|                               |              
|------------------------------ | -------------
|BENIHANA INC. AND SUBSIDIARIES | Exhibit 13.01

SELECTED FINANCIAL DATA

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

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

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

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

1

---



BENIHANA INC. AND SUBSIDIARIES

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

Overview

Our Business

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

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

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

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

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

Summary of results

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

|  |                                                                                                                                                                                                                                                                 
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | sixteenth consecutive year with total sales increases;                                                                                                                                                                                                          
|  |                                                                                                                                                                                                                                                                 
| | opened 3 new Benihana teppanyaki-style restaurants in Maple
 Grove, MN, Chandler, AZ and Dulles, VA;                                                                                                                                                            
|  |                                                                                                                                                                                                                                                                 
| | opened 5 new RA Sushi restaurants in Lombard, IL, Tustin, CA,
 Mesa, AZ, Baltimore, MD and Plano, TX;                                                                                                                                                           
|  |                                                                                                                                                                                                                                                                 
| | opened 2 new Haru restaurants in Boston, MA and New York, NY;                                                                                                                                                                                                   
|  |                                                                                                                                                                                                                                                                 
| | completed remodeling projects of our Benihana teppanyaki-style
 restaurants in Fort Lauderdale, FL, Miami Beach, FL, Burlingame, CA,
 Torrance, CA, San Diego, CA, Sacramento, CA, Bethesda, MD, New York City, NY,
 Cherry Hill, NJ, Tucson, AZ and Dallas, TX;
|  |                                                                                                                                                                                                                                                                 
| | 4 Benihana teppanyaki-style restaurants
 located in Houston, TX, Denver, CO, Cupertino, CA and Newport Beach, CA were
 closed undergoing renovations at the end of fiscal 2008;                                                                                 
|  |                                                                                                                                                                                                                                                                 
| | the Benihana
 teppanyaki-style restaurant in Memphis, TN is currently closed and being
 rebuilt after being destroyed by fire; and                                                                                                                              
|  |                                                                                                                                                                                                                                                                 
| | 2 Benihana teppanyaki-style
 restaurants located in Chicago, IL and Turtle Creek, TX were closed.                                                                                                                                                               

2

---



BENIHANA INC. AND SUBSIDIARIES

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

Outlook

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

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

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

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

Operating results

Revenues

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

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

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

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

3

---



BENIHANA INC. AND SUBSIDIARIES

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

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

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

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

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

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

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

4

---



BENIHANA INC. AND SUBSIDIARIES

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

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

2008 compared to
2007

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

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

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

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

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

5

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BENIHANA INC. AND SUBSIDIARIES

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

2007 compared to
2006

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

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

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

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

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

Operating costs and expenses

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

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

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

6

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BENIHANA INC. AND SUBSIDIARIES

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

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

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

7

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BENIHANA INC. AND SUBSIDIARIES

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

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

2008 compared to
2007

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

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

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

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

8

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BENIHANA INC. AND SUBSIDIARIES

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

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

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

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

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

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

2007 compared to
2006

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

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

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

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

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

9

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BENIHANA INC. AND SUBSIDIARIES

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

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

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

Our financial resources

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

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

Line of Credit Facility

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

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

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

Series B Preferred Stock

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

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

10

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BENIHANA INC. AND SUBSIDIARIES

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

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

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

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

Expansion and Renovation Program

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

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

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

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

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

Minority Stockholders Liability

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

11

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BENIHANA INC. AND SUBSIDIARIES

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

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

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

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

Supply Agreements

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

Cash Flows

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

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

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

Operating activities

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

Investing activities

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

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

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

Financing activities

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

12

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BENIHANA INC. AND SUBSIDIARIES

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

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

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

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

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

Contractual obligations and commitments

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

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

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

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

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

* See Notes to
Consolidated Financial Statements

Off-balance sheet arrangements

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

The impact of inflation

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

13

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BENIHANA INC. AND SUBSIDIARIES

