Case Study Analysis

Benihana of Tokyo
Binus Business School,
MM Executive Batch 20
Presented by Group I
Alexander Christian
Dina Sandri Fani
Jenna Widyawati
Ridwan Martawidjaja

The Story of Benihana

The 70s Benihana Facing Issues

Detailed Analysis

Conclusion & Recommendation

Key Takeaways

Case Analysis Benihana of Tokyo

7/28/2014

Table of Contents

The Story of Benihana

The 70s Benihana Facing Issues

Detailed Analysis

Conclusion & Recommendation

Key Takeaways

Case Analysis Benihana of Tokyo

7/28/2014

Table of Contents

1935

1st Benihanas restaurant chain in Japan

1958

Introduction of Hibachi table arrangement

1964

Entry in US at West Side, NY

1966

2nd restaurant chain at East Side, NY

1967

3rd restaurant in Chicago; Big Blockbuster

1969

4th & 5th restaurant opened in SF and Las

Vegas. Started franchising the unit

1970

Opened Benihana Palace. Discontinued

franchising scheme

1971

Bill Susha joined Benihanas management

1972

15 units in US (9 owned, 5 franchised, & 1

JV). Grossed revenue over $12 mio per year.
Considered future expansion

Case Analysis Benihana of Tokyo

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Benihana of Tokyo in Years

Americans and Their Eating Behavior

Enjoyed eating in
exotic surroundings

Deeply mistrustful
of exotic foods

Enjoyed watching
their foods being
prepared

Case Analysis Benihana of Tokyo

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Problems at the Restaurant Industry in the United States

High labor
cost

Availability

Limited seating capacity

Food storage and food
wastage
Contribute significantly to
the overhead cost of the
typical restaurant

Case Analysis Benihana of Tokyo

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Contributed
30-35% to
total
operating
expense

Introduced hibachi table

arrangement

Simplified menu (Middle

American entrees)

Keep labor cost low at

a level of 10-12%

Virtually no waste

Minimize flow time

resulted to higher
turnover rate

Cut food costs to

between 30-35%
depending on the price
of meat

Higher utilization and

throughput due to high
turnover rate

Lower overhead costs

Japanese historical
authenticity
Hire two crews of
Japanese carpenters to
keep authenticity
Decorations, foods,
and chefs are all
Japanese

Creating unique business model is the key for Benihana to win the market!!!

Case Analysis Benihana of Tokyo

7/28/2014

How Benihana responded Americans eating behavior and

problems faced by the restaurant industry in the United States

The 70s Benihana Business Model

Unique positioning is reflected on its chosen business model

Value Proposition
Theatre of Stomach
Japan historical authenticity
Simplicity in operational

Channels
Owned restaurant and franchise (later stopped in 1970)
Outstanding visual ads through newspaper and magazines

Case Analysis Benihana of Tokyo

Business travellers
Leisure customers

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Customer Segment

The 70s Benihana Business Model

Unique positioning is reflected on its chosen business model

Revenue Streams
Beverage sale through lounge and Food sell from Hibachi
Franchise system

Key Resources

Case Analysis Benihana of Tokyo

Personal assistance through full service restaurant system

Co-creation by using customer feedback

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Customer Relationship

Restaurant physical asset

Human resources: Japanese chefs and other staffs

The 70s Benihana Business Model

Unique positioning is reflected on its chosen business model

Restaurant operation and management

People development
Competitive compensation and benefit
Creative marketing

Key Partnership
Raw material vendors
Japanese carpenter

Cost Structure
Restaurant cost: raw material, salary, bonuses, creative marketing
Initial investment on Japanese style interior

Case Analysis Benihana of Tokyo

7/28/2014

Key Activities

10

The Story of Benihana

The 70s Benihana Facing Issues

Detailed Analysis

Conclusion & Recommendation

Key Takeaways

Case Analysis Benihana of Tokyo

7/28/2014

Table of Contents

11

Benihanas Issues in 1970s

Benihanas business model

required approximately 30
people who are all Oriental

High initial investment

2

Each new unit costs Benihana

a minimum of $300,000.

Use of Japanese authentic

material
3

High construction costs. Every

items used on construction
were imported from Japan

Future expansion
4

Find the right formula for future

expansion was a difficult task
for Benihana

1. What is the right formula for

future expansion of Benihana?
Branching out into the new
products concept?
Branching out into new
geographic areas

2. Is Benihana really on the

forefront of a trend of the future?
Or in other words, should
Benihana emphasize restaurant
operations only?

Case Analysis Benihana of Tokyo

7/28/2014

Limited supply of skilful staff

12

Capacity problem
due to authentic
Japanese materials
and people

The Restaurant as
a process

Benihana Value
Proposition: food as
a Broadway Show

Case Analysis Benihana of Tokyo

7/28/2014

Our Hypothesis

13

The Story of Benihana

The 70s Benihana Facing Issues

Detailed Analysis

Conclusion & Recommendation

Key Takeaways

Case Analysis Benihana of Tokyo

7/28/2014

Table of Contents

14

Benihanas footprint in the restaurant industry in the United States

Steakhouse with a difference: grossed over $12 million per year
Benihana Restaurant Chain Development
Period of 1935 to 1972

6
5
4
3
2
1
1935

1958

1964

1966

1967

1970

1972

Three years of making a systematic analysis of the U.S. restaurant market before
decided to entry the U.S. market
One basic criterion for site selection high traffic!!!

