in the event that at the time of any such Termination (i)the Company has securities that are publicly traded on an “established securities market”, and (ii) Executive is a “specified employee” of the Company (in each case as such quoted terms are defined in Section 409A of the Code or rules and regulations issued thereunder), the Company shall delay any Section 8 Severance Payment due to Executive to the date that is six months plus one day (the “Delayed Payment Date”) after such Termination, it being understood that any payment so delayed shall be paid to Executive in a lump sum and without interest on the Delayed Payment Date; provided, however, that such payment shall be so delayed only to the extent necessary to prevent any accelerated or additional tax under Section 409A of the Code. The Section 8 Severance Payment shall constitute liquidated damages and not a penalty, and Executive shall not be obligated to seek employment to mitigate his damages; nor shall any compensation Executive receives from any party subsequent to such Termination be an offset to the amount of such payment. The Section 8 Severance Payment is in addition to and not in lieu of any Retirement Benefit to which Executive is entitled under the provisions of Section 9 below.

                                                  8.3 As used herein, the term “Cause” shall mean:(i) Executive’s deliberate and intentional refusal (except by reason of incapacity due to mental or physical illness or disability) to comply with the provisions of Section 3.1 of this Agreement relating to the time and effort to be devoted by Executive to the business and affairs of the Company after demand for performance by the Company that specifically identifies the manner in which the Company alleges Executive has not performed his duties, (ii) Executive’s proven dishonesty with respect to the Company, disloyalty, Executive’s gross negligence or willful misconduct which, in any case, results in demonstrable material harm to the Company, (iii) the breach by Executive of his covenant not to compete contained in Section 10.4 hereof, (iv) the continuing breach of any of the other covenants on Executive’s part herein set forth resulting in, or which may reasonably be expected to result in a substantial adverse effect on the Company, or (v) Executive’s conviction of a crime involving moral turpitude. “Good Reason” shall mean a termination by Executive (A) pursuant to the provisions of Section 1.1 or (B) as a result of a material breach by the Company of any of the Company’s material obligations under this Agreement, provided that (i) Executive gives notice of such condition to the Company within 90 days after the initial existence of the condition, which notice gives the Company 30 days within which to cure the condition and (ii) the condition is not cured within such 30-day period.

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                         9.          LONG TERM COMPENSATION AND MEDICAL INSURANCE

                         (a) In recognition of Executive’s many years of service to the Company and its predecessors, (A) in the event Executive’s employment with the Company is terminated by reason of (i) a Section 6.2 Termination, (ii) a Section 7.1 Termination, or (iii) a Section 8 Termination, or (B) in the event that this Agreement shall terminate on its scheduled expiration date without having been renewed or extended (an “Expiration Event”), the Company shall pay Executive, as additional long term compensation, an amount (referred to herein as the “Retirement Benefit”) equal to Five (5) times Executive’s Basic Compensation in effect as at the time of the relevant event specified in clause (A) or (B) above. The Retirement Benefit shall be paid to Executive in sixty (60) equal, consecutive monthly installments, commencing on the first day of the month following the month in which the relevant Termination or Expiration Event occurred. Nothing in this provision shall imply any obligation on the part of Executive or the Company to enter into an extension, renewal or replacement of this Agreement or to be reasonable in negotiating any such extension, renewal or replacement. Notwithstanding anything to the contrary contained above, in the event that at the time of the relevant Termination or Expiration Event, (i) the Company has securities that are publicly traded on an “established securities exchange”, and (ii) Executive is a “specified employee” of the Company (in each case as such quoted terms are defined in Section 409A of the Code or rules and regulations issued thereunder), the Company shall delay the payment of the first six installments of the Retirement Benefit due to Executive under this Section 9 to the date that is six months plus one day (the “Delayed Payment Date”) after the relevant Termination or Expiration Event, it being understood that any payment so delayed shall be paid to Executive in a lump sum and without interest on the Delayed Payment Date; provided, however, that such payment shall be so delayed only to the extent necessary to prevent any accelerated or additional tax under Section 409A of the Code.

                         (b) In addition, for a period of three years following any termination of his employment hereunder (other than a termination for Cause), Executive and his family members shall continue to be covered, at the expense of the Company, under any group medical, dental or similar insurance plan maintained generally for the benefit of the Company’s senior executives (the “Insurance Plans”) to the extent that Executive and such family members are then eligible to participate therein in accordance with their terms, it being understood that the Company shall use its good faith efforts (but without incurring any additional costs) to ensure that Executive and such family members maintain such eligibilty. To the extent that Executive is not eligible to participate in the Insurance Plans, the Company shall pay to Executive an amount (the “Insurance Payment”) equal to the amount paid by the Company during calendar year 2007 with respect to Executive’s participation in the Insurance Plans maintained by the Company. The Insurance Payment shall be increased annually to reflect any increases in the cost of living from and after December, 2007, such increases in the cost of living to be determined in accordance with the procedures set forth in Section 4.2 above. The Insurance Payment shall be made to Executive in such periodic installments as the Company may determine but in no event less frequently than quarterly, provided however that any Insurance Payment due to Executive with respect to any calendar year shall be payable no later than the end of the following calendar year. Notwithstanding anything herein to the contrary, (i) the Insurance Payment hereunder for any calendar year or the insurance benefit to be provided to Executive hereunder with respect to any calendar year shall not affect the amounts eligible for payment to Executive hereunder or the Insurance Payment to be provided to Executive hereunder in any other calendar year, and (ii) the right to the Insurance Payment or the insurance benefit to be provided to Executive hereunder shall not be subject to liquidation or exchange for another benefit.

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                         10.          CONFIDENTIAL INFORMATION; INVENTIONS; RESTRICTIVE COVENANT

                                                  10.1 Executive agrees not to divulge, furnish or make available to anyone (other than in the regular course of business of the Company) any knowledge or information with respect to the Company, or with respect to any other confidential or secret aspect of the Company’s activities.

                                                  10.2 Any methods, developments, inventions and/or improvements, whether patentable or unpatentable, which Executive may conceive or make along the lines of the Company’s business while in its employ as an employee or consultant, shall be and remain the property of the Company. Executive further agrees on request to execute patent applications based on such methods, developments, inventions and/or improvements, including any other instruments deemed necessary by the Company for the prosecution of such patent application or the acquisition of Letters Patent of this and any foreign country.

                                                  10.3 Executive agrees to communicate and make known to the Company all knowledge possessed by him relating to any methods, developments, inventions and/or improvements, whether patented, patentable or unpatentable, which concern in any way the business of the Company, whether acquired by him before or during the term hereof, provided, however, that nothing herein shall be construed as requiring any such communication where the method, development, invention and/or improvement is lawfully protected from disclosure as the trade secret of a third party or by any other lawful bar to such communication.

                                                  10.4 The services of Executive are unique and extraordinary and essential to the business of the Company, especially since Executive shall have access to the Company’s customer lists, trade secrets and other privileged and confidential information essential to the Company’s business. Therefore, Executive agrees that, so long as the Company is not in breach of any of its material obligations hereunder, during the term of this Agreement and for the Applicable Period following any termination hereof, Executive will not, without the prior written approval of the Company, directly or indirectly, within the United States of America, or any other area in which the Company shall then conduct substantial operations, engage in any business activity “competitive with the business of the Company”, as hereinafter defined, or solicit, directly or indirectly, any person who, at the time of such solicitation or at any time within twelve months prior thereto, was an employee or customer or account of the Company. For the purpose of this agreement a business activity competitive with the business of the Company shall include only (i) the operation or franchising of restaurants of a type then being operated, or under construction, by the Company and (ii) the sale, at wholesale or retail, of products similar in type and quality to those being marketed by the Company at the time of Executive’s termination of employment. “Applicable Period” means the period commencing upon the termination of Executive’s employment with the Company and ending upon the later of (i) one-year after any such termination, or (ii) the date on which the Company’s obligations to make payments to Executive hereunder shall terminate.

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                         11.          VACATIONS

                                                  During the Employment Period, Executive shall be entitled to reasonable vacations during each twelve-month period of the term hereof, the time and duration thereof to be determined by mutual agreement between Executive and the Company.

                         12.          PARTICIPATION IN EMPLOYEE BENEFIT PLANS

                                                  During the Employment Period, Executive and any beneficiary of Executive shall be accorded the right to participate in and receive benefits under and in accordance with the provisions of any pension, profit-sharing, insurance, bonus, deferred compensation, medical and dental insurance or reimbursement, stock option, or other plan or program of the Company now in existence or hereafter adopted for the benefit of its executive employees.

                         13.          INJUNCTIVE RELIEF

                                                  Executive acknowledges and agrees that, in the event he shall violate any of the restrictions of Section 10 hereof, the Company will be without adequate remedy at law and will therefore be entitled to enforce such restrictions by temporary or permanent injunctive or mandatory relief obtained in an action or may have at law or in equity, and Executive hereby consents to the jurisdiction of such Court for such purpose, provided that reasonable notice of any proceeding is given, it being understood that such injunction shall be in addition to any remedy which the Company may have at law or otherwise.

                         14.          ASSIGNMENT, ETC.

                                                  This Agreement, as it relates to the employment of Executive, is a personal contract and the rights and interests of Executive hereunder may not be sold, transferred, assigned, pledged or hypothecated. Except as otherwise expressly provided, this Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

                         15.          RIGHT TO PAYMENTS, ETC.

                                                  Executive shall not under any circumstances have any option or right to require payments hereunder otherwise than in accordance with the terms hereof. To the extent allowed by law, Executive shall not have any power of anticipation, alienation or assignment of payments contemplated hereunder, and all rights and benefits of Executive, and no other person shall acquire any right, title or interest hereunder by reason of any sale, assignment, transfer, claim or judgment or bankruptcy proceedings against Executive.

                                                  Notwithstanding anything in this Agreement to the contrary, payments upon termination of employment hereunder may only be made upon a “separation from service” as determined under Section 409A of the Code (but only in the event that Section 409A of the Code is in effect at the time of the termination of this Agreement), and in no event may Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement.

                         16.          NOTICES, ETC.

                                                  Any notice required or permitted to be given to Executive pursuant to this Agreement shall be sufficiently given if sent to Executive by certified mail addressed to him at the following address: 4100 North 36th Avenue, Hollywood, Florida, 33021, or at any such other address as he shall designate by notice to the Company, and any notice required or permitted to be given to the Company pursuant to this Agreement shall be sufficiently given if sent to the Company by certified mail addressed to it at 8685 Northwest 53rd Terrace, Miami, Florida 33166, attention of Corporation Secretary, or such other address as the Company shall designate by notice to Executive, with a copy to Landey Strongin, Esq., Dornbush Schaeffer Strongin & Venaglia, LLP, 747 Third Avenue, New York, New York, 10017.

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                         17.          GOVERNING LAW

                                                  This Agreement shall be governed by, and construed in accordance with the laws of the State of Florida, applicable to agreements made and to be performed solely within such state.

                         18.          WAIVER OF BREACH; PARTIAL INVALIDITY

                                                  The waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. If any provisions of this Agreement shall be held to be invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and not in any way affect or render invalid or unenforceable any other provisions of this Agreement, and this Agreement shall be carried out as if such invalid or unenforceable provision were not embodied therein.

                         19.          ENTIRE AGREEMENT

                                                  This Agreement constitutes the entire agreement between the parties hereto and there are no representations, warranties or commitments except as set forth herein. This Agreement supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether written or oral, of the parties hereto relating to the transactions contemplated by this Agreement. This Agreement may be amended only in writing executed by the parties hereto affected by such amendment.

                         IN WITNESS WHEREOF, the undersigned have executed this Amended and Restated Agreement as of the day and year first above written.

BENIHANA INC.

By:

Joel A. Schwartz

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EXHIBIT A—FORM OF GENERAL RELEASE

          Joel A. Schwartz (“Schwartz” or the “Executive”) acknowledges and agrees that, for and in consideration of the benefits payable to him under Sections 6.2, 7, 8 and 9 of that certain Amended and Restated Employment Agreement (the “Employment Agreement”) between Schwartz and Benihana Inc. (the “Company”) dated as of March __, 2008 and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, for himself and for his heirs, executors, administrators, trustees, legal representatives, successors and assigns (collectively referred to for purposes of this General Release as the “Schwartz Releasors”), hereby forever releases and discharges the Company and any and all of the Company’s past, present and future parent entities, subsidiaries, divisions, affiliates or related business entities, assets, employee benefit and/or pension plans or funds, successors and assigns and any of their and/or the Company’s past, present and future owners, directors, officers, attorneys, fiduciaries, agents, trustees, administrators, Executives, successors and assigns, whether acting as agents for the Company or in their individual capacities (collectively referred to as the “Company Releasees”), from all claims, demands, causes of action, and liabilities of any kind whatsoever (upon any legal or equitable theory, whether based on any federal, state or local constitution, statute, ordinance, regulation, common law, court decision or otherwise), whether known or unknown, asserted or unasserted, which any of the Schwartz Releasors ever had, now have, or hereafter may have against any of the Company Releasees by reason of any actual or alleged act, omission, transaction, practice, policy, conduct, occurrence and/or other matter from the beginning of the world up to and including the date that Schwartz signs this General Release.

          Without in any way limiting the generality of the foregoing, the Schwartz Releasors so release and discharge the Company Releasees from, including but not limited to: (a) any and all claims arising under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, as amended by the Older Workers Benefit Protection Act, 42 U.S.C. § 1981, the Americans With Disabilities Act, the Family and Medical Leave Act, the Executive Retirement Income Security Act (except for any vested benefits, which are not affected by this General Release), the Fair Labor Standards Act, the Equal Pay Act, the National Labor Relations Act, (b) any and all other claims for employment discrimination, harassment, and/or retaliation (whether based on a federal, state or local constitution, statute, ordinance, code, common law, court decision or otherwise); (c) any and all claims relating to Schwartz’s employment by the Company (and/or by any of the other of the Company Releasees), the terms and conditions of such employment and/or the termination of such employment; (d) any and all claims relating to, or arising out of, the making of the Employment Agreement and this General Release; (e) any and all claims for damages or personal injury of any type whatsoever (whether arising by virtue of any constitution, statute, ordinance, common law, court decision or otherwise); (f) any and all claims of breach of implied or express contract, misrepresentation, negligence, fraud, wrongful discharge, constructive discharge, infliction of emotional distress, intentional infliction of emotional distress, battery, defamation, libel, slander, compensatory and/or punitive damages; and (g) any and all claims for attorneys’ fees, costs, disbursements and the like.

          This General Release specifically excludes and does not apply to any of Schwartz’s (i) claims for any payments due to him based upon Sections 6, 7, 8 and 9 of the Employment Agreement, (ii) any rights he may have under any stock option agreement, restricted stock award or similar agreement entered into between Schwartz and the Company, (iii) claims arising under the provisions of any employee benefit plans of the Company, if any, which are applicable generally to former employees of the Company, and (iv) claims for indemnification arising under any contract between the Company and the Executive or under the provisions of the Company’s Certificate of Incorporation or By-laws, or the Delaware General Corporation Law.

9

          Schwartz acknowledges and agrees that: (a) he has carefully read and fully understands all of the provisions of this General Release; (b) he has not relied upon any representations or statements, written or oral, not set forth in this General Release or in the Employment Agreement; (c) he executes this General Release freely, voluntarily and with full knowledge of its terms and consequences; (d) he has been afforded sufficient time and opportunity to consult with an attorney and is hereby advised to consult with an attorney prior to signing this General Release; (e) he has been given at least twenty-one (21) days within which to consider this General Release and that if he signs this General Release in less than twenty-one days he does so voluntarily and without any pressure or coercion of any nature from the Company; (f) for a period of seven (7) days following his execution of this General Release, he may revoke this General Release by providing written notice of such revocation to Company and that this General Release shall not become effective or enforceable until the seven (7) day revocation period has expired; and (g) that if he timely revokes this General Release, he will forfeit his entitlement to any additional payments under the Employment Agreement.

          IN WITNESS WHEREOF, Executive has executed this General Release on the day of___________.

Joel A. Schwartz

10

EX-13

BENIHANA INC. AND SUBSIDIARIES Exhibit 13.01

SELECTED FINANCIAL DATA

The following table sets forth, for the periods indicated, selected consolidated financial data that has been derived from our audited consolidated financial statements. The following selected consolidated financial data should be read in conjunction with our Consolidated Financial Statements and related notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We have a 52/53-week fiscal year. Our fiscal year ends on the Sunday within the dates of March 26 through April 1. Fiscal year 2007 consisted of 53 weeks and all other fiscal years presented consisted of 52 weeks.

	Fiscal Year Ended
(in thousands except per share data)	March 30, 2008		April 1, 2007		March 26, 2006		March 27, 2005			March 28, 2004
			(53 week year)
CONSOLIDATED STATEMENTS OF EARNINGS DATA:
Revenues	$	296,946	$	272,649	$	245,553	$	218,331		$	202,963
Cost of food and beverage sales		69,727		66,051		59,014		53,372			51,437
Restaurant operating expenses		178,099		159,456		139,433		126,825			118,183
Restaurant opening costs		3,440		1,535		1,270		1,304			2,088
Marketing, general and administrative expenses		28,092		23,811		22,693		20,939			16,362
Impairment charge		—		—		—		2,668			—
Interest income (expense), net		270		465		88		(298	)		(457	)
Income before income taxes and minority interest		17,858		22,261		23,231		12,925			14,436
Income tax provision		5,065		7,766		8,491		4,520			4,821
Income before minority interest		12,793		14,495		14,740		8,405			9,615
Minority interest		—		—		178		585			643
Net income		12,793		14,495		14,562		7,820			8,972
Basic earnings per share (1)	$	0.77	$	0.90	$	0.93	$	0.54		$	0.67
Diluted earnings per share (1)	$	0.75	$	0.84	$	0.91	$	0.51		$	0.65
CONSOLIDATED BALANCE SHEETS DATA:
Total assets	$	241,654	$	204,289	$	191,516	$	154,254		$	142,643
Long-term debt including current maturities		17,422		—		6,666		10,000			21,500
Stockholders’ equity		157,616		142,482		125,262		103,207			95,045
OTHER FINANCIAL DATA:
Capital expenditures	$	55,136	$	37,543	$	25,834	$	22,446		$	22,950

⁽¹⁾ On May 18, 2007, the Board of Directors declared a 3 for 2 stock dividend payable in Common Shares to the holders of both the Class A Shares and Common Shares. The stock dividend was paid on June 15, 2007 to holders of record June 1, 2007. The basic and diluted earnings per common share are shown as if the stock dividend had been in existence for each fiscal year presented, in accordance with Financial Accounting Standards Board Statements of Financial Accounting Standard No. 128, “Earnings per Share.”

1

BENIHANA INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Condition and Results of Operations

Overview

Our Business

Benihana Inc. is one of the largest chains of Asian restaurants in the United States. We have operated “Benihana” teppanyaki-style Japanese restaurants in the United States for over 40 years, and we believe we are the largest operator of teppanyaki-style restaurants in the country. Our core concept, the traditional Benihana restaurant, offers teppanyaki-style Japanese cooking in which fresh steak, chicken and seafood are prepared by a chef on a steel teppan grill at the center of the customers’ table. We also operate other restaurant concepts offering Asian, predominately sushi, entrees. Our Haru concept offers an extensive menu of traditional Japanese and Japanese fusion dishes in a modern, urban atmosphere as well take-out and delivery services. We believe that the Haru concept is well suited for densely populated cities with nearby shopping, office and tourist areas. Our RA Sushi concept offers sushi and a full menu of Pacific-Rim dishes in a high-energy environment featuring upbeat design elements and contemporary music. RA Sushi caters to a younger demographic, and we believe that it is highly suitable for a variety of real estate options, including life-style centers, shopping centers and malls, as well as urban areas with a nightlife component.

Our revenues consist of sales of food and beverages at our restaurants and licensing fees from franchised restaurants. Cost of restaurant food and beverages sold represents the direct cost of the ingredients for the prepared food and beverages sold. Restaurant operating expenses consist of direct and indirect labor, occupancy costs, advertising and other costs that are directly attributed to each restaurant location. Restaurant opening costs include rent paid during the development period as well as labor, training expenses and certain other pre-opening charges which are expensed as incurred.