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

Quantitative and qualitative disclosures
about market risks

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

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

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

Seasonality of our business

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

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

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

Critical accounting policies and estimates

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

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

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

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

14

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BENIHANA INC. AND SUBSIDIARIES

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

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

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

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

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

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

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

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

15

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BENIHANA INC. AND SUBSIDIARIES

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

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

New accounting pronouncements that may affect
our financial reporting

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

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

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

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

Forward looking statements

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

16

---



BENIHANA INC. AND SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS

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

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

See Accompanying Notes to the Consolidated
Financial Statements.

17

---



BENIHANA INC. AND SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS

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

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

See Accompanying Notes to the
Consolidated Financial Statements.

18

---



BENIHANA INC. AND SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS

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

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

See Accompanying Notes to the
Consolidated Financial Statements.

19

---



BENIHANA INC. AND SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED
STATEMENTS OF CASH FLOWS(In thousands)

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

See Accompanying Notes to the
Consolidated Financial Statements.

20

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

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

21

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

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Accounting for Long-Lived Assets - Property
 and equipment are stated at cost. The Company capitalizes all direct costs
 incurred to construct restaurants. Upon opening, these costs are depreciated
 and charged to expense based upon their useful life classification. Rent
 expense incurred during the construction period is not capitalized but is
 charged to restaurant opening costs. The amount of interest capitalized in
 connection with restaurant construction in fiscal years 2008, 2007 and 2006
 was approximately $0.2 million, $0.3 million and $0.2 million, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | The Company
 evaluates its net investment in restaurant properties and its other
 long-lived assets for impairment when events or changes in circumstances that
 indicate the carrying amounts of an asset may not be recoverable. The Company
 considers a history of relatively small operating gains or consistent and
 significant operating losses to be a primary indicator of potential asset
 impairment, after the individual restaurant locations have been operating for
 two years. Assets are grouped and evaluated for impairment at the lowest
 level for which there is identifiable cash flows, primarily the individual
 restaurant units. A restaurant unit is deemed to be impaired if a forecast of
 undiscounted future operating cash flows directly related to the restaurant
 is less than the carrying amount of the restaurants long-lived assets. If a
 restaurant unit is determined to be impaired, the impairment loss is measured
 as the amount by which the carrying amount of the restaurants long-lived
 assets exceeds its fair value and a charge is taken against results of
 operations. Fair value is an estimate based on the best information
 available, including multiples of cash flow derived from recent purchases and
 sales of businesses in the restaurant industry.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | Depreciation and Amortization - Depreciation
 and amortization are computed by the straight-line method over the estimated
 useful life (buildings - 30 years; restaurant furniture, fixtures and
 equipment - 8 years; office equipment - 8 years; personal computers, software
 and related equipment - 3 years; and leasehold improvements - lesser of the
 underlying lease terms, including renewal options, or their useful lives).
 Depreciation expense associated with property and equipment totaled $16.6
 million, $13.3 million and $11.4 million for fiscal years 2008, 2007 and
 2006, respectively. During fiscal years 2008, 2007 and 2006, the Company
 incurred incremental depreciation expense of $2.4 million, $1.6 million and
 $1.1 million, respectively, related to the Companys review of estimated
 useful lives of assets for restaurants scheduled to be remodeled.                                                                                                                                                                                                                                                                                                                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | Accounting for Goodwill and Intangibles -
 Goodwill consists of the cost of an acquired business in excess of the fair
 value of net assets acquired, using the purchase method of accounting.
 Goodwill and intangible assets deemed to have indefinite lives are not
 amortized and are subject to annual impairment tests. Intangible assets deemed
 to have definite lives are amortized over their estimated useful lives.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | The Company
 annually reviews goodwill for recoverability based primarily on a multiple of
 earnings analysis comparing the fair value to the carrying value. The Company
 performs its annual assessment for impairment annually or more frequently if
 impairment indicators are identified during the year. The Company performed
 its assessment for possible impairment and no impairment charges resulted
 from the impairment tests during fiscal years 2008, 2007 and 2006. There have
 been no changes in goodwill during fiscal years 2008 or 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | Intangible
 assets consist of premiums on liquor licenses, lease acquisition costs,
 capitalized computer software costs and reacquired franchise rights. These
 intangible assets are classified as other assets, net in the accompanying
 consolidated balance sheets. Premiums on liquor licenses are indefinite lived
 intangible assets. The Company reviews premiums on liquor licenses for
 impairment annually or more frequently if impairment indicators are
 identified during the year. Lease acquisition costs are amortized over the
 remaining life of the acquired lease. Capitalized computer software costs are
 amortized over three years. Reacquired franchise rights are amortized over
 the remaining term of purchased rights. Amortization of intangibles totaled
 $0.7 million, $0.5 million and $0.4 million during fiscal years 2008, 2007
 and 2006, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | Estimated
 amortization expense over the estimated remaining life of intangible assets
 is as follows (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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

