Firas Ahmed / BENIHANA SIMULATION ANALYSIS 1

MANAGING Service Operations , M921

Facility : Alain Gervaix

By : Firas Ahmed 309209

Benihana Simulation Analysis

Monday, March 9, 2015

Word Count : 2093

Table of Contents
BENIHANA SIMULATION ANALYSIS 2

Introduction.................................................................................................................................................3

Discussion of the decision criteria...............................................................................................................3

Presentation of the simulation results (best strategy).................................................................................12

Analysis of simulation results....................................................................................................................12

Reflections on lessons learned...................................................................................................................14

References.................................................................................................................................................15

List of Tables

Batching Dining room customers…………………………………………………………………4

Summary with choosing 63 bar seats and 13 Tables……………………………………………..5

Changing dining time……………………………………………………………………………...7

Summary of Boost Demand with Advertising and Special Programs…………………………….9

Type of batching during different dining hours………………………………………………….11

A Scenario chosen as best strategy………………………………………………………………12

List of Figures

Batching Dining room customers…………………………………………………………………4

Changing dining time……………………………………………………………………………...7

Benihana Simulation Analysis

BENIHANA SIMULATION ANALYSIS 3

Introduction

Benihana is a Florida-based American restaurant company that franchises 116 Japanese

restaurants in the world. Trading with the brand, Benihana Teppanyuki, Sasser and Ernst (2013)

assert that this restaurant is based on the principal of cooking in an open-air kitchen. The

Benihana restaurant is renowned for its candid services, and what most pleases customers is their

decision to cook meals in the open, meaning that customers are able to witness how their meals

are prepared. As observed in the simulation by Sasser and Ernst (2013), besides their high

skillful qualities, employees at this restaurant exhibit high interactive standards while attending

customers. It is therefore by no surprise that the Benihana restaurant is doing quite better as

compared to most of otherJapanese restaurants across the world (Cheng, 2013). The Benihana

restaurant’s seating capacity consists of 55 bar seats, and 14 dining tables. This paper will

attempt to find and analyze the simulation by Sesser and Ernst (2013) and then find the best

solutions to optimizing profitability and that can utilize capacity with minimal loss of customers.

With this objective in mind, the decisions in this paper will be based on elements such as bar and

dining area size, batching (seating people according to standards with 8 pax), budget and type of

advertisement, and dining hours. Because each decision is critical in that it can affect all

variables, this paper will be very careful in analyzing chosen strategies so as not to miss the

desired objective.

Discussion of the decision criteria

In the Sesser and Ernst (2013) simulation, the first decision criterion is based on whether

to adopt Benihana’s standard of batching or adopt a different method. The Benihana seating

arrangement is unique in that batched guests can also be arranged to seat together with complete
BENIHANA SIMULATION ANALYSIS 4

strangers and dine from the same table. As simulated, customers are sharing the table and the

chef present is responsible for serving food in this table.

Name of Nightly profit Total Revenue Bar Revenue Use Batching

scenario Revenue Dinner

Scenario 3 $201.58 2,909.82 871.32 2,038.50 No
Scenario 2 $201.58 2,909.82 871.32 2,038.50 No
Scenario 1 $121.80 3,155.34 403.34 2,752.00 Yes

Figure 1. Batching Dining room customers

Exhibit 1: scenario with the option of batching and no batching (Sesser & Ernst, 2013).

If we go by the figures from a 20-day simulation in exhibit 1, then it is explicitly clear that

Benahina restaurant stands the best chance to benefit high revenues with batching. It will in

particular benefit high revues for food and nightly profits. Batching proves to be the best deal

for the restaurant as far as profit generation and less loss of customers is concerned.

Designing the number of bar seats against dining tables is another challenge witnessed in

the Sesser and Ernst (2013) simulation. Going by the batching policy, it means that customers
BENIHANA SIMULATION ANALYSIS 5

would have to seat at while taking their drinks. As simulated, Benahina restaurant has 55 bar

seats and 14 tables of 8. This small capacity is therefore a challenge to the restaurant as it cannot

accommodate most of the customers that would want to come in for either meals or for a drink.

A solution can however be reached by manipulating these variables, and as a result get some

profitability and establish loyal customers. As part of the solution, this paper will evaluate

whether adding more tables to the bar would bring more profit than adding more bar seats while

decreasing the number of tables.

Bar usage Dining Room usage

Drinks sold 276.81 Dinners served 271.5

Average Customers 12.26 Tables served 34.3

Maximum Customers 58.5 Average tables in use 8.18A

Average Wait 20.0 Average Dining Time 70.17

Maximum Wait 39.95 Average customers 64.17

Lost customers 27 Maximum Customers 104

Avg. Drinks/cust 1.67 Average Utilization 57.11%

Revenue $3,268.62 Nightly Profit $155.61

Exhibit 2: summary with choosing 63 bar seats and 13 Tables (Sesser & Ernst, 2013).

As it can be seen from the above exhibit 2, using more tables and less bar seats leads to

the restaurant making a loss. On the other hand, when the number of bar seats is increased and

tables decreased, the restaurant ends up making a profit. When the number of seats and tables is

kept maximum the restaurant ends up making a profit of about 1 to 2 dollars but it ends losing

revenue from dinner.

BENIHANA SIMULATION ANALYSIS 6

Despite this scenario, the restaurant will on the other hand make a profit in the bar. In

other words, the choice of increasing bar seats to 63 and de creasing the number of tables to 13 is

an illustration that 55% of space is utilized in the restaurant resulting in 27 customers being lost

while waiting. Because the average waiting time is just 20 minutes, customers would have

opportunity to consume drinks as they keep on waiting to be served. As opined by Maister

(2005), one implication by this scenario is that these customers would be offered service and

products that would ultimately eliminate their boredom due to over waiting for main service.

