<PAGE>

                                                                   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".

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. Fiscal year 2007 consisted
of 53 weeks, while all other fiscal years presented consisted each of 52 weeks.

<TABLE>
<CAPTION>
                                                                     Fiscal Year Ended
                                               April 1,      March 26,      March 27,       March 28,     March 30,
                                                 2007           2006           2005           2004          2003
                                                 ----           ----           ----           ----          ----
                                             (53 wk yr.)
                                                           (In thousands, except per share information)
CONSOLIDATED STATEMENTS
OF EARNINGS DATA:
<S>                                            <C>            <C>            <C>            <C>           <C>
    Total revenues                             $272,649       $245,553       $218,331       $202,963      $189,244
    Cost of food and beverage
       sales                                     66,051         59,014         53,372         51,437        46,182
    Restaurant operating expenses               159,456        139,433        126,825        118,183       112,050
    Restaurant opening costs                      1,535          1,270          1,304          2,088           501
    Marketing, general and
       administrative expenses                   23,811         22,693         20,939         16,362        15,512
    Impairment charge                                 -              -          2,668              -             -
    Interest income (expense), net                  465             88          (298)          (457)         (528)
    Income before income taxes and
       minority interest                         22,261         23,231         12,925         14,436        14,471
    Income tax provision                          7,766          8,491          4,520          4,821         4,725
    Income before minority interest              14,495         14,740          8,405          9,615         9,746
    Minority interest                                 -            178            585            643           477
    Net income                                   14,495         14,562          7,820          8,972         9,269
    Basic earnings  per share (1)                  1.35           1.40            .81           1.01          1.06
    Diluted earnings per share (1)                 1.26           1.36            .77            .98           .99

CONSOLIDATED BALANCE SHEETS
DATA:
    Total assets                               $204,289       $191,516       $154,254       $142,643      $129,759
    Long-term debt including current
       maturities                                     -          6,666         10,000         21,500        22,000
    Stockholders' equity                        142,482        125,262        103,207         95,045        83,713

OTHER FINANCIAL DATA:
    Capital expenditures                        $37,543        $25,834        $22,446        $22,950       $27,418
</TABLE>


(1)  Subsequent to the end of fiscal 2007, 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 is
     payable on June 15, 2007 to holders of record June 1, 2007. The basic and
     diluted earnings per common share are not shown as if the stock dividend
     had been in existence for each fiscal year presented, in accordance with
     SFAS No. 128, "Earnings per Share," as the stock dividend had not occurred
     prior to the issuance of this annual report.



                                       1
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

OUR BUSINESS

We are 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 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 is prepared by a chef on a steel teppanyaki grill which
forms a part of the table at which the food is served. We also operate other
restaurant concepts offering Asian, predominately sushi, entrees. Our Haru
concept offers an extensive menu of Japanese fusion dishes in an urban
atmosphere, as well as catering to customers seeking take-out or delivery of
their meals. In addition to traditional, high quality sushi and sashimi
creations, Haru offers raw bar items and Japanese cuisine. We believe that Haru
is well situated 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.

The Company's 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 March 26, 2006 and April 1, 2007:

<TABLE>
<CAPTION>
                                                                  RA                         Sushi
                                              Teppanyaki         Sushi          Haru         Doraku          Total
                                              --------------    ----------    ---------    ------------    ----------
<S>                         <C>                       <C>              <C>          <C>           <C>           <C>
Restaurant count, March 27, 2005                      56               8            6             1             71
    Openings                                           1               1            1             -              3
    Sale to Franchisee                                (1)              -            -             -             (1)
                                              --------------    ----------    ---------    ------------    ----------

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             0             79
                                              ==============    ==========    =========    ============    ==========
</TABLE>

SUMMARY OF RESULTS

Summary highlights of our fiscal 2007 year compared to the previous year:

o       fifteenth consecutive year with total sales increases,

o       opened 2 new Benihana teppanyaki-style restaurants in Miramar, Florida
        and Coral Gables, Florida and acquired a restaurant from a franchisee in
        Broomfield, Colorado,

o       opened 4 new RA Sushi restaurants in Torrance, California; Corona,
        California; Glenview, Illinois and Palm Beach Gardens, Florida,

o       completed major remodeling projects of our teppanyaki-style restaurants
        in Anaheim, California; Cleveland, Ohio; Memphis, Tennessee; and
        Indianapolis, Indiana, as well as a minor remodeling of our Bethesda,
        Maryland restaurant, and

o       four teppanyaki-style restaurants located in Burlingame, California;
        Torrance, California; Ft. Lauderdale, Florida and Miami Beach, Florida
        were closed undergoing renovations at the end of fiscal 2007.

                                       2
<PAGE>

OUTLOOK

In fiscal 2007, we opened two teppanyaki restaurants and four RA Sushi
restaurants. We also acquired a teppanyaki restaurant from a franchisee. We
believe that our revenues will increase next year due to the newly opened
restaurants and from continuing increases in customer counts at restaurants open
for longer than one year. We believe that total revenues will also increase
during fiscal 2008 from the planned openings of two new teppanyaki restaurants
in Maple Grove, Minnesota and Chandler, Arizona; and six new RA Sushi
restaurants in Lombard, Illinois; Tustin, California; Mesa, Arizona; South
Miami, Florida; Baltimore, Maryland and Plano, Texas; and two new Haru
restaurants in New York, New York and Boston, Massachusetts. We will, however,
have to contend with lost sales due to temporary closures resulting from our
renovation and revitalization program.

We have undertaken 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, Florida, which
opened during June 2006, is 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 teppanyaki
restaurant units.

During fiscal 2006, management made a strategic decision to accelerate the
renovation and revitalization program, which was discussed above. We are
committed to revitalizing our 40-plus year old Benihana teppanyaki concept for a
new generation, while simultaneously generating a solid return on invested
capital for our shareholders. 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 a total of approximately 20-25 of our mature
teppanyaki restaurants over a thirty month timeframe. By beginning the
transformation of these 20-25 mature Benihana teppanyaki units now, 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, New Jersey was the first teppanyaki to be retrofitted with the
new design elements. During fiscal 2007, our Memphis, Tennessee; Cleveland,
Ohio; Indianapolis, Indiana and Anaheim, California restaurants re-opened after
similar renovations were completed. A minor remodel has also been completed at
the Bethesda, Maryland restaurant, without the need to temporarily close the
location. At the end of fiscal 2007, restaurants closed and undergoing major
renovations included the Fort Lauderdale, Florida; Miami Beach, Florida;
Burlingame, California and Torrance, California locations. The Torrance location
has subsequently reopened and we believe that we will complete two more of these
major renovations during the first quarter of fiscal 2008. We expect the other
one to be completed during the second quarter of fiscal 2008. Similar to the
Bethesda location, two restaurants located in the New York City, New York and
Sacramento, California are currently undergoing minor remodeling, as well. These
restaurants have not required temporary closures either. We expect to complete a
total of 17 renovations and have four other restaurants in progress, by the end
of fiscal 2008. As we roll out the new design, we currently estimate the capital
expenditures of the program to average approximately between $2.0 million and
$2.3 million 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 the
Company's older 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.

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, chicken 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.

                                       3
<PAGE>


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 April 1, 2007,
March 26, 2006 and March 27, 2005 and the related percentage changes (dollar
amounts in thousands):

<TABLE>
<CAPTION>
                                                                    Fiscal year ended
                              --------------------------------------------------------------------------------------
                                             2007                              2006                      2005
                                         (53 wk yr.)
                              --------------------------------------------------------------------------------------
                                                   Percentage                       Percentage
                                                   change from                      change from
                                                   2006                             2005
 -------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                <C>           <C>                <C>            <C>
 Restaurant sales                       $271,080           11.1%         $244,032           12.6%          $216,756
 Franchise fees and  royalties             1,569            3.2%            1,521          (3.4%)             1,575
 -------------------------------------------------------------------------------------------------------------------
 Total revenues                         $272,649           11.0%         $245,553           12.5%          $218,331
 ===================================================================================================================
</TABLE>

In addition to our Benihana teppanyaki restaurants, we have other concepts that
feature sushi along with other predominately Asian menu choices. Our Haru
concept features an extensive menu of Japanese fusion dishes served in a high
energy, urban setting. Haru's menu offers traditional sushi and sashimi
creations as well as raw bar items and Japanese cuisine. The Haru concept
generates exceptionally high average unit sales volumes from take-out and
delivery and as a result of customer satisfaction and the high population
density that comprises the concept's primary market, New York City.
Approximately 40% of Haru's revenues are derived from delivery and takeout
sales. 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 35% of restaurant sales. The RA Sushi units are less expensive to
build than the Company's other two concepts and offer the Company a growth
vehicle that we believe can succeed in larger markets. The Company's sole Doraku
restaurant, which was sold during fiscal 2007, offered sushi and other Japanese
dishes.

We believe that the Benihana 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 entertainment value provided by the chef cooking
directly at their table. Sushi bars have been added to most of the Benihana
restaurants over the past several years.


The following table summarizes the components of total restaurant sales for the
fiscal years ended April 1, 2007, March 26, 2006 and March 27, 2005 and the
related percentage changes (dollar amounts in thousands):

<TABLE>
<CAPTION>
                                                                Fiscal year ended
                              --------------------------------------------------------------------------------------
 Total restaurant sales by                   2007                              2006                      2005
     concept:                            (53 wk yr.)
                              --------------------------------------------------------------------------------------
                                                   Percentage                       Percentage
                                                   change from                      change from
                                                   2006                             2005
 -------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                 <C>          <C>                 <C>           <C>
     Teppanyaki                         $200,248            5.5%         $189,796            8.4%          $175,045
     RA Sushi                             38,986           58.4%           24,620           42.0%            17,334
     Haru                                 31,661           14.5%           27,662           21.4%            22,785
     Doraku                                  185         (90.5%)            1,954           22.7%             1,592
 -------------------------------------------------------------------------------------------------------------------
 Total restaurant sales                 $271,080           11.1%         $244,032           12.6%          $216,756
 ===================================================================================================================
</TABLE>



                                       4
<PAGE>

The following tables summarize the components of comparable restaurant sales and
the percentage changes between fiscal years 2007 and 2006, and fiscal years 2006
and 2005, 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.