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

22

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

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Accounting for the Costs of Computer Software Developed or Obtained
 for Internal Use - The Company capitalizes and
 records in other assets the cost of computer software obtained for internal
 use and amortizes such costs over a three-year period. Amortization of these
 costs totaled $0.4 million, $0.2 million and $0.3 million during fiscal years
 2008, 2007 and 2006, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Self-Insurance - The Company is self-insured
 for certain losses, principally related to health and workers compensation.
 The Company maintains stop loss coverage with third party insurers to limit
 its total exposure. The self-insurance liability represents an estimate of
 the ultimate cost of claims incurred and unpaid as of the balance sheet date.
 The Company utilizes estimates of expected losses, based on statistical
 analyses, to validate its self-insurance liability. The self-insurance
 liability is reviewed by the Company on a quarterly basis to ensure that the
 liability is appropriate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Income Taxes - The Company uses the asset
 and liability method which recognizes the amount of current and deferred
 taxes payable or refundable at the date of the financial statements as a
 result of all events that have been recognized in the consolidated financial
 statements as measured by the provisions of enacted law. Recognition of
 deferred tax assets is limited to amounts considered by management to be more
 likely than not of realization in future periods. On April 2, 2007, the
 Company adopted the provisions of FASB Interpretation No. 48, Accounting for
 Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109 (FIN
 48). FIN 48 addresses the determination of how benefits claimed or expected
 to be claimed on a tax return should be recorded in the financial statements.
 Under FIN 48, the Company must recognize the tax benefit from an uncertain
 tax position only if it is more likely than not that the tax position will be
 sustained on examination by the taxing authorities, based on the technical
 merits of the position. The tax benefits recognized in the financial
 statements from such a position are measured based on the largest amount of
 benefit that is greater than 50% likely of being realized upon ultimate
 settlement with a taxing authority.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Derivative Instruments - The Company does
 not currently utilize instruments to hedge exposure to fluctuations in
 variable interest rates, currency fluctuations or fluctuations in the prices
 of commodities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Stock-Based Compensation - Prior to March
 27, 2006, the Company accounted for stock options issued to employees and
 directors under the intrinsic value method of accounting for stock-based
 compensation as defined in Accounting Principles Board Opinion No. 25,
 Accounting for Stock Issued to Employees (APB 25). Accordingly, the
 Company recognized no compensation expense with respect to such awards
 because stock options were granted at the fair market value of the underlying
 shares on the date of the grant. On March 27, 2006, the Company adopted SFAS
 No. 123 (revised 2004), Share-Based Payment (SFAS 123R), which replaces
 SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123) and
 supersedes APB 25.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The Company
 elected to adopt SFAS 123R using the modified prospective method, which
 required compensation expense to be recorded for all unvested share-based
 awards beginning in the first quarter of adoption. Accordingly, the 2006
 fiscal year presented has not been restated to reflect the fair value method
 of expensing stock options. In accordance with SFAS 123R, tax benefits
 related to equity award grants that are in excess of the tax benefits recorded
 on the Companys consolidated statements of earnings are classified as a cash
 inflow in the financing section of the Companys consolidated statements of
 cash flows beginning in fiscal 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | SFAS 123R
 requires compensation costs related to share-based payments to employees,
 including grants of employee and director stock options, to be recognized in
 the financial statements based on their fair values. With limited exceptions,
 the amount of compensation cost is measured based on the fair market value on
 the grant date of the equity or liability instruments issued. The estimated
 fair value of share-based compensation is amortized to expense over the
 vesting period, which is generally two to three years. For liability awards,
 the fair value of the award, which determines the measurement of the
 liability on the balance sheet, is remeasured at each reporting period until
 the award is settled. Fluctuations in the fair value of the liability award
 are recorded as increases or decreases in compensation cost, either
 immediately or over the remaining service period, depending on the vested
 status of the award. As of March 30, 2008, the Company does not have any
 awards required to be classified as liabilities.                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The fair
 value of restricted stock awards is the market price of the underlying shares
 on the date of grant. The Company will generally use the Black-Scholes option
 pricing model to estimate the fair value of options granted. This model
 requires the use of subjective assumptions that can materially affect fair
 value estimates. The following summarizes assumptions used in estimating the
 fair value of option grants:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