Restaurant revenues and expenses are dependent upon a number of factors, including the number of restaurants in operation, restaurant patronage and the average check amount. Expenses are additionally dependent upon commodity costs, average wage rates, marketing costs and the costs of administering restaurant operations.

The following table reflects changes in restaurant count by concept during the fiscal years ended April 1, 2007 and March 30, 2008:

	Teppanyaki		RA Sushi	Haru	Sushi Doraku		Total
Restaurant count, March 26, 2006	56		9	7	1		73
Openings	2		4	—	—		6
Acquisition from franchisee	1		—	—	—		1
Sale to related party	—		—	—	(1	)	(1	)
Restaurant count, April 1, 2007	59		13	7	—		79
Openings	3		5	2			10
Closings	(2	)	—	—	—		(2	)
Restaurant count, March 30, 2008	60		18	9	—		87

Summary of results

Summary highlights of our fiscal 2008 year compared to the previous year are as follows:

• sixteenth consecutive year with total sales increases;

• opened 3 new Benihana teppanyaki-style restaurants in Maple Grove, MN, Chandler, AZ and Dulles, VA;

• opened 5 new RA Sushi restaurants in Lombard, IL, Tustin, CA, Mesa, AZ, Baltimore, MD and Plano, TX;

• opened 2 new Haru restaurants in Boston, MA and New York, NY;

• completed remodeling projects of our Benihana teppanyaki-style restaurants in Fort Lauderdale, FL, Miami Beach, FL, Burlingame, CA, Torrance, CA, San Diego, CA, Sacramento, CA, Bethesda, MD, New York City, NY, Cherry Hill, NJ, Tucson, AZ and Dallas, TX;

• 4 Benihana teppanyaki-style restaurants located in Houston, TX, Denver, CO, Cupertino, CA and Newport Beach, CA were closed undergoing renovations at the end of fiscal 2008;

• the Benihana teppanyaki-style restaurant in Memphis, TN is currently closed and being rebuilt after being destroyed by fire; and

• 2 Benihana teppanyaki-style restaurants located in Chicago, IL and Turtle Creek, TX were closed.

2

BENIHANA INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Condition and Results of Operations

Outlook

In fiscal 2008, we opened three Benihana teppanyaki restaurants, five RA Sushi restaurants and two Haru restaurants. We believe that our revenues will increase in fiscal 2009 due to these newly opened restaurants and the planned openings of four new Benihana teppanyaki and seven new RA Sushi restaurants. We will, however, have to contend with lost sales due to temporary closures resulting from our renovation and revitalization program as well as possible decreases in guest counts as a result of current economic conditions impacting retailers and restaurant companies, particularly in the Arizona, Southern California, South Florida and Nevada markets where we have 13 out of our 19 RA Sushi restaurants and approximately 30% of our Benihana teppanyaki locations.

During fiscal 2006, management made a strategic decision to accelerate the renovation and revitalization program. We plan to complete the renovation of an aggregate 24 of our mature Benihana restaurants by the end of January 2009, using many of the design elements of the new prototype Benihana restaurant. By transforming these 24 mature Benihana teppanyaki units, we are opportunistically building a stronger foundation for our core brand amid a growing American appetite for Asian cuisine. As of the end of fiscal 2008, we had completed a total of 16 renovations with 4 restaurants closed undergoing major renovations. These closed locations, as well as four more renovations scheduled to commence in fiscal 2009, are expected to be completed by the end of January 2009.

Renovations currently require on average, between $2.0 million and $2.3 million in capital expenditures per unit. The cost to remodel each unit is directly dependent on the scope of work to be performed at each location. Management is continuously reviewing the extent of work to be performed at these sites. The scope of work may be impacted by the age of the location, current condition of the location as well as local permitting requirements. The renovation of our older Benihana units is necessary to ensure the continued relevance of the Benihana brand, and the program will enhance our leadership position as the premier choice for Japanese-style dining.

The restaurant industry is a highly competitive business, which is sensitive to changes in economic conditions, trends in lifestyles and fluctuating costs. Operating margins for the restaurant industry are susceptible to fluctuations in prices of commodities, which include beef and seafood as well as other items necessary to operate such as electricity or other energy supplies, and the ability to pass along increased costs to customers through price increases. Additionally, the restaurant industry is characterized by a significant initial capital investment coupled with high labor costs. Our management is focused on monitoring these costs and increasing same store sales to continue to raise restaurant operating profit in existing restaurants as well as new restaurants. Our expansion plans take into account these operational factors and investment costs to generate sustainable operating results and achieve acceptable returns of investment from each of our restaurant concepts.

Operating results

Revenues

Revenues consist of the sales of food and beverages at our restaurants and royalties and licensing fees from franchised restaurants. Revenues are dependent upon the number of restaurants in operation, the number of patrons that visit our restaurants and franchisees’ restaurants and the average per person guest check amounts.

The following table shows revenues for the fiscal years ended March 30, 2008, April 1, 2007 and March 26, 2006 and the related percentage changes (dollar amounts in thousands):

	Fiscal Year Ended
	2008				2007 (53 weeks)				2006
			Percentage change from 2007				Percentage change from 2006
Restaurant sales	$	295,190	8.9	%	$	271,080	11.1	%	$	244,032
Franchise fees and royalties		1,756	11.9	%		1,569	3.2	%		1,521
Total revenues	$	296,946	8.9	%	$	272,649	11.0	%	$	245,553

The following table summarizes the components of total restaurant sales for the fiscal years ended March 30, 2008, April 1, 2007 and March 26, 2006 and the related percentage changes (dollar amounts in thousands):

3

BENIHANA INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Condition and Results of Operations

	Fiscal Year Ended
	2008				2007				2006
			Percentage change from 2007				Percentage change from 2006
Total restaurant sales by concept:
Teppanyaki	$	215,716	7.7	%	$	200,248	5.5	%	$	189,796
RA Sushi		44,965	15.3	%		38,986	58.4	%		24,620
Haru		34,509	9.0	%		31,661	14.5	%		27,662
Sushi Doraku		—	-100.0	%		185	-90.5	%		1,954
Total restaurant sales	$	295,190	8.9	%	$	271,080	11.1	%	$	244,032

We believe that the Benihana teppanyaki style of presentation makes us a unique choice for customers. We believe that customers who are seeking greater value for their dining budget appreciate the added entertainment provided by the chef cooking directly at their table. Additionally, most of the Benihana restaurants have sushi bars.

In addition to our Benihana teppanyaki restaurants, our two other concepts offer Asian, predominately sushi, entrees. The RA Sushi concept is a vibrant, hip restaurant featuring sushi and other Asian menu items in a high-energy environment featuring upbeat design elements and contemporary music. RA Sushi’s beverage sales represent approximately 33% of restaurant sales. The RA Sushi units are less expensive to build than our other two concepts and offer us a growth vehicle that we believe can succeed in various types of markets. Our Haru concept features an extensive menu of traditional Japanese and Japanese fusion dishes served in a modern, urban setting. The Haru concept generates exceptionally high average unit sales volumes from take-out and delivery as a result of customer satisfaction and the high population density that comprises the concept’s primary market, New York City. Approximately 35% of the Haru New York, NY locations’ revenues are derived from delivery and takeout sales. We sold our sole Sushi Doraku restaurant during fiscal 2007.

The following tables summarize the components of comparable restaurant sales and the percentage changes between fiscal years 2008 and 2007 and fiscal years 2007 and 2006, respectively (dollar amounts in thousands). Restaurants are considered comparable when they are open during the same periods in the two years being compared. New restaurants enter the comparable restaurant base when they have been open for more than one year. Restaurants may leave and enter the comparable restaurant base, as they are closed for renovation and subsequently re-open.

	Fiscal Year Ended					Fiscal Year Ended
	2008		2007		Percentage change from 2007	2007		2006		Percentage change from 2006
Comparable restaurant sales by concept:
Teppanyaki	$	186,602	$	181,278	2.9%	$	184,531	$	171,793	7.4%
RA Sushi		37,694		38,089	-1.0%		27,892		24,620	13.3%
Haru		32,160		31,045	3.6%		30,716		27,661	11.0%
Sushi Doraku		—		—	0.0%		185		175	5.7%
Total comparable restaurant sales	$	256,456	$	250,412	2.4%	$	243,324	$	224,249	8.5%

The following table summarizes the changes in restaurant sales between the fiscal years ended March 26, 2006, April 1, 2007 and March 30, 2008 (in thousands):

4

BENIHANA INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Condition and Results of Operations

	Teppanyaki			RA Sushi			Haru			Sushi Doraku			Total
Restaurant sales during fiscal year ended March 26, 2006	$	189,796		$	24,620		$	27,662		$	1,954		$	244,032
Increase in comparable sales		12,738			3,272			3,055			10			19,075
Increase from new or acquired restaurants		8,306			10,192			328			—			18,826
Decrease from closed or sold restaurants		(1,210	)		—			—			(1,779	)		(2,989	)
Decrease from temporary closures, net		(13,377	)		—			—			—			(13,377	)
Impact of 53rd week for fiscal year		3,995			902			616			—			5,513
Restaurant sales during fiscal year ended April 1, 2007		200,248			38,986			31,661			185			271,080
Increase (decrease) in comparable sales		5,324			(395	)		1,115			—			6,044
Increase from new restaurants		11,325			7,276			2,349			—			20,950
Decrease from closed or sold restaurants		(2,561	)		—			—			(185	)		(2,746	)
Increase from temporary closures, net		5,375			—			—			—			5,375
Impact of 53rd week during prior fiscal year		(3,995	)		(902	)		(616	)		—			(5,513	)
Restaurant sales during fiscal year ended March 30, 2008	$	215,716		$	44,965		$	34,509		$	—		$	295,190

2008 compared to 2007

Total revenues increased 8.9% in fiscal 2008 when compared to fiscal 2007. Restaurant sales increased $24.1 million in fiscal 2008 when compared to fiscal 2007. The increase was mainly attributable to sales from new restaurants of $21.0 million, an increase in sales from restaurants opened longer than one year of $6.0 million and increases in sales of $5.4 million due to a fewer number of lost weeks from temporary closures in the current fiscal year, offset by decreases in sales of $5.5 million attributable to an additional week in fiscal 2007 and $2.7 million for permanently closed or sold restaurants.

Benihana - Sales for the Benihana teppanyaki restaurants increased $15.5 million in fiscal 2008 compared to fiscal 2007. The increase is attributable to increases in sales from new restaurants of $11.3 million, increases in sales from restaurants opened longer than one year of $5.3 million and increases in sales of $5.4 million due to a fewer number of lost weeks from temporary closures in the current fiscal year offset by decreases in sales of $4.0 million attributable to an additional week in fiscal 2007 and lost sales attributable to permanent restaurant closures totaling $2.6 million. Sales from new restaurants were mainly attributable to the Chandler, AZ, Maple Grove, MN and Dulles, VA restaurants that opened during the current fiscal year as well as the Coral Gables, FL and Miramar, FL locations that contributed operating weeks in the current fiscal year before entering the comparable restaurant base. Total comparable restaurant sales growth for Benihana teppanyaki restaurants opened longer than one year increased 2.9% due primarily to a 9.5% increase in the average per person dine-in guest check offset by a decrease of 5.5% in dine-in guest counts. The average comparable per person dine-in guest check amount was $27.63 in fiscal 2008 compared to $25.23 in fiscal 2007. The decrease in dine-in guest counts was primarily experienced in lunch traffic. Comparable Benihana teppanyaki dine-in guest counts during dinner remained flat when compared to fiscal 2007.

RA Sushi - Sales for the RA Sushi restaurants increased $6.0 million in fiscal 2008 compared to fiscal 2007. The increase is attributable to sales from new restaurants of $7.3 million offset by decreases in sales from restaurants opened longer than one year of $0.4 million and a $0.9 million decrease in sales attributable to an additional week in fiscal 2007. Sales from new restaurants were mainly attributable to the Mesa, AZ, Tustin, CA, Lombard, IL, Baltimore, MD and Plano, TX restaurants that opened during the current fiscal year as well as the Corona, CA, Torrance, CA, and Glenview, IL locations that contributed operating weeks in the current fiscal year before entering the comparable restaurant base. Total comparable restaurant sales for RA restaurants opened longer than one year decreased 1.0% due primarily to a decrease of 3.0% in dine-in guest counts offset by an increase of 2.2% in the average per person dine-in guest check. The average comparable per person dine-in guest check amount was $21.52 in fiscal 2008 compared to $21.05 in fiscal 2007.

Haru - Sales for the Haru restaurants increased $2.8 million in fiscal 2008 compared to fiscal 2007. The increase is attributable to sales from new restaurants of $2.3 million and increases in sales from restaurants opened longer than one year of $1.1 million offset by decreases in sales of $0.6 million attributable to an additional week in fiscal 2007. Sales from new restaurants were mainly attributable to the Boston, MA restaurant and the Wall Street location in New York City, which opened during the current fiscal year. Total comparable restaurant sales for Haru restaurants opened longer than one year increased 3.6% due primarily to a 1.5% increase in the average per person dine-in guest check and a 3.6% increase in dine-in guest counts. The average comparable per person dine-in guest check amount was $30.35 in fiscal 2008 compared to $29.90 in fiscal 2007.

Franchise fees and royalties - Franchise fees and royalties increased 11.9% in fiscal 2008 when compared to fiscal 2007 due primarily to increased royalties as a result of increased sales at franchised locations. During fiscal 2008, one new franchised restaurant was opened in Panama, and a franchised restaurant in Monterey, CA was closed.

5

BENIHANA INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Condition and Results of Operations

2007 compared to 2006

Revenues increased 11.1% in fiscal 2007 when compared to fiscal 2006. Restaurant sales increased $27.1 million in fiscal 2007 when compared to fiscal 2006. The increase was mainly attributable to sales from new or acquired restaurants of $18.8 million, increases in sales from restaurants opened longer than one year of $19.1 million as well as $5.5 million in sales from an additional week offset by lost sales of $13.4 million for restaurants temporarily closed for remodeling and $3.0 million for permanently closed restaurants.

Benihana - Sales for the Benihana teppanyaki restaurants increased $10.5 million in fiscal 2007 compared to fiscal 2006. The increase is attributable to increases in sales from restaurants opened longer than one year of $12.7 million and from sales from new and acquired restaurants of $8.3 million as well as $4.0 million in sales from an additional week offset by lost sales attributable to permanent restaurant closures totaling $1.2 million and sales reductions attributable to temporary restaurant closures due to major refurbishing totaling $13.4 million. Total comparable restaurant sales growth for Benihana teppanyaki restaurants opened longer than one year increased 7.4%. The average per person dine-in guest check amount was $25.51 in fiscal 2007 compared to $24.96 in fiscal 2006. Sales from new restaurants were mainly attributable to the Miramar, FL and Coral Gables, FL restaurants which opened in June and October 2006, respectively.

RA Sushi - Sales for the RA Sushi restaurants increased $14.4 million in fiscal 2007 compared to fiscal 2006. The increase is attributable to increases in sales from restaurants opened longer than one year of $3.3 million and from sales from new restaurants of $10.2 million as well as $0.9 million in sales from an additional week. The increase from restaurants opened longer than one year is a result of increased traffic of 11.7% and from the maturation of recently opened restaurants in new markets. Total comparable restaurant sales growth for the RA Sushi restaurants was 13.3% for fiscal 2007 compared to fiscal 2006. The average per person dine-in guest check amount was $21.05 in fiscal 2007 compared to $20.51 in fiscal 2006.

Haru - Sales for the Haru restaurants increased $4.0 million in fiscal 2007 compared to fiscal 2006. The increase is attributable to increases in sales from restaurants opened longer than one year of $3.1 million and from sales of $0.3 million from a new restaurant as well as $0.6 million in sales from an additional week. The increase from restaurants opened longer than one year was a result of increased traffic of 3.9%. In addition, take-out and delivery sales increased by 14.3% compared to the prior year. Total comparable restaurant sales growth for the Haru restaurants increased 11.0% from fiscal 2006. The average per person dine-in guest check amount was $29.90 in fiscal 2007 compared to $29.36 in fiscal 2006.

Franchise fees and royalties - Franchise fees and royalties increased slightly in fiscal 2007 when compared to fiscal 2006. One new franchised location opened in Trinidad during fiscal 2007. During fiscal 2007, we acquired the Benihana restaurant located in Broomfield, CO from the franchisee.

Operating costs and expenses

Cost of restaurant food and beverages sold represents the direct cost of the ingredients for the prepared food and beverages sold. Restaurant operating expenses consist of direct and indirect labor, occupancy costs, advertising and other costs that are directly attributed to each restaurant location. Restaurant opening costs include rent paid during the development period as well as labor, training expenses and certain other pre-opening charges which are expensed as incurred.

Operating costs and expenses are largely dependent on the number of customers that visit our restaurants and the cost of commodities, the number of employees that are necessary to provide a high quality of service to our customers, rents we pay for our restaurant properties, utilities and other necessary operating costs. Expenses are additionally dependent upon average wage rates, marketing costs and the costs of administering restaurant operations.

The following table summarizes the costs and expenses by concept, as well as consolidated, for the years ended March 30, 2008, April 1, 2007 and March 26, 2006.

6

BENIHANA INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Condition and Results of Operations

	Teppanyaki		RA Sushi		Haru		Sushi Doraku		Corporate		Consolidated
Fiscal Year Ended March 30, 2008:
Cost of food and beverage sales	$	50,939	$	11,061	$	7,727	$	—	$	—	$	69,727
Restaurant operating expenses		130,496		27,347		20,256		—		—		178,099
Restaurant opening costs		823		1,869		748		—		—		3,440
Marketing, general and administrative expenses		8,281		3,881		1,452		—		14,478		28,092
Total operating expenses	$	190,539	$	44,158	$	30,183	$	—	$	14,478	$	279,358
Fiscal Year Ended April 1, 2007:
Cost of food and beverage sales	$	49,169	$	9,780	$	7,039	$	63	$	—	$	66,051
Restaurant operating expenses		119,024		22,614		17,766		52		—		159,456
Restaurant opening costs		478		854		203		—		—		1,535
Marketing, general and administrative expenses		7,727		3,200		1,202		—		11,682		23,811
Total operating expenses	$	176,398	$	36,448	$	26,210	$	115	$	11,682	$	250,853
Fiscal Year Ended March 26, 2006:
Cost of food and beverage sales	$	46,011	$	6,287	$	6,176	$	540	$	—	$	59,014
Restaurant operating expenses		108,690		13,410		15,960		1,373		—		139,433
Restaurant opening costs		471		602		197		—		—		1,270
Marketing, general and administrative expenses		9,339		2,019		730		—		10,605		22,693
Total operating expenses	$	164,511	$	22,318	$	23,063	$	1,913	$	10,605	$	222,410

The following table summarizes the costs and expenses as a percentage of restaurant sales by concept, as well as consolidated, for the years ended March 30, 2008, April 1, 2007 and March 26, 2006.