Case Analysis Benihana of Tokyo

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15

Benihanas Operating Statistics

Operates more efficient compared to the other typical US restaurants
Labor Cost
(% of Operating Expense)

Food Cost
(% of Food Sales)

Beverage Cost
(% of Beverage Sales)

30-35%

30-35%
20%

10-12%

US Restaurant

Benihana

Low labor cost was driven

by eliminating the need
for a conventional kitchen

US Restaurant

Benihana

Simple menu resulted no

waste. Cut food costs to
between 30-35%

US Restaurant

Benihana

. Managed to get an
average of 20% of the
beverage sales

Case Analysis Benihana of Tokyo

30-35%

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38-48%

16

Being efficient in operationalizing its restaurant units!!!

Winning Strategy behind Benihanas Success

Effective
Training

Benihana
Comparatively lower
expenditure

Employee
Satisfaction/
Motivation

Customer
Satisfaction

Effective &
Aggressive
Marketing

Ensuring
Benihanas
success by
implementing
7 winning
recipes
consistently

Case Analysis Benihana of Tokyo

Competence
-based
positioning

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Implementation
Strategy

17

Winning Strategy behind Benihanas Success

Implementation Strategy

Penetration in U.S.
market

Positioning: appealing to
a different customer
need

Successful cost
reduction

Hibachi/
teppanyaki
table
arrangement

Effective
utilization of
space

Implementation
Strategy
Site
Selection

Simple
management
structure

Economized
menu
choices

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Helped Benihana in:

Ambience
historically
authentic

Case Analysis Benihana of Tokyo

Effective
implementation
strategy

Collaboration

18

Winning Strategy behind Benihanas Success

Effective Training

Competence
-based
positioning

Effective
Training

Three years formal

apprenticeship training
with certification in
Benihana form of
cooking

Three to six months

course in English
language and for
American manners

Training was a
continuous process

Benihana
Comparatively lower
expenditure

Employee
Satisfaction/
Motivation

Customer
Satisfaction

Effective &
Aggressive
Marketing

Case Analysis Benihana of Tokyo

Implementation
Strategy

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Heavily invest on training

program for chefs

19

Winning Strategy behind Benihanas Success

Employee Satisfaction/Motivation

Competence
-based
positioning

Chances of growth in
organization

Paternal attitude
cultural bonding with
management

Good salaries & perks

like bonus plan

Intangible benefits like

job security & well-being
of employees

Pride serves as a
motivator factor

Effective
Training

Benihana
Comparatively lower
expenditure

Employee
Satisfaction/
Motivation

Customer
Satisfaction

Effective &
Aggressive
Marketing

Case Analysis Benihana of Tokyo

Implementation
Strategy

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Supportive ecosystem
available for all employees

20

Winning Strategy behind Benihanas Success

Effective & Aggressive Marketing

Competence
-based
positioning

Invested 8-10% of gross

sales in advertising

Promoted as an
experience vis--vis an
eatery

Innovative advertising
approach

Outstanding,
contemporary, off-beat
visuals in advertisement

Consistent word of mouth

policy

Effective
Training

Benihana
Comparatively lower
expenditure

Employee
Satisfaction/
Motivation

Customer
Satisfaction

Effective &
Aggressive
Marketing

Case Analysis Benihana of Tokyo

Implementation
Strategy

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Substantial investment in
creative ads & public relations

21

Winning Strategy behind Benihanas Success

Customer Satisfaction

Competence
-based
positioning

Effective
Training

Benihana
Comparatively lower
expenditure

Employee
Satisfaction/
Motivation

Customer
Satisfaction

Effective &
Aggressive
Marketing

Conduct a considerable
amount of market
research
Food quality drives the
satisfaction the most
use of prime grade food

Service & atmosphere

are the other key drivers
for satisfaction

Case Analysis Benihana of Tokyo

Implementation
Strategy

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Knows who customers

really are and what they
really want

22

Whats more for the future?

Aimed to grow faster; however some constraints limited Benihana to do so

Expansion

Operations

No experience of
investors with
regards to restaurant
business

Funds reluctance
to take loan from
financial institutions

No quick service
option

No knowledge of
Japanese culture
and Benihana style
of cooking

Scarcity of surplus
trained staff

Does not have full

control towards
operational

Productivity &
limitation with 2
carpenters

High advertisement
cost & specifically
target towards food

Limited to primary
market in USA
Limited variation in
menu

Case Analysis Benihana of Tokyo

7/28/2014

Franchisee

23

The Story of Benihana

The 70s Benihana Facing Issues

Detailed Analysis

Conclusion & Recommendation

Key Takeaways

Case Analysis Benihana of Tokyo

7/28/2014

Table of Contents

24

Use of 100% authentic Japanese

material. Hibachi table arrangement
keep turnover rate high.