23

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

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

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The
 risk-free interest rate is based on the U.S. Treasury yield curve in effect
 at the time of grant for the expected term of the option. The expected term
 is based on the period of time the options are expected to be outstanding.
 The expected dividend yield is based on the Companys history and expectation
 of dividend payments. The volatility factor is based on historical monthly
 price observations of the underlying shares over the expected term of the
 option as the Company has no reason to believe that future volatility over
 the expected term is likely to differ from historical volatility.                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | The Company
 recorded $0.6 million ($0.4 million net of tax) and $0.4 million ($0.2
 million net of tax) in stock compensation expense during the fiscal years
 ended March 30, 2008 and April 1, 2007, respectively. The Company did not
 recognize any stock compensation expense during the fiscal year 2006. As of
 March 30, 2008, total unrecognized compensation cost related to nonvested
 stock options totaled $1.3 million and is expected to be recognized over
 approximately 3 years. As of March 30, 2008, total unrecognized compensation
 cost related to restricted stock awards totaled $0.3 million and is expected
 to be recognized over approximately 3 years.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | Under SFAS
 123, the fair value of each stock option granted is estimated on the date of
 grant using the Black-Scholes option-pricing model. Had the Company accounted
 for its stock-based awards under the fair value method, the table below shows
 the pro forma effect on net income and earnings per share for the fiscal year
 ended March 26, 2006 (in thousands, except per share information):                                                                                                                                                                                                                                                                            

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

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Segment Reporting- The Company accounts for
 its segments in accordance with SFAS No. 131, Disclosure about Segments of
 an Enterprise and Related Information (SFAS 131). SFAS 131 requires that a
 public company report annual and interim financial and descriptive
 information about its reportable operating segments. Operating segments, as
 defined, are components of an enterprise about which separate financial
 information is available that is evaluated regularly by the chief operating
 decision maker in deciding how to allocate resources and in assessing
 performance. The Company has determined that its reportable segments are
 those that are based on the Companys methods of internal reporting and
 management structure, which is based upon the Companys restaurant concepts.
 Accordingly, the Companys reportable segments are based on restaurant
 concept.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | There were
 no material amounts of revenues or transfers between reportable segments.
 Revenues from external customers are derived principally from food and
 beverage sales. The Company does not rely on any major customers as a source
 of revenue. For fiscal years 2008, 2007 and 2006, franchise revenues
 attributed to foreign countries totaled approximately, $0.5 million, $0.3
 million and $0.3 million, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | Restaurant Opening Costs- Restaurant
 opening costs include incremental out-of-pocket costs, which are directly
 related to the opening of new restaurants that are not capitalizable and the
 amortization of rentals under lease agreements for accounting purposes.
 Restaurant opening costs include costs to recruit and train hourly restaurant
 employees, wages, travel and lodging costs for the Companys opening training
 team and other support employees, costs for practice service activities and
 straight-line minimum base rent during the restaurant preopening period. The
 Company expenses restaurant opening costs as incurred.                                                                                                                                                                                                                                                 