7

BENIHANA INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Condition and Results of Operations

	Teppanyaki			RA Sushi			Haru			Sushi Doraku			Consolidated
Fiscal Year Ended March 30, 2008:
Cost of food and beverage sales		23.6	%		24.6	%		22.4	%		—			23.6	%
Restaurant operating expenses		60.5	%		60.8	%		58.7	%		—			60.3	%
Restaurant opening costs		0.4	%		4.2	%		2.2	%		—			1.2	%
Marketing, general and administrative expenses		3.8	%		8.6	%		4.2	%		—			9.5	%
Total operating expenses		88.3	%		98.2	%		87.5	%		—			94.6	%
Fiscal Year Ended April 1, 2007:
Cost of food and beverage sales		24.6	%		25.1	%		22.2	%		33.9	%		24.4	%
Restaurant operating expenses		59.4	%		58.0	%		56.1	%		27.9	%		58.8	%
Restaurant opening costs		0.2	%		2.2	%		0.6	%		—			0.6	%
Marketing, general and administrative expenses		3.9	%		8.2	%		3.8	%		—			8.7	%
Total operating expenses		88.1	%		93.5	%		82.7	%		61.8	%		92.5	%
Fiscal Year Ended March 26, 2006:
Cost of food and beverage sales		24.2	%		25.5	%		22.3	%		27.6	%		24.2	%
Restaurant operating expenses		57.3	%		54.5	%		57.7	%		70.3	%		57.1	%
Restaurant opening costs		0.2	%		2.4	%		0.7	%		—			0.5	%
Marketing, general and administrative expenses		4.9	%		8.2	%		2.6	%		—			9.3	%
Total operating expenses		86.6	%		90.6	%		83.3	%		97.9	%		91.1	%

2008 compared to 2007

Cost of food and beverage sales - Cost of food and beverage sales increased in absolute amount in fiscal 2008 when compared to fiscal 2007. The increase in absolute amount is directly attributable to the increase in sales resulting from new restaurants opened during the year and overall increase in comparable sales. Cost of food and beverage sales decreased when expressed as a percentage of restaurant sales in fiscal 2008 when compared to fiscal 2007. The decrease, when expressed as a percentage of sales, during the current fiscal year is attributable to menu price increases, effected at the beginning of the current fiscal year, at our Benihana teppanyaki locations, and during the second quarter of fiscal 2008, at our RA Sushi and Haru locations. The Benihana teppanyaki menu prices were increased by approximately 7% and the RA Sushi and Haru menu prices were increased by approximately 3% in order to offset increases in commodity costs and minimum wage rates. We expect continued upward pressure on the cost of commodities during the upcoming fiscal year. We do not expect to be able to increase menu prices sufficiently during the upcoming fiscal year to fully offset these pressures.

Restaurant operating expenses - Restaurant operating expenses increased in absolute amount and when expressed as a percentage of restaurant sales in fiscal 2008 when compared to fiscal 2007. The increase in absolute amount was mainly attributable to the aforementioned increase in sales resulting from new restaurants opened during the year and overall increase in comparable sales. Inefficiencies associated with new store openings were realized due to the opening of three new Benihana teppanyaki restaurants, five new RA Sushi restaurants and two new Haru restaurants during the year. The decreasing traffic counts previously described also contributed to operating inefficiencies at mature restaurants, specifically as it relates to labor and fixed costs at the restaurants. Further minimum wage increases are scheduled during the upcoming year and may impact labor margins in light of current economic conditions.

We continued to recognize additional depreciation expense which resulted from the reevaluation of the remaining useful lives of assets at Benihana teppanyaki restaurants to be renovated as part of our rejuvenation program. This additional depreciation totaled approximately $2.4 million and $1.6 million, during fiscal years 2008 and 2007, respectively. We continued to incur approximately $1.5 million and $2.0 million in ongoing expenses at Benihana teppanyaki restaurants which were temporarily closed for remodeling during fiscal year 2008 and 2007, respectively. During the renovation program, we have retained skilled labor while stores have been temporarily closed, resulting in further inefficiencies in operating expenses.

Restaurant opening costs - Restaurant opening expenses increased in absolute amount and when expressed as a percentage of restaurant sales in fiscal 2008. The increase in the current fiscal year is attributable to the fact that we opened more restaurants during fiscal 2008 than in the prior year. We intend to continue expanding our restaurant base. Currently, we intend to open four additional Benihana and seven additional RA Sushi restaurants during fiscal 2009.

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BENIHANA INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Condition and Results of Operations

Marketing, general and administrative expenses - Marketing, general and administrative expenses increased in absolute amount and when expressed as a percentage of restaurant sales in fiscal 2008 when compared to fiscal 2007. These increases are directly related to the continued expansion of our infrastructure to support planned development, as evidenced at RA Sushi and Haru and on a consolidated basis. While marketing, general and administrative expenses will increase in the absolute amount during the upcoming year, we intend to begin leveraging the additions to our infrastructure towards the end of fiscal 2009.

During fiscal 2008, we recognized a reserve of $0.4 million on a note receivable due from a franchisee after evaluating collectibility of the note.

Interest income, net - Interest income, net, decreased in fiscal 2008 when compared to fiscal 2007 primarily due to an increase in interest expense as a result of outstanding borrowings and a decrease in interest income. We expect to incur additional interest expense as we continue to draw on our line of credit to finance our expansion and renovation programs. Interest income is expected to decrease as cash on hand is also used to fund these programs.

Income tax provision - Our effective tax rate was 28.4% for fiscal 2008 compared to 34.9% for fiscal 2007. The effective tax rate for fiscal 2008 was favorably impacted primarily by lower pretax income, increasing tax credits and the resolution of uncertain tax positions previously recognized upon the adoption of Financial Accounting Standards Board (“FASB”) Financial Interpretation No. 48, “Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109.”

Net income - Net income for fiscal 2008 was $12.8 million, a decrease of 11.7% from net income of approximately $14.5 million in fiscal 2007. Basic earnings per common share decreased to $0.77 for fiscal 2008 from basic earnings per share of $0.90 for fiscal 2007. Basic weighted average shares outstanding increased by approximately 332,000 shares to 15,173,000 shares at March 30, 2008 from 14,841,000 shares at April 1, 2007. Diluted earnings per common share decreased to $0.75 for fiscal 2008 from diluted earnings per common share of $0.84 in fiscal 2007. Average diluted weighted shares outstanding decreased by approximately 108,000 shares to 17,169,000 shares at March 30, 2008 from 17,277,000 shares at April 1, 2007. The increase in basic weighted average shares outstanding during fiscal 2008 compared to fiscal 2007 was due primarily to the issuance of shares as a result of stock option exercises. The decrease in diluted weighted average shares outstanding during fiscal 2008 compared to fiscal 2007 was due to the impact of lower stock prices during fiscal 2008 on the weighted average shares calculation.

2007 compared to 2006

Cost of food and beverage sales - Cost of food and beverage sales increased in absolute amount in fiscal 2007 when compared to fiscal 2006. The increase in absolute amount is directly attributable to the increase in sales from new restaurants opened during the year, increases in comparable sales and the additional week in fiscal 2007. Cost of food and beverage sales increased slightly when expressed as a percentage of restaurant sales in fiscal 2007 when compared to fiscal 2006. We continued to experience relatively stable commodity prices throughout the year.

Restaurant operating expenses - Restaurant operating expenses increased in absolute amount in fiscal 2007 when compared to fiscal 2006. The increase in absolute amount was mainly attributable to the aforementioned increase in sales resulting from new restaurants opened during the year, increases in comparable sales and the additional week in fiscal 2007. Additionally, we continued to recognize additional depreciation expense which resulted from the reevaluation of the remaining useful lives of assets at Benihana teppanyaki restaurants to be renovated as part of our renovation program. This additional depreciation totaled approximately $1.6 million and $1.1 million, during fiscal years 2007 and 2006, respectively. The significant increase in restaurant operating expenses specifically experienced at the RA Sushi concept reflects the overall increase in restaurant count between years. Restaurant operating expenses increased when expressed as a percentage of sales in fiscal 2007 when compared to fiscal 2006. The additional depreciation expense is partially responsible for the increase in restaurant operating expenses when expressed as a percentage of restaurant sales, specifically in the teppanyaki segment. Additionally, during fiscal 2007, we continued to incur approximately $2.0 million in ongoing expenses at Benihana teppanyaki restaurants which were temporarily closed for remodeling. At RA Sushi, the change in margins is reflective of inefficiencies experienced at newer restaurants during initial operations.

Restaurant opening costs - Restaurant opening expenses increased in absolute amount but remained stable when expressed as a percentage of restaurant sales in fiscal 2007. We opened more restaurants during fiscal 2007 than in the prior year. Additionally, we had more restaurants under development at the end of fiscal 2007 than fiscal 2006.

Marketing, general and administrative expenses - - Marketing, general and administrative expenses increased in absolute amount but decreased when expressed as a percentage of restaurant sales in fiscal 2007 when compared to fiscal 2006. The increase in absolute amount is attributable to increased administration headcount and professional fees. Additional corporate personnel were hired in fiscal 2007 to accommodate our growth plans.

Interest income, net - Interest income, net, increased in fiscal 2007 when compared to fiscal 2006 due to an increase in interest earning balances during fiscal 2007 compared to fiscal 2006, as a result of the proceeds from the sale of the Series B Preferred Stock during fiscal 2006. Additionally, interest expense decreased as a result of a continued decrease in the average outstanding bank debt in fiscal 2007 compared to fiscal 2006. During fiscal 2007, we paid off the outstanding term loan. No borrowings were outstanding against our $75 million line of credit, as of April 1, 2007.

9

BENIHANA INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Condition and Results of Operations

Income tax provision - Our effective tax rate was 34.9% for fiscal 2007 compared to 36.6% for fiscal 2006. During fiscal 2007, we benefited from increasing tax credits on decreased pre-tax income.

Net income - Net income for fiscal 2007 was $14.5 million, a decrease of 0.5% from net income of approximately $14.6 million in fiscal 2006. Basic earnings per common share decreased to $0.90 for fiscal 2007 from basic earnings per share of $0.93 for fiscal 2006. Basic weighted average shares outstanding increased by approximately 795,000 shares to 14,841,000 shares at April 1, 2007 from 14,046,000 shares at March 26, 2006. Diluted earnings per common share decreased to $0.84 for fiscal 2007 from diluted earnings per common share of $0.91in fiscal 2006. Average diluted weighted shares outstanding increased by approximately 1,270,000 shares to 17,277,000 shares at April 1, 2007 from 16,007,000 shares at March 26, 2006. The increase in both basic and diluted weighted average shares outstanding during fiscal 2007 compared to fiscal 2006 was due to the issuance of shares for stock option exercises and the issuance of convertible preferred stock during fiscal 2006, as well as the impact of higher stock prices during fiscal 2007 on the weighted average shares calculation.

Our financial resources

Cash flow from operations has historically been the primary source to fund our capital expenditures; however, as a result of our expansion and renovation programs, we are relying more upon financing obtained from financial institutions.

Since restaurant businesses do not have large amounts of inventory and accounts receivable, there is generally no need to finance such items. As a result, many restaurant businesses, including our own, operate with negative working capital. During the current fiscal year ended March 30, 2008, the working capital deficit has increased by $3.2 million. This trend is reflective of our ongoing expansion and renovation programs, which have resulted in decreased cash and cash equivalents as well as increased liabilities associated with capital expenditures.

Line of Credit Facility

We presently have available up to $75 million from Wachovia Bank, National Association (“Wachovia”) under the terms of a line of credit entered on March 15, 2007. The line of credit facility allows us to borrow up to $75 million through March 15, 2012, and is secured by the assets of the Company. There are no scheduled payments prior to maturity. We may, however, prepay outstanding borrowings prior to that date. We have the option to pay interest at Wachovia’s prime rate plus an applicable margin or at the London interbank offering rate plus an applicable margin. The interest rate may vary depending upon the ratio of the sum of our earnings before interest, taxes, depreciation and amortization, as defined in the agreement, to our indebtedness. We also incur a commitment fee on the unused balance available under the terms of the line of credit, based on a leverage ratio. While providing for working capital, capital expenditures and general corporate purposes, the agreement requires that we maintain certain financial ratios and profitability amounts and restricts the payment of cash dividends as well as the use of proceeds to purchase our own stock.

At March 30, 2008, we had $17.4 million outstanding under the line of credit facility at an interest rate of 3.38%; borrowings from which were used to fund capital expenditures in connection with our expansion and renovation programs. The amount available to be borrowed under the line of credit is reduced on a dollar-for-dollar basis by the cumulative amount of any outstanding letters of credit. At March 30, 2008, we had approximately $1.0 million in letters of credit outstanding against this facility in connection with our workers’ compensation insurance program and certain leases. Accordingly, at March 30, 2008, we had approximately $56.6 million available for borrowing under the line of credit facility.

As of March 30, 2008, we were in compliance with all covenants of our line of credit agreement with Wachovia.

Series B Preferred Stock

On July 1, 2004, we received net proceeds of $9.3 million, after transaction costs, representing the funding of the first $10.0 million tranche of our sale of $20.0 million aggregate principal amount of Series B Convertible Preferred Stock (“Series B Preferred Stock”) to BFC Financial Corporation (“BFC”). In connection with the first tranche, we issued and sold 400,000 shares of our Series B Preferred Stock. John E. Abdo, a director of the Company, is a director and Vice Chairman of the Board of BFC and is a significant shareholder of BFC. On August 4, 2005, we completed the second and final tranche consisting of $10.0 million aggregate principal amount of our Series B Preferred Stock sold to BFC. In connection with the second tranche, we issued and sold 400,000 shares of our Series B Preferred Stock. We received net proceeds of $9.9 million, after transaction costs, from the sale.

The Series B Preferred Stock has a liquidation preference of $20.0 million, or $25.00 per share, (subject to anti-dilution provisions) plus accrued and unpaid dividends. The Series B Preferred Stock is convertible into Common Stock of the Company at a conversion price of approximately $12.67 per share (as adjusted to reflect the three-for-two stock split) that equates to 1.97 shares of Common Stock for each share of Series B Preferred Stock (subject to anti-dilution provisions). The 800,000 shares of Series B Preferred Stock outstanding at March 30, 2008 are convertible into an aggregate 1,578,943 shares of Common Stock. The Series B Preferred Stock carries a dividend at the annual rate of $1.25 per share (or 5% of the purchase price) payable in cash or additional Series B Preferred Stock and votes on an “as if converted” basis together with the Company’s Common Stock on all matters put to a vote of the holders of Common Stock. In addition, under certain circumstances, the approval of a majority of the Series B Preferred Stock is required for certain events outside the ordinary course of business, principally acquisitions or disposition of assets having a value in excess of 25% of the total consolidated assets of the Company.

10

BENIHANA INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Condition and Results of Operations

We pay quarterly dividends on the Series B Preferred Stock, and at March 30, 2008, accrued but unpaid dividends on the Series B Preferred Stock totaled $0.2 million.

We are obligated to redeem the Series B Preferred Stock at its original issue price on July 2, 2014, which date may be extended by the holders of a majority of the then-outstanding shares of Series B Preferred Stock to a date no later than July 2, 2024. We may pay the redemption in cash or, at our option, in shares of Common Stock valued at then-current market prices unless the aggregate market value of the Company’s Common Stock and any other common equity is below $75.0 million. In addition, the Series B Preferred Stock may, at our option, be redeemed in cash at any time beginning three years from the date of issue if the volume-weighted average price of the Common Stock exceeds approximately $25.33 per share (as adjusted to reflect the three-for-two stock split) for sixty consecutive trading days.

The holders of a majority of the outstanding Series B Preferred Stock are entitled to nominate one individual to the Company’s board of directors. In the event that dividends are not paid for two consecutive quarters, the holders of the majority of the Series B Preferred Stock are entitled to elect one additional director.

Expansion and Renovation Program

We implemented a design initiative to develop a prototype Benihana teppanyaki restaurant to improve the unit-level economics while shortening construction time and improving decor. The restaurant in Miramar, FL, which opened during June 2006, was the first restaurant to feature the new prototype design. Under a renovation program commenced during 2005, we are also using many of the design elements of the new prototype to refurbish our mature Benihana restaurant units.

During fiscal 2006, management made a strategic decision to accelerate the renovation and revitalization program. We are committed to revitalizing our 40-plus year old Benihana teppanyaki concept for a new generation. The new design reflects the cutting edge of contemporary dining and entertainment and places the customer at the center of the Benihana experience through the visual impact of the exterior, a vibrant waiting area and a more dramatic stage setting for our legendary Benihana chefs. We plan to complete the renovation of an aggregate 24 of our mature Benihana restaurants. By transforming these 24 mature Benihana teppanyaki units, we are opportunistically building a stronger foundation for our core brand amid a growing American appetite for Asian cuisine. During fiscal 2006, our restaurant in Short Hills, NJ was the first Benihana restaurant to be retrofitted with the new design elements. During fiscal 2007 our Memphis, TN, Cleveland, OH, Indianapolis, IN and Anaheim, CA restaurants re-opened after similar renovations were completed. During fiscal 2008, our Fort Lauderdale, FL, Miami Beach, FL, Burlingame, CA, Torrance, CA, San Diego, CA, Sacramento, CA, Bethesda, MD, New York City, NY, Cherry Hill, NJ, Tucson, AZ and Dallas, TX restaurants re-opened after similar renovations were completed.

At the end of fiscal 2008, restaurants closed and undergoing major renovations included the Houston, TX, Denver, CO, Cupertino, CA and Newport Beach, CA locations. These locations, as well as four more renovations scheduled to commence in fiscal 2009, are expected to be completed by the end of January 2009.

Renovations currently require on average, between $2.0 million and $2.3 million in capital expenditures per unit. The cost to remodel each unit is directly dependent on the scope of work to be performed at each location. Management is continuously reviewing the extent of work to be performed at these sites. The scope of work may be impacted by the age of the location, current condition of the location, as well as local permitting requirements. The scope of work will vary by location. Some locations will undergo a limited remodel, while others will undergo a complete renovation and a major facility upgrade of its HVAC, electrical and plumbing systems. Management believes the long-term benefits of the revitalization initiative far outweigh the costs. The renovation of our older Benihana units is necessary to ensure the continued relevance of the Benihana brand, and the program will enhance our leadership position as the premier choice for Japanese-style dining.

Other future capital requirements depend on numerous factors, including market acceptance of products, the timing and rate of expansion of the business, acquisitions and other factors. We have experienced increases in our expenditures commensurate with growth in our operations, and management anticipates that expenditures will continue to increase in the foreseeable future. As of May 31, 2008, we have fifteen restaurants under development, consisting of eight Benihana teppanyaki restaurants and seven RA Sushi restaurants.

Minority Stockholders Liability

In addition to the renovation program, we will use our capital resources to settle the outstanding liability incurred when the former Minority Stockholders exercised their put option in Haru Holding Corp. On July 1, 2005, the former Minority Stockholders exercised the put option to sell their respective shares to us. Currently, there is a dispute between us and the former Minority Stockholders concerning the price at which the former Minority Stockholders exercised their put option to sell the remaining interest in Haru to us. We believe that the proper application of the put option price formula would result in a payment to the former Minority Stockholders of approximately $3.7 million. We have offered to pay such amount to the former Minority Stockholders and recorded a $3.7 million liability for the payment of the put option with respect thereto.

11

BENIHANA INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Condition and Results of Operations

On August 25, 2006, the former Minority Stockholders sued us. The suit (which was originally filed in the Supreme Court of the State of New York, County of New York, but has been removed to the United States District Court for the Southern District of New York) seeks an award of $10.7 million, based on the former Minority Stockholders’ own calculation of the put option price formula and actions allegedly taken by us to reduce the value of the put option.

On December 19, 2007, the Court dismissed all of the claims against us except for the breach of fiduciary duty and breach of contract claims. On January 25, 2008, we filed our Answer and Affirmative Defenses to the Amended Complaint. The Court has set a discovery deadline of July 25, 2008.

We believe that we have correctly calculated the put option price and that the claims of the former Minority Stockholders are without merit. However, there can be no assurance as to the outcome of this litigation.

Supply Agreements

We have entered into non-cancellable supply agreements for the purchase of certain beef and seafood items, in the normal course of business, at fixed prices for up to twelve-month terms. These supply agreements will eliminate volatility in the cost of the commodities over the terms of the agreements. These supply agreements are not considered derivative contracts.

Cash Flows

We believe that our cash from operations and the funds available under the line of credit will provide sufficient capital to fund operations, commitments and contingencies, the restaurant renovation program and restaurant expansion for at least the next twelve months.

The following table summarizes the sources and uses of cash and cash equivalents (in thousands):

	Fiscal Year Ended
	2008			2007			2006
Net cash provided by operating activities	$	27,757		$	31,153		$	29,440
Net cash used in investing activities		(55,145	)		(36,771	)		(25,286	)
Net cash provided by (used in) financing activities		20,657			(4,236	)		11,539
Net (decrease) increase in cash and cash equivalents	$	(6,731	)	$	(9,854	)	$	15,693

Operating activities

Cash provided by operations decreased during the year when compared to fiscal 2007. The decrease resulted mainly from the changes in working capital during the current fiscal year when compared to the prior fiscal year primarily due to the timing of estimated payments for income taxes.

