group 1 benihana of tokyo

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Benihana of Tokyo SOM | Group 1

Executive Summary

Raised in Tokyo, Hiroaki (Rocky) Aoki managed to launch his first business in the United States.

Heopened a Chinese-Japanese cuisine restaurant offering a unique experience and attention to its

customers. The food process was transformed to an exceptional food experience .

He opened a chain of total 15 restaurants across US with some of them being corporate owned and

others franchised or with joint venture with leading hotel chains. Hiroaki Aoki proved to be a

pioneer in the restaurant industry.

The way he succeeded was through complete overhaul of restaurant‘s environment, financial

operations and service structure. By decorating his restaurant with Japanese elements and

employing Japanese chefs as showmen, the perception of dining at Benihana changed. The new

perspective was further supported by reducing the kitchen-room as to have more space for tables

and fully adapt the Japanese philosophy as well as creating an unparalleled image for his business.

He was able to cut both the labour and food cost and was able to lower wastage by following

Hibachi Table arrangement.

Due to the uniqueness of the Benihana restaurants, franchise as a growth strategy brought upon

many problems: starting from a lack of communication between managers and the Japanese

speaking personnel, to inexperienced managers in franchised businesses abroad. This led Hiroaki

Aoki to reconsider his options and deciding to expand through other models (joint-venture and

hotel-corporation) and in other areas of food industry (retail and quick service food sector).

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Table of Contents

Executive Summary .................................................................................................................. 1

What is Benihana Concept? ....................................................................................................... 3

What is the process flow on a busy night? .................................................................................. 4

How does Benihana cost structure differ from that of a typical sit-down restaurant ....................... 5

Calculate the Chef’s Annual Wages for Chicago unit .................................................................. 6

Determining the profit after tax for Chicago unit ......................................................................... 7

Discuss the Service Characteristics and Concepts ....................................................................... 9

Management Concerns............................................................................................................ 11

Analysis ................................................................................................................................. 11

Recommendation.................................................................................................................... 12

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What is Benihana Concept?

Benihana’s concept is based on an authentic Japanese atmosphere. The use of American food

favourites (chicken, steak, etc.) combined with the “Hibachi” method of presentation makes this

restaurant very different from others. Benihana enhances the experience of their customers by

treating the chef as a showman and having a different production line to service (ibid.). The front

stage is the largest part of the operations with the chef cooking and serving the dishes together with

the waiter, whereas the kitchen preparation is a very small part of their process.

Major facts about Benihana are:

Benihana is a restaurant chain founded in 1964, by Hiroaki (Rocky) Aoki

Consisting of 15 restaurants in US by 1972

Gross Sales of the entire chain is about $12 million

Offers a limited menu and targets Business person, Tourist visitors and White Collar

Targets high traffic area and spends heavily on advertisements and promotion

Targets rapid growth by collaborating with various hotel chains and opening quick service

stations.

Key focus Elements for Benihana include:

Optimum space utilization

Hibachi Table arrangement

Waste management

Historical authenticity

Location advantage

Basic Features include:

Limited Menu

Offers only three simple Middle American entrees: steak, chicken & shrimp

Keeps cost of food and wastage to bare minimum

Minimal inventory

Minimize flow time

Keeps turnover rates high, thus high utilization and throughput

Reduces wait time for customers

High Space Utilization

High proportion for productive dining space

Only 22% of the total space of a unit is back of the house

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Non-Conventional Kitchen

Follows Hibachi Table Arrangement, thereby providing high customer attention

Reduced Labor Cost and the additional cost of kitchen space

Infrastructure

Infrastructure is specially imported from Japan, thereby giving Historical Authenticity

Good atmosphere and authentic ambience

We have simulated the environment for all the clients involved in the simulation software

to understand the process and its performance.

What is the process flow on a busy night?

Process flow includes the following steps:

Customer enters the restaurant area

He then enters the Bar and orders for drink if required

Then the customer moves to the dining area and gets seated

Waitress takes the order and presents some salads and soup

Chef arrives after that and starts cooking as per the order

Customer enjoys the food

Customer pays for the food and then leaves

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How does Benihana cost structure differ from that of a typical

sit-down restaurant

Typical Restaurant:

Benihana:

Comparison of Cost Structureof a Typical Restaurant and Benihana:

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Calculate the Chef’s Annual Wages for Chicago unit

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Determining the profit after tax for Chicago unit

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Net profit before income tax = 21.5% of $1.3 million = $279,500/year

Profit after Tax (assuming tax rate of 33% in US) = $187,265/year

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Discuss the Service Characteristics and Concepts

Service Characteristics:

Intangibility: Authentically detailed Japanese Country Inn Décor

Simultaneous Production and Consumption: Food was prepared in front of the

customers by Japanese chefs

Proximity to the customer: Customer involvement in the service production process

Perishability: As the Chefs prepare food in front of the customers, hence if the restaurant

does not have enough customers, it leads to perishability of the chef’s time

Service Package:

Supporting facility:

Teppanyaki table arrangement

Large Bar

Facilitating goods:

Authentically detailed Japanese Country Inn Décor

Information:

Limited Variation in Menu

Extensive Marketing

Explicit or Implicit Service:

Customer participation

Reduced waiting time

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SERVICE PROCESS MATRIX:

Due to low Degree of Labour Intensity and low degree of customization, Benihana come into the

“Service Factory” Category

Success Parameters:

Order Qualifiers :

Speed: Fast table turnover

Quality

Skilled and Motivated Workforce

Lost Cost Operations

Low food wastage and storage costs

Low labor costs

High space utilization

Order Winners :

Creative Advertising

High expenditure on Advertising and Public Relations

High quality and customer service

Authentic Japanese atmosphere

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Management Concerns

Franchising

No knowledge of native Japanese style

No experience of Investors w.r.t restaurant business

Future Expansion

Fund availability

Concern about loosing autonomy by taking loans

Manpower constraints

Higher cost and lead time for Japanese construction material

Limited carpenter crew

Catering need of younger generation

Operations limited to primary markets only

Analysis

Franchisee

No knowledge of Japanese culture and Benihana style of cooking

No experience of investors w.r.t restaurant business

Low control over the business operations

Expansion

Reluctance to take loans from financial institutions

Limited carpenter crew

Scarcity of surplus trained staff

Operations

High advertisement and PR cost

Limited variation in menu

No presence in secondary markets and markets outside USA

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Recommendation

Expansion

Explore secondary markets and other potential areas for further expansion

Collaborate with more hotel chains to expand overseas

Go public to secure funds

Employ more staff for further expansion

Operations

Introduce quick service option

Introduce variations in menu

Introduce attractive schemes for female and older people

Cost

Optimize the advertising and PR cost

Use local material for infrastructure

Use local manpower for carpentry work in order to rapidly expand the operations and lower

cost

group 1 benihana of tokyo

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