<TABLE>
<CAPTION>
                                      Fiscal year ended                          Fiscal year ended
 ----------------------------      ------------------------                   ------------------------
 Comparable restaurant                2007        2006      Percentage           2006        2005      Percentage
     sales by concept:                                      change                                     change
                                                            from 2006                                  from 2005
 ----------------------------      -------------------------------------      ----------- ------------ -------------
<S>                                  <C>          <C>              <C>          <C>          <C>               <C>
     Teppanyaki                      $184,531     $171,793         7.4%         $181,398     $169,157          7.2%
     RA Sushi                          27,892       24,620        13.3%           22,529       17,338         29.9%
     Haru                              30,716       27,661        11.0%           23,429       22,784          2.8%
     Doraku                               185          175         5.7%            1,954        1,592         22.7%
 ----------------------------      -------------------------------------      --------------------------------------
 Total comparable
     restaurant sales                $243,324     $224,249         8.5%         $229,310     $210,871          8.7%
 ----------------------------      =====================================      ======================================
</TABLE>

The following table summarizes the changes in restaurant sales between the
fiscal years ended March 27, 2005, March 26, 2006 and April 1, 2007 (in
thousands):

<TABLE>
<CAPTION>
                                                                                            Sushi
                                           Teppanyaki        RA Sushi         Haru          Doraku         Total
                                           -------------    -----------    -----------    -----------    ----------
<S>                                            <C>             <C>            <C>             <C>         <C>
  Restaurant sales during fiscal year          $175,045        $17,334        $22,785         $1,592      $216,756
      ended March 27, 2005
  Increase in comparable sales                   12,241          5,191            645            362        18,439
  Increase from new or acquired
      restaurants                                 4,025          2,095          4,232              -        10,352
  Decrease from closed or sold
      restaurants                               (2,907)              -              -              -       (2,907)
  Increase from re-openings (decrease
      from temporary closures), net               1,392              -              -              -         1,392
                                           -------------    -----------    -----------    -----------    ----------
  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
                                           =============    ===========    ===========    ===========    ==========
</TABLE>

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 and from 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 prior to becoming comparable
restaurant units 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 refurbishings totaling $13.4 million.
Comparable restaurant sales growth for teppanyaki restaurants opened longer than
one year increased 7.4%. The average per person 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, Florida and Coral Gables, Florida
restaurants which opened in June and October 2006, respectively.

                                       5
<PAGE>



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. Comparable restaurant sales
growth for the Haru restaurants increased 11.0% from fiscal 2006. The average
per person guest check amount was $29.90 in fiscal 2007 compared to $29.36 in
fiscal 2006.

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 of
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. Comparable restaurant sales growth for the RA Sushi
restaurants was 13.3% for fiscal 2007 compared to fiscal 2006. The average per
person guest check amount was $ 21.05 in fiscal 2007 compared to $20.51 in
fiscal 2006.

Franchise fees and royalties increased slightly in fiscal 2007 when compared to
fiscal 2006. There was one new franchised location in Trinidad opened during
fiscal 2007. During fiscal 2007, the Company acquired the Benihana restaurant
located in Broomfield, Colorado from the franchisee.

2006 COMPARED TO 2005

Revenues increased 12.5% in fiscal 2006 when compared to fiscal 2005. Restaurant
sales increased $27.3 million in fiscal 2006 when compared to fiscal 2005. The
increase was mainly attributable to increases in sales from restaurants opened
longer than one year of $18.4 million, sales from new or acquired restaurants of
$10.4 million, and a net increase of $1.4 million in sales from restaurants
closed for remodeling offset by $2.9 million decrease for restaurants
permanently closed.

BENIHANA - Sales for the Benihana teppanyaki restaurants increased $14.8 million
in fiscal 2006 compared to fiscal 2005. The increase is attributable to
increases in sales from restaurants opened longer than one year of $12.2 million
and from sales of new or acquired restaurants prior to becoming comparable
restaurant units of $4.1 million. Sales were positively impacted by $1.4 million
due to the timing of temporary closures during fiscal 2006 when compared to
fiscal 2005. These increases were offset by sales reductions attributable to
permanent restaurant closures totaling $1.2 million. Two restaurants were closed
during fiscal 2005 as a result of lease expirations and one unit was sold to a
franchisee during fiscal 2006. The increase in sales from restaurants opened
longer than one year benefited from a 2-3% menu price increase initiated during
the second quarter of fiscal 2005. Additionally, guest counts increased 4.6% to
7.6 million guests in fiscal 2006 from fiscal 2005. Comparable restaurant sales
growth for teppanyaki restaurants opened longer than one year increased 7.2%.
The average per person guest check amount was $24.96 in fiscal 2006 compared to
$24.15 in fiscal 2005, representing a 3.4% increase. Guest counts for teppanyaki
restaurants opened longer than one year increased by 4.2%. Sales from new or
acquired restaurants were mainly attributable to the Carlsbad, California
restaurant which opened in June 2005 and the Anchorage, Alaska restaurant and
the Tucson, Arizona restaurant, which were acquired in March 2005 and November
2005, respectively. We closed two teppanyaki restaurants in fiscal 2005, after
their leases expired. One restaurant was located in Kendall, a suburb of Miami,
Florida and the other was located in New York City. The Kendall restaurant was
replaced by the Coral Gables, Florida restaurant which opened in fiscal 2007.
During fiscal 2006, we sold the Monterey, California restaurant to a franchisee.

HARU - Sales for the Haru restaurants increased $4.9 million in fiscal 2006
compared to fiscal 2005. The increase is attributable to increases in sales from
restaurants opened longer than one year of $0.6 million and from sales of $4.2
million from two new Haru restaurants, one restaurant located in Philadelphia,
Pennsylvania, which opened during fiscal 2006, and the other in Manhattan
located in Gramercy Park, which opened during fiscal 2005. Comparable restaurant
sales growth for the Haru restaurants increased 2.8% from fiscal 2005. The
average per person guest check amount was $29.36 in fiscal 2006 compared to
$27.73 in fiscal 2005, representing a 5.9% increase. The increase in average per
person guest checks, however, was offset by a decrease in traffic at restaurants
opened longer than one year totaling 3.2%.

RA SUSHI - Sales for the RA Sushi restaurants increased $7.3 million in fiscal
2006 compared to fiscal 2005. The increase is attributable to increases in sales
from restaurants opened longer than one year of $5.2 million and from sales of
new restaurants of $2.1 million. As a result, during fiscal 2006, total traffic
increased by 39.8%. Comparable restaurant sales growth for the RA Sushi
restaurants was 29.9% for fiscal 2006 compared to fiscal 2005. The average per
person guest check amount was $20.51 in fiscal 2006 compared to $20.19 in fiscal
2005, representing an increase of 1.6%. Additionally, traffic at restaurants
opened longer than one year increased by 24.2% between fiscal years. Sales from
new restaurants were attributable to the opening of a RA Sushi restaurant in
Houston, Texas in February 2006 and the restaurant in Las Vegas, Nevada, which
opened in October 2004.

Franchise fees and royalties decreased slightly in fiscal 2006 when compared to
fiscal 2005. There was a net decrease of one restaurant in the franchise
portfolio. The net decrease reflected one new opening offset by the closure of
two franchise locations.


                                       6
<PAGE>


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 April 1, 2007, March 26, 2006 and March 27,
2005.

<TABLE>
<CAPTION>
                                                                            Sushi
                                        Teppanyaki    RA Sushi     Haru     Doraku      Corporate   Consolidated
                                        -------------------------------------------------------------------------
<S>                                        <C>          <C>        <C>        <C>          <C>          <C>
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
                                        =========================================================================

Fiscal Year Ended March 27, 2005
    Cost of food and beverage sales         $43,501     $ 4,454    $ 4,979    $   438            -      $ 53,372
    Restaurant operating expenses           103,725      10,149     11,675      1,276            -       126,825
    Restaurant opening costs                    500         219        585          -            -         1,304
    Marketing, general and
       administrative expenses                8,081       1,608        581          -       10,669        20,939
    Impairment charge                           834       1,462          -        372            -         2,668
                                        -------------------------------------------------------------------------
    Total operating expenses               $156,641     $17,892    $17,820    $ 2,086      $10,669      $205,108
                                        =========================================================================
</TABLE>


                                       7
<PAGE>


The following table summarizes the costs and expenses as a percentage of
restaurant sales by concept, as well as consolidated for the years ended April
1, 2007, March 26, 2006 and March 27, 2005.

<TABLE>
<CAPTION>
                                                                            Sushi
                                        Teppanyaki    RA Sushi     Haru    Doraku      Consolidated
                                       -------------------------------------------------------------
<S>                                          <C>         <C>       <C>         <C>            <C>
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%
                                       =============================================================

Fiscal Year Ended March 27, 2005
    Cost of food and beverage
       sales                                 24.9%       25.7%     21.9%       27.5%          24.6%
    Restaurant operating expenses            59.3%       58.5%     51.2%       80.2%          58.5%
    Restaurant opening costs                  0.3%        1.3%      2.6%           -           0.6%
    Marketing, general and
       administrative expenses                4.6%        9.3%      2.5%           -           9.7%
    Impairment charge                         0.5%        8.4%         -       23.4%           1.2%
                                       -------------------------------------------------------------
    Total operating expenses                 89.6%      103.2%     78.2%      131.1%          94.6%
                                       =============================================================
</TABLE>


2007 COMPARED TO 2006

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 resulting 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.
The Company continued to experience relatively stable commodity prices
throughout the year.

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, the Company continued to recognize additional
depreciation expense which resulted from the Company reevaluating the remaining
useful lives of assets at teppanyaki restaurants to be renovated as part of its
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, the
Company continued to incur approximately $2.0 million in ongoing expenses at
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.



                                       8
<PAGE>


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

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 to accommodate the Company's growth plans.

Interest income, net, increased in fiscal 2007 when compared to fiscal 2006.
Interest income increased during fiscal 2007 due to an increase in interest
earning balances during the current fiscal year compared to prior year, 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, the Company paid off the outstanding term loan. No
borrowings were outstanding against the Company's $75 million line of credit, as
of April 1, 2007. The Company expects to incur additional interest expense as it
begins to draw on its new line of credit to finance its expansion and renovation
programs. Interest income is expected to decrease as cash on hand is also used
to fund these programs.

Our effective tax rate was 34.9% for fiscal 2007 compared to 36.6% for fiscal
2006. During fiscal 2007, the Company benefited from increasing tax credits on
decreased pre-tax 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 $1.35 for fiscal 2007 from basic earnings per share of $1.40 for
fiscal 2006. Basic weighted average shares outstanding increased by
approximately 530,000 shares to 9,894,000 shares at April 1, 2007 from 9,364,000
shares at March 26, 2006. Diluted earnings per common share decreased to $1.26
for fiscal 2007 from diluted earnings per common share of $1.36 in fiscal 2006.
Average diluted weighted shares outstanding increased by approximately 847,000
shares to 11,518,000 shares at April 1, 2007 from 10,671,000 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.


2006 COMPARED TO 2005

Cost of food and beverage sales increased in absolute amount but decreased when
expressed as a percentage of restaurant sales in fiscal 2006 when compared to
fiscal 2005. The increase in absolute amount is directly attributable to the
increase in restaurant sales. The decrease when expressed as a percentage of
sales during the current fiscal year can be attributed to menu price increases
taken during the prior year's second fiscal quarter coupled with relatively
stable commodity prices.

Restaurant operating expenses increased in absolute amount but decreased when
expressed as a percentage of restaurant sales in fiscal 2006 when compared to
fiscal 2005. The increase in absolute amount was primarily attributable to
increases in variable costs directly related to restaurant sales and new
restaurant units. Also, the Company recognized additional depreciation expense
totaling approximately $1.1 million during fiscal 2006, which resulted from the
Company reevaluating the remaining useful lives of assets at restaurants to be
renovated as part of its renovation program. The decrease when expressed as a
percentage of sales was primarily attributable to gains in labor productivity in
fiscal 2006 when compared to fiscal 2005.

Restaurant opening expenses decreased slightly in absolute amount and when
expressed as a percentage of restaurant sales in fiscal 2006. A comparable
number of restaurants were under active development in fiscal 2006 compared to
fiscal 2005.