24

---



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

| |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Advertising - Advertising costs are expensed
 as incurred. Advertising costs were $7.7 million, $6.7 million and $7.4
 million in fiscal 2008, 2007 and 2006, respectively, and are included in
 marketing, general and administrative expenses in the accompanying
 consolidated statements of earnings.                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Other Comprehensive Loss During fiscal
 2008, the only component of other comprehensive loss is the unrealized losses
 on the investments available for sale.                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Earnings Per Share - Basic earnings per
 share is computed by dividing net income available to common shareholders by
 the weighted average number of common shares outstanding during each period.
 The diluted earnings per share computation includes dilutive share
 equivalents issued under the Companys various stock option plans and the
 dilutive convertible preferred stock outstanding during fiscal years 2008,
 2007 and 2006.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | The
 components used in the computation of basic earnings per share and diluted earnings per share for
 each fiscal year are shown below (in thousands):                                                                                                                                                                                                                                                                                      

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

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During
 fiscal years 2008 and 2006, stock options to purchase 457,000 and 60,000
 shares of common stock were excluded from the calculation of diluted earnings
 per share since the effect would be considered antidilutive. During fiscal
 2007, no stock options were excluded from the calculation of diluted earnings
 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | New Accounting Pronouncements That May Affect Financial Reporting
  In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements
 (SFAS 157). SFAS 157 defines fair value, establishes a framework for
 measuring fair value and enhances disclosures about fair value measures
 required under other accounting pronouncements but does not change existing
 guidance as to whether or not an instrument is carried at fair value. SFAS
 157 is effective for financial assets and liabilities for fiscal years
 beginning after November 15, 2007. The FASB has provided a one year deferral
 for the implementation of SFAS No. 157 for non-financial assets and
 liabilities that are not required to be measured at fair value on a recurring
 basis. The Company is currently reviewing the provisions of SFAS 157 to
 determine the impact on its consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | In February
 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
 Assets and Financial Liabilities (SFAS 159). SFAS 159 provides reporting
 entities an option to report selected financial assets, including investment
 securities designated as available for sale, and liabilities, including most
 insurance contracts, at fair value. SFAS 159 establishes presentation and disclosure
 requirements designed to facilitate comparisons between companies that choose
 different measurement attributes for similar types of assets and liabilities.
 The standard also requires additional information to aid financial statement
 users understanding of a reporting entitys choice to use fair value on its
 earnings and also requires entities to display the fair value of those
 affected assets and liabilities in the primary financial statements. SFAS 159
 is effective as of the beginning of a reporting entitys first fiscal year
 beginning after November 15, 2007. Application of the standard is optional
 and any impacts are limited to those financial assets and liabilities to
 which SFAS 159 would be applied. The Company is currently reviewing the provisions
 of SFAS 159 to determine the impact, if elected, on its consolidated
 financial statements.

