Case summary The case is about Benihana of Tokyo (BOT), a Japanese style steak house restaurant chain and

its rise to success in the USA market. The case provides insights on how Rocky (the founder of Benihana, USA) transformed his dream into reality by implementing well thought out restaurant model wherein he integrated Japanese essence with American food style. Other aspects the case included were around Benihanas background, business strategy and expansion, operation model, etc. Benihana enjoyed a unique niche in the market, with traditional Japanese style restaurant offering American style food. Their main attraction is offering familiar food, high touch customer service and new concept of preparation and serving food. The novel concept of Hibachi table, not only reduced the overheads associated with conventional kitchen but also gave patron an unique food preparation show with unusual amount of attentive service.

Benihana is a steakhouse with food cooked in front of the customers by Japanese chefs and the decorated in an authentic Japanese setting. Operation advantages: Benihana has several operation advantages: firstly, by eliminating the need for a conventional kitchen with hibachi table arrangement, the restaurant keep labor cost low while providing attentive service. Secondly, the dining space was increased. Thirdly, by reducing the menu to three simple Middle American entrees, the restaurant solved the problem of food storage and wastage. Introduction: Benihana now has a chain of 15 units across the country. Nine were company-owned and five were franchised. The decision to stop franchising was made because franchise investors are novice and they have problems relate to native Japanese staff. It is also more difficult to maintain control over the franchisee. Sales and training: Benihana also included the bar/lounge in the restaurant. The beverage sales accounts for 30%-33% in the Benihana East. Benihana choose business location with high traffic. There are around 30 orient employees in each unit. Benihana took a paternal attitude toward all its employees which results in a low turnover rate of staff. Advertising policy: Rocky consider creative advertising and public relations vital to the success of business. They invested 8%-10% of gross sales on advertising. Future expansion: The company's biggest concern is how to expand. They are constrained by availability of staff since they need lots of Asian servants in the restaurant. They also concerned about the cost factor. Thus the firm is considering secondary markets as those smaller units offer fewer headaches and generate nice profits.

The firm is also considering going public, but they have to consider the amount of control and autonomy they have to give up when going public.

Examine the Benihana service system in detail. A unique Japanese concept is used to deliver a food service to customers by serving freshly prepared food at the table by a chef using three basic menus. Since only fresh ingredients are used, storage is reduced to a minimum, i.e. 22% (including non-food areas as employee dressing room and office space) of total space compared to 30% in normal restaurants. The production flow is therefore very short, and limited to food being moved from the cooler room to the tables and being prepared at the table. Supplier delivers inventories to organisation To cold room to To tables 1 Chef and 1 waiter per table

What are the major design choices which generate operational efficiencies at Benihana?

What are the key ingredients of Benihanas success ?

Compare the operating ratios(& cost structure) of benihana with an average restaurant

Does the process design contribute to the success of Benihana? If so how?

Banihana strategy

Inputs Food & Beverages Labor Customers Capital Debt Management

Processes Food & Beverage Preparation Store Construction Customer consumption of drinks & meals Customer payment Employee hiring & training Marketing

Outputs Revenue & profit Equity value Credit rating Customer satisfaction Employee satisfaction

Elements of the Benihana concept: Low costs (labor, food & beverage, rent) Aggressive promotion Authentic japanese atmosphere Also: Decreased labor costs Decreased food costs Decreased beverage costs Decreased rent Increased construction costs

Benihana Labor Food Beverage Rent Promotion Construction 10-12% 30-35% 20% 5-7% 8-10% Somewhat More (because of Japanese authenticity)

Typical 30-35% 38-48% 25-30% 5-9% 0.75-2.0%

Benihana process analysis

Get Hungry
Decide to go to Benihana

Drinks

Food

Go to Benihana

Pay

Yes

Satisfied?

No

Never Return

Important parameters: How many chefs and waitresses there are How frequently customers arrive at the restaurant How quickly customers are seated, either in the bar or in the dining area How frequently the customers order and consume drinks How quickly drinks are served How long it takes to prepare the meal at the grill How long it takes for the customers to eat their meal How long it takes for customers to pay and leave the dining area.

Assume that the dining process takes 60 minutes, and that we want customers in the bar for 24 minutes. Consider three scenarios: Bar - 8 seats; Dining area - 40 seats Bar - 16 seats; Dining Area - 80 seats Bar - 48 seats; Dining Area - 120 seats

Bar - 8 seats; Dining area - 40 seats It takes 60 minutes for one customer to eat dinner, and there are 40 seats in the dining area. Therefore 40 people eat every 60 minutes (throughput). On the average a dinner cycle is completed every 60 minutes/40 people = 1.5 minutes per person (cycle time). We know that dinners are processed in batches of 8, so on the average a table of 8 finishes every 12 minutes. This means that the 8-seat bar must empty every 12 minutes. The "ideal" time for someone to remain in the bar is about double that time (because this will be just after the second drink has reached the table).

Therefore, it would appear that the ratio of 0.2 (8 bar seats to 40 dining seats) is too small.

Bar - 16 seats; Dining Area - 80 seats It takes 60 minutes for one customer to eat dinner, and there are 80 seats in the dining area. Therefore 80 people eat every 60 minutes (throughput). On the average a dinner cycle is completed every 60 minutes/80 people = 0.75 minutes per person (cycle time). We know that dinners are processed in batches of 8, so on the average a table of 8 finishes every 6 minutes This means that the 16-seat bar must empty every 12 minutes. Therefore, it would appear that the ratio of 0.2 (16 bar seats to 80 dining seats) is too small. In fact, all this does is double the restaurants capacity, and the bar time remains at 12 minutes. The only benefit is that 16 seats might allow the host or hostess to do a better job of assembling groups of eight

Bar - 48 seats; Dining Area - 120 seats it takes 60 minutes for one customer to eat dinner, and there are 120 seats in the dining area. Therefore 120 people eat every 60 minutes (throughput). On the average a dinner cycle is completed every 60 minutes/120 people = 0.5 minutes per person (cycle time). We know that dinners are processed in batches of 8, so on the average a table of 8 finishes every 4 minutes. To send 8 people into the dining area every 4 minutes means that the 48-seat bar must empty every 24 minutes. Perfect! Given our assumptions regarding the cycle times of the bar and the dining area, it would appear that a ratio of bar seats to grill seats of 0.4 is about right. (In our case 120:48, but the ratio is more important than the specific numbers.)