Marketing, general and administrative expenses increased in absolute amount but
decreased slightly when expressed as a percentage of restaurant sales in fiscal
2006 when compared to fiscal 2005. The increase in absolute amount is primarily
attributable to increased administration headcount. Additional corporate
personnel have been hired to accommodate the Company's growth plans and
renovation program. The Company's expansion and renovation programs have also
resulted in increased travel expenses between the corporate office and
restaurant locations. Advertising and promotional costs have also increased
during fiscal 2006 as a result of increased advertising related to new store
openings and entrance into new markets. The Company did realize a decrease in
professional fees during fiscal 2006 attributable to Benihana of Tokyo, Inc.
litigation fees primarily incurred during fiscal 2005, as the trial was held
during fiscal 2005. This decrease was partially offset by increased costs
associated with professional fees incurred by the Company in order to remediate
its material weakness identified during fiscal 2005.

Interest income (expense), net, increased in fiscal 2006 when compared to fiscal
2005. The decrease in expense was a result of a decrease in the average
outstanding bank debt in fiscal 2006 compared to fiscal 2005 offset by
increasing interest rates between fiscal years. Additionally, the Company's
invested cash balances were higher during fiscal 2006 due to the completion of
the second tranche of the Series B Preferred Stock sale during fiscal year 2006,
as well as greater cash provided by operating activities than cash used in
investing activities during 2006, which resulted in increased interest income.


                                       9
<PAGE>


Our effective tax rate was 36.6% for fiscal 2006 compared to 35.0% for fiscal
2005. The increase was a direct result of increasing marginal tax rates caused
by increased sales, as well as sales and profitability increasing at a greater
rate than tax credits earned during the current year.

Net income for fiscal 2006 was $14.6 million, an increase of 86.2% over net
income of $7.8 million in fiscal 2005, as a result of the items previously
described. Basic earnings per common share increased to $1.40 for fiscal 2006
from basic earnings per share of $.81 for fiscal 2005. Basic average weighted
shares outstanding increased by approximately 210,000 shares to 9,364,000 shares
at March 26, 2006 from 9,154,000 shares at March 27, 2005. Diluted earnings per
common share increased to $1.36 for fiscal 2006 from diluted earnings per common
share of $.77 in fiscal 2005. Average diluted weighted shares outstanding
increased by approximately 524,000 shares to 10,671,000 shares at March 26, 2006
from 10,147,000 shares at March 27, 2005. The increase in both basic and diluted
average weighted shares outstanding during fiscal 2006 compared to fiscal 2005
was due to the issuance of shares for stock option exercises and the issuance of
convertible preferred stock in fiscal 2006 and 2005.


OUR FINANCIAL RESOURCES

Cash flow from operations has historically been the primary source to fund our
capital expenditures. Since the Company has accelerated its building program,
the Company will be relying more upon financing obtained from financial
institutions.

The Company presently has available up to $75 million from Wachovia Bank,
National Association ("Wachovia") under the terms of a line of credit entered
into 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. The Company has the option to pay interest at Wachovia's prime rate or
at libor plus applicable margin. The interest rate may vary depending upon the
ratio of the sum of earnings before interest, taxes, depreciation and
amortization, as defined in the agreement, to our 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. The agreement requires that the
Company maintain certain financial ratios and profitability amounts and limits
the payment of cash dividends. At April 1, 2007, the Company had approximately
$2.0 million in letters of credit outstanding against this credit facility in
connection with its workers compensation insurance program and certain leases.
Accordingly, at April 1, 2007, the Company had approximately $73 million
available for borrowing under the line of credit facility, as no borrowings were
outstanding.

On July 1, 2004, the Company received net proceeds of $9,253,000, 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 $9,884,000, 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). The Series B Preferred
Stock is convertible into Common Stock of the Company at a conversion price of
$19.00 per share, that is 1.32 shares of Common Stock for each share of Series B
Preferred Stock (subject to anti-dilution provisions), 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.

The Company pays quarterly dividends on the Series B Preferred Stock, and at
April 1, 2007, accrued but unpaid dividends on the Series B Preferred Stock
totaled $249,000.

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 $38.00 per share 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.

As further discussed in Item 3, Legal Proceedings, the sale of the Series B
Preferred Stock was the subject of litigation. While the Delaware Court of
Chancery (the "Chancery Court") has rejected all claims asserted against the
Company and certain directors, the decision had been appealed. On August 24,
2006, the Delaware Supreme Court issued an opinion affirming the Chancery
Court's ruling in favor of the Company and its Board of Directors in all
respects.


                                       10
<PAGE>

The Company has entered into supply agreements for the purchase of beef and
seafood, 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.

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.

We have undertaken 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, Florida, which
opened during June 2006, is 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 teppanyaki
restaurant units.

During fiscal 2006, management made a strategic decision to accelerate the
renovation and revitalization program, which was discussed above. We are
committed to revitalizing our 40-plus year old Benihana teppanyaki concept for a
new generation, while simultaneously generating a solid return on invested
capital for our shareholders. 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 a total of approximately 20-25 of our mature
teppanyaki restaurants over a thirty month timeframe. By beginning the
transformation of these 20-25 mature Benihana teppanyaki units now, 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, New Jersey was the first teppanyaki to be retrofitted with the
new design elements. During fiscal 2007, our Memphis, Tennessee; Cleveland,
Ohio; Indianapolis, Indiana and Anaheim, California restaurants re-opened after
similar renovations were completed. A minor remodel has also been completed at
the Bethesda, Maryland restaurant, without the need to temporarily close the
location. At the end of fiscal 2007, restaurants closed and undergoing major
renovations included the Fort Lauderdale, Florida; Miami Beach, Florida;
Burlingame, California and Torrance, California locations. The Torrance location
has subsequently reopened and we believe that we will complete two more of these
major renovations during the first quarter of fiscal 2008. We expect the other
one to be completed during the second quarter of fiscal 2008. Similar to the
Bethesda location, two restaurants located in the New York City, New York and
Sacramento, California are currently undergoing minor remodeling, as well. These
restaurants have not required temporary closures either. We expect to complete a
total of 17 renovations and have four other restaurants in progress, by the end
of fiscal 2008. As we roll out the new design, we currently estimate the capital
expenditures of the program to average approximately between $2.0 million and
$2.3 million 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 the
Company's older 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.

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. The Company has experienced increases in its
expenditures commensurate with growth in its operations, and management
anticipates that expenditures will continue to increase in the foreseeable
future. The Company currently has fifteen restaurants under development,
consisting of four Benihana teppanyaki restaurants, nine RA Sushi restaurants,
and two Haru restaurants.

In addition to the renovation program, the Company will use its capital
resources to settle the outstanding liability incurred when the Minority
Stockholders exercised their put option in Haru Holding Corp. On July 1, 2005,
the Minority Stockholders exercised the put option to sell their respective
shares to the Company. Currently, there is a dispute between the Company 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 the Company. 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
for the payment of the put option with respect thereto.

On August 25, 2006, the former Minority Stockholders sued the Company. The
complaint, which was filed in the Supreme Court of the State of New York, County
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 September 21, 2006, the parties jointly removed the case from the Supreme
Court of the State of New York, County of New York, to the United States
District Court for the Southern District of New York. The former Minority
Stockholders filed a motion to remand the case back to the Supreme Court of the
State of New York, County of New York, but that motion was denied on May 21,
2007. The District Court has set a scheduling conference for June 21, 2007.

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.


                                       11
<PAGE>

Management believes that the Company's cash from operations and the funds
available under the line of credit will provide sufficient capital to fund
operations, 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
                                                   --------------------
                                                     2007         2006
                                                   --------    --------
Cash provided by operating activities              $ 31,153    $ 29,440
Cash used in investing activities                   (36,771)    (25,286)
Cash (used in) provided by financing activities      (4,236)     11,539
                                                   --------    --------
(Decrease) increase in cash and cash equivalents   $ (9,854)   $ 15,693
                                                   --------    --------

OPERATING ACTIVITIES

Cash provided by operations increased during the year when compared to fiscal
2006. The increase resulted mainly from the changes in working capital during
the current fiscal year when compared to the prior fiscal year, as well as from
increases in earnings after adjustment for significant non-cash expenses, such
as depreciation and amortization and stock-based compensation.

INVESTING ACTIVITIES

Expenditures for property and equipment increased during fiscal 2007 when
compared to the prior year. The Company continues to pursue its new construction
and renovation programs. Capital expenditures are expected to increase, as the
Company accelerates the pace of its programs. The Company currently has fifteen
restaurants under development, consisting of four Benihana teppanyaki
restaurants, nine RA Sushi restaurants and two Haru restaurants.

In September 2006, the Company completed the acquisition of a Benihana
restaurant in Broomfield, Colorado. 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.

As discussed in Note 16 of the consolidated financial statements, in April 2006,
the Company sold its Sushi Doraku restaurant to Kevin Aoki, the Company's former
Vice President of Marketing and a current member of the Board of Directors.

FINANCING ACTIVITIES

During fiscal 2007, there were stock option exercises with cash proceeds to the
Company of $2,242,000 as compared to $5,720,000 in the prior year. Our total
indebtedness decreased by $6,666,000 during fiscal 2007, as we paid off the term
loan. Additionally, as discussed above, during fiscal 2006, the Company
completed the sale of the second and final tranche consisting of $10,000,000
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
$9,884,000, after transaction costs, from the sale.

Contractual obligations and commitments (in thousands):

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
                                 Total      2008       2009       2010       2011      2012    Thereafter
<S>                           <C>        <C>        <C>        <C>        <C>        <C>        <C>
Operating lease obligations   $174,285   $ 12,233   $ 12,429   $ 12,324   $ 12,327   $ 12,125   $112,847
Haru put option                  3,718      3,718       --         --         --         --         --
Purchase commitments            10,618     10,618       --         --         --         --         --
--------------------------------------------------------------------------------------------------------
  Total                       $188,621   $ 26,569   $ 12,429   $ 12,324   $ 12,327   $ 12,125   $112,847
========================================================================================================
</TABLE>


OFF-BALANCE SHEET ARRANGEMENTS

As of April 1, 2007 the Company 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 Company does not believe that inflation has had a material effect on sales
or expenses during the last three years other than labor costs. The Company's
restaurant operations are subject to federal and state minimum wage laws
governing such matters as working conditions, overtime and tip credits.
Significant numbers of the Company's food service and preparation personnel are
paid at rates related to the federal minimum wage and, accordingly, increases in
the minimum wage have increased the Company's labor costs in recent years. To
the extent permitted by competition, the Company has mitigated increased costs
by increasing menu prices and may continue to do so if deemed necessary in
future years.


                                       12
<PAGE>


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 libor. 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 April 1, 2007.

We purchase commodities such as chicken, beef, lobster, fish and shrimp 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 supply agreements for the purchase of beef and
seafood, 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 year 2007 consisted of 53 weeks, while fiscal years 2006 and 2005 each
consisted of 52 weeks.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES


The Company's discussion and analysis of its financial condition and results of
operations are based upon the Company's 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 the Company 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 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
or uncertainties regarding the application of these policies 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.