25

---



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

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

26


---



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

|   |                                        
|-- | ---------------------------------------
|4. | INVENTORIES                            
|   |                                        
|   | Inventories
 consist of (in thousands):

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

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

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

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

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

27

---



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

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

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

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

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

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

28

---



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

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

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

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

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

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

|                                 |  |                 |        |                |   |   | 
|-------------------------------- |  | --------------- | ------ | -------------- | - | - | 
|                                 |  | March 30,
 2008 |        | April 1,
 2007 |  
|                                 |  |                 |       
|Borrowings
 under line of credit |  | $               | 17,422 |                | $ |  | 

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

29

---



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

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

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

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

30

---



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

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company
  files income tax returns that are periodically audited by various federal and
  state jurisdictions. With few exceptions, the Company is no longer subject to
  federal and state income tax examinations for years prior to fiscal year
  2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | The Company
  adopted the provisions of FIN48 on April 2, 2007. As a result of the
  implementation of FIN 48, the Company recorded a non-cash cumulative
  transition charge of approximately $1.4 million as a reduction of retained
  earnings (see Consolidated Statement of Stockholders Equity). As of April 2,
  2007, the Company had $3.3 million of unrecognized tax benefits, of which
  approximately $0.7 million would impact the effective tax rate if recognized.
  As of March 30, 2008, the Company had $0.7 million of unrecognized tax
  benefits, all of which would impact the tax rate, if recognized. Of
  the total unrecognized tax benefits at March 30, 2008, the Company believes
  is reasonably possible that this amount could be reduced by $0.4 million in
  the next twelve months due the expiration of statute of limitations.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | The
  unrecognized tax benefits and related interest and penalties are generally
  classified as other long term liabilities in the accompanying fiscal year
  2008 consolidated balance sheet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | A
  reconciliation of beginning and ending unrecognized tax benefits, exclusive
  of related interest and penalties, is as follows (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | The Company
  recognizes interest and penalties related to unrecognized tax benefits in
  income tax expense. As of April 2, 2007, the Company had approximately $0.4
  million accrued for the payment of interest and approximately $0.6 million
  accrued for the payment of penalties related to unrecognized tax benefits. As
  of March 30, 2008, the Company had approximately $0.2 million accrued for the
  payment of interest and no amount accrued for the payment of penalties
  related to unrecognized tax benefits.                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | During the
  current fiscal year, the Company reduced the related interest and penalties
  associated with unrecognized tax benefits by approximately $0.1 million and
  $0.6 million, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|12. | COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Acquisitions  Haru Holding Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | In December
  1999, the Company completed the acquisition of 80% of the equity of Haru
  Holding Corp. (Haru). The acquisition was accounted for using the purchase
  method of accounting. Pursuant to the purchase agreement, at any time during
  the period from July 1, 2005 through September 30, 2005, the holders of the
  balance of Harus equity (the Minority Stockholders) had a one-time option
  to sell their remaining shares to the Company (the put option). The
  exercise price under the put option was to be calculated as four and one-half
  (41⁄2) 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
  Stockholders and recorded a $3.7 million liability with respect thereto.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | On August
  25, 2006, the former Minority Stockholders sued the Company. The complaint,
  (which was originally filed in the Supreme Court of the State of New York,
  County of New York, but has been removed to the United States District Court
  for the Southern District of New York) seeks an award of $10.7 million, based
  on the former Minority Stockholders own calculation of the put option price
  formula and actions allegedly taken by the Company to reduce the value of the
  put option.                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | On December,
  19, 2007, the Court dismissed all of the claims against the Company, except
  for the breach of fiduciary duty and breach of contract claims. On January
  25, 2008, the Company filed its Answer and Affirmative Defenses to the
  Amended Complaint. The Court has set a discovery deadline of July 25, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Company
  believes that it has correctly calculated the put option price and that the
  claims of the former Minority Stockholders are without merit. However, there
  can be no assurance as to the outcome of this litigation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

31

---



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

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

32

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

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

33

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BENIHANA INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED MARCH 30, 2008, APRIL 1, 2007 AND MARCH 26, 2006