Theatre of the Stomach

Making Japanese cooking tangible.
Customers watch their food
cooked/fun and in time experience.

Case Analysis Benihana of Tokyo

Japanese historical authenticity

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Unique business model helped Benihana stood out from the

competition in the restaurant industry in the U.S.

25

Efficient process flow is one of the keys of its winning strategy

BACK END

Cleaning

Preparation

Precook rice &

soup

Cooking

Salad bar

Customer
arrives

Wait in
lounge

Cooking
show

Seated @
hibachi table

Customer
orders drinks

Customer
eats

Waitress takes
order

Salad, soup, rice &

beverages served

Chef arrive with

cart

Drinks are
served

Check is
prepared
FRONT END

Customer
pays

Customer
leaves

Case Analysis Benihana of Tokyo

Food
Storage

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Chef's cart

26

Economized menu choices helped Benihana to reduce labor costs

and total overhead costs

No waste +
reduce labour
cost

Reduce food
cost to 30-35%
of food sales

Increase profit
margin

Case Analysis Benihana of Tokyo

7/28/2014

BENIHANA OF TOKYO ONLY OFFER FOUR ENTREES

27

Combining storage, task and flow of information in one

Smaller back space size required

Only about 22% of unit total space is back of the house (vs. 30% in
typical the U.S. restaurants)

Efficient kitchen arrangement

Maximizing space usage through careful selection of kitchen equipment

Case Analysis Benihana of Tokyo

Bigger dining room

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Introduction of hibachi table arrangement gave a huge impact in

efficiency of the back-end process

28

Entire space were being used effectively, including cocktail lounge

area. Functioned as temporary waiting area as well as revenue
generator

Temporary waiting area

Sell beverage while waiting

Enlarge restaurant capacity

Case Analysis Benihana of Tokyo

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Bar/Lounge

29

Proposed Recommendation

Cost

Operations

Explore potential areas for

further expansions, e.g.
suburb areas
Can go for joint ventures
instead of franchisee (e.g.
with international hotel
chain)
Take funds from financial
institutions. Cash flows were
not an issue for Benihana at
that time
Expanding to international
market mostly South East
Asia market. Focus on mid
to upper class segment
Develop several brands with
different value proposition
e.g. Benihana Signature,
Benihana Oriental Express,
and Benihana of Tokyo

Reduce site cost by

expanding to the suburb
areas
Economize advertisement
cost
Use local building material
for giving shape of Japanese
architecture
Use local available
manpower for carpentry
work
Purchase in bulk for
decoration material to get
more discount
Build workshops in 3rd
country, e.g. Thailand or
Indonesia to produce
Japanese dcor craft as a
new line of business.

Go for quick-service
operation to cater younger
segment
Can go for add-on business
of selling traditional
Japanese stuff in a dedicated
area of restaurant
Introduce variations in menu,
e.g. sushi-on-the-go,
robatayaki, or even udon
Introduce attractive schemes
for females and older
generation
Introduce a complimentary
membership card to offer
special offer package to its
loyal customers
Build local training center to
train local staff

Case Analysis Benihana of Tokyo

Expansion

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To address management concerns, consider to improve current operating model as well

as to further implement cost reduction in several areas

30

Benihanas nowadays
The 70s business model has been adjusted to catch up a massive growth

1970s

2014

Employ only
Japanese chef
trained in Japan

Local chefs are

allowed

Stop franchise

Affordable price for

mainly business
segment

Allow more franchise

Middle up pricing for

middle up class
customers

Case Analysis Benihana of Tokyo

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BUSINESS OPERATIONAL COMPARISON: 1970s & 2014

31

Benihanas nowadays
Menu has been also adjusted to cater more customer segments

2014

Familiar Middle
America entrees
mainly hibachi steak

Traditional & fusion

Japanese food e.g.
sushi, udon,
robatayaki and
kaiseki

Limited number of
menu choice (4 main
dish)

Vast array of menu

choice (more than 60
menu items)

Case Analysis Benihana of Tokyo

1970s

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MENU COMPARISON: 1970s & 2014

32

Benihanas nowadays
Changes in operating model and menu selection required look & feel as well as space
layout adjustment

2014

Keep authenticity of
Japanese style and
material

Modern Japanese
style without
necessarily
Japanese material

Simple and efficient

kitchen

Require additional
sushi station, noodle &
robatayaki equipment
and cold kitchen

Case Analysis Benihana of Tokyo

1970s

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LAYOUT AND LOOK & FEEL COMPARISON: 1970s & 2014

33

The Story of Benihana

The 70s Benihana Facing Issues

Detailed Analysis

Conclusion & Recommendation

Key Takeaways

Case Analysis Benihana of Tokyo

7/28/2014

Table of Contents

34

Key Takeaways from Benihanas Case

2
Do the homework seriously making
systematic analysis for the market

3
Reduce costs on smart way that give more
advantages

Case Analysis Benihana of Tokyo

Have a dream

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Case Analysis Benihana of Tokyo

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