BENIHANA OF TOKYO
Service Operations Management
Group No:1
Akshit Mathur | 13P004
Robin Bansal | 13P035
Manu Mehrotra | 13P084
Amitabh Gautam | 13P123
Siddharth Jain | 13P173
Rohit Thakur | 13P229
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 restaurants 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?........................................................................................5
How does Benihana cost structure differ from that of a typical sit-down restaurant.........................6
Calculate the Chefs Annual Wages for Chicago unit.......................................................................7
Determining the profit after tax for Chicago unit..............................................................................8
Discuss the Service Characteristics and Concepts...........................................................................10
Management Concerns....................................................................................................................12
Analysis..........................................................................................................................................12
Recommendation............................................................................................................................13
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What is Benihana Concept?
Benihanas 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
Non-Conventional Kitchen
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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 Chefs 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 Dcor
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 chefs time
Service Package:
Supporting facility:
Teppanyaki table arrangement
Large Bar
Facilitating goods:
Authentically detailed Japanese Country Inn Dcor
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
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