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The purpose
  of the 2007 Equity Incentive Plan is to enable the Company to attract, retain
  and motivate key employees and non-employee directors by providing them
  equity participation. The plan provides for incentive stock options (ISOs)
  under Section 422 of the Internal Revenue Code of 1986, as amended, and for
  options which are not ISOs, stock appreciation rights (SARs), stock grants
  and stock equivalent units. Options, SARs and stock equivalent units granted
  under the employee plans may not have terms exceeding ten years (in the case
  of optionees holding 10% or more of the combined voting rights of the
  Companys securities, ISOs may not have terms exceeding five years) and may
  not provide for an option exercise price of less than 100% of the fair market
  value of the Companys Class A Stock on the day of the grant (110% of such
  fair market value in the case of optionees holding 10% or more of the
  combined voting rights of the Companys securities). With regard to each
  option grant, the option first vests with respect to one-third on first
  anniversary of the grant of such option, one-third on the second anniversary
  of the grant of such option and as to the balance of such shares on the third
  anniversary of such option. With regard to each restricted stock grant, the
  grant is subject to a risk of forfeiture which fist lapses with respect to
  approximately one-third on the first anniversary of such grant, approximately
  one-third on the second anniversary of such grant and the balance of such
  shares on the third anniversary of such grant.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Under the
  2007 Equity Incentive Plan, options to purchase 10,000 shares of Class A
  Common Stock are automatically granted to each of the Companys non-employee
  directors on the date of the Companys annual meeting and are exercisable
  ratably as to one-third of the shares on the date which is six months after
  the date of grant, one-third of the shares on the first anniversary of the
  grant of such option and as to the balance of such shares on the second
  anniversary of grant of such option.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Transactions
  under the above plans for the fiscal years 2006, 2007 and 2008 are as
  follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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

| |                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company
  expects options to purchase 157,800 shares to vest during fiscal 2009.
  Historically, forfeitures of options have not been significant.
| |                                                                                                                                                       
| | The weighted
  average grant date fair values of options granted during fiscal years 2008,
  2007 and 2006 were $4.27, $6.53 and $4.45, respectively. 

34

---



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

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

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The
 intrinsic value of a stock option is the amount by which the market value of
 the underlying stock exceeds the exercise price of the option. For fiscal
 years 2008, 2007 and 2006, the total intrinsic value of stock options
 exercised was approximately $4.0 million, $3.5 million and $7.4 million,
 respectively. Proceeds from stock options exercised during the fiscal years
 ended 2008, 2007 and 2006 totaled $2.6 million, $2.2 million and $5.7
 million, respectively. Upon the exercise of stock options, shares are issued
 from new issuances of stock. The tax benefit realized for tax deductions from
 stock options during the fiscal years ended 2008, 2007 and 2006 totaled $1.6
 million, $1.2 million and $2.7 million, respectively. As of March 30, 2008,
 total unrecognized compensation cost related to nonvested stock options
 totaled $1.3 million and is expected to be recognized over approximately 3
 years. The total fair value of shares vested during fiscal year was $0.6 million.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Restricted stockIn March of
 2008, the Company granted 25,900 shares of restricted non-vested Class A
 Common Stock awards to certain employees, and as of March 30, 2008 none of
 these awards were vested or forfeited. The grant date fair value of
 restricted stock awards granted was $10.35, which was the market price of the
 underlying shares on the date of grant. The aggregate fair value of the
 restricted stock awards was approximately $0.3 million. There were no
 restricted stock awards granted in prior periods. As of March 30, 2008, there
 was approximately $0.3 million of unrecognized compensation cost related to
 restricted stock awards, which is expected to be recognized over
 approximately 3 years.                                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Stock Rights
 - The Company has a Shareholder Rights Plan under which a Preferred Share
 Purchase Right (Right) is represented by outstanding shares of the Companys
 Common and Class A Common Stock. The Rights operate to create substantial
 dilution to a potential acquirer who seeks to make an acquisition, the terms
 of which the Companys Board of Directors believes is inadequate or
 structured in a coercive manner.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | The Rights
 become exercisable on the tenth day (or such later date as the Board of
 Directors may determine) after public announcement that a person or a group
 (subject to certain exceptions) has acquired 20% or more of the outstanding
 Common Stock or an announcement of a tender offer that would result in
 beneficial ownership by a person or a group of 20% or more of the Common Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | On January
 31, 2007, the Board of Directors of the Company approved and the Company
 entered into an Amended and Restated Rights Agreement (the Agreement). The
 Agreement amended and restated that certain Rights Agreement (the Original
 Agreement) between the Company and First Union National Bank of North
 Carolina (which was succeeded in interest by American Stock Transfer &
 Trust Company) dated as of February 6, 1997. The principal purpose of the
 Agreement was to extend the final expiration date of the Rights certificates
 issued under the Original Agreement from February 2, 2007 to February 2,
 2011. The Agreement also implements certain other changes to the Original
 Agreement, including modifications to the provisions governing Exempt
 Persons.                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | On May 18,
 2007, the Board of Directors of the Company approved and the Company entered
 into an Amendment (the Amendment) to the Amended and Restated Rights
 Agreement, dated as of January 31, 2007, between the Company and American
 Stock Transfer & Trust Company, as rights agent. The Amendment amended
 the Agreement to clarify that an Exempt Person (as defined under the
 Agreement) will not cease to be an Exempt Person if such person acquires
 additional shares of Common Stock pursuant to one or more actions or
 transactions approved by the Companys Board of Directors.                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Treasury Stock  During fiscal year 2007, the
 Company retired 9,177 shares of Common Stock and 1,651 shares of Class A
 Common Stock, previously held in treasury.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