Investing activities

Capital expenditures were $55.1 million, $37.5 million and $25.8 million during the fiscal years ended March 30, 2008, April 1, 2007 and March 26, 2006, respectively. Capital expenditures are expected to increase as we complete our renovation programs and increase new store construction. We currently have fifteen restaurants under various stages of development, consisting of eight Benihana teppanyaki restaurants and seven RA Sushi restaurants. We intend to open four new Benihana and seven new RA Sushi restaurants during fiscal 2009. Additionally, during fiscal 2009, we intend to conclude the renovation program by completing the renovation of eight restaurants. Capital expenditures during the upcoming year are expected to total approximately $60 million.

In April 2006, we sold our Sushi Doraku restaurant to Mr. Kevin Aoki, a former director of the Company and the Company’s former Vice President of Marketing. The restaurant facility was sold for $0.5 million, of which approximately $0.5 million was paid in cash and less than $0.1 million as a note receivable payable over 12 months. The note receivable has been paid in full by Mr. Aoki during fiscal year 2008.

In September 2006, we completed the acquisition of a Benihana restaurant in Broomfield, CO that was previously owned and operated by a franchisee. The purchase price totaled $2.8 million, of which approximately $2.7 million was paid in cash and the remainder in other consideration.

Financing activities

We began drawing on our $75 million line of credit during the current fiscal year. Additionally, we expect to continue to draw on the line of credit in the near future, as a result of planned development and renovations previously discussed. During the current fiscal year, we borrowed $75.8 million under the credit facility and made $58.3 million in payments. As of the end of fiscal 2008, $56.6 million remained available for borrowing on the line of credit.

12

BENIHANA INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Condition and Results of Operations

During fiscal year 2007 and 2006, we made $6.7 million and $3.4 million, respectively, in payments related to borrowings under a term loan with Wachovia Bank, which was repaid in full during fiscal year 2007.

During fiscal years 2008, 2007 and 2006, cash proceeds from stock option exercises were $2.6 million, $2.2 million and $5.7 million, respectively.

During fiscal year 2006, we completed the sale of the second and final tranche consisting of $10.0 million aggregate principal amount of our Series B Preferred Stock sold to BFC. In connection with the second tranche, we issued and sold 400,000 shares of our Series B Preferred Stock. We received net proceeds of $9.9 million, after transaction costs, from the sale.

During fiscal years 2008 and 2007, we paid approximately $1.0 million in dividends on the Series B Preferred Stock during each fiscal year. During fiscal year 2006, we paid approximately $0.7 million in dividends on the Series B Preferred Stock.

Contractual obligations and commitments

The following table summarizes contractual obligations and commitments at March 30, 2008 (in thousands):

	Total		2009		2010		2011		2012		2013		Thereafter
Operating lease obligations(1) (Note 9)*	$	164,935	$	11,938	$	11,836	$	11,849	$	11,748	$	11,770	$	105,794
FIN 48 obligation(2) (Note 11)*		769		—		—		—		—		—		769
Haru put option (Note 12)*		3,718		3,718		—		—		—		—		—
Long-term debt(3)(Note 10)*		17,422		—		—		—		17,422		—		—
Purchase commitments		15,094		15,094		—		—		—		—		—
Total	$	201,938	$	30,750	$	11,836	$	11,849	$	29,170	$	11,770	$	106,563

⁽¹⁾ Operating lease obligations do not include certain operating expenses such as contingent rent obligations and common area maintenance. In fiscal 2008, these charges totaled approximately $4.6 million.

⁽²⁾ Unrecognized tax benefits relate to uncertain tax positions recorded under Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FAS109, Accounting for Income Taxes.” As we are not able to reasonably estimate the amount by which the liability will increase or decrease over time, the related balance has been reflected in the caption “Thereafter.”

⁽³⁾ Borrowings under the line of credit facility as of March 30, 2008. The line of credit facility allows us to borrow up to $75 million through March 15, 2012. There are no scheduled payments prior to maturity; however, we may prepay outstanding borrowings prior to that date. Estimates of future interest payments for our variable rate debt are excluded.

* See Notes to Consolidated Financial Statements

Off-balance sheet arrangements

As of March 30, 2008, we did not have any “off-balance sheet arrangements” as that term is defined in Regulation S-K Item 303(a)(4).

The impact of inflation

The primary inflationary factors affecting our operations are labor and commodity costs. Our profitability is dependent, among other things, on our ability to anticipate and react to changes in the costs of operating resources, including food and other raw materials, labor and other supplies and services. Other than labor costs, we do not believe that inflation has had a material effect on sales or expenses during the last three years. Our restaurant operations are subject to federal and state minimum wage laws governing such matters as working conditions, overtime and tip credits. Significant numbers of our food service and preparation personnel are paid at rates related to the federal minimum wage and, accordingly, increases in the minimum wage have increased our labor costs in recent years. To the extent permitted by competition, we have mitigated increased costs by increasing menu prices and may continue to do so if deemed necessary in future years. To the extent that price increases cannot be passed along to our customers, those increases could impact our financial results.

13

BENIHANA INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Condition and Results of Operations

Quantitative and qualitative disclosures about market risks

We are exposed to certain risks of increasing interest rates and commodity prices. The interest on our indebtedness is largely variable and is benchmarked to the prime rate in the United States or to the London interbank offering rate. We may protect ourselves from interest rate increases from time-to-time by entering into derivative agreements that fix the interest rate at predetermined levels. We have a policy not to use derivative agreements for trading purposes. We have no derivative agreements as of March 30, 2008.

We purchase commodities such as chicken, beef and seafood for our restaurants. The prices of these commodities may be volatile depending upon market conditions. We do not purchase forward commodity contracts because the changes in prices for them have historically been short-term in nature and, in our view, the cost of the contracts is in excess of the benefits.

We have, however, entered into non-cancellable supply agreements for the purchase of certain beef and seafood items, in the normal course of business, at fixed prices for up to twelve-month terms. These supply agreements will eliminate volatility in the cost of the commodities over the terms of the agreements. These supply agreements are not considered derivative contracts.

Seasonality of our business

We have a 52/53-week fiscal year. Our fiscal year ends on the Sunday within the dates of March 26 through April 1. We divide the fiscal year into 13 four-week periods. Because of the odd number of periods, our first fiscal quarter consists of 4 periods totaling 16 weeks and each of the remaining three quarters consists of 3 periods totaling 12 weeks each. In the event of a 53-week year, the additional week is included in the fourth quarter of the fiscal year. This operating calendar provides us a consistent number of operating days within each period as well as ensures that certain holidays significant to our operations occur consistently within the same fiscal quarters. Because of the differences in length of fiscal quarters, however, results of operations between the first quarter and the later quarters of a fiscal year are not comparable.

Our business is not highly seasonal although we do have more diners coming to our restaurants for special holidays such as Mother’s Day, Valentine’s Day and New Year’s Eve. Mother’s Day falls in our first fiscal quarter, New Year’s Eve in the third fiscal quarter and Valentine’s Day in the fourth fiscal quarter of each year.

Fiscal years 2008 and 2006 consisted of 52 weeks, while fiscal year 2007 consisted of 53 weeks.

Critical accounting policies and estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities during the reported period. Actual amounts could differ from those estimates. (See Note 1 of Notes to Consolidated Financial Statements included in this Annual Report).

Critical accounting policies and estimates are those that we believe are most important to portraying our financial condition and results of operations and also require the greatest amount of subjective or complex judgments by management. Judgments made by management in the application of these policies or uncertainties at the time of application may result in materially different amounts being reported under different conditions or using different assumptions. We consider the following policies to be the most critical in understanding the judgments that are involved in preparing our consolidated financial statements based on the high degree of judgment or complexity in their application.

Long-Lived Assets - We record all property and equipment at cost. Improvements are capitalized while repairs and maintenance costs are expensed as incurred. Depreciation and amortization of long-lived assets are calculated using the straight-line method over the estimated useful life of the assets or the lease terms of the respective leases, whichever is shorter. The useful life of property and equipment and the determination as to what constitutes a capitalized cost versus a repair and maintenance expense involves judgments by management. These judgments may produce materially different amounts of depreciation and amortization expense and repairs and maintenance expense if different assumptions were used.

We periodically assess the potential impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. We consider a history of relatively small operating gains or consistent and significant operating losses to be a primary indicator of potential asset impairment, after the individual restaurant locations have been operating for two years. Assets are grouped and evaluated for impairment at the lowest level for which there is identifiable cash flows, primarily the individual restaurant units. A restaurant unit is deemed to be impaired if a forecast of undiscounted future operating cash flows directly related to the restaurant is less than the carrying amount of the restaurant’s long-lived assets. If a restaurant unit is determined to be impaired, the impairment loss is measured as the amount by which the carrying amount of the restaurant’s long-lived assets exceeds its fair value and a charge is taken against results of operations. Fair value is an estimate based on the best information available, including multiples of cash flow derived from recent purchases and sales of restaurant businesses in the restaurant industry. As of March 30, 2008, we believe that all of our restaurant units have sufficient estimated future cash flows to support the carrying value of their long-lived assets. However, if an individual restaurant unit’s estimated future cash flows decline below its carrying value of long-lived assets, it could result in impairment charges.

14

BENIHANA INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Condition and Results of Operations

Goodwill and Other Intangible Assets - - We review the recoverability of goodwill and other long-lived intangible assets annually. Goodwill is evaluated at the reporting unit level using an estimation of the fair market value based upon an analysis of cash flows of the related investment assets in comparison to cash flows of similar restaurant businesses that were bought and sold within a reasonable time frame to our own evaluation. We also would make a similar evaluation whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The analysis involves judgments by management, which could produce materially different results if different assumptions were used in the analysis.

Leases - We are obligated under various lease agreements for certain restaurant facilities. For operating leases, we recognize rent expense on a straight-line basis over the expected lease term. Under the provisions of certain of our leases, there are rent holidays and/or escalations in payments over the base lease term, as well as options for renewal for additional periods. The effects of the rent holidays and escalations have been reflected in rent expense on a straight-line basis over the expected lease term, which includes option periods when we determine that we will exercise such option periods due to the fact that we would incur an economic penalty for not doing so. Generally, the lease term commences on the date when we become legally obligated for the rent payments or as specified in the lease agreement. Recognition of rent expense begins when we have the right to control the use of the leased property, which is typically before rent payments are due under the terms of most of our leases. Leasehold improvements are amortized on the straight-line method over the shorter of the estimated life of the asset or the same expected lease term used for lease accounting purposes. For each restaurant facility, the consolidated financial statements reflect the same lease term for amortizing leasehold improvements as we use to determine capital versus operating lease classifications and in calculating straight-line rent expense. Percentage rent expense is generally based upon sales levels and is accrued at the point in time we determine that it is probable that such sales levels will be achieved. Leasehold improvements paid for by the lessor are recorded as leasehold improvements and deferred rent.

Judgments made by us related to the probable term for each restaurant’s lease affect the classification and accounting for a lease as capital or operating, the rent holidays and/or escalations in payments that are taken into consideration when calculating straight-line rent and the term over which leasehold improvements for each restaurant facility are amortized. These judgments may produce materially different amounts of depreciation, amortization and rent expense than would be reported if different lease term assumptions were used.

Self-Insurance - We are self-insured for certain losses, principally related to health and workers’ compensation. We maintain stop loss coverage with third party insurers to limit our total exposure. The self-insurance liability represents an estimate of the ultimate cost of claims incurred and unpaid as of the balance sheet date. We utilize estimates of expected losses, based on statistical analyses, to validate our self-insurance liability. The self-insurance liability is reviewed by us on a quarterly basis to ensure that the liability is appropriate. If actual trends, including the severity or frequency of claims, differ from our estimates, our financial results could be materially impacted.

Income Taxes - Accounting for our income taxes requires significant judgment in the evaluation of our uncertain tax positions and in the calculation of our provision for income taxes. On April 2, 2007, we adopted Financial Accounting Standards Board (“FASB”) Financial Interpretation No. 48, “Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 addresses the determination of how benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. We estimate certain components of our provision for income taxes. These estimates include, but are not limited to, effective state and local income tax amounts, allowable tax credits for items such as FICA taxes paid on reported tip income and estimates related to depreciation expense allowable for tax purposes. Our estimates are made based on the best available information at the time that we prepare the provision. We usually file our income tax returns many months after our fiscal year-end. All tax returns are subject to audit by federal and state governments, usually years after the returns are filed, and could be subject to differing interpretations of the tax laws or our application of such laws to our business (see Note 11 of Notes to Consolidated Financial Statements). Although we believe we have adequately reserved for our uncertain tax positions, the ultimate outcome of these tax matters may differ from our expectations. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made.

Stock-Based Compensation - - Prior to March 27, 2006, we accounted for stock options issued to employees and directors under the intrinsic value method of accounting for stock-based compensation as defined in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). Accordingly, we recognized no compensation expense with respect to such awards because stock options were granted at the fair market value of the underlying shares on the date of the grant. On March 27, 2006, we adopted Statement of Financial Accounting Standards (“SFAS”) No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”), which replaced SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), and superseded APB 25. SFAS 123R requires compensation costs related to share-based payments to employees, including grants of employee and director stock options, to be recognized in the financial statements based on their fair values. With limited exceptions, the amount of compensation cost will be measured based on the fair market value on the grant date of the equity or liability instruments issued. Compensation cost will be recognized over the period that an employee provides service for that award, resulting in charges to earnings. For liability awards, the fair value of the award, which determines the measurement of the liability on the balance sheet, is remeasured at each reporting period until the award is settled. Fluctuations in the fair value of the liability award are recorded as increases or decreases in compensation cost, either immediately or over the remaining service period, depending on the vested status of the award. As of March 30, 2008, we do not have any awards required to be classified as liabilities.

We elected to adopt SFAS 123R using the modified prospective method, which required compensation expense to be recorded for all unvested share-based awards beginning in the first quarter of adoption. Accordingly, the prior fiscal years presented in this Annual Report on Form 10-K have not been restated to reflect the fair value method of expensing stock options. In accordance with SFAS 123R, tax benefits related to equity award grants that are in excess of the tax benefits recorded in our consolidated statements of earnings are classified as a cash inflow in the financing section of our consolidated statements of cash flows beginning in fiscal 2007.

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BENIHANA INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Condition and Results of Operations

The fair value of stock options granted was estimated at the date of grant using the Black-Scholes option-pricing model, which requires the input of highly subjective assumptions, including the risk-free interest rate, expected dividend yield, expected volatility and expected life of the award. Changes in the assumptions used could materially affect the grant date fair value of an award.

New accounting pronouncements that may affect our financial reporting

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measures required under other accounting pronouncements but does not change existing guidance as to whether or not an instrument is carried at fair value. SFAS 157 is effective for financial assets and liabilities for fiscal years beginning after November 15, 2007. The FASB has provided a one year deferral for the implementation of SFAS No. 157 for non-financial assets and liabilities that are not required to be measured at fair value on a recurring basis. The Company is currently reviewing the provisions of SFAS 157 to determine the impact on its consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 provides reporting entities an option to report selected financial assets, including investment securities designated as available for sale, and liabilities, including most insurance contracts, at fair value. SFAS 159 establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. The standard also requires additional information to aid financial statement users’ understanding of a reporting entity’s choice to use fair value on its earnings and also requires entities to display the fair value of those affected assets and liabilities in the primary financial statements. SFAS 159 is effective as of the beginning of a reporting entity’s first fiscal year beginning after November 15, 2007. Application of the standard is optional and any impacts are limited to those financial assets and liabilities to which SFAS 159 would be applied. We are currently reviewing the provisions of SFAS 159 to determine the impact, if elected, on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (“SFAS 141R”). SFAS 141R establishes the principles and requirements on how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree as well as the recognition and measurement of goodwill acquired in a business combination. SFAS 141R also requires certain disclosures to enable users of the financial statements to evaluate the nature and financial effects of the business combination. Acquisition costs associated with the business combination will generally be expensed as incurred. SFAS 141R is effective for business combinations occurring in fiscal years beginning after December 15, 2008. Early adoption of SFAS 141R is not permitted. Acquisitions, if any, after the effective date will be accounted for in accordance with SFAS 141R.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an Amendment of ARB No. 51” (“SFAS 160”). SFAS 160 applies to all entities that prepare consolidated financial statements but will affect only those entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a subsidiary. SFAS 160 establishes accounting and reporting standards that require noncontrolling interests to be reported as a component of equity, changes in a parent’s ownership interest while the parent retains its controlling interest be accounted for as equity transactions and any retained noncontrolling equity investment upon the deconsolidation of a subsidiary be initially measured at fair value. SFAS 160 is to be applied prospectively to business combinations consummated on or after the beginning of the first annual reporting period on or after December 15, 2008. Acquisitions, if any, after the effective date will be accounted for in accordance with SFAS 160.

Forward looking statements

This Annual Report contains various “forward-looking statements,” which represent our expectations or beliefs concerning future events, including unit growth, future capital expenditures and other operating information. A number of factors could, either individually or in combination, cause actual results to differ materially from those included in the forward-looking statements, including changes in consumer dining preferences, fluctuations in commodity prices, availability of qualified employees, changes in the general economy, industry cyclicality, and in consumer disposable income, competition within the restaurant industry, availability of suitable restaurant locations or acquisition opportunities, harsh weather conditions in areas in which we and our franchisees operate restaurants or plan to build new restaurants, acceptance of our concepts in new locations, changes in governmental laws and regulations affecting labor rates, employee benefits and franchising, ability to complete new restaurant construction and obtain governmental permits on a reasonably timely basis, the possibility of an adverse outcome in our dispute with the former Minority Stockholders of Haru Holding Corp., unstable economic conditions in foreign countries where we franchise restaurants and other factors that we cannot presently foresee.

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BENIHANA INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share information)

	Fiscal Year Ended
	March 30, 2008		April 1, 2007		March 26, 2006
Revenues
Restaurant sales	$	295,190	$	271,080	$	244,032
Franchise fees and royalties		1,756		1,569		1,521
Total revenues		296,946		272,649		245,553
Costs and Expenses
Cost of food and beverage sales		69,727		66,051		59,014
Restaurant operating expenses		178,099		159,456		139,433
Restaurant opening costs		3,440		1,535		1,270
Marketing, general and administrative expenses		28,092		23,811		22,693
Total operating expenses		279,358		250,853		222,410
Income from operations		17,588		21,796		23,143
Interest income, net		270		465		88
Income before income taxes and minority interest		17,858		22,261		23,231
Income tax provision		5,065		7,766		8,491
Income before minority interest		12,793		14,495		14,740
Minority interest		—		—		178
Net Income		12,793		14,495		14,562
Less: accretion of issuance costs and preferred stock dividends		1,084		1,104		1,430
Net income attributable to common stockholders	$	11,709	$	13,391	$	13,132
Earnings Per Share
Basic earnings per common share	$	0.77	$	0.90	$	0.93
Diluted earnings per common share	$	0.75	$	0.84	$	0.91

See Accompanying Notes to the Consolidated Financial Statements.