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. 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. Recoverability of assets is measured by comparing the carrying
value of the assets to the future cash flows to be generated by the asset. If
the total estimated future cash flows are less than the carrying amount of the
asset, the carrying amount is written down to the estimated fair value, and an
impairment charge is taken against results of operations. In fiscal 2005 we
recorded such an impairment charge resulting in a write down of long-lived
assets of approximately $2.7 million. (See Note 3 of Notes to Consolidated
Financial Statements). No impairment charges were recognized during fiscal 2007
or 2006.


                                       13
<PAGE>


GOODWILL - We review the recoverability of goodwill annually based primarily
upon 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. Our annual evaluation is made during the third fiscal
quarter of each year. 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 are used in the analysis.

LEASES - The Company is obligated under various lease agreements for certain
restaurant facilities. For operating leases, the Company recognizes rent expense
on a straight-line basis over the expected lease term. Capital leases, if any,
are recorded as an asset and an obligation at an amount equal to the present
value of the minimum lease payments during the lease term. 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 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 management determines that the Company will
exercise such option periods due to the fact that the Company would incur an
economic penalty for not doing so. The lease term commences on the date when the
Company becomes legally obligated for the rent payments. Leasehold improvements
and property held under capital leases, if any, for each restaurant facility 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 the Company uses 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 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.

Judgments made by the Company 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 - 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 contracted with
third-party actuaries, who utilize 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. If actual trends, including the
severity or frequency of claims, differ from our estimates, our financial
results could be impacted.

INCOME TAXES - 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 the Company's
application of such laws to its business (see Note 12 of Notes to Consolidated
Financial Statements).

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 Statement of Financial Accounting Standards ("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.
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. 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 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 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. The Company
recorded $399,000 ($239,000 net of tax) in stock compensation expense during the
fiscal year ended April 1, 2007, as a result of adopting SFAS 123R. As of April
1, 2007, total unrecognized compensation cost related to nonvested share-base
compensation totaled $647,000 and is expected to be recognized over
approximately 1.75 years.

The fair value of options granted was estimated at the date of grant using the
Black-Scholes option-pricing model. Option valuation models, including
Black-Scholes, require the input of highly subjective assumptions, and changes
in the assumptions used can materially affect the grant date fair value of an
award. These assumptions include the risk-free interest rate, expected dividend
yield, expected volatility and the expected life of the award.


                                       14
<PAGE>

NEW ACCOUNTING PRONOUNCEMENTS THAT MAY AFFECT OUR FINANCIAL REPORTING

In June 2006, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes, an
interpretation of FAS109, Accounting for Income Taxes" ("FIN 48"), to create a
single model to address accounting for uncertainty in tax positions. FIN 48
clarifies the accounting for income taxes, by prescribing a minimum recognition
threshold a tax position is required to meet before being recognized in the
financial statements. FIN 48 also provides guidance on derecognition,
measurement, classification, interest and penalties, accounting in interim
periods, disclosure and transition. FIN 48 is effective for fiscal years
beginning after December 15, 2006. The cumulative effect of adopting FIN 48 will
be recorded in retained earnings and other accounts as applicable. The Company
is currently evaluating the effect, if any, the adoption of FIN 48, as of April
2, 2007, will have on the Company's financial position, results of operations
and disclosures.

In June 2006, the Emerging Issues Task Force ("EITF") issued EITF Issue 06-03,
"How Taxes Collected from Customers and Remitted to Governmental Authorities
Should Be Presented in the Income Statement (That Is, Gross versus Net
Presentation)." A consensus was reached that entities may adopt a policy of
presenting sales taxes in the income statement on either a gross or net basis.
If taxes are significant, an entity should disclose its policy of presenting
taxes and the amounts of taxes. The guidance is effective for periods beginning
after December 15, 2006. The Company presents restaurant sales net of sales
taxes. The adoption of EITF Issue 06-03 will have no impact on the presentation
of sales tax in the Company's consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measures" ("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 fiscal
years beginning after November 15, 2007. 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 on the face
of the balance sheet the fair value of those assets and liabilities for which
the reporting entity has chosen to measure at fair value. SFAS 159 is effective
as of the beginning of a reporting entity's first fiscal year beginning after
November 15, 2007. Early adoption is permitted as of the beginning of the
previous fiscal year provided the entity makes that choice in the first 120 days
of that fiscal year and also elects to apply the provisions of SFAS 157. Because
application of the standard is optional, any impacts are limited to those
financial assets and liabilities to which SFAS 159 would be applied, which has
yet to be determined, as is any decision concerning the early adoption of the
standard.

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 the
Company and its franchisees operate restaurants or plan to build new
restaurants, acceptance of the Company's 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 the Company's 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.



                                       15
<PAGE>



CONSOLIDATED FINANCIAL STATEMENTS

BENIHANA INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share information)
<TABLE>
<CAPTION>
                                                                               Fiscal year ended
                                                                -------------------------------------------------
                                                                    April 1,         March 26,       March 27,
                                                                      2007            2006            2005
-----------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>             <C>             <C>
Revenues
    Restaurant sales                                                    $271,080        $244,032        $216,756
    Franchise fees and royalties                                           1,569           1,521           1,575
-----------------------------------------------------------------------------------------------------------------
    Total revenues                                                       272,649         245,553         218,331
-----------------------------------------------------------------------------------------------------------------

Costs and Expenses

    Cost of food and beverage sales                                       66,051          59,014          53,372
    Restaurant operating expenses                                        159,456         139,433         126,825
    Restaurant opening costs                                               1,535           1,270           1,304
    Marketing, general and administrative expenses                        23,811          22,693          20,939
    Impairment charge                                                          -               -           2,668
-----------------------------------------------------------------------------------------------------------------
    Total operating expenses                                             250,853         222,410         205,108
-----------------------------------------------------------------------------------------------------------------

    Income from operations                                                21,796          23,143          13,223
    Interest income (expense), net                                           465              88            (298)
-----------------------------------------------------------------------------------------------------------------

    Income before income taxes and minority interest                      22,261          23,231          12,925
    Income tax provision                                                   7,766           8,491           4,520
-----------------------------------------------------------------------------------------------------------------

    Income before minority interest                                       14,495          14,740           8,405
    Minority interest                                                          -             178             585
-----------------------------------------------------------------------------------------------------------------

Net Income                                                                14,495          14,562           7,820
    Less:  accretion of issuance costs and preferred stock dividends       1,104           1,430             422

-----------------------------------------------------------------------------------------------------------------
    Net Income attributable to common stockholders                       $13,391         $13,132          $7,398
-----------------------------------------------------------------------------------------------------------------

Earnings Per Share
    Basic earnings per common share                                        $1.35           $1.40            $.81
    Diluted earnings per common share                                      $1.26           $1.36            $.77
-----------------------------------------------------------------------------------------------------------------

Proforma Earnings Per Share to effect stock dividend (Note 1)
    Basic earnings per common share                                        $0.90           $0.93            $.54
    Diluted earnings per common share                                      $0.84           $0.91            $.51
-----------------------------------------------------------------------------------------------------------------
</TABLE>


See notes to consolidated financial statements.


                                       16
<PAGE>



BENIHANA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share information)
<TABLE>
<CAPTION>
                                                                                  April 1,            March 26,
                                                                                    2007                 2006
-------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>                    <C>
Assets
Current Assets:
    Cash and cash equivalents                                                      $  8,449               $ 18,303
    Receivables, net                                                                  2,800                  2,437
    Inventories                                                                       5,729                  6,528
    Income tax receivable                                                                 -                  1,634
    Prepaid expenses and other current assets                                         2,784                  1,517
    Investment securities, available for sale - restricted                              841                    835
    Deferred income tax asset, net                                                      931                    805
-------------------------------------------------------------------------------------------------------------------
Total current assets                                                                 21,534                 32,059

Property and equipment, net                                                         146,479                123,578
Goodwill                                                                             29,900                 29,900
Deferred income tax asset, net                                                          169                      -
Other assets, net                                                                     6,207                  5,979
-------------------------------------------------------------------------------------------------------------------
                                                                                   $204,289               $191,516
===================================================================================================================
Liabilities, Convertible Preferred Stock and Stockholders' Equity
Current Liabilities:
    Accounts payable                                                                 $9,318                 $8,044
    Accrued expenses                                                                 20,663                 20,821
    Accrued put option liability                                                      3,718                  3,718
    Income tax payable                                                                  136                      -
    Current maturity of bank debt                                                         -                  4,166
-------------------------------------------------------------------------------------------------------------------
Total current liabilities                                                            33,835                 36,749

Deferred obligations under operating leases                                           8,611                  7,059
Long-term debt - bank                                                                     -                  2,500
Deferred income tax liability, net                                                        -                    673
-------------------------------------------------------------------------------------------------------------------
Total liabilities                                                                    42,446                 46,981
-------------------------------------------------------------------------------------------------------------------

Commitments and Contingencies (Notes 10, 11 and 13) 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 2007
    and 2006, respectively, with a liquidation preference of $20 million plus
    accrued and unpaid dividends as of April 1, 2007 (note
    14)                                                                              19,361                 19,273
-------------------------------------------------------------------------------------------------------------------
Stockholders' Equity:
    Common stock - $.10 par value; convertible into Class A Common stock;
       authorized - 12,000,000 shares; issued and outstanding -
       2,158,312 and 2,649,953 shares in 2007 and 2006, respectively                    216                    265
    Class A Common stock - $.10 par value; authorized - 20,000,000
       shares; issued and outstanding - 7,791,588 and 7,111,671 shares
       in 2007 and 2006, respectively                                                   779                    711
    Additional paid-in capital                                                       64,060                 60,393
    Retained earnings                                                                77,427                 64,036
    Treasury stock - 10,828 shares of Common and Class A Common stock at
       cost in 2006                                                                       -                  (143)
-------------------------------------------------------------------------------------------------------------------
Total stockholders' equity                                                          142,482                125,262
-------------------------------------------------------------------------------------------------------------------
                                                                                   $204,289               $191,516
===================================================================================================================
See notes to consolidated financial statements.
</TABLE>


                                       17
<PAGE>


BENIHANA INC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share information)
<TABLE>
<CAPTION>
                                                            Class A    Additional                          Total
                                                  Common    Common     Paid-in    Retained   Treasury   Stockholders'
                                                    Stock     Stock     Capital    Earnings    Stock      Equity
--------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>        <C>     <C>        <C>         <C>       <C>
BALANCE, MARCH 28, 2004                                $313       $597    $50,772    $43,506     $(143)    $ 95,045
   Net income                                                                          7,820                  7,820
   Issuance of 71,598 shares of Class A Common
       stock from exercise of options                                8        604                               612
   Conversion of 159,000 shares of Common stock
       into 159,000 shares of Class A Common
       stock                                            (15)        15                                            -
   Issuance of 350 shares of Class A Common
       stock for incentive compensation                                         7                                 7
   Dividends declared on Series B Preferred
       Stock                                                                           (370)                   (370)
   Accretion of issuance costs on Series B
       Preferred Stock                                                                  (52)                    (52)
   Tax benefit from stock option exercises                                    145                               145
--------------------------------------------------------------------------------------------------------------------


BALANCE, MARCH 27, 2005                                 298        620     51,528     50,904      (143)     103,207
   Net income                                                                         14,562                 14,562
   Issuance of 571,670 shares of Class A Common
       stock from exercise of options                               57      5,532                             5,589
   Issuance of 15,500 shares of Common stock
       from exercise of options                           1                   130                               131
   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                                 265        711     60,393     64,036       (143)    125,262
   Net income                                                                         14,495                 14,495
   Issuance of 194,104 shares of Class A Common
       stock from exercise of options                               19      2,173                             2,192
   Issuance of 5,000 shares of Common stock from
       exercise of options                                1                    49                                50
   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                                 $216       $779    $64,060    $77,427     $    -    $ 142,482
--------------------------------------------------------------------------------------------------------------------
</TABLE>

See notes to consolidated financial statements.