35

---



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

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

36

---



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

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

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

37

---



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

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

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

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

38

---



REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

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

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

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

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

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

Deloitte &
Touche LLP
Certified Public Accountants

Miami, Florida
June 13, 2008

39

---



EVALUATION DISCLOSURE CONTROLS AND PROCEDURES

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

Managements Report on Internal Control over
Financial Reporting

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

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

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

| |                          | 
| | ------------------------ | 
| | /s/
 Joel A. Schwartz    | 
| |                          | 
| | Joel
 A. Schwartz        | 
| | Chief
 Executive Officer | 
| |                          | 
| | /s/
 Jose I. Ortega      | 
| |                          | 
| | Jose
 I. Ortega          | 
| | Chief
 Financial Officer | 
| |                          | 
| | June
 13, 2008           | 

40

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REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

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

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

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

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

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

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

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

Deloitte &
Touche LLP
Certified Public Accountants

Miami, Florida
June 13, 2008

41

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OFFICERS AND DIRECTORS

CORPORATE OFFICERS

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

Juan C. Garcia
 President and Chief Operating Officer

Taka Yoshimoto
- Executive Vice President - Operations

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

Darwin C.
Dornbush - Secretary

DIRECTORS

Joel A.
Schwartz

Taka Yoshimoto

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

Norman Becker - Independent
Consultant, Certified Public Accountant

J. Ronald
Castell - ReelRon LLC

Lewis Jaffe - Chief Executive Officer, Lynch Ambulance

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

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

42

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

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

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

10-K REPORT AVAILABILITYA 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 HEADQUARTERS8685 Northwest 53rd Terrace
Miami, Florida 33166
(305) 593-0770

43

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COMMON STOCK INFORMATION

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

On May 18,
2007, the Board of Directors declared a 3 for 2 stock dividend payable in
Common Shares to the holders of both the Class A Shares and Common Shares. The stock dividend was paid on
June 15, 2007 to holders of record June 1, 2007. The table below sets forth the high and low prices for the Companys Common Stock and Class A Common Stock for the periods indicated.
The high and low prices have
been adjusted as if the stock dividend had been in existence for the fiscal
periods presented.

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

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

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

44

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

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

(LINE GRAPH)

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

---



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

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

(LINE GRAPH)

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

45

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