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BENIHANA INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share information)

	March 30, 2008			April 1, 2007
Assets
Current Assets:
Cash and cash equivalents	$	1,718		$	8,449
Receivables, net		4,473			2,800
Inventories		6,477			5,729
Income tax receivable		3,756			—
Prepaid expenses and other current assets		2,036			2,784
Investment securities, available for sale - restricted		808			841
Deferred income tax asset, net		347			931
Total current assets		19,615			21,534
Property and equipment, net		184,176			146,479
Goodwill		29,900			29,900
Deferred income tax asset, net		746			169
Other assets, net		7,217			6,207
Total assets	$	241,654		$	204,289
Liabilities, Convertible Preferred Stock and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	6,158		$	9,318
Accrued expenses		25,226			20,663
Accrued put option liability		3,718			3,718
Income tax payable		—			136
Total current liabilities		35,102			33,835
Deferred obligations under operating leases		11,296			8,611
Borrowings under line of credit		17,422			—
Other long-term liabilities		769			—
Total liabilities		64,589			42,446
Commitments and Contingencies (Notes 9, 10 and 12)
Convertible Preferred Stock - $1.00 par value; authorized - 5,000,000 shares; Series B Mandatory Redeemable Convertible Preferred Stock – authorized – 800,000 shares; issued and outstanding – 800,000 shares in 2008 and 2007, respectively, with a liquidation preference of $20 million plus accrued and unpaid dividends as of March 30, 2008 (Note 13)		19,449			19,361
Stockholders’ Equity:
Common stock - $.10 par value; convertible into Class A Common stock; authorized – 12,000,000 shares; issued and outstanding – 6,234,964 and 7,133,092 shares in 2008 and 2007, respectively		623			713
Class A Common stock - $.10 par value; authorized – 20,000,000 shares; issued and outstanding – 9,044,436 and 7,791,588 shares in fiscal 2008 and 2007, respectively		905			779
Additional paid-in capital		68,342			63,563
Retained earnings		87,777			77,427
Accumulated other comprehensive loss, net of tax		(31	)		—
Total stockholders’ equity		157,616			142,482
Total liabilities, convertible preferred stock and stockholders’ equity	$	241,654		$	204,289

See Accompanying Notes to the Consolidated Financial Statements.

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BENIHANA INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share information)

	Common Stock			Class ACommonStock		AdditionalPaid-inCapital			RetainedEarnings			TreasuryStock			AccumulatedOtherComprehensiveLoss,net of tax			TotalStockholders’Equity
Balance, March 27, 2005	$	757		$	620	$	51,069		$	50,904		$	(143	)	$	—		$	103,207
Net income										14,562									14,562
Issuance of 306,085 shares of common stock and 571,670 shares of Class A common stock from exercise of options		30			57		5,633												5,720
Conversion of 341,526 shares of common stock into 341,526 shares of Class A common stock		(34	)		34		—												—
Dividends declared on Series B Preferred Stock										(820	)								(820	)
Accretion of issuance costs on Series B Preferred Stock										(84	)								(84	)
Deemed dividend on Series B Preferred Stock beneficial conversion feature							526			(526	)								—
Tax benefit from stock option exercises							2,677												2,677
Balance, March 26, 2006		753			711		59,905			64,036			(143	)		—			125,262
Net income										14,495									14,495
Issuance of 104,552 shares of common stock and 194,104 shares of Class A common stock from exercise of options		10			19		2,213												2,242
Conversion of 487,464 shares of common stock into 487,464 shares of Class A common stock		(49	)		49														—
Dividends declared on Series B Preferred Stock										(1,016	)								(1,016	)
Accretion of issuance costs on Series B Preferred Stock										(88	)								(88	)
Stock-based compensation							399												399
Retirement of treasury stock		(1	)				(142	)					143						—
Tax benefit from stock option exercises							1,188												1,188
Balance, April 1, 2007		713			779		63,563			77,427			—			—			142,482
Comprehensive income:
Net income										12,793									12,793
Unrealized loss on investment securities available for sale, net of tax																(31	)		(31	)
Total comprehensive income																			12,762
Cumulative effect of accounting change (Note 11)										(1,355	)								(1,355	)
Issuance of 109,990 shares of common stock and 218,830 shares of Class A common stock from exercise of options		11			22		2,592												2,625
Issuance of 25,900 shares of restricted Class A common stock					3		(3	)											—
Conversion of 1,008,118 shares of common stock into 1,008,118 shares of Class A common stock		(101	)		101														—
Cash dividend paid in lieu of fractional shares on stock split										(4	)								(4	)
Dividends declared on Series B Preferred Stock										(996	)								(996	)
Accretion of issuance costs on Series B Preferred Stock										(88	)								(88	)
Stock-based compensation							576												576
Tax benefit from stock option exercises							1,614												1,614
Balance, March 30, 2008	$	623		$	905	$	68,342		$	87,777		$	—		$	(31	)	$	157,616

See Accompanying Notes to the Consolidated Financial Statements.

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BENIHANA INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

	Fiscal Year Ended
	March 30, 2008			April 1, 2007			March 26, 2006
Operating Activities:
Net income	$	12,793		$	14,495		$	14,562
Adjustments to reconcile net income to net cash provided by operating activities, net of business acquisitions:
Depreciation and amortization		17,347			13,906			11,896
Stock-based compensation		576			399			—
Tax benefit from stock option exercises		(1,614	)		(1,188	)		2,677
Loss on disposal of assets		869			181			149
Provision for loss on promissory note		400			—			—
Deferred income taxes		2,562			(968	)		129
Minority interest		—			—			178
Change in operating assets and liabilities that provided (used) cash:
Receivables		(921	)		(148	)		(1,402	)
Inventories		(748	)		765			22
Income taxes and other long-term liabilities		(5,396	)		2,958			(2,635	)
Prepaid expenses and other current assets		748			(1,271	)		210
Other assets		(1,762	)		(627	)		(1,163	)
Accounts payable		(1,787	)		(146	)		988
Accrued expenses and deferred obligations under operating leases		4,690			2,797			3,829
Net cash provided by operating activities		27,757			31,153			29,440
Investing Activities:
Expenditures for property and equipment		(55,136	)		(34,572	)		(25,486	)
Business acquisition, net of cash acquired		—			(2,743	)		—
Payment of contingent consideration on RA Sushi acquisition		—			(228	)		(348	)
Purchase of investment securities, available for sale, net		(21	)		(6	)		(167	)
Cash proceeds from disposal of property and equipment		10			241			715
Cash proceeds from sale of Sushi Doraku		—			515			—
Collection on Sushi Doraku note		2			22			—
Net cash used in investing activities		(55,145	)		(36,771	)		(25,286	)
Financing Activities:
Borrowings on line of credit		75,767			—			—
Repayments on line of credit		(58,345	)		—			—
Repayment of long-term debt		—			(6,666	)		(3,360	)
Proceeds from issuance of common and Class A common stock upon exercise of options		2,625			2,242			5,720
Proceeds from issuance of Series B Preferred stock, net		—			—			9,884
Tax benefit from stock option exercises		1,614			1,188			—
Dividends paid on Series B preferred stock		(1,000	)		(1,000	)		(705	)
Cash dividend paid in lieu of fractional shares on stock split		(4	)		—			—
Net cash provided by (used in) financing activities		20,657			(4,236	)		11,539
Net (decrease) increase in cash and cash equivalents		(6,731	)		(9,854	)		15,693
Cash and cash equivalents, beginning of year		8,449			18,303			2,610
Cash and cash equivalents, end of year	$	1,718		$	8,449		$	18,303
Supplemental Cash Flow Information
Cash paid during the fiscal year for:
Interest	$	300		$	447		$	387
Income taxes		7,898			5,775			8,331
Noncash investing and financing activities
Acquired property and equipment for which cash payments had not yet been made	$	6,735		$	4,235		$	3,635
Fair value of assets acquired, other than cash		—			2,743			—
Note receivable received as part of consideration for sale of location		—			24			375
Accrued but unpaid dividends on the Series B Preferred Stock		245			249			233
Unrealized loss on investment securities available for sale, net of tax		31			—			—

See Accompanying Notes to the Consolidated Financial Statements.

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BENIHANA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 30, 2008, APRIL 1, 2007 AND MARCH 26, 2006

1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	Operations – As of March 30, 2008, Benihana Inc., including its wholly-owned subsidiaries, (the “Company”) owned and operated 60 teppanyaki theme and 27 Japanese theme restaurants featuring sushi. The Company also had 18 franchised teppanyaki theme restaurants as of March 30, 2008. The Company owns the right to open, license and develop restaurants using the Benihana name and trademarks in the United States, Central and South America and the Caribbean islands.
	Basis of Presentation - The consolidated financial statements include the assets, liabilities and results of operations of the Company’s wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. During fiscal year 2006, income attributable to other interest holders is reflected as minority interest in the consolidated statements of earnings.
	The Company has a 52/53-week fiscal year. The Company’s fiscal year ends on the Sunday within the dates of March 26 through April 1. The Company divides the fiscal year into 13 four-week periods. Because of the odd number of periods, the Company’s first fiscal quarter consists of 4 periods totaling 16 weeks and each of the remaining three quarters consists of 3 periods totaling 12 weeks each. In the event of a 53-week year, the additional week is included in the fourth quarter of the fiscal year. This operating calendar provides the Company a consistent number of operating days within each period as well as ensures that certain holidays significant to the Company occur consistently within the same fiscal quarters. Because of the differences in length of fiscal quarters, however, results of operations between the first quarter and the later quarters of a fiscal year are not comparable. Fiscal years 2008 and 2006 consisted of 52 weeks, while fiscal year 2007 consisted of 53 weeks.
	On May 18, 2007, the Company’s Board of Directors unanimously declared a three-for-two stock split to be effected by means of a dividend of one-half of one share of Common Stock for each outstanding share of Common Stock and each outstanding share of Class A Common Stock. Share and per share information included in the consolidated financial statements has been adjusted to reflect the impact of the stock dividend, in accordance with Statement of Financial Accounting Standards No. 128, “Earnings per Share.”
	Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”) requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual amounts could differ from those estimates.
	Revenue Recognition - Restaurant Sales - Revenues from food and beverage sales are recognized as products are sold. Franchise Fees and Royalties - The Company recognizes initial franchise fees as income when substantially all of its obligations are satisfied, which generally coincides with the opening of the franchised restaurants. The Company also receives continuing royalties based upon a percentage of each franchised restaurant’s gross revenues. Royalties are recognized as income when earned.
	The Company sells gift cards to customers in its restaurants and through its websites. Proceeds from the sale of gift cards are deferred until the revenue recognition criteria has been met, generally upon redemption. Gift card breakage is recorded when the likelihood of the redemption of the gift cards becomes remote, which is based on historical redemption patterns. Historically, gift card breakage has not been material.
	Cash and Cash Equivalents - The Company considers all highly liquid investment instruments purchased with an initial maturity of three months or less to be cash equivalents. Amounts receivable from third-party credit card processors are also considered cash equivalents because they are both short-term and highly liquid in nature and are typically converted to cash within three days of the sales transaction.
	Inventories - Inventories, which consist principally of restaurant operating supplies and food and beverage, are stated at the lower of cost (first-in, first-out method) or market.
	Investment securities, available for sale - The Company maintains investments in certain publicly traded mutual funds that invest in debt and equity securities. The Company invests in these mutual funds to mirror and track the performance of the elections made by employees that participate in the Company’s deferred compensation plan. These investments are held in trust in accordance with the deferred compensation plan and are restricted for payment of plan expenses and benefits to the participants. These mutual fund investments are classified as available for sale and are carried at fair value with unrealized gains and losses reflected as a separate component of stockholders’ equity. The unrealized gain (loss) positions of the investments as of April 1, 2007 and March 26, 2006 were not material to these consolidated financial statements. These investments have no stated maturities.

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BENIHANA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 30, 2008, APRIL 1, 2007 AND MARCH 26, 2006

Accounting for Long-Lived Assets - Property and equipment are stated at cost. The Company capitalizes all direct costs incurred to construct restaurants. Upon opening, these costs are depreciated and charged to expense based upon their useful life classification. Rent expense incurred during the construction period is not capitalized but is charged to restaurant opening costs. The amount of interest capitalized in connection with restaurant construction in fiscal years 2008, 2007 and 2006 was approximately $0.2 million, $0.3 million and $0.2 million, respectively.

The Company evaluates its net investment in restaurant properties and its other long-lived assets for impairment when events or changes in circumstances that indicate the carrying amounts of an asset may not be recoverable. The Company considers a history of relatively small operating gains or consistent and significant operating losses to be a primary indicator of potential asset impairment, after the individual restaurant locations have been operating for two years. Assets are grouped and evaluated for impairment at the lowest level for which there is identifiable cash flows, primarily the individual restaurant units. A restaurant unit is deemed to be impaired if a forecast of undiscounted future operating cash flows directly related to the restaurant is less than the carrying amount of the restaurant’s long-lived assets. If a restaurant unit is determined to be impaired, the impairment loss is measured as the amount by which the carrying amount of the restaurant’s long-lived assets exceeds its fair value and a charge is taken against results of operations. Fair value is an estimate based on the best information available, including multiples of cash flow derived from recent purchases and sales of businesses in the restaurant industry.

Depreciation and Amortization - Depreciation and amortization are computed by the straight-line method over the estimated useful life (buildings - 30 years; restaurant furniture, fixtures and equipment - 8 years; office equipment - 8 years; personal computers, software and related equipment - 3 years; and leasehold improvements - lesser of the underlying lease terms, including renewal options, or their useful lives). Depreciation expense associated with property and equipment totaled $16.6 million, $13.3 million and $11.4 million for fiscal years 2008, 2007 and 2006, respectively. During fiscal years 2008, 2007 and 2006, the Company incurred incremental depreciation expense of $2.4 million, $1.6 million and $1.1 million, respectively, related to the Company’s review of estimated useful lives of assets for restaurants scheduled to be remodeled.

Accounting for Goodwill and Intangibles - Goodwill consists of the cost of an acquired business in excess of the fair value of net assets acquired, using the purchase method of accounting. Goodwill and intangible assets deemed to have indefinite lives are not amortized and are subject to annual impairment tests. Intangible assets deemed to have definite lives are amortized over their estimated useful lives.

The Company annually reviews goodwill for recoverability based primarily on a multiple of earnings analysis comparing the fair value to the carrying value. The Company performs its annual assessment for impairment annually or more frequently if impairment indicators are identified during the year. The Company performed its assessment for possible impairment and no impairment charges resulted from the impairment tests during fiscal years 2008, 2007 and 2006. There have been no changes in goodwill during fiscal years 2008 or 2007.

Intangible assets consist of premiums on liquor licenses, lease acquisition costs, capitalized computer software costs and reacquired franchise rights. These intangible assets are classified as other assets, net in the accompanying consolidated balance sheets. Premiums on liquor licenses are indefinite lived intangible assets. The Company reviews premiums on liquor licenses for impairment annually or more frequently if impairment indicators are identified during the year. Lease acquisition costs are amortized over the remaining life of the acquired lease. Capitalized computer software costs are amortized over three years. Reacquired franchise rights are amortized over the remaining term of purchased rights. Amortization of intangibles totaled $0.7 million, $0.5 million and $0.4 million during fiscal years 2008, 2007 and 2006, respectively.

Estimated amortization expense over the estimated remaining life of intangible assets is as follows (in thousands):

Fiscal year:
2009	$	304
2010		331
2011		331
2012		294
2013		254
Thereafter		545
Total	$	2,059

Accounting for Leases - Operating Leases - Rent expense for the Company’s operating leases, which generally have escalating rentals over the term of the lease, is recorded on a straight-line basis over the lease term, as defined in Statement of Financial Accounting Standards (“SFAS”) No. 13, “Accounting for Leases.” Generally, the lease term commences on the date when the Company becomes legally obligated for the rent payments or as specified in the lease agreement. Recognition of rent expense begins when the Company has the right to control the use of the leased property, which is typically before rent payments are due under the terms of most of the Company’s leases. The difference between rent expense and rent paid is recorded as deferred rent obligation and is included in the consolidated balance sheets.

22

BENIHANA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 30, 2008, APRIL 1, 2007 AND MARCH 26, 2006

Accounting for the Costs of Computer Software Developed or Obtained for Internal Use - The Company capitalizes and records in other assets the cost of computer software obtained for internal use and amortizes such costs over a three-year period. Amortization of these costs totaled $0.4 million, $0.2 million and $0.3 million during fiscal years 2008, 2007 and 2006, respectively.

Self-Insurance - The Company is self-insured for certain losses, principally related to health and workers’ compensation. The Company maintains stop loss coverage with third party insurers to limit its total exposure. The self-insurance liability represents an estimate of the ultimate cost of claims incurred and unpaid as of the balance sheet date. The Company utilizes estimates of expected losses, based on statistical analyses, to validate its self-insurance liability. The self-insurance liability is reviewed by the Company on a quarterly basis to ensure that the liability is appropriate.

Income Taxes - The Company uses the asset and liability method which recognizes the amount of current and deferred taxes payable or refundable at the date of the financial statements as a result of all events that have been recognized in the consolidated financial statements as measured by the provisions of enacted law. Recognition of deferred tax assets is limited to amounts considered by management to be more likely than not of realization in future periods. On April 2, 2007, the Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 addresses the determination of how benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN 48, the Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority.

Derivative Instruments - The Company does not currently utilize instruments to hedge exposure to fluctuations in variable interest rates, currency fluctuations or fluctuations in the prices of commodities.

Stock-Based Compensation - Prior to March 27, 2006, the Company accounted for stock options issued to employees and directors under the intrinsic value method of accounting for stock-based compensation as defined in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). Accordingly, the Company recognized no compensation expense with respect to such awards because stock options were granted at the fair market value of the underlying shares on the date of the grant. On March 27, 2006, the Company adopted SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”), which replaces SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”) and supersedes APB 25.

The Company elected to adopt SFAS 123R using the modified prospective method, which required compensation expense to be recorded for all unvested share-based awards beginning in the first quarter of adoption. Accordingly, the 2006 fiscal year presented has not been restated to reflect the fair value method of expensing stock options. In accordance with SFAS 123R, tax benefits related to equity award grants that are in excess of the tax benefits recorded on the Company’s consolidated statements of earnings are classified as a cash inflow in the financing section of the Company’s consolidated statements of cash flows beginning in fiscal 2007.

SFAS 123R requires compensation costs related to share-based payments to employees, including grants of employee and director stock options, to be recognized in the financial statements based on their fair values. With limited exceptions, the amount of compensation cost is measured based on the fair market value on the grant date of the equity or liability instruments issued. The estimated fair value of share-based compensation is amortized to expense over the vesting period, which is generally two to three years. For liability awards, the fair value of the award, which determines the measurement of the liability on the balance sheet, is remeasured at each reporting period until the award is settled. Fluctuations in the fair value of the liability award are recorded as increases or decreases in compensation cost, either immediately or over the remaining service period, depending on the vested status of the award. As of March 30, 2008, the Company does not have any awards required to be classified as liabilities.

The fair value of restricted stock awards is the market price of the underlying shares on the date of grant. The Company will generally use the Black-Scholes option pricing model to estimate the fair value of options granted. This model requires the use of subjective assumptions that can materially affect fair value estimates. The following summarizes assumptions used in estimating the fair value of option grants:

23

BENIHANA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 30, 2008, APRIL 1, 2007 AND MARCH 26, 2006

	Fiscal Year
	2008	2007	2006
Risk free interest rate	3.4% - 4.6%	4.6%	4.3%
Expected term	3 years	3 years	3 years
Expected dividend yield	—	—	—
Expected volatility	46.4% - 48.5%	44.0%	37.0%

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option. The expected term is based on the period of time the options are expected to be outstanding. The expected dividend yield is based on the Company’s history and expectation of dividend payments. The volatility factor is based on historical monthly price observations of the underlying shares over the expected term of the option as the Company has no reason to believe that future volatility over the expected term is likely to differ from historical volatility.

The Company recorded $0.6 million ($0.4 million net of tax) and $0.4 million ($0.2 million net of tax) in stock compensation expense during the fiscal years ended March 30, 2008 and April 1, 2007, respectively. The Company did not recognize any stock compensation expense during the fiscal year 2006. As of March 30, 2008, total unrecognized compensation cost related to nonvested stock options totaled $1.3 million and is expected to be recognized over approximately 3 years. As of March 30, 2008, total unrecognized compensation cost related to restricted stock awards totaled $0.3 million and is expected to be recognized over approximately 3 years.