                                       18
<PAGE>


<TABLE>
<CAPTION>
BENIHANA INC. AND SUBSIDIARIES                                                        FISCAL YEAR ENDED
                                                                           -----------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share information)                                     April 1,    March 26,   March 27,
                                                                               2007       2006         2005
--------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>         <C>         <C>
OPERATING ACTIVITIES:
    Net income                                                               $ 14,495    $ 14,562    $  7,820
    Adjustments to reconcile net income to net cash provided by operating
       activities, net of business acquisitions:

       Depreciation and amortization                                           13,906      11,896       9,837

       Minority interest                                                         --           178         585
       Stock-based compensation                                                   399        --          --
       Tax benefit from stock option exercises                                   --         2,677         145
       Loss on disposal of assets                                                 181         149         327
       Deferred income taxes                                                     (968)        129         (76)
       Impairment charge                                                         --          --         2,668
       Issuance of Class A Common stock for incentive compensation               --          --             7
       Change in operating assets and liabilities that provided (used)
          cash:
          Receivables                                                            (148)     (1,402)        (28)
          Inventories                                                             765          22        (424)
          Income taxes                                                          1,770      (2,635)      1,897
          Prepaid expenses and other current assets                            (1,271)        210        (197)
          Other assets                                                           (627)     (1,163)       (716)
          Accounts payable                                                       (146)        988         771
          Accrued expenses and deferred obligations under operating leases      2,797       3,829       2,798
-------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                                      31,153      29,440      25,414
-------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
    Expenditures for property and equipment                                   (34,572)    (25,486)    (18,978)
    Business acquisition, net of cash acquired                                 (2,743)       --        (2,816)
    Payment of contingent consideration on RA Sushi acquisition                  (228)       (348)       (652)
    (Purchase) sale of investment securities, available for sale, net              (6)       (167)        169
    Cash proceeds from sale of Sushi Doraku                                       515        --          --
    Collection on Sushi Doraku note                                                22        --          --
    Cash proceeds from disposal of property and equipment                         241         715         274
-------------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                         (36,771)    (25,286)    (22,003)
-------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
    Repayment of long-term debt and obligations under capital leases           (6,666)     (3,360)    (19,773)
    Proceeds from issuance of Series B Preferred stock, net                      --         9,884       9,253
    Proceeds from issuance of long-term debt                                     --          --         8,000
    Proceeds from issuance of common stock upon exercise of options             2,242       5,720         612
    Tax benefit from stock option exercises                                     1,188        --          --
    Dividends paid on Series B preferred stock                                 (1,000)       (705)       (252)
-------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities                            (4,236)     11,539      (2,160)
-------------------------------------------------------------------------------------------------------------
    Net (decrease)  increase in cash and cash equivalents                      (9,854)     15,693       1,251
    Cash and cash equivalents, beginning of year                               18,303       2,610       1,359
-------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year                                       $  8,449    $ 18,303    $  2,610
=============================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION
CASH PAID DURING THE FISCAL YEAR FOR:
    Interest                                                                 $    447    $    387    $    386
    Income taxes                                                                5,775       8,331       3,380
=============================================================================================================
NONCASH INVESTING AND FINANCING ACTIVITIES
    Acquired property and equipment for which cash payments had not yet
       been made                                                             $  4,235    $  3,635    $  1,083
    Fair value of assets acquired, other than cash                              2,743        --         2,816
    Note receivable received as part of consideration for sale of
       locations                                                                   24         375        --
    Accrued but unpaid dividends on the Series B Preferred Stock                  249         233         118
=============================================================================================================
</TABLE>

See notes to consolidated financial statements.


                                       19
<PAGE>


BENIHANA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED APRIL 1, 2007, MARCH 26, 2006 AND MARCH 27, 2005

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         OPERATIONS - Benihana Inc., including its wholly-owned subsidiaries
         (the "Company"), owned and operated 59 teppanyaki theme and 20 Japanese
         theme restaurants featuring sushi, as of April 1, 2007. The Company
         also has 17 franchised teppanyaki theme restaurants as of April 1,
         2007. 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 years 2006 and
         2005, 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 year 2007 consisted of 53 weeks, while fiscal years 2006 and
         2005 each consisted of 52 weeks.

         As further discussed in Note 15, subsequent to the end of fiscal year
         2007, 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 does not reflect the impact of the stock dividend,
         in accordance with Statement of Financial Accounting Standards No. 128,
         "Earnings per Share," as the stock dividend had not occurred prior to
         the issuance of these consolidated financial statements. However, the
         Company has presented the proforma effects of the stock dividend on
         earnings per share in the accompanying consolidated statements of
         earnings.

         Certain amounts shown in the consolidated balance sheet as of March 26,
         2006 have been reclassified to conform to the current year consolidated
         balance sheet presentation. Specifically, investment securities,
         available for sale have been presented as a separate item in the
         current year presentation. Corresponding changes have been made to the
         consolidated statements of cash flows for fiscal 2006 and 2005. The
         effects on the consolidated statements of cash flows resulted in
         changes from amounts previously presented to the captions described
         below:

         These changes resulted in:

        o       Net (decrease) increase in cash and cash equivalents decreased
                by $167,000 in 2006 and increased by $169,000 in 2005; and

        o       Net cash used in investing activities increased by $167,000 in
                2006 and decreased by $169,000 in 2005

         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.


                                       20
<PAGE>


         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) position of the
         investments as of April 1, 2007 and March 26, 2006 was not material to
         these consolidated financial statements. These investments have no
         stated maturities.

         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 2007, 2006 and
         2005 were approximately $318,000, $213,000 and $127,000, 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. During fiscal 2005, the Company recorded an impairment
         charge of $2.7 million for the write-down to fair value of property and
         equipment at two teppanyaki restaurants, one RA Sushi restaurant and
         its sole Doraku restaurant. (See Note 3). No impairment charges were
         recognized during fiscal years 2007 or 2006.

         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,
         including property under capital leases, totaled $13,323,000,
         $11,386,000, and $9,452,000, for fiscal years 2007, 2006, and 2005,
         respectively. During fiscal years 2007 and 2006, the Company incurred
         incremental depreciation expenses of $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 represents the
         residual purchase price remaining after allocation of the purchase
         price, based upon the fair value of assets acquired. Goodwill and
         intangible assets deemed to have indefinite lives are not amortized,
         but 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 during the third quarter of its fiscal year and more
         frequently if impairment indicators are identified during the year. The
         Company reviewed goodwill for possible impairment during fiscal years
         2007, 2006 and 2005 and determined that there was no impairment of
         goodwill.

         The following table reflects the changes in the carrying amount of
         goodwill for fiscal years 2006 and 2007 (in thousands):

              Balance as of March 27, 2005                         $28,131
                  RA Sushi contingent payment                          228
                  Haru put option exercise                           1,541
                                                                   -------
              Balance as of March 26, 2006 and April 1, 2007       $29,900
                                                                   =======

         There was no change in goodwill during fiscal 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. Premiums on liquor licenses are indefinite lived intangible
         assets. 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 $454,000, $438,000 and $324,000 during fiscal years
         2007, 2006 and 2005, respectively.


                                       21
<PAGE>



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

              Fiscal year ending:
                  2008                                               $ 584
                  2009                                                 269
                  2010                                                 256
                  2011                                                 255
                  2012                                                 254
                  Thereafter                                           812
                                                                    ------
              Total                                                 $2,430
                                                                    ======

         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 SFAS No. 13, "Accounting for Leases." The
         lease term 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. CAPITAL LEASES, if any,
         are recorded as an asset and an obligation is recorded at an amount
         equal to the present value of the minimum lease payments during the
         lease term.

        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
        $221,000, $259,000 and $84,000 during fiscal years 2007, 2006 and 2005,
        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 contracted with third-party actuaries, who utilize
         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. If actual trends, including the severity or
         frequency of claims, differ from the Company's estimates, the Company's
         financial results could be impacted.

         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.

         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 used in its products.

         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
         Statement of Financial Accounting Standards ("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. 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. 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 prior fiscal years presented 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 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.


                                       22
<PAGE>



         The Company recorded $399,000 ($239,000 net of tax) in stock
         compensation expense during the fiscal year ended April 1, 2007, as a
         result of adopting SFAS 123R. The Company did not recognize any stock
         compensation expense during the fiscal years 2006 and 2005. The
         pro-forma disclosures for fiscal years 2006 and 2005 below are provided
         as if the Company had adopted the fair value recognition requirements
         under SFAS 123. 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. This model requires the use of subjective
         assumptions that can materially affect fair value estimates.

         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 years ended March 26, 2006 and
         March 27, 2005 (in thousands, except per share information):

<TABLE>
<CAPTION>
                                                                           March 26,     March 27,
                                                                             2006            2005
                                                                           --------      --------
<S>                                                                        <C>           <C>
          Net Income
              As reported                                                  $ 14,562      $  7,820
          Less:  Accretion of issuance costs and preferred stock
              dividends                                                      (1,430)         (422)
                                                                           --------      --------
          Net income attributable to common stockholders                     13,132         7,398
          Add:  Stock-based compensation cost included in net income,
              net of tax                                                       --               7
          Less:  Total stock-based employee compensation expense
              determined under fair value based method for all
              awards, net of tax                                               (263)         (248)
                                                                           --------      --------
          Pro forma income for computation of basic earnings per share       12,869         7,157
          Add:  Accretion of issuance costs and preferred stock
              dividends                                                       1,430           422
                                                                           --------      --------
          Pro forma income for computation of diluted earnings per         $ 14,299      $  7,579
              share
                                                                           ========      ========
          Basic earnings per share:
              As reported                                                  $   1.40      $    .81
                                                                           ========      ========
              Pro forma                                                    $   1.37      $    .78
                                                                           ========      ========
          Diluted earnings per share:
              As reported                                                  $   1.36      $    .77
                                                                           ========      ========
              Pro forma                                                    $   1.34      $    .75
                                                                           ========      ========
</TABLE>

         The following weighted average assumptions were used in the
         Black-Scholes option-pricing model used in estimating the fair value of
         option grants: a risk-free interest rate of 4.6%, 4.3% and 3.6% for
         fiscal years 2007, 2006 and 2005, respectively; an expected life of
         three years for fiscal years 2007, 2006 and 2005; no expected dividend
         yield; and a volatility factor of 44%, 37% and 36% for fiscal years
         2007, 2006 and 2005, respectively. 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 life 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 the historical
         price of the Company's Common Stock or Class A Common Stock, as
         appropriate, over the expected life of the option.

         The Company will generally use the Black-Scholes option pricing model
         to estimate the fair value of options granted. The estimated fair value
         of share-based compensation is amortized to expense over the vesting
         period, which is generally two years.