Under SFAS 123, the fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option-pricing model. Had the Company accounted for its stock-based awards under the fair value method, the table below shows the pro forma effect on net income and earnings per share for the fiscal year ended March 26, 2006 (in thousands, except per share information):

Net Income
As reported	$	14,562
Less: Accretion of issuance costs and preferred stock dividends		(1,430	)
Net income attributable to common stockholders		13,132
Add: Stock-based compensation cost included in net income, net of tax		—
Less: Total stock-based employee compensation expense determined under fair value based method for all awards, net of tax		(263	)
Pro forma income for computation of basic earnings per share		12,869
Add: Accretion of issuance costs and preferred stock dividends		1,430
Pro forma income for computation of diluted earnings per share	$	14,299
Basic earnings per share:
As reported	$	0.93
Pro forma	$	0.92
Diluted earnings per share:
As reported	$	0.91
Pro forma	$	0.89

Segment Reporting - The Company accounts for its segments in accordance with SFAS No. 131, “Disclosure about Segments of an Enterprise and Related Information” (“SFAS 131”). SFAS 131 requires that a public company report annual and interim financial and descriptive information about its reportable operating segments. Operating segments, as defined, are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company has determined that its reportable segments are those that are based on the Company’s methods of internal reporting and management structure, which is based upon the Company’s restaurant concepts. Accordingly, the Company’s reportable segments are based on restaurant concept.

There were no material amounts of revenues or transfers between reportable segments. Revenues from external customers are derived principally from food and beverage sales. The Company does not rely on any major customers as a source of revenue. For fiscal years 2008, 2007 and 2006, franchise revenues attributed to foreign countries totaled approximately, $0.5 million, $0.3 million and $0.3 million, respectively.

Restaurant Opening Costs - Restaurant opening costs include incremental out-of-pocket costs, which are directly related to the opening of new restaurants that are not capitalizable and the amortization of rentals under lease agreements for accounting purposes. Restaurant opening costs include costs to recruit and train hourly restaurant employees, wages, travel and lodging costs for the Company’s opening training team and other support employees, costs for practice service activities and straight-line minimum base rent during the restaurant preopening period. The Company expenses restaurant opening costs as incurred.

24

BENIHANA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 30, 2008, APRIL 1, 2007 AND MARCH 26, 2006

Advertising - Advertising costs are expensed as incurred. Advertising costs were $7.7 million, $6.7 million and $7.4 million in fiscal 2008, 2007 and 2006, respectively, and are included in marketing, general and administrative expenses in the accompanying consolidated statements of earnings.

Other Comprehensive Loss –During fiscal 2008, the only component of other comprehensive loss is the unrealized losses on the investments available for sale.

Earnings Per Share - Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during each period. The diluted earnings per share computation includes dilutive share equivalents issued under the Company’s various stock option plans and the dilutive convertible preferred stock outstanding during fiscal years 2008, 2007 and 2006.

The components used in the computation of basic earnings per share and diluted earnings per share for each fiscal year are shown below (in thousands):

	March 30, 2008			April 1, 2007			March 26, 2006
Net income	$	12,793		$	14,495		$	14,562
Less: Accretion of issuance costs and preferred stock dividends		(1,084	)		(1,104	)		(1,430	)
Income for computation of basic earnings per share		11,709			13,391			13,132
Add: Accretion of issuance costs and preferred dividends (See Note 13)		1,084			1,104			1,430
Income for computation of diluted earnings per share	$	12,793		$	14,495		$	14,562
Weighted average number of common shares in basic earnings per share		15,173			14,841			14,046
Effect of dilutive securities:
Stock options and warrants		334			838			644
Convertible preferred shares		1,662			1,598			1,317
Weighted average number of common shares and dilutive potential common shares used in diluted earnings per share		17,169			17,277			16,007

During fiscal years 2008 and 2006, stock options to purchase 457,000 and 60,000 shares of common stock were excluded from the calculation of diluted earnings per share since the effect would be considered antidilutive. During fiscal 2007, no stock options were excluded from the calculation of diluted earnings per share.

New Accounting Pronouncements That May Affect Financial Reporting – In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measures required under other accounting pronouncements but does not change existing guidance as to whether or not an instrument is carried at fair value. SFAS 157 is effective for financial assets and liabilities for fiscal years beginning after November 15, 2007. The FASB has provided a one year deferral for the implementation of SFAS No. 157 for non-financial assets and liabilities that are not required to be measured at fair value on a recurring basis. The Company is currently reviewing the provisions of SFAS 157 to determine the impact on its consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 provides reporting entities an option to report selected financial assets, including investment securities designated as available for sale, and liabilities, including most insurance contracts, at fair value. SFAS 159 establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. The standard also requires additional information to aid financial statement users’ understanding of a reporting entity’s choice to use fair value on its earnings and also requires entities to display the fair value of those affected assets and liabilities in the primary financial statements. SFAS 159 is effective as of the beginning of a reporting entity’s first fiscal year beginning after November 15, 2007. Application of the standard is optional and any impacts are limited to those financial assets and liabilities to which SFAS 159 would be applied. The Company is currently reviewing the provisions of SFAS 159 to determine the impact, if elected, on its consolidated financial statements.

25

BENIHANA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 30, 2008, APRIL 1, 2007 AND MARCH 26, 2006

	In December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (“SFAS 141R”). SFAS 141R establishes the principles and requirements on how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree as well as the recognition and measurement of goodwill acquired in a business combination. SFAS 141R also requires certain disclosures to enable users of the financial statements to evaluate the nature and financial effects of the business combination. Acquisition costs associated with the business combination will generally be expensed as incurred. SFAS 141R is effective for business combinations occurring in fiscal years beginning after December 15, 2008. Early adoption of SFAS 141R is not permitted. Acquisitions, if any, after the effective date will be accounted for in accordance with SFAS 141R.
	In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an Amendment of ARB No. 51” (“SFAS 160”). SFAS 160 applies to all entities that prepare consolidated financial statements but will affect only those entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a subsidiary. SFAS 160 establishes accounting and reporting standards that require noncontrolling interests to be reported as a component of equity, changes in a parent’s ownership interest while the parent retains its controlling interest be accounted for as equity transactions and any retained noncontrolling equity investment upon the deconsolidation of a subsidiary be initially measured at fair value. SFAS 160 is to be applied prospectively to business combinations consummated on or after the beginning of the first annual reporting period on or after December 15, 2008. Acquisitions, if any, after the effective date will be accounted for in accordance with SFAS 160.
2.	PURCHASE AND SALE OF RESTAURANT FACILITIES
	Fiscal 2007 - In April 2006, the Company sold its Sushi Doraku restaurant to Mr. Kevin Aoki, a former director of the Company and the Company’s former Vice President of Marketing. The restaurant facility was sold for $0.5 million, of which approximately $0.5 million was paid in cash and less than $0.1 million as a note receivable payable over 12 months. The note receivable has been paid in full by Mr. Aoki.
	In September 2006, the Company completed the acquisition of a Benihana restaurant in Broomfield, CO. This restaurant was previously owned and operated by a franchisee. The purchase price totaled $2.8 million, of which approximately $2.7 million was paid in cash and the remainder in other consideration.
	Fiscal 2006 - During November 2005, the Company completed the acquisition of a teppanyaki restaurant facility in Tucson, AZ. The purchase price totaled $1.9 million payable in cash. The restaurant facility has been converted to a Benihana restaurant. The cash expenditure for this asset purchase is included in expenditures for property and equipment in the consolidated statement of cash flows for the year ended March 26, 2006.
	During December 2005, the Company sold its Benihana restaurant facility located in Monterey, CA to a new franchisee. The restaurant facility was sold for $522,000, of which $147,000 was paid in cash and $375,000 is payable with interest over three years. The franchisee entered into a 15-year franchise agreement for the operation of the Monterey location. The initial cash payment has been included in cash proceeds from sale of property and equipment in the consolidated statement of cash flows for the year ended March 26, 2006. Refer to Note 12, Commitments and Contingencies, for further discussion regarding the complaint filed by the Company in connection with a default on the $375,000 Promissory Note.
3.	FAIR VALUE OF FINANCIAL INSTRUMENTS
	The carrying amounts of cash and cash equivalents, receivables, accounts payable and accrued liabilities approximate fair value because of the short-term nature of the items as of March 30, 2008 and April 1, 2007. The carrying amount of the Company’s debt at March 30, 2008 approximates fair value due to the variable rates associated with the debt instrument. The fair value of available for sale investment securities are based on quoted market prices.

26

BENIHANA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 30, 2008, APRIL 1, 2007 AND MARCH 26, 2006

4.	INVENTORIES
	Inventories consist of (in thousands):

	March 30, 2008		April 1, 2007
Food and beverage	$	2,511	$	2,165
Supplies		3,966		3,564
	$	6,477	$	5,729

5.	PROPERTY AND EQUIPMENT
	Property and equipment, net consists of (in thousands):

	March 30, 2008		April 1, 2007
Land	$	14,414	$	12,975
Buildings		39,880		27,572
Leasehold improvements		147,705		130,609
Restaurant furniture, fixtures and equipment		39,011		32,898
		241,010		204,054
Less: Accumulated depreciation and amortization		70,687		74,090
		170,323		129,964
Construction in progress		13,853		16,515
	$	184,176	$	146,479

	During fiscal 2008, the Benihana restaurant in Memphis, Tennessee was destroyed by fire. As of March 30, 2008, the Company wrote off the net book value of damaged property and recorded an insurance receivable for those assets. The Company records insurance receivable amounts from third-party insurers for property and casualty claims when recovery is probable. The Company believes that the loss will be fully recoverable.
	As of March 30, 2008, the Company believes that all of its restaurant units have sufficient estimated future cash flows to support the carrying value of their long-lived assets.
6.	OTHER ASSETS
	Other assets, net consist of (in thousands):

	March 30, 2008		April 1, 2007
Security deposits	$	3,035	$	2,037
Premium on liquor licenses		1,899		1,451
Lease acquisition costs, net of accumulated amortization of $1,261 and $1,083, respectively		1,120		1,298
Reacquired franchise rights, net of accumulated amortization of $118 and $40, respectively		707		785
Other, net of accumulated amortization of $1,745 and $1,247, respectively		456		636
	$	7,217	$	6,207

27

BENIHANA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 30, 2008, APRIL 1, 2007 AND MARCH 26, 2006

7.	ACCRUED EXPENSES
	Accrued expenses consist of (in thousands):

	March 30, 2008		April 1, 2007
Accrued payroll, incentive compensation and related taxes	$	5,525	$	4,221
Accrued capital expenditures		5,056		1,584
Unredeemed gift cards and certificates		3,488		3,075
Accrued workers compensation claims		2,226		2,045
Sales taxes payable		1,529		1,754
Accrued percentage rent		1,379		2,077
Other accrued liabilities		6,023		5,907
	$	25,226	$	20,663

8.	RESTAURANT OPERATING EXPENSES
	Restaurant operating expenses are those costs that are directly attributed to the operation of individual restaurant locations and consist of (in thousands):

	Fiscal Year Ended
	March 30, 2008		April 1, 2007		March 26, 2006
Labor and related costs	$	100,655	$	91,903	$	81,398
Occupancy costs		17,620		16,523		14,204
Depreciation and amortization		16,595		13,369		11,467
Utilities		7,926		6,917		6,084
Restaurant supplies		6,841		6,120		5,065
Credit card discounts		5,592		5,020		4,450
Other restaurant operating expenses		22,870		19,604		16,765
Total restaurant operating expenses	$	178,099	$	159,456	$	139,433

9.	LEASES
	The Company is obligated under various lease agreements for most of its restaurant units, as well as its corporate office. The Company generally operates its restaurant units in leased premises. The typical restaurant premises lease is for a term of between 15 to 25 years with renewal options ranging from 5 to 20 years. The leases generally provide for the obligation to pay property taxes, utilities and various other use and occupancy costs. Rentals under certain leases are based on a percentage of sales in excess of a certain minimum level. Certain leases provide for increases based upon the changes in the consumer price index. The Company is also obligated under various leases for restaurant equipment and for office space and equipment.
	Under the provisions of certain of the Company’s leases, there are rent holidays and/or escalations in payments over the base lease term as well as renewal periods. The effects of the rent holidays and escalations have been reflected in rent expense on a straight-line basis over the expected lease term, which includes option periods when it is deemed to be reasonably assured that the Company will exercise such option periods due to the fact that the Company would incur an economic penalty for not doing so. Generally, the lease term commences on the date when the Company becomes legally obligated for the rent payments or as specified in the lease agreement. Recognition of rent expense begins when the Company has the right to control the use of the leased property, which is typically before rent payments are due under the terms of most of the Company’s leases. Percentage rent expense is generally based upon sales levels and is accrued at the point in time the Company determines that it is probable that such sales levels will be achieved. Leasehold improvements paid for by the lessor are recorded as leasehold improvements and deferred rent.

28

BENIHANA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 30, 2008, APRIL 1, 2007 AND MARCH 26, 2006

Minimum payments under lease commitments are summarized below for operating leases. The amounts of operating lease obligations are as follows (in thousands):

	Operating Leases
Fiscal year:
2009	$	11,938
2010		11,836
2011		11,849
2012		11,748
2013		11,770
Thereafter		105,794
Total minimum lease payments	$	164,935

          Rent expense is comprised of the following for the fiscal years ended 2008, 2007 and 2006 (in thousands):

	2008		2007		2006
Minimum rentals	$	13,489	$	12,103	$	10,304
Contingent rentals		3,401		3,712		3,293
	$	16,890	$	15,815	$	13,597

10.	LONG-TERM DEBT AND LINE OF CREDIT
	Long-term debt consisted of (in thousands):

	March 30, 2008		April 1, 2007
Borrowings under line of credit	$	17,422	$	—

	The Company presently has available up to $75 million from Wachovia Bank, National Association (“Wachovia”) under the terms of a line of credit entered on March 15, 2007. The line of credit facility allows the Company to borrow up to $75 million through March 15, 2012 and is secured by the assets of the Company. There are no scheduled payments prior to maturity. The Company may, however, prepay outstanding borrowings prior to that date. The Company has the option to pay interest at Wachovia’s prime rate plus an applicable margin or at the London interbank offering rate plus an applicable margin. The interest rate may vary depending upon the ratio of the sum of the Company’s earnings before interest, taxes, depreciation and amortization, as defined in the agreement, to its indebtedness. The Company also incurs a commitment fee on the unused balance available under the terms of the line of credit, based on a leverage ratio. While providing for working capital, capital expenditures and general corporate purposes, the agreement requires that the Company maintains certain financial ratios and profitability amounts and restricts the payment of cash dividends as well as the use of proceeds to purchase stock of the Company.
	At March 30, 2008, the Company had $17.4 million outstanding under the line of credit facility at an interest rate of 3.38%; borrowings from which were used to fund capital expenditures in connection with the Company’s expansion and renovation program. The amount available to be borrowed under the line of credit is reduced on a dollar-for-dollar basis by the cumulative amount of any outstanding letters of credit. At March 30, 2008, the Company had approximately $1.0 million in letters of credit outstanding against this facility in connection with its workers’ compensation insurance program and certain leases. Accordingly, at March 30, 2008, the Company had approximately $56.6 million available for borrowing under the line of credit facility.
	During fiscal years 2007 and 2006, the Company made approximately $6.7 million and $3.4 million in payments related to borrowings under a term loan with Wachovia Bank. At April 1, 2007, the Company had no outstanding debt, as the term loan was repaid in full during fiscal 2007.
	As of March 30, 2008, the Company was in compliance with all covenants of the Company’s line of credit agreement with Wachovia.
11.	INCOME TAXES
	Deferred tax assets and liabilities reflect the tax effect of temporary differences between amounts of assets and liabilities for financial reporting purposes and the amounts of such assets and liabilities as measured by income tax law. A valuation allowance is recognized to reduce deferred tax assets to the amounts that are more likely than not to be realized.

29

BENIHANA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 30, 2008, APRIL 1, 2007 AND MARCH 26, 2006

The income tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows (in thousands):

	March 30, 2008		April 1, 2007
Deferred tax assets:
Straight-line rent expense	$	3,771	$	2,046
Gift certificate liability		1,427		1,258
Amortization of gain		705		744
Employee benefit accruals		742		807
Workers compensation		283		—
Other		272		30
		7,200		4,885
Deferred tax liabilities:
Property and equipment		2,970		1,085
Inventories		997		910
Goodwill		2,140		1,790
		6,107		3,785
Net deferred tax asset	$	1,093	$	1,100
Net deferred tax asset consists of (in thousands):
	March 30, 2008		April 1, 2007
Current asset	$	347	$	931
Long-term asset		746		169
	$	1,093	$	1,100

The income tax provision consists of (in thousands):
	Fiscal Year Ended
	March 30, 2008			April 1, 2007			March 26, 2006
Current tax expense:
Federal	$	1,581		$	6,707		$	5,823
State		915			2,027			2,539
Deferred tax expense (benefit):
Federal and State		2,569			(968	)		129
Income tax provision	$	5,065		$	7,766		$	8,491
The income tax provision differed from the amount computed at the statutory rate as follows (in thousands):
	Fiscal Year Ended
	March 30, 2008			April 1, 2007			March 26, 2006
Federal income tax provision at statutory rate of 35%	$	6,250		$	7,791		$	8,131
State income taxes, net of federal benefit		968			1,179			1,519
Tax credits, net		(1,437	)		(1,372	)		(1,226	)
Tax benefit recognized for FIN 48 uncertainties in the income statement, net		(824	)		—			—
Other		108			168			67
Income tax provision	$	5,065		$	7,766		$	8,491
Effective income tax rate		28.4	%		34.9	%		36.6	%

30

BENIHANA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 30, 2008, APRIL 1, 2007 AND MARCH 26, 2006

The Company files income tax returns that are periodically audited by various federal and state jurisdictions. With few exceptions, the Company is no longer subject to federal and state income tax examinations for years prior to fiscal year 2005.

The Company adopted the provisions of FIN48 on April 2, 2007. As a result of the implementation of FIN 48, the Company recorded a non-cash cumulative transition charge of approximately $1.4 million as a reduction of retained earnings (see Consolidated Statement of Stockholders’ Equity). As of April 2, 2007, the Company had $3.3 million of unrecognized tax benefits, of which approximately $0.7 million would impact the effective tax rate if recognized. As of March 30, 2008, the Company had $0.7 million of unrecognized tax benefits, all of which would impact the tax rate, if recognized. Of the total unrecognized tax benefits at March 30, 2008, the Company believes is reasonably possible that this amount could be reduced by $0.4 million in the next twelve months due the expiration of statute of limitations.

The unrecognized tax benefits and related interest and penalties are generally classified as other long term liabilities in the accompanying fiscal year 2008 consolidated balance sheet.

A reconciliation of beginning and ending unrecognized tax benefits, exclusive of related interest and penalties, is as follows (in thousands):

Unrecognized tax benefits, April 2, 2007	$	3,308
Gross decreases - prior period tax positions		(2,725	)
Gross increases - prior period tax positions		76
Unrecognized tax benefits, March 30, 2008	$	659

	The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. As of April 2, 2007, the Company had approximately $0.4 million accrued for the payment of interest and approximately $0.6 million accrued for the payment of penalties related to unrecognized tax benefits. As of March 30, 2008, the Company had approximately $0.2 million accrued for the payment of interest and no amount accrued for the payment of penalties related to unrecognized tax benefits.
	During the current fiscal year, the Company reduced the related interest and penalties associated with unrecognized tax benefits by approximately $0.1 million and $0.6 million, respectively.
12.	COMMITMENTS AND CONTINGENCIES
	Acquisitions – Haru Holding Corp.
	In December 1999, the Company completed the acquisition of 80% of the equity of Haru Holding Corp. (“Haru”). The acquisition was accounted for using the purchase method of accounting. Pursuant to the purchase agreement, at any time during the period from July 1, 2005 through September 30, 2005, the holders of the balance of Haru’s equity (the “Minority Stockholders”) had a one-time option to sell their remaining shares to the Company (the “put option”). The exercise price under the put option was to be calculated as four and one-half (4½) times Haru’s consolidated cash flow for the fiscal year ended March 27, 2005 less the amount of Haru’s debt (as that term is defined in the purchase agreement) at the date of the computation.
	On July 1, 2005, the Minority Stockholders exercised the put option.
	The Company believes that the proper application of the put option price formula would result in a payment to the former Minority Stockholders of approximately $3.7 million. The Company has offered to pay such amount to the former Minority Stockholders and recorded a $3.7 million liability with respect thereto.
	On August 25, 2006, the former Minority Stockholders sued the Company. The complaint, (which was originally filed in the Supreme Court of the State of New York, County of New York, but has been removed to the United States District Court for the Southern District of New York) seeks an award of $10.7 million, based on the former Minority Stockholders’ own calculation of the put option price formula and actions allegedly taken by the Company to reduce the value of the put option.
	On December, 19, 2007, the Court dismissed all of the claims against the Company, except for the breach of fiduciary duty and breach of contract claims. On January 25, 2008, the Company filed its Answer and Affirmative Defenses to the Amended Complaint. The Court has set a discovery deadline of July 25, 2008.
	The Company believes that it has correctly calculated the put option price and that the claims of the former Minority Stockholders are without merit. However, there can be no assurance as to the outcome of this litigation.

31

BENIHANA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 30, 2008, APRIL 1, 2007 AND MARCH26, 2006

	Acquisitions – RA Sushi
	In December 2002, the Company completed the acquisition of RA Sushi, a privately owned Arizona chain which operated four restaurants. Pursuant to the purchase agreement of RA Sushi, the Company was required to pay the seller contingent purchase price payments based on certain operating results. The contingent purchase price payments were based upon the achievement of stipulated levels of operating earnings and revenues by the acquired restaurants over a three-year period commencing with the end of fiscal 2004 and such payments were not contingent on the continued employment of the sellers of the restaurants. The minimum contingent payment levels were met in all three years. Payments associated with these levels were paid out in fiscal years 2007 and 2006.
	Litigation -
	On May 17, 2007, Benihana Monterey Corporation, a subsidiary of the Company, filed a complaint in the action, Benihana Monterey Corporation v. Nara Benihana Monterey, Inc., et al, , pending in the Superior Court of California, County of Monterey. The action was commenced against various defendants in connection with a default on a Promissory Note in the amount of $375,000 signed by one of the Company’s franchisees and a Personal Guaranty signed by the owner of such franchise. The Company seeks $375,000 plus interest and costs and has attached certain of the defendants’ assets by way of an Attachment Order. The franchisee filed a counter-claim alleging certain misrepresentations by the Company, and in March of 2008, the Court dismissed the counter-claim. The Company has obtained judgment against the defendant for approximately $500,000, including repayment of the $375,000 Promissory Note, interest and costs. The Company has served the defendant with an order regarding examination of the defendant’s assets and has filed a subpoena requiring the defendant and the defendant’s entities to produce substantial documents. The Company has evaluated the collectibility of the outstanding balance of the Promissory Note, and during fiscal 2008, established a $400,000 reserve for the estimated portion of the Promissory Note that may not be collectible.
	On August 3, 2007, the Company was served with a complaint in the action, National Cable Communications, LLC v. The Romann Group and Benihana Inc., pending in the Supreme Court of the State of New York. In this action, plaintiff alleges that the Company is jointly and severally liable with its co-defendant, the Romann Group, for unpaid payments relating to spot cable advertisements allegedly purchased by Romann Group on behalf of the Company and placed by plaintiff. Plaintiff’s complaint demands judgment of approximately $570,000 plus interest, costs and disbursements. The Company has answered the complaint, denying liability with respect to the plaintiff’s claims and has asserted cross-claims against the Romann Group. The Romann Group served its answer in this action denying the Company’s cross claims and asserted counterclaims against the plaintiff and cross-claims against the Company for unspecified damages. The Company believes that both the plaintiff’s and the Romann Group’s cross-claims are without merit and will vigorously defend against the claims.
	The Company is not subject to any other significant pending legal proceedings, other than ordinary routine claims incidental to its business.
	Supply Agreements -
	The Company has entered into non-cancellable supply agreements for the purchase of certain beef and seafood items, in the normal course of business, at fixed prices for up to twelve-month terms. These supply agreements will eliminate volatility in the cost of the commodities over the terms of the agreements. These supply agreements are not considered derivative contracts. As of March 30, 2008, purchase commitments totaled approximately $15.1 million.
13.	CONVERTIBLE PREFERRED STOCK
	On July 1, 2004, the Company received net proceeds of $9.3 million, after transaction costs, representing the funding of the first $10.0 million tranche of its sale of $20.0 million aggregate principal amount of Series B Convertible Preferred Stock (“Series B Preferred Stock”) to BFC Financial Corporation (“BFC”). In connection with the first tranche, the Company issued and sold 400,000 shares of its Series B Preferred Stock. John E. Abdo, a director of the Company, is a director and Vice Chairman of the Board of BFC and is a significant shareholder of BFC.
	On August 4, 2005, the Company completed the second and final tranche consisting of $10.0 million aggregate principal amount of its Series B Preferred Stock sold to BFC. In connection with the second tranche, the Company issued and sold 400,000 shares of its Series B Preferred Stock. The Company received net proceeds of $9.9 million, after transaction costs, from the sale.
	The Series B Preferred Stock has a liquidation preference of $20.0 million, or $25.00 per share, (subject to anti-dilution provisions) plus accrued and unpaid dividends. The Series B Preferred Stock is convertible into Common Stock of the Company at a conversion price of approximately $12.67 per share (as adjusted, to reflect the three-for-two stock split) that equates to 1.97 shares of Common Stock for each share of Series B Preferred Stock (subject to anti-dilution provisions). The 800,000 shares of Series B Preferred Stock outstanding at March 30, 2008 are convertible into an aggregate 1,578,943 shares of Common Stock. The Series B Preferred Stock carries a dividend at the annual rate of $1.25 per share (or 5% of the purchase price) payable in cash or additional Series B Preferred Stock, and votes on an “as if converted” basis together with the Company’s Common Stock on all matters put to a vote of the holders of Common Stock. In addition, under certain circumstances, the approval of a majority of the Series B Preferred Stock is required for certain events outside the ordinary course of business, principally acquisitions or disposition of assets having a value in excess of 25% of the total consolidated assets of the Company.

32

BENIHANA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 30, 2008, APRIL 1, 2007 AND MARCH 26, 2006

	The Company pays quarterly dividends on the Series B Preferred Stock, and at March 30, 2008, accrued but unpaid dividends on the Series B Preferred Stock totaled $0.2 million, or $0.31 per share, of the Series B Preferred Stock.
	Since the Series B Preferred Stock is convertible into Common Stock at a conversion price of approximately $12.67 per share (as adjusted to reflect the three-for-two stock split) and the Common Stock was trading at approximately $13.33 per share (as adjusted to reflect the three-for-two stock split) on August 4, 2005 when the second tranche was completed, a deemed dividend was recognized on the beneficial conversion feature, in connection with the second tranche, totaling $526,000. The deemed dividend will not result in any cash payments to the holders of the Series B Preferred Stock.
	The Company is obligated to redeem the Series B Preferred Stock at its original issue price on July 2, 2014, which date may be extended by the holders of a majority of the then-outstanding shares of Series B Preferred Stock to a date no later than July 2, 2024. The Company may pay the redemption in cash or, at its option, in shares of Common Stock valued at then-current market prices unless the aggregate market value of the Company’s Common Stock and any other common equity is below $75.0 million. In addition, the Series B Preferred Stock may, at the Company’s option, be redeemed in cash at any time beginning three years from the date of issue if the volume-weighted average price of the Common Stock exceeds approximately $25.33 per share (as adjusted to reflect the three-for-two stock split) for sixty consecutive trading days.
	The holders of a majority of the outstanding Series B Preferred Stock are entitled to nominate one individual to the Company’s board of directors. In the event that dividends are not paid for two consecutive quarters, the holders of the majority of the Series B Preferred Stock are entitled to elect one additional director.
	Consistent with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” and EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock,” the conversion option of the Series B Preferred Stock is not a derivative liability that must be fair valued.
14.	STOCKHOLDERS’ EQUITY
	Common and Class A Common Stock - The Company’s Common Stock is convertible into Class A Common Stock on a one-for-one basis. The Class A Common Stock is identical to the Common Stock except that it gives the holder one-tenth (1/10) vote per share, voting together with the Company’s Common Stock as a single class on all matters except the election of directors. For election of directors, the Class A Common stockholders vote as a class to elect 25% of the members of the Board of Directors.
	Stock Dividend – On May 18, 2007, the Company’s Board of Directors unanimously declared a three-for-two stock split to be effected by means of a dividend of one-half of one share of Common Stock for each outstanding share of Common Stock and each outstanding share of Class A Common Stock. The stock dividend was paid on June 15, 2007 to holders of record of the Common Stock and Class A Common Stock at the close of business on June 1, 2007. In lieu of distributing a fractional share of Common Stock, the Company paid to stockholders holding an odd number of shares of Common Stock or an odd number of shares of Class A Common Stock an amount in cash equal to one-third of the closing price of the Common Stock on the Nasdaq National Market System on June 1, 2007, totaling approximately $4,000.
	The number and class of shares available upon exercise of any options granted by the Company under its various stock options plans were equitably adjusted to reflect the stock dividend in accordance with the terms of such plans, taking into effect any differential in the closing price of the Common Stock and the Class A Common Stock on June 1, 2007. Applicable terms of all other instruments and agreements to purchase Common Stock or Class A Common Stock were appropriately adjusted to reflect the stock dividend as well. All applicable share and per-share data in these consolidated financial statements and related disclosures have been retroactively adjusted to give effect to this stock split.
	Stock Options – On November 2, 2007, the Company’s shareholders approved the 2007 Equity Incentive Plan. As of that date, all future awards are to be granted under the 2007 Equity Incentive Plan. Therefore, the Company no longer grants options under any of its previously approved plans, including: the 2003 Directors’ Stock Option Plan, 2000 Employees Class A Stock Option Plan, 1997 Employees Class A Stock Option Plan and Amended and Restated Directors’ Stock Option Plan (together, the “Prior Option Plans”). All outstanding options issued under such Prior Option Plans will not be affected and will continue to be outstanding in accordance with their terms and the terms of the Prior Option Plans pursuant to which they were issued. The number of shares of Class A stock available for grant under the 2007 Equity Incentive Plan is 750,000, of which a maximum of 550,000 may be issued upon the exercise of incentive stock options. As of March 30, 2008, of these amounts, the Company has granted 25,900 shares of restricted Class A Common Stock and options to purchase 313,400 shares of Class A Common Stock, leaving 410,700 shares available for future grants.

33

BENIHANA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 30, 2008, APRIL 1, 2007 AND MARCH 26, 2006

The purpose of the 2007 Equity Incentive Plan is to enable the Company to attract, retain and motivate key employees and non-employee directors by providing them equity participation. The plan provides for incentive stock options (“ISO’s”) under Section 422 of the Internal Revenue Code of 1986, as amended, and for options which are not ISO’s, stock appreciation rights (SARs), stock grants and stock equivalent units. Options, SARs and stock equivalent units granted under the employee plans may not have terms exceeding ten years (in the case of optionees holding 10% or more of the combined voting rights of the Company’s securities, ISO’s may not have terms exceeding five years) and may not provide for an option exercise price of less than 100% of the fair market value of the Company’s Class A Stock on the day of the grant (110% of such fair market value in the case of optionees holding 10% or more of the combined voting rights of the Company’s securities). With regard to each option grant, the option first vests with respect to one-third on first anniversary of the grant of such option, one-third on the second anniversary of the grant of such option and as to the balance of such shares on the third anniversary of such option. With regard to each restricted stock grant, the grant is subject to a risk of forfeiture which fist lapses with respect to approximately one-third on the first anniversary of such grant, approximately one-third on the second anniversary of such grant and the balance of such shares on the third anniversary of such grant.

Under the 2007 Equity Incentive Plan, options to purchase 10,000 shares of Class A Common Stock are automatically granted to each of the Company’s non-employee directors on the date of the Company’s annual meeting and are exercisable ratably as to one-third of the shares on the date which is six months after the date of grant, one-third of the shares on the first anniversary of the grant of such option and as to the balance of such shares on the second anniversary of grant of such option.

Transactions under the above plans for the fiscal years 2006, 2007 and 2008 are as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
				(per share)		(in years)
Outstanding at March 27, 2005		2,566,283		$	7.47
Granted		90,000			14.91
Canceled/Expired		(15,752	)		7.35
Exercised		(880,755	)		6.49
Outstanding at March 26, 2006		1,759,776			8.33
Granted		105,000			18.81
Canceled/Expired		(5,198	)		6.17
Exercised		(298,656	)		7.51
Outstanding at April 1, 2007		1,560,922			9.21
Granted		313,400			11.69
Canceled/Expired		(16,164	)		17.79
Exercised		(328,820	)		7.99
Outstanding at March 30, 2008		1,529,338		$	9.90		5.2	$	3,612,000
Exercisable at March 30, 2008		1,185,938		$	9.20		3.8	$	3,342,000

The Company expects options to purchase 157,800 shares to vest during fiscal 2009. Historically, forfeitures of options have not been significant.

The weighted average grant date fair values of options granted during fiscal years 2008, 2007 and 2006 were $4.27, $6.53 and $4.45, respectively.

34

BENIHANA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 30, 2008, APRIL 1, 2007 AND MARCH 26, 2006

					Options Outstanding				Options Exercisable
Ranges of exercise prices:					Number	Weighted- Average Remaining Contractual Life	Weighted Average Exercise Price		Number	Weighted Average Exercise Price
$	4.42	-	$	5.24	146,625	2.8	$	4.92	146,625	$	4.92
	6.59	-		7.13	101,200	1.1		6.60	101,200		6.60
	7.36	-		9.01	573,613	3.2		8.11	573,613		8.11
	10.00	-		11.22	457,900	7.4		10.73	214,500		11.16
	14.91	-		16.36	160,000	8.7		15.55	90,000		14.92
	18.81	-		18.84	90,000	8.9		18.82	60,000		18.82
					1,529,338	5.2	$	9.90	1,185,938	$	9.20

The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. For fiscal years 2008, 2007 and 2006, the total intrinsic value of stock options exercised was approximately $4.0 million, $3.5 million and $7.4 million, respectively. Proceeds from stock options exercised during the fiscal years ended 2008, 2007 and 2006 totaled $2.6 million, $2.2 million and $5.7 million, respectively. Upon the exercise of stock options, shares are issued from new issuances of stock. The tax benefit realized for tax deductions from stock options during the fiscal years ended 2008, 2007 and 2006 totaled $1.6 million, $1.2 million and $2.7 million, respectively. As of March 30, 2008, total unrecognized compensation cost related to nonvested stock options totaled $1.3 million and is expected to be recognized over approximately 3 years. The total fair value of shares vested during fiscal year was $0.6 million.

Restricted stock – In March of 2008, the Company granted 25,900 shares of restricted “non-vested” Class A Common Stock awards to certain employees, and as of March 30, 2008 none of these awards were vested or forfeited. The grant date fair value of restricted stock awards granted was $10.35, which was the market price of the underlying shares on the date of grant. The aggregate fair value of the restricted stock awards was approximately $0.3 million. There were no restricted stock awards granted in prior periods. As of March 30, 2008, there was approximately $0.3 million of unrecognized compensation cost related to restricted stock awards, which is expected to be recognized over approximately 3 years.

Stock Rights - The Company has a Shareholder Rights Plan under which a Preferred Share Purchase Right (Right) is represented by outstanding shares of the Company’s Common and Class A Common Stock. The Rights operate to create substantial dilution to a potential acquirer who seeks to make an acquisition, the terms of which the Company’s Board of Directors believes is inadequate or structured in a coercive manner.

The Rights become exercisable on the tenth day (or such later date as the Board of Directors may determine) after public announcement that a person or a group (subject to certain exceptions) has acquired 20% or more of the outstanding Common Stock or an announcement of a tender offer that would result in beneficial ownership by a person or a group of 20% or more of the Common Stock.

On January 31, 2007, the Board of Directors of the Company approved and the Company entered into an Amended and Restated Rights Agreement (the “Agreement”). The Agreement amended and restated that certain Rights Agreement (the “Original Agreement”) between the Company and First Union National Bank of North Carolina (which was succeeded in interest by American Stock Transfer & Trust Company) dated as of February 6, 1997. The principal purpose of the Agreement was to extend the final expiration date of the Rights certificates issued under the Original Agreement from February 2, 2007 to February 2, 2011. The Agreement also implements certain other changes to the Original Agreement, including modifications to the provisions governing “Exempt Persons.”

On May 18, 2007, the Board of Directors of the Company approved and the Company entered into an Amendment (the “Amendment”) to the Amended and Restated Rights Agreement, dated as of January 31, 2007, between the Company and American Stock Transfer & Trust Company, as rights agent. The Amendment amended the Agreement to clarify that an Exempt Person (as defined under the Agreement) will not cease to be an Exempt Person if such person acquires additional shares of Common Stock pursuant to one or more actions or transactions approved by the Company’s Board of Directors.

Treasury Stock – During fiscal year 2007, the Company retired 9,177 shares of Common Stock and 1,651 shares of Class A Common Stock, previously held in treasury.

35

BENIHANA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 30, 2008, APRIL 1, 2007 AND MARCH 26, 2006

15.	RELATED PARTY TRANSACTIONS
	In October 2007, the Company entered into a lease for a Benihana restaurant to be located in Orlando, FL. The landlord is Bluegreen Vacations Unlimited, Inc., a subsidiary of Bluegreen Corporation. Two directors of the Company are also directors of Bluegreen Corporation.
	As discussed in Note 13, the Company sold an aggregate 800,000 shares of its Series B Preferred Stock to BFC for $20.0 million. John E. Abdo, a director of the Company, is a director and Vice Chairman of the Board of BFC and is a significant shareholder of BFC. The sale of Series B Preferred Stock was completed in two tranches during fiscal years 2005 and 2006. The sale of Series B Preferred Stock resulted in net aggregate proceeds of $19.2 million ($9.3 million in fiscal 2005 and $9.9 million in fiscal 2006).
	Benihana of Tokyo, Inc. (“BOT”) owns a Benihana restaurant in Honolulu, Hawaii (the “Honolulu Restaurant”) and all rights to the Benihana name and trade names, service marks and proprietary systems outside the territory served by the Company which consists of the United States (except for rights related to the State of Hawaii) and Central and South America and the islands of the Caribbean Sea. The Company also granted to BOT a perpetual license to operate the Honolulu Restaurant and an exclusive license to own and operate Benihana restaurants in Hawaii. This license is royalty free with respect to any Hawaiian restaurant beneficially owned by Rocky H. Aoki, the Company founder. The Company has a right of first refusal to purchase any Hawaiian restaurant or any joint venture or sublicensing thereof proposed to be made by BOT with an unaffiliated third party; and, in the event any Hawaiian restaurant is sold, sublicensed or transferred to a third party not affiliated with Rocky H. Aoki, the Company will be entitled to receive royalties from such restaurant equal to 6% of gross revenues.
	In April 2006, the Company sold the assets of its sole Doraku restaurant to Kevin Aoki, the Company’s former Vice President of Marketing and a former member of the Board of Directors. The assets were sold for $0.5 million, after adjustment, as determined by an independent appraisal. The transaction was approved by the Board of Directors. Pursuant to the sale agreement, Kevin Aoki extended the non-competition provision of his employment agreement through August 31, 2008, but Mr. Aoki is permitted (i) to own, operate and manage Sushi Doraku restaurants in Hawaii and in Miami-Dade County, Florida, provided any such restaurants in Miami-Dade County are not within a seven mile radius of any existing or proposed restaurants then being operated by the Company or any of its subsidiaries or franchisees and (ii) to have an interest in any other additional Sushi Doraku restaurants with the prior written consent, not to be unreasonably withheld, of a committee of Benihana’s Board of Directors. Additionally, the Company paid Mr. Aoki less than $0.1 million upon his resignation from the Company, representing the remainder of his unearned salary under an employment agreement. Consistent with SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities,” these items are reflected in the Company’s fiscal 2007 results. The financial impact of this transaction was nominal.
	While the assets of the Doraku restaurant meet the definition of “discontinued operations,” as defined in SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company has not segregated Doraku’s results of operations, as the amounts are immaterial. Net income totaled approximately $41,000 and $24,000 for fiscal years 2007 and 2006, respectively.
	Darwin C. Dornbush, the Company’s Secretary and a retired director of the Company, is a partner in Dornbush Schaeffer Strongin & Venaglia, LLP, formerly known as Dornbush Schaeffer Strongin & Weinstein, LLP, a law firm. In the fiscal years 2008, 2007 and 2006, the Company incurred approximately $0.9 million, $0.8 million and $0.7 million, respectively, in legal fees and expenses to Dornbush Schaeffer Strongin & Venaglia, LLP.
	During fiscal 2008, J. Ronald Castell, a director of the Company, provided certain marketing consulting services. Mr. Castell earned approximately $30,000 in consulting fees during the fiscal year.
16.	INCENTIVE AND DEFERRED COMPENSATION PLANS
	The Company has an incentive compensation plan whereby bonus awards are made if the Company attains a certain targeted return on its equity at the beginning of each fiscal year or at the discretion of the Compensation Committee. The purpose of the plan is to improve the long-term sustainable results of operations of the Company by more fully aligning the interests of management and key employees with the shareholders of the Company.
	The Company’s annual incentive compensation plan ties key employees’ bonus earning potential to individually-designed performance objectives. Under the plan, each plan participant is provided a range of potential annual cash incentive awards based on his or her individually-designed performance objectives. Actual awards paid under the plan are based on exceeding goals tied to certain budgeted results of the Company. A portion of awards is also determined by achieving other performance and management goals.