         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. Prior to fiscal year 2007, the Company
         operated as a single reporting segment. As a result of the change in
         presentation, prior years have been presented in a manner consistent
         with the current year's presentation.

         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.


                                       23
<PAGE>

         RESTAURANT OPENING COSTS - Restaurant opening costs include incremental
         out-of-pocket costs that are directly related to the opening of new
         restaurants and 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.

         ADVERTISING - Advertising costs are expensed as incurred. Advertising
         costs were $6.7 million, $7.4 million, and $6.7 million in fiscal 2007,
         2006 and 2005, respectively and are included in Marketing, General and
         Administrative expenses in the Consolidated Statements of Earnings.

         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 2007, 2006
         and 2005.

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

<TABLE>
<CAPTION>
                                                                 April 1,      March 26,    March 27,
                                                                   2007          2006          2005
                                                                 --------      --------      --------
<S>                                                              <C>           <C>           <C>
          Net income                                             $ 14,495      $ 14,562      $  7,820
          Less:  Accretion of issuance costs and preferred
              stock dividends                                      (1,104)       (1,430)         (422)
                                                                 --------      --------      --------
          Income for computation of basic earnings per share       13,391        13,132         7,398
          Add:  Accretion of issuance costs and
              preferred dividends (See Note 14)                     1,104         1,430           422
                                                                 --------      --------      --------
          Income for computation of diluted earnings per
              share                                              $ 14,495      $ 14,562      $  7,820
                                                                 ========      ========      ========


          Weighted average number of common shares in basic
              earnings per share                                    9,894         9,364         9,154
          Effect of dilutive securities:
               Stock options and warrants                             558           429           483
               Convertible preferred shares                         1,066           878           510
                                                                 --------      --------      --------
           Weighted average number of common shares and
              dilutive potential common shares used in
              diluted earnings per share                           11,518        10,671        10,147
                                                                 ========      ========      ========
</TABLE>



         During fiscal 2007, no stock options were excluded from the calculation
         of diluted earnings per share. During fiscal years 2006 and 2005, stock
         options to purchase 60,000 and 222,750 shares, respectively, of common
         stock were excluded from the calculation of diluted earnings per share
         since the effect would be considered antidilutive.


         NEW ACCOUNTING PRONOUNCEMENTS THAT MAY AFFECT OUR FINANCIAL REPORTING -
         In June 2006, the Financial Accounting Standards Board ("FASB") issued
         Interpretation No. 48, "Accounting for Uncertainty in Income Taxes, an
         interpretation of FAS109, Accounting for Income Taxes" ("FIN 48"), to
         create a single model to address accounting for uncertainty in tax
         positions. FIN 48 clarifies the accounting for income taxes, by
         prescribing a minimum recognition threshold a tax position is required
         to meet before being recognized in the financial statements. FIN 48
         also provides guidance on derecognition, measurement, classification,
         interest and penalties, accounting in interim periods, disclosure and
         transition. FIN 48 is effective for fiscal years beginning after
         December 15, 2006. The cumulative effect of adopting FIN 48 will be
         recorded in retained earnings and other accounts as applicable. The
         Company is currently evaluating the effect, if any, the adoption of FIN
         48, as of April 2, 2007, will have on the Company's financial position,
         results of operations and disclosures.

         In June 2006, the Emerging Issues Task Force ("EITF") issued EITF Issue
         06-03, "How Taxes Collected from Customers and Remitted to Governmental
         Authorities Should Be Presented in the Income Statement (That Is, Gross
         versus Net Presentation)." A consensus was reached that entities may
         adopt a policy of presenting sales taxes in the income statement on
         either a gross or net basis. If taxes are significant, an entity should
         disclose its policy of presenting taxes and the amounts of taxes. The
         guidance is effective for periods beginning after December 15, 2006.
         The Company presents restaurant sales net of sales taxes. The adoption
         of EITF Issue 06-03 will have no impact on the presentation of sales
         tax in the Company's consolidated financial statements.


                                       24
<PAGE>


         In September 2006, the FASB issued SFAS No. 157, "Fair Value Measures"
         ("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 fiscal years beginning after November
         15, 2007. 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
         on the face of the balance sheet the fair value of those assets and
         liabilities for which the reporting entity has chosen to measure at
         fair value. SFAS 159 is effective as of the beginning of a reporting
         entity's first fiscal year beginning after November 15, 2007. Early
         adoption is permitted as of the beginning of the previous fiscal year
         provided the entity makes that choice in the first 120 days of that
         fiscal year and also elects to apply the provisions of SFAS 157.
         Because application of the standard is optional, any impacts are
         limited to those financial assets and liabilities to which SFAS 159
         would be applied, which has yet to be determined, as is any decision
         concerning the early adoption of the standard.


2.       PURCHASE AND SALE OF RESTAURANT FACILITIES

         FISCAL 2007 - As discussed in Note 16, in April 2006, the Company sold
         its Sushi Doraku restaurant to Kevin Aoki, the Company's former Vice
         President of Marketing and a current member of the Board of Directors.

         In September 2006, the Company completed the acquisition of a Benihana
         restaurant in Broomfield, Colorado. 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, Arizona. 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, California 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 has
         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.

         FISCAL 2005 - During March 2005, the Company acquired a Benihana
         restaurant from a franchisee in Anchorage, Alaska. The restaurant was
         acquired for $2.8 million, which was paid in cash.

3.       IMPAIRMENT CHARGE

         The Company reviews its long-lived assets for impairment whenever
         events or changes in circumstances indicate the carrying value amount
         of an asset or group of assets 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 2 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 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 loss is measured as the amount by which the carrying
         amount of the restaurant's long-lived assets exceeds its fair value.
         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.

         In fiscal 2005, the Company recorded a $2,668,000 expense for the
         impairment of long-lived assets. The loss on impairment of long-lived
         assets primarily related to the write-down of equipment and leasehold
         improvements at four restaurant units. No impairment charges were
         recognized during fiscal years 2007 or 2006.

         As of April 1, 2007, 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. However, if an individual
         restaurant unit's estimated future cash flows decline below its
         carrying value of long-lived assets, it could result in additional
         impairment charges.

                                       25
<PAGE>
4.       FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying amounts of cash and cash equivalents, accounts receivable
         and payable, and accrued liabilities approximate fair value because of
         the short-term nature of the items. The carrying amounts of the
         Company's debt, at March 26, 2006, and other payables approximate fair
         value either due to their short-term nature or the variable rates
         associated with these debt instruments. The fair value of investment
         securities, available for sale are based on quoted market prices.

5.       INVENTORIES

              Inventories consist of (in thousands):

                                    April 1,   March 26,
                                      2007       2006
                                     ------------------

               Food and beverage     $2,165     $3,152
               Supplies               3,564      3,376
                                     -----------------

                                     $5,729     $6,528
                                     =================


6.       PROPERTY AND EQUIPMENT

              Property and equipment, net consist of (in thousands):

<TABLE>
<CAPTION>
                                                                 April 1,    March 26,
                                                                   2007        2006
                                                                 ---------------------

<S>                                                              <C>          <C>
               Land                                              $ 12,975     $ 12,975
               Buildings                                           27,572       30,511
               Leasehold improvements                             130,609      105,244
               Restaurant furniture, fixtures, and equipment       32,898       29,804
                                                                 ---------------------
                                                                  204,054      178,534
               Less: Accumulated depreciation and
                  amortization                                     74,090       69,949
                                                                 ---------------------
                                                                  129,964      108,585
               Construction in progress                            16,515       14,993
                                                                 ---------------------

                                                                 $146,479     $123,578
                                                                 =====================
</TABLE>


7.       OTHER ASSETS

              Other assets, net consist of (in thousands):

<TABLE>
<CAPTION>
                                                                April 1,  March 26,
                                                                  2007       2006
                                                                 =================
<S>                                                              <C>        <C>
               Lease acquisition costs, net of accumulated
                  amortization of $1,083 and $904,
                  respectively                                   $1,298     $1,478
               Premium on liquor licenses                         1,451      1,308
               Reacquired franchise rights, net of
                  accumulated amortization of $40                   785       --
               Security deposits                                  2,037      2,018
               Computer software costs, net of accumulated
                  amortization of $1,231 and $1,009,
                  respectively                                      303        375
               Non-compete agreements, net of accumulated
                  amortization of $14 and $1, respectively           46          9
               Cash surrender value of life insurance policy       --          391
               Deferred financing charges, net of
                  accumulated amortization of $2 and $643,
                  respectively                                      277        127
               Long-term receivables                                 10        273
                                                                 -----------------

                                                                 $6,207     $5,979
                                                                 =================
</TABLE>


                                       26
<PAGE>
8.       ACCRUED EXPENSES

              Accrued expenses consist of (in thousands):

<TABLE>
<CAPTION>

                                                                 April 1,       March 26,
                                                                   2007            2006
                                                                 --------------------------
<S>                                                                  <C>            <C>
              Accrued payroll, incentive compensation and
                 related taxes                                       $4,221         $4,824
              Unredeemed gift cards and
              certificates                                            3,075          2,521
              Accrued workers compensation claims                     2,045          1,325
              Sales taxes payable                                     1,754          1,287
              Accrued percentage rent                                 2,077          1,248
              Deferred compensation                                     884            861
              Accrued property taxes                                    674            682
              Accrued health insurance costs                            888            608
              Straight-line rent accrual                                199            130
              Other accrued operating expenses                        4,846          7,335
                                                                 --------------------------

                                                                    $20,663        $20,821
                                                                 ==========================
</TABLE>

9.       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):

<TABLE>
<CAPTION>
                                                       April 1,      March 26,   March 27,
              Fiscal year ended                          2007          2006       2005
              ----------------------------------------------------------------------------
<S>                                                    <C>          <C>          <C>
               Labor and related costs                 $ 91,903     $ 81,398     $ 76,026
               Occupancy costs                           16,523       14,204       12,830
               Depreciation and amortization             13,369       11,467        9,607
               Utilities                                  6,917        6,084        5,239
               Restaurant supplies                        6,120        5,065        4,313
               Credit card discounts                      5,020        4,450        3,871
               Other restaurant operating expenses       19,604       16,765       14,939
                                                       ----------------------------------

               Total restaurant operating expenses     $159,456     $139,433     $126,825
                                                        =================================
</TABLE>

10.      LEASES

              The Company is obligated under various lease agreements for most
              of its restaurant units, as well as its corporate office. For
              operating leases, the Company recognizes rent expense on a
              straight-line basis over the expected lease term.

              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. The
              lease term commences on the date when the Company gains access to
              the leased property. 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.

              Judgments made by the Company related to the probable term for
              each restaurant unit 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 unit 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.

                                       27
<PAGE>

              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 25
              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.

              Minimum payments under lease commitments are summarized below for
              operating leases (in thousands).

              The amounts of operating lease obligations are as follows:

                                                             Operating
                                                               Leases
                                                             ---------
              Fiscal year ending:
              2008                                            $12,233
              2009                                             12,429
              2010                                             12,324
              2011                                             12,327
              2012                                             12,125
              Thereafter                                      112,847
                                                             ---------
              Total minimum lease payments                   $174,285
                                                             =========


              There are no remaining amounts due under the Company's capital
              lease agreements at April 1, 2007.

              Rent expense is comprised of the following for the fiscal years
               ended 2007, 2006 and 2005 (in thousands):

<TABLE>
<CAPTION>
                                            2007             2006            2005
                                         -------------------------------------------
<S>                                         <C>              <C>             <C>
              Minimum rentals               $12,103          $10,304         $9,948
              Contingent rentals              3,712            3,293          2,454
                                         -------------------------------------------
                                            $15,815          $13,597        $12,402
                                         ===========================================
</TABLE>


11.      LONG-TERM DEBT

         At March 26, 2006, long-term debt consisted of (in thousands):

              Term loan - bank (5.53% at March 26, 2006)             $6,666
              Less current portion                                    4,166
                                                                    --------
                                                                     $2,500
                                                                    ========

         The term loan was repaid during fiscal 2007.

         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. The Company has the option to pay
         interest at Wachovia's prime rate plus 1% or at the London interbank
         offering rate plus an applicable margin. The interest rate may vary
         depending upon the ratio of the sum of 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. The agreement requires that the Company maintain
         certain financial ratios and profitability amounts and limits the
         payment of cash dividends. At April 1, 2007, the Company had
         approximately $2 million in letters of credit outstanding against this
         facility in connection with its workers' compensation insurance program
         and certain leases. Accordingly, at April 1, 2007, the Company had
         approximately $73 million available for borrowing under the line of
         credit facility, as no borrowings were outstanding. As of April 1,
         2007, the Company was in compliance with all covenants of the Company's
         credit agreement with Wachovia.


                                       28
<PAGE>


12.      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.

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

                                                April 1,   March 26,
                                                  2007       2006
                                                 -----------------
               Deferred tax assets:
                  Straight-line rent expense     $2,046     $1,715
                  Gift certificate liability      1,258      1,031
                  Amortization of gain              744        784
                  Employee benefit accruals         807        302
                  Other                              30        396
                                                 -----------------
                                                  4,885      4,228
                                                 -----------------
               Deferred tax liabilities:
                  Property and equipment          1,085      1,741
                  Inventories                       910        853
                  Goodwill                        1,790      1,502
                                                 -----------------
                                                  3,785      4,096
                                                 -----------------
               Net deferred tax asset            $1,100     $  132
                                                 =================


                                              April 1,   March 26,
                                                2007       2006
                                               -----------------
               Current asset                   $  931     $  805
               Long-term asset (liability)        169       (673)
                                               -----------------
                                               $1,100     $  132
                                               =================

         The income tax provision consists of (in thousands):

                                         April 1,    March 26,   March 27,
              Fiscal year ended            2007         2006        2005
              -----------------------------------------------------------
               Current:
                   Federal               $ 6,707      $ 5,823     $ 3,037
                   State                   2,027        2,539       1,559
               Deferred:
                   Federal and State        (968)         129         (76)
                                         --------------------------------

               Income tax provision      $ 7,766      $ 8,491     $ 4,520
                                         ================================

         The income tax provision differed from the amount computed at the
statutory rate as follows (in thousands):

<TABLE>
<CAPTION>
                                                              April 1,      March 26,    March 27,
              Fiscal year ended                                 2007          2006         2005
              -----------------------------------------------------------------------------------
               <S>                                            <C>           <C>           <C>
               Federal income tax provision at statutory
               rate of 35%                                    $ 7,791       $ 8,131       $ 4,524
               Benefit of graduated rates                        --            --             (86)
               State income taxes, net of federal benefit       1,179         1,519           963
               Tax credits, net                                (1,372)       (1,226)       (1,222)
               Other                                              168            67           341
                                                              -----------------------------------

               Income tax provision                           $ 7,766       $ 8,491       $ 4,520
                                                              ===================================

               Effective income tax rate                         34.9%         36.6%         35.0%
                                                              ===================================
</TABLE>


                                       29
<PAGE>


13.      COMMITMENTS AND CONTINGENCIES

         ACQUISITIONS - 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 (4 1/2)
         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 Stockholder 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 filed in the Supreme Court of the State of New
         York, County 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 September 21, 2006, the parties jointly removed the case from the
         Supreme Court of the State of New York, County of New York, to the
         United States District Court for the Southern District of New York. The
         former Minority Stockholders filed a motion to remand the case back to
         the Supreme Court of the State of New York, County of New York, but
         that motion was denied on May 21, 2007. The District Court has set a
         scheduling conference for June 21, 2007.

         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.

         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 of the acquired business for fiscal years ending
         2004, 2005 and 2006. 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 fiscal
         years 2006, 2005 and 2004. The Company recorded $228,000, $348,000 and
         $652,000 in fiscal years 2006, 2005 and 2004, respectively, as
         additional goodwill for the contingent purchase price payments due for
         those years. These amounts were paid during fiscal years 2007, 2006 and
         2005, respectively.

         LITIGATION - On July 2, 2004, Benihana of Tokyo, Inc. ("BOT"), a
         significant holder of the Company's Common Stock, commenced a lawsuit
         in the Court of Chancery of the State of Delaware (the "Chancery
         Court") against the Company, individuals who were then members of the
         Company's Board of Directors and BFC Financial Corporation ("BFC"). The
         action sought temporary and permanent injunctive relief, monetary
         damages and recovery of costs and expenses, in connection with the
         closing of the $20.0 million sale of a new class of Series B Preferred
         Stock of the Company to BFC, a diversified holding company with
         operations in banking, real estate and other industries (see Note 14).
         John E. Abdo, a director of the Company, serves as a Vice Chairman,
         director, and is a significant shareholder of BFC. Among other relief
         sought, the action sought rescission of the sale of the Series B
         Preferred Stock to BFC.

         The action alleged that the director defendants breached their
         fiduciary duties in approving the financing transaction with BFC by
         diluting the voting power represented by BOT's Common Stock holding in
         the Company.

         After a trial, the Chancery Court rejected all claims asserted against
         the Company and its directors finding that "the directors who approved
         the transaction did so, on an informed basis, acting in good faith and
         believing that they were acting in the best interests of Benihana."
         Thereafter, BOT filed an appeal with respect to the decision of the
         Chancery Court, and on August 24, 2006, the Delaware Supreme Court
         issued an opinion affirming the trial court's ruling in favor of the
         Company and the Board of Directors in all respects.


                                       30
<PAGE>



         The Company is not subject to any other significant pending legal
         proceedings, other than ordinary routine claims incidental to its
         business.

         The Company has entered into supply agreements for the purchase of
         beef, chicken and seafood, 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 April 1, 2007, purchase commitments totaled
         approximately $10.6 million.


14.      CONVERTIBLE PREFERRED STOCK

         On July 1, 2004, the Company received net proceeds of $9,253,000, 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 $9,884,000, 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
         $19.00 per share that equates to 1.32 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 April 1, 2007 are convertible into an aggregate 1,052,632 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.

         The Company pays quarterly dividends on the Series B Preferred Stock,
         and at April 1, 2007, accrued but unpaid dividends on the Series B
         Preferred Stock totaled $249,000 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 $19.00 per share and the Common Stock was trading
         at $20.00 per share 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 $38.00 per share 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.


15.      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.

                                       31
<PAGE>


         STOCK OPTIONS - The Company has various stock option plans: a 1997
         Class A Stock Option Plan, a 2000 Class A Stock Option Plan, an Amended
         and Restated Directors' Stock Option Plan and a 2003 Directors' Stock
         Option Plan ("2003 Directors' Plan"), under all of which a maximum of
         3,157,750 shares of the Company's Common Stock and Class A Common Stock
         were authorized for grant and for all of which options for 1,054,954
         shares remain available for grant.

         Options granted under the 1997 and 2000 Plans have a term of ten years
         from date of issuance, and are exercisable ratably over a three-year
         period commencing with the date of the grant. Options granted under
         these plans require that the exercise price be at market value on the
         date of the grant, or for optionees that own more than 10% of the
         combined voting rights of the Company, at 110% of market value for
         incentive stock options.

         Under the 2003 Directors' 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.
         Options granted under the 2003 Directors' Plan 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.

         The purpose of the employee plans and the directors' plans is to enable
         the Company to attract, retain and motivate key employees and directors
         by providing them equity participation. The employee plans provide for
         incentive stock options (ISO's) under Section 422A of the Internal
         Revenue Code of 1986, as amended, and for options which are not ISO's.
         Options granted under the employee plans may not have terms exceeding
         ten years, and, in the case of the options which are ISO's, may not
         provide for an option exercise price of less than 100% of the fair
         market value of the Company's Common Stock or 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).

         Transactions under the above plans for the fiscal years 2005, 2006 and
         2007 are as follows:

<TABLE>
<CAPTION>

                                                                    Weighted
                                                         Weighted    Average
                                                         Average    Remaining    Aggregate
                                                         Exercise  Contractual   Intrinsic
                                              Shares      Price       Term         Value
         ------------------------------------------------------------------------------------
                                                       (per share)  (in years)
<S>                                           <C>           <C>
         Outstanding at March 28, 2004        1,727,453     $11.07
         Granted                                 70,000      11.87
         Canceled/Expired                      (15,000)      12.04
         Exercised                             (71,598)       8.55

         Outstanding at March 27, 2005        1,710,855      11.20
         Granted                                 60,000      22.36
         Canceled/Expired                      (10,501)      11.02
         Exercised                            (587,170)       9.74

         Outstanding at March 26, 2006        1,173,184      12.49
         Granted                                 70,000      28.22
         Canceled/Expired                       (3,465)       9.25
         Exercised                            (199,104)      11.26
                                           --------------------------------------------------

         Outstanding at April 1, 2007         1,040,615     $13.81         4.6   $15,048,000
                                           ==================================================

         Exercisable at April 1, 2007           950,615     $12.57         4.2   $14,926,000
                                           ==================================================
</TABLE>

         The Company expects options to purchase 66,667 shares to vest during
         fiscal 2008. Historically, forfeitures of options have not been
         significant.

         The weighted average fair values of options granted during fiscal years
         2007, 2006 and 2005 were $9.79, $6.67 and $3.37, respectively.


                                       32
<PAGE>


         The following table summarizes information about stock options
outstanding at April 1, 2007:

<TABLE>
<CAPTION>

                                                  Options Outstanding                    Options Exercisable
                                       ------------------------------------------      --------------------------
                                                       Weighted-
                                                        Average       Weighted                          Weighted
         Ranges of                                     Remaining      Average                            Average
         Exercise                                     Contractual     Exercise                          Exercise
         Prices                           Number          Life         Price              Number         Price
         --------------------------------------------------------------------------------------------------------
<S>       <C>              <C>                <C>         <C>           <C>                <C>             <C>
          $6.63     -      $7.83              98,526      3.8           $7.37              98,526          $7.37
           9.89     -      10.65             203,250      2.5           10.39             203,250          10.39
          11.03     -      13.48             425,589      4.1           12.10             425,589          12.10
          15.00     -      16.78             183,250      5.3           16.73             183,250          16.73
          22.36                               60,000      8.8           22.36              40,000          22.36
          28.22                               70,000      9.8           28.22                   -              -
                                       ---------------------------------------      -----------------------------
                                           1,040,615      4.6           13.81             950,615          12.57
                                       =======================================      =============================
</TABLE>

         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 2007, 2006 and 2005, the total intrinsic value of
         stock options exercised was approximately $3,463,000, $7,377,000 and
         $472,000, respectively. Proceeds from stock options exercised during
         the fiscal years ended 2007, 2006 and 2005 totaled $2,242,000,
         $5,720,000 and $612,000, 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 2007, 2006 and 2005 totaled $1,188,000, $2,677,000 and $145,000,
         respectively. As of April 1, 2007, total unrecognized compensation cost
         related to nonvested share-base compensation totaled $647,000 and is
         expected to be recognized over approximately 1.75 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".