36

BENIHANA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 30, 2008, APRIL 1, 2007 AND MARCH 26, 2006

	For fiscal year 2008, the maximum incentive awards that could be awarded to the Company’s named executive officers pursuant to the incentive compensation plan are as follows: for the chief executive officer – 50% of annual base salary, chief operating officer and president – 45% of annual base salary, executive vice president – operations – 40% of annual base salary, and other vice presidents– 30% of annual base salary. The controller and the other senior directors are eligible to receive their annual base salary multiplied by 25%.
	For fiscal years 2007 and 2006, the maximum incentive awards that could be awarded to the Company’s named executive officers pursuant to the incentive compensation plan are as follows: for the president and chief executive officer, executive vice president of operations, senior vice president – finance, vice president – marketing, senior vice president – chief operating officer and the vice president – sushi division: their annual base salary multiplied by 30%. The controller and the other senior directors are eligible to receive their annual base salary multiplied by 25% in fiscal 2007 and 20% in fiscal 2006.
	Incentive compensation earned is payable in a lump sum payment.
	Target rates are approved annually based upon a review of the rates of return on equity of other publicly traded restaurant businesses by the Compensation Committee of the Board of Directors.
	The Company recorded $0.3 million, $0.3 million, and $0.5 million of corporate incentive compensation expense for fiscal years 2008, 2007 and 2006, respectively.
	The Company has an executive retirement plan whereby certain key employees may elect to defer up to 20% of their salary and 100% of their bonus until retirement or age 55, whichever is later, or due to disability or death. Employees may select from various investment options for their available account balances. The Company has elected to invest the deferrals in mutual funds that track the election made by the participants and to monitor the selected investment’s performance. Investment earnings are credited to their accounts and the Company increases or decreases its obligations under the deferred compensation plan.
17.	SEGMENT REPORTING
	The Company’s reportable segments are those that are based on the Company’s methods of internal reporting and management structure. The Company manages operations by restaurant concept.
	Revenues for each of the segments consist of restaurant sales. Franchise revenues, while generated from Benihana franchises, have not been allocated to the Benihana teppanyaki segment. Franchise revenues are reflected as corporate revenues.
	The table below presents information about reportable segments for fiscal years 2008, 2007 and 2006 (in thousands):

	Fiscal Year Ended
	March 30, 2008
	Teppanyaki		RA Sushi		Haru		Sushi Doraku		Corporate			Consolidated
Revenues	$	215,716	$	44,965	$	34,509	$	—	$	1,756		$	296,946
Income from operations		25,177		807		4,326		—		(12,722	)		17,588
Capital expenditures		33,844		10,483		10,809		—		—			55,136
Depreciation expense		12,173		2,192		2,096		—		134			16,595
Goodwill		11,214		11,880		6,896		—		—			29,990
Total assets		140,798		40,332		30,543		—		29,981			241,654

37

BENIHANA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 30, 2008, APRIL 1, 2007 AND MARCH 26, 2006

	Fiscal Year Ended
	April 1, 2007
	Teppanyaki		RA Sushi		Haru		Sushi Doraku		Corporate			Consolidated
Revenues	$	200,248	$	38,986	$	31,661	$	185	$	1,569		$	272,649
Income from operations		23,850		2,538		5,451		70		(10,113	)		21,796
Capital expenditures		29,774		6,201		1,568		—		—			37,543
Depreciation expense		9,951		1,507		1,756		—		109			13,323
Goodwill		11,214		11,880		6,896		—		—			29,990
Total assets		120,485		30,540		22,121		—		31,143			204,289
	Fiscal Year Ended
	March 26, 2006
	Teppanyaki		RA Sushi		Haru		Sushi Doraku		Corporate			Consolidated
Revenues	$	189,796	$	24,620	$	27,662	$	1,954	$	1,521		$	245,553
Income from operations		25,285		2,302		4,599		41		(9,084	)		23,143
Capital expenditures		17,816		4,904		3,111		3		—			25,834
Depreciation expense		8,715		903		1,572		115		81			11,386
Goodwill		11,214		11,880		6,896		—		—			29,990
Total assets		100,294		25,079		22,960		534		42,649			191,516

18.	QUARTERLY FINANCIAL DATA (UNAUDITED)
	Fiscal quarter ended (in thousands except for per share information)

	March 30, 2008								April 1, 2007
	Fourth		Third		Second		First		Fourth		Third		Second		First
Revenues	$	70,228	$	69,814	$	66,969	$	89,935	$	71,625	$	62,202	$	58,929	$	79,893
Gross profit		53,110		53,096		50,923		68,334		53,801		46,714		44,247		60,267
Net income		2,907		3,171		2,509		4,206		4,072		3,279		2,623		4,521
Basic earnings per share	$	0.17	$	0.19	$	0.15	$	0.26	$	0.25	$	0.20	$	0.16	$	0.28
Diluted earnings per share	$	0.17	$	0.19	$	0.15	$	0.25	$	0.23	$	0.19	$	0.15	$	0.26

38

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Benihana Inc.
Miami, Florida

We have audited the accompanying consolidated balance sheets of Benihana Inc. and subsidiaries (the “Company”) as of March 30, 2008 and April 1, 2007, and the related consolidated statements of earnings, stockholders’ equity, and cash flows for each of the three years in the period ended March 30, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 30, 2008 and April 1, 2007, and the results of its operations and its cash flows for each of the three years in the period ended March 30, 2008, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of March 30, 2008, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated June 13, 2008 expressed an unqualified opinion on the Company’s internal control over financial reporting.

Deloitte & Touche LLP
Certified Public Accountants

Miami, Florida
June 13, 2008

39

EVALUATION DISCLOSURE CONTROLS AND PROCEDURES

We have established and maintain disclosure controls and procedures that are designed to ensure that material information relating to the Company and our subsidiaries required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only a reasonable assurance of achieving the desired control objectives, and management was necessarily required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the date of such evaluation.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f) and 15d-15(f), internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we carried out an evaluation of the effectiveness of our internal control over financial reporting as of March 30, 2008 based on the criteria in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based upon this evaluation, our management concluded that the Company’s internal control structure and consequently, the Company’s internal control over financial reporting were effective as of March 30, 2008.

Deloitte & Touche LLP, the independent registered public accounting firm that audited our consolidated financial statements included in this Annual Report on Form 10-K, has also audited the effectiveness of the Company’s internal control over financial reporting as of March 30, 2008. Deloitte & Touche LLP expressed an unqualified opinion on our internal control over financial reporting as of March 30, 2008 as stated in their report included herein.

   /s/ Joel A. Schwartz

   Joel A. Schwartz

   Chief Executive Officer

   /s/ Jose I. Ortega

   Jose I. Ortega

   Chief Financial Officer

   June 13, 2008

40

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Benihana Inc.
Miami, Florida

We have audited the internal control over financial reporting of Benihana Inc. and subsidiaries (the “Company”) as of March 30, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 30, 2008, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended March 30, 2008 of the Company and our report dated June 13, 2008 expressed an unqualified opinion on those financial statements.

Deloitte & Touche LLP
Certified Public Accountants

Miami, Florida
June 13, 2008

41

OFFICERS AND DIRECTORS

CORPORATE OFFICERS

Joel A. Schwartz – Chairman of the Board and Chief Executive Officer

Juan C. Garcia – President and Chief Operating Officer

Taka Yoshimoto - Executive Vice President - Operations

Jose I. Ortega - Vice President-Finance, Chief Financial Officer and Treasurer

Darwin C. Dornbush - Secretary

DIRECTORS

Joel A. Schwartz

Taka Yoshimoto

John E. Abdo - Vice Chairman of the Board of Directors and Chairman of the Executive Committee,
	BFC Financial Corporation; Vice Chairman of the Board and Chairman of the Executive Committee, BankAtlantic Bancorp., Inc.; Vice Chairman, Woodbridge Holdings Inc.; and Vice Chairman of the Board, Bluegreen Corporation.

Norman Becker - Independent Consultant, Certified Public Accountant

J. Ronald Castell - ReelRon LLC

Lewis Jaffe - Chief Executive Officer, Lynch Ambulance

Robert B. Sturges - Chief Executive Officer, Nevada Gold & Casinos Inc. and Limited Partner in the Miami Heat NBA
	franchise
Richard C. Stockinger – Restaurant Consultant; Former President, Patina Restaurant Group; Former Vice President,
	Treasurer and Secretary, The Smith & Wollensky Restaurant Group, Inc.

Joseph J. West, Ph.D. - Dean, School of Hospitality and Tourism Management, Florida International University

42

CORPORATE INFORMATION
COMMON STOCK
NASDAQ Symbols
Common Stock	BNHN
Class A Common Stock	BNHNA

GENERAL COUNSEL
Dornbush Schaeffer Strongin & Venaglia, LLP
747 Third Avenue
New York, New York 10017

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
200 South Biscayne Boulevard
Suite 400
Miami, Florida 33131

10-K REPORT AVAILABILITY
A copy of the Benihana Inc. Form 10-K, filed with the U.S. Securities and Exchange Commission, is available on our corporate website at www.Benihana.com or can be obtained by writing us at:
8685 N.W. 53rd Terrace
Miami, Florida 33166

TRANSFER AGENT AND REGISTRAR
American Stock Transfer & Trust Company
Shareholder Services Group
10150 Mallard Creek Drive, Suite 307
Charlotte, North Carolina 28262
(800) 937-5449

CORPORATE HEADQUARTERS
8685 Northwest 53rd Terrace
Miami, Florida 33166
(305) 593-0770

43

COMMON STOCK INFORMATION

The Company’s Common Stock and Class A Common Stock are traded on the Nasdaq Global Market. There were 439 holders of record of the Company’s Common Stock and 415 holders of record of the Class A Common Stock at March 30, 2008.

On May 18, 2007, the Board of Directors declared a 3 for 2 stock dividend payable in Common Shares to the holders of both the Class A Shares and Common Shares. The stock dividend was paid on June 15, 2007 to holders of record June 1, 2007.

The table below sets forth the high and low prices for the Company’s Common Stock and Class A Common Stock for the periods indicated. The high and low prices have been adjusted as if the stock dividend had been in existence for the fiscal periods presented.

	Fiscal Year Ended
	March 30, 2008				April 1, 2007
COMMON STOCK	High		Low		High		Low
1st Quarter	$	22.31	$	19.23	$	24.10	$	14.57
2nd Quarter		21.56		16.50		20.23		14.10
3rd Quarter		18.23		10.80		22.17		17.78
4th Quarter		12.49		9.20		22.81		18.83
	Fiscal Year Ended
CLASS A	March 30, 2008				April 1, 2007
COMMON STOCK	High		Low		High		Low
1st Quarter	$	22.08	$	19.36	$	24.14	$	14.53
2nd Quarter		21.47		16.49		20.13		14.19
3rd Quarter		18.45		10.74		21.90		17.19
4th Quarter		12.52		9.21		22.42		18.74

The Class A Common Stock is identical to the Common Stock except that it gives the holder one-tenth (1/10) vote per share, voting together with the Company’s Common Stock as a single class on all matters except the election of directors. For election of directors, the Class A Common stockholders vote as a class to elect 25% of the members of the Board of Directors.

The Company has not declared or paid a cash dividend on common equity since its organization and has no present intention of paying any such dividend in the foreseeable future. The Company intends to retain all available cash for the operation and expansion of its business. In addition, the Company’s present loan agreement restricts the payment of cash dividends on all classes of common stock.

44

Set forth below is a comparison of the five-year cumulative total return among Common Stock of the Company, the NASDAQ stock market-US index and the SIC Code Index for SIC Code 5812 (Retail – Eating Places), in each case assuming that $100 was invested on the last day of the fiscal year ending of 2003, March 30, 2003. Stockholder returns over the indicated period should not be considered indicative of future stockholder returns.

COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG BENIHANA INC., COMMON STOCK
NASDAQ MARKET (U.S.) INDEX AND SIC CODE INDEX

	2003		2004		2005		2006		2007		2008
BENIHANA INC.		100.00		162.94		143.00		281.03		274.80		167.13
SIC CODE INDEX		100.00		160.09		176.60		198.67		218.10		216.79
NASDAQ MARKET INDEX (U.S.)		100.00		154.14		155.50		184.83		195.64		183.38

Set forth below is a comparison of the five-year cumulative total return among Class A Common Stock of the Company, the NASDAQ stock market-US index and the SIC Code Index for SIC Code 5812, in each case assuming that $100 was invested on the last day of the fiscal year ending in 2003, March 30, 2003. Stockholder returns over the indicated period should not be considered indicative of future stockholder returns.

COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG BENIHANA INC., CLASS A,
NASDAQ MARKET (U.S.) INDEX AND SIC CODE INDEX

	2003	2004	2005	2006	2007	2008
BENIHANA INC. CLASS A	100.00	168.57	149.10	288.96	283.84	170.40
SIC CODE INDEX	100.00	160.09	176.60	198.67	218.10	216.79
NASDAQ MARKET INDEX (U.S.)	100.00	154.14	155.50	184.83	195.64	183.38

45

EX-21

Exhibit 21.01

Subsidiary Name	State of Incorporation
1501 Broadway Restaurant Corp.	New York
Benihana Bethesda Corp.	New York
Benihana Brickell Station Corp.	Delaware
Benihana Broomfield Corp.	Delaware
Benihana Carlsbad Corp.	Delaware
Benihana Chandler Corp.	Delaware
Benihana Chicago Corp.	Delaware
Benihana Columbus Corp.	Delaware
Benihana Coral Springs Corp.	Delaware
Benihana Encino Corp.	California
Benihana International Inc.	Delaware
Benihana Las Colinas Corp.	Texas
Benihana Lincoln Road Corp. (formerly known as Rudy’s Sirloin SteakBurgers, Inc.)	Florida
Benihana Lombard Corp.	Illinois
Benihana Marina Corp.	California
Benihana Meadowlands Corp.	Delaware
Benihana Memphis II Corp.	Delaware
Benihana Monterey Corporation (formerly known as Benihana Development Corp.)	Delaware
Benihana National Corp.	Delaware
Benihana National of Florida Corp.	Delaware
Benihana New York Corp. (formerly known as Benihana Frozen Food Corp.)	Delaware
Benihana Plano Corp.	Texas
Benihana of Puente Hills Corp.	Delaware
Benihana of Texas, Inc.	Texas
Benihana Ontario Corp.	Delaware
Benihana Orlando Corp.	Delaware
Benihana Park Central Club, Inc. (D/B/A Benihana Private Club)	Texas
Benihana Plymouth Meeting Corp.	Delaware
Benihana Schaumburg Corp.	Delaware
Benihana Sunrise Corp.	Delaware
Benihana Tucson Corp.	Delaware
Benihana Westbury Corp.	Delaware
Benihana Westwood Corp.	Delaware
Benihana Wheeling Corp.	Delaware
Benihana Woodlands Corp.	Texas
Big Splash Kendall Corp.	Delaware
Haru Amsterdam Avenue Corp.	New York
Haru Food Corp.	New York
Haru Gramercy Park Corp. (formerly known as Haru Soho Corp.)	New York
Haru Holding Corp.	Delaware
Haru Park Avenue Corp.	Delaware
Haru Philadelphia Corp.	Delaware
Haru Prudential Corp.	Delaware
Haru Third Avenue Corp.	New York
Haru Too, Inc.	New York
Haru Wall Street Corp.	Delaware
Maxwell’s International Inc.	Delaware
Noodle Time Inc.	Florida
Ra Ahwatukee Restaurant Corp.	Delaware
Ra Fashion Valley Corp.	Delaware
Ra Houston Corp.	Texas
Ra Kierland Restaurant Corp.	Delaware
Ra Scottsdale Corp.	Delaware
Ra Sushi Atlanta Midtown Corp.	Delaware
Ra Sushi South Miami Corp.	Delaware
Ra Sushi Chicago Corp. (f/k/a Benihana State & Elm Corp., f/k/a Benihana Beachplace, Inc.)	Delaware
Ra Sushi City Center Corp.	Texas
Ra Sushi Corona Corp.	Delaware

1

Exhibit 21.01

Subsidiary Name	State of Incorporation
Ra Sushi Glenview Corp.	Delaware
Ra Sushi Baltimore Corp.	Delaware
Ra Sushi Chino Hills Corp.	Delaware
Ra Sushi Denver Corp.	Delaware
Ra Sushi Holding Corp.	Delaware
Ra Sushi Huntington Beach Corp.	Delaware
Ra Sushi Las Vegas Corp.	Nevada
Ra Sushi Leawood Corp.	Delaware
Ra Sushi Lombard Corp.	Delaware
Ra Sushi Mesa Corp.	Delaware
Ra Sushi Orlando Corp.	Delaware
Ra Sushi Palm Beach Gardens Corp.	Delaware
Ra Sushi Pembroke Pines Corp.	Delaware
Ra Sushi Plano Corp.	Texas
Ra Sushi San Diego Corp.	Delaware
Ra Sushi Tucson Corp.	Delaware
Ra Tempe Corp.	Delaware
Ra Sushi Torrance Corp.	Delaware
Ra Sushi Tustin Corp.	Delaware
Ra Sushi Westwood Corp.	Delaware
Rudy’s Restaurant Group, Inc.	Nevada
Teppan Restaurants Ltd.	Oregon
The Samurai, Inc.	New York

2

EX-23

Exhibit 23.01

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statements No. 333-33880, 333-63783, 333-13973 and 333-150322 on Form S-8 and Registration Statements No. 333-83585 and 333-13977 on Form S-3 of our reports dated June 13, 2008, relating to the consolidated financial statements of Benihana Inc. and subsidiaries (the “Company”), and the effectiveness of the Company’s internal control over financial reporting, incorporated by reference in this Annual Report on Form 10-K of the Company for the year ended March 30, 2008.

Deloitte & Touche LLP

Miami, Florida
June 13, 2008

EX-31

Exhibit 31.01

CERTIFICATION

I, Joel A. Schwartz, certify that:
1.	I have reviewed this Annual Report on Form 10-K of Benihana Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
	(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

   /s/ Joel A. Schwartz

   Joel A. Schwartz

   Chief Executive Officer

   June 13, 2008

EX-31

Exhibit 31.02

CERTIFICATION

I, Jose I. Ortega, certify that:
1.	I have reviewed this Annual Report on Form 10-K of Benihana Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
	(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

   /s/ Jose I. Ortega

   Jose I. Ortega

   Chief Financial Officer

   June 13, 2008

EX-32

Exhibit 32.01

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

          In connection with the Annual Report of Benihana Inc. (the “Company”) on Form 10-K for the period ended March 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joel A. Schwartz, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

   /s/ Joel A. Schwartz

   Joel A. Schwartz

   Chief Executive Officer

   June 13, 2008

EX-32

Exhibit 32.02

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

          In connection with the Annual Report of Benihana Inc. (the “Company”) on Form 10-K for the period ended March 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jose I. Ortega, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

   /s/ Jose I. Ortega.

   Jose I. Ortega

   Chief Financial Officer

   June 13, 2008