         Subsequent to the end of fiscal year 2007, 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.

         STOCK DIVIDEND - Subsequent to the end of fiscal year 2007, 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 will be payable 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 will pay 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.

         The number and class of shares available upon exercise of any options
         granted by the Company under its various stock options plans will be
         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.


                                       33
<PAGE>

         Applicable terms of all other instruments and agreements to purchase
         Common Stock or Class A Common Stock will be appropriately adjusted to
         reflect the stock dividend.

         Share and per share information included in the consolidated financial
         statements does not reflect the impact of the stock dividend, in
         accordance with SFAS 128, as the stock dividend had not occurred prior
         to the issuance of these consolidated financial statements.

         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.


16.      RELATED PARTY TRANSACTIONS

         As discussed in Note 14, the Company sold an aggregate 800,000 shares
         of its Series B Preferred Stock to BFC for $20,000,000. 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 $19,137,000 ($9,253,000 in fiscal 2005 and
         $9,884,000 in fiscal 2006).

         As discussed in Note 13, BOT, a significant holder of the Company's
         Common Stock, commenced a lawsuit in the Delaware Chancery Court
         against the Company, individuals who were then members of the Company's
         Board of Directors and BFC, in connection with the closing of the $20.0
         million sale of Series B Preferred Stock of the Company to BFC. After a
         trial, the Chancery Court rejected all claims asserted against the
         Company and its directors finding that "the directors who approved the
         transaction did so, on an informed basis, acting in good faith and
         believing that they were acting in the best interests of Benihana."
         Thereafter, BOT filed an appeal with respect to the decision of the
         Chancery Court, and on August 24, 2006, the Delaware Supreme Court
         issued an opinion affirming the trial court's ruling in favor of the
         Company and the Board of Directors in all respects.

         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 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 current member of the Board of Directors. The assets
         were sold for $539,000, 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 approximately $56,000 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 assets and results of operations, as the amounts
         are immaterial. Assets held for sale at March 26, 2006, totaled
         $499,000, and net income (loss) totaled approximately $41,000, $24,000
         and $(296,000) for fiscal years 2007, 2006 and 2005, 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 2007, 2006, and 2005, the Company
         incurred approximately $841,000, $660,000 and $650,000, respectively,
         in legal fees and expenses to Dornbush Schaeffer Strongin & Venaglia,
         LLP.


                                       34
<PAGE>


17.      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.

         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 administrative 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 during fiscal years 2007 and 2006
         is payable in a lump sum payment.

         For fiscal 2005, the amount of the awards is capped at 50% of the
         eligible salary of the employee. One-third of the amounts awarded were
         immediately made available to the employee and the remaining two-thirds
         become available ratably over the succeeding two years. Amounts
         allocated under the plan may be taken in cash or stock deferred in a
         non-qualified deferred compensation plan.

         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 $280,000, $461,000 and $75,000 of corporate
         incentive compensation expense for fiscal years 2007, 2006 and 2005,
         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.


                                       35
<PAGE>



18.      SEGMENT REPORTING

         The table below presents information about reportable segments for
fiscal years 2007, 2006 and 2005 (in thousands):

<TABLE>
<CAPTION>
                                                               Fiscal Year Ended
                       ---------------------------------------------------------------------------------------------------
                                                                 April 1, 2007
                       ---------------------------------------------------------------------------------------------------
                        Teppanyaki         RA Sushi          Haru        Sushi Doraku        Corporate       Consolidated
                       --------------    -------------    ------------   --------------    --------------    -------------
<S>                        <C>                <C>            <C>             <C>                <C>              <C>
    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

    Total assets             120,485           30,540         22,121            -               31,142           204,288

                                                               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

    Total assets             100,294           25,079         22,960           534              42,649             191,516

                                                                Fiscal Year Ended
                       ----------------------------------------------------------------------------------------------------
                                                                 March 27, 2005
                       ----------------------------------------------------------------------------------------------------
                        Teppanyaki         RA Sushi           Haru        Sushi Doraku       Corporate        Consolidated
                       --------------    --------------    -----------    --------------    -------------     -------------

    Revenues               $175,045           $17,334         $22,785         $1,592             $1,575           $218,331

    Income from
        operations           18,404              (558)          4,965           (494)            (9,094)            13,223

    Capital
        expenditures         13,507             3,534           5,405              -                  -             22,446

    Depreciation
        expense                7,222               959          1,013            186                 72              9,452

    Total assets              89,220            19,884         20,567            632             23,951           154,254

</TABLE>

         Revenues for each of the segments consist of restaurant sales.
         Franchise revenues, while generated from Benihana franchises, have not
         been allocated to the Teppanyaki segment. Franchise revenues are
         reflected as corporate revenues.


                                       36
<PAGE>



19.  QUARTERLY FINANCIAL DATA (UNAUDITED)

         Fiscal quarter ended (in thousands except for per share information)

<TABLE>
<CAPTION>
                                       APRIL 1, 2007                                      March 26, 2006
         ---------------------------------------------------------------  ------------------------------------------
                              FOURTH     THIRD      SECOND     FIRST        Fourth    Third      Second     First
<S>                            <C>        <C>        <C>        <C>         <C>        <C>        <C>       <C>
         Revenues              $71,625    $62,202    $58,929    $79,893     $61,222    $55,644    $54,622   $74,065
         Gross profit           53,801     46,714     44,247     60,267      46,104     41,869     41,384    55,661
         Net income              4,072      3,279      2,623      4,521       3,919      3,300      2,845     4,498
         Basic earnings                                    .
             per share             .38        .30        .24        .43       $ .38      $ .33      $ .22     $ .47
         Diluted earnings
             per share             .35        .28        .23        .40       $ .35      $ .30      $ .21     $ .44

</TABLE>



                                       37
<PAGE>


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 April 1, 2007 and March 26, 2006, and the
related consolidated statements of earnings, stockholders' equity, and cash
flows for each of the three years in the period ended April 1, 2007. 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 April 1, 2007 and
March 26, 2006, and the results of its operations and its cash flows for each of
the three years in the period ended April 1, 2007, 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 effectiveness of the Company's
internal control over financial reporting as of April 1, 2007, 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 15, 2007 expressed an unqualified opinion on management's assessment
of the effectiveness of the Company's internal control over financial reporting
and an unqualified opinion on the effectiveness of the Company's internal
control over financial reporting.



Deloitte & Touche LLP
Certified Public Accountants

Fort Lauderdale, Florida
June 15, 2007



                                       38
<PAGE>


         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 April 1, 2007 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 April 1, 2007.

         Deloitte & Touche LLP, the independent registered public accounting
         firm that audited our financial statements included in this Annual
         Report on Form 10K, has also audited management's assessment of the
         effectiveness of the Company's internal control over financial
         reporting and the effectiveness of the Company's internal control over
         financial reporting as of April 1, 2007. Deloitte & Touche LLP
         expressed an unqualified opinion on management's assessment of the
         effectiveness of our internal control over financial reporting and an
         unqualified opinion on the effectiveness of our internal control over
         financial reporting as of April 1, 2007 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 15, 2007


                                       39
<PAGE>


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited management's assessment, included in the accompanying
Management's Report on Internal Control over Financial Reporting, that Benihana
Inc. and subsidiaries (the "Company") maintained effective internal control over
financial reporting as of April 1, 2007, 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. Our responsibility is to express an opinion on management's
assessment and an opinion on the effectiveness of 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, evaluating management's assessment, testing and evaluating
the design and operating effectiveness of internal control, and performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinions.

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, management's assessment that the Company maintained effective
internal control over financial reporting as of April 1, 2007, is fairly stated,
in all material respects, based on the criteria established in INTERNAL
CONTROL--INTEGRATED FRAMEWORK issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Also in our opinion, the Company
maintained, in all material respects, effective internal control over financial
reporting as of April 1, 2007, 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 April 1, 2007 of the Company and our
report dated June 15, 2007 expressed an unqualified opinion on those financial
statements.


Deloitte & Touche LLP
Certified Public Accountants

Fort Lauderdale, Florida
June 15, 2007


                                       40
<PAGE>




OFFICERS AND DIRECTORS




CORPORATE OFFICERS

Joel A. Schwartz - CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER

Juan C. Garcia - PRESIDENT

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 AND PRESIDENT, LEVITT CORPORATION; AND VICE CHAIRMAN
        OF THE BOARD, BLUEGREEN CORPORATION.

Kevin Aoki - PRESIDENT, AOKI GROUP LLC

Norman Becker - INDEPENDENT CONSULTANT, CERTIFIED PUBLIC ACCOUNTANT

J. Ronald Castell - REELRON LLC

Lewis Jaffe - CHIEF EXECUTIVE OFFICER, OXFORD MEDIA INC.

Robert B. Sturges - CHIEF EXECUTIVE OFFICER, NEVADA GOLD & CASINOS INC.

Joseph J. West - DEAN, SCHOOL OF HOSPITALITY AND TOURISM MANAGEMENT, FLORIDA
INTERNATIONAL UNIVERSITY


                                       41
<PAGE>





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 East Las Olas Boulevard
Suite 1400
Fort Lauderdale, Florida 33301


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



                                       42
<PAGE>


COMMON STOCK INFORMATION

The Company's Common Stock and Class A Common Stock are traded on the Nasdaq
National Market System. There were 188 holders of record of the Company's Common
Stock and 427 holders of record of the Class A Common Stock at April 1, 2007.

The table below sets forth high and low prices for the Company's Common Stock
and Class A Common Stock for the periods indicated.


<TABLE>
<CAPTION>
                                                                  FISCAL YEAR ENDED
                                                    APRIL 1, 2007                   MARCH 26, 2006
                                           -----------------------------------------------------------------
              COMMON STOCK                       HIGH             LOW            HIGH            LOW
              ----------------------------------------------------------------------------------------------
<S>           <C>                                <C>               <C>            <C>            <C>
              1st Quarter                        $36.45            $21.40         $16.05         $13.00
              2nd Quarter                         31.12             21.10          21.66          14.25
              3rd Quarter                         33.26             26.40          23.73          16.97
              4th Quarter                         34.29             27.93          30.53          21.60
</TABLE>


<TABLE>
<CAPTION>
                                                                  FISCAL YEAR ENDED
              CLASS A                               APRIL 1, 2007                   MARCH 26, 2006
                                           -----------------------------------------------------------------
              COMMON STOCK                       HIGH             LOW            HIGH            LOW
              ----------------------------------------------------------------------------------------------
<S>           <C>                                <C>               <C>            <C>            <C>
              1st Quarter                        $36.40            $21.25         $16.10         $13.07
              2nd Quarter                         31.00             21.03          20.64          14.20
              3rd Quarter                         33.29             25.55          23.20          16.23
              4th Quarter                         33.81             28.05          30.50          20.89
</TABLE>


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 common stock.



                                       43