The third challenge is all about the average dining period of guests at Benahina

restaurant. Typically, at this restaurant the average dining period per guest is 60 minutes. The

restaurant is scheduled to operate from 5.00pm to 10.30 pm, and peak hours start from 7.00 to

8.00pm. As suggested by Bates (2011), it would be good for profit maximization to set a

standard dining period even though it might upset some customers.

Scenario Nightly Revenue Revenue Dinning Dining Dining time (open

Name profit Bar Dinner Time (open time (open 8pm-1030pm)

7pm) 7pm -8pm)

Scenario 12 $218.39 $3,215.96 $239.96 $2,976.00 45 mins 45 mins
Scenario 11 $217.85 $3,214.17 $238.17 $2,976.00 45 mins 45 mins
Scenario 10 $217.85 $3,214.17 $238.17 $2,976.00 45 mins 45 mins
Scenario 9 $61.84 $3,090.21 $453.71 $2,636.50 45 mins 75mins
Scenario 8 $94.86 $3,113.95 $403.45 $2,710.50 45 mins 68mins
Scenario 7 $110.91 $3,102.69 $3,102.69 $336.69 45 mins 60 mins
Scenario 6 $195.15 $3,203.83 $283.83 $2,920.00 45 mins 50 mins
Scenario 5 $154.28 $3,186.61 $368.61 $2,818.00 75 mins 45 mins
Scenario 4 $173.43 $3,190.93 $321.93 $2,869.00 68 mins 45 mins
Scenario 3 $186.01 $3,186.20 $277.20 $2,909.00 60 mins 45 mins
Scenario 2 $216.95 $3,220.50 $252.50 $2,968.00 50 mins 45 mins
Scenario 1 $218.59 $3,216.63 $240.63 $2,976.00 46 mins 45 mins
BENIHANA SIMULATION ANALYSIS 7

Figure 2. Changing dining time

Exhibit 3: Changing Dining Times during Operations (Sesser & Ernst, 2013).

Looking at the figures in exhibit 3, it is evident that the restaurant’s standard dining

period of 60 minutes generates a substantial figure of profit of $121.80. Should the restaurant be

opened just before the normal time of 7.00pm, it would be possible to maintain dining for a

period of 60 minutes.

Coming to peak hours, increasing time the restaurant will make a profit of more than 195

dollars. But if the dining is increased to 75 minutes, the restaurant will still make some profit of

about 100 dollars. However, as argued by Kimes, Mattila, Noone and Wirtz (2007), limited

dining hour would cause customers to be dissatisfied with the move as well to the quality of food

served. As from 8pm and above, if 45 minutes is adopted the restaurant will make a profit of 217

dollars. This outlines a very good figure but if the dining period is increased to 75 minutes from

45 minutes, the restaurant will make more profit.

BENIHANA SIMULATION ANALYSIS 8

The next challenge for profit maximization at the restaurant is concerned Challenge is

concerned with boost demand with Advertising and Special Programs. Adoption of different

strategies represents different results to the restaurant’s situation and performance.

Scenario Nightly profit Total Revenue Revenue Advertising Advertising

Name Revenue Bar Dinner budget Campaign Opening

Time
Scenario $448.50 $4,687.06 $581.56 $4,105.50 2.5 Happy hour 5pm

12
Scenario $512.51 $3,974.18 $354.18 $3,620.00 1.5 Happy hour 5pm

11
Scenario $452.69 $3,502.41 $269.41 $3,233.00 1 Happy hour

10
Scenario $194.99 $2,139.58 $170.08 $1,969.50 0 Happy Hour 7pm

9
Scenario $353.34 $2,540.68 $195.18 $2,345.50 0 Happy Hour 6pm

8
Scenario $442.04 $2,820.24 $204.24 $2,616.00 0 Happy Hour 5pm

7
Scenario -$89.72 $1,900.84 $226.77 $1,674.08 0 Discount 7pm

6 Promotion
Scenario $16.92 $2,253.92 $260.24 $1,993.68 0 Discount 6pm

5 Promotion
Scenario $64.39 $2,495.92 $272.32 $2,223.60 0 Discount 5pm

4 Promotion
Scenario $106.54 $2,196.27 $226.77 $1,969.50 0 Awareness 7pm

3
Scenario $261.65 $2,605.74 $260.24 $2,345.50 0 Awareness 6pm

2
Scenario $341.76 $2,888.32 $272.32 $2,616.00 0 Awareness 5pm
BENIHANA SIMULATION ANALYSIS 9

1
Exhibit 4: Summary of Boost Demand with Advertising and Special Programs

As observed in the above exhibit 4, the restaurant can make some profit by spending

nothing on advertisement at 5 pm. However, if the restaurant decides to spend nothing on

advertisement with awareness at 7pm, it will result in a loss more than 160 dollars. This will

mean that awareness is not a good thing as far as profit maximization is concerned.

On the other hand, operating on discounts does not help anything between 5pm to 7pm.

The best hours for this restaurant is the happy hours, where it can make a lot profit at the opening

hours of the restaurant because normally this is the time people retire from their works and

would find it necessary to nice themselves at a restaurant. Going forward, the profit keeps on

decreasing, but it still remains to be a significant figure.

Finally, it can be said that happy hours are the best deal for the restaurant, and it would be

therefore wise to start with advertising. By spending a normal budget of 1, the restaurant will

make a profit of 452 dollars. But if the budget is increased from 1 to 1.5 times, the restaurant will

make a profit of 515 dollars. Though the restaurant can make more profit by increasing the

normal budget to more 2.5, but it does not exceed the one made by the normal 1 budget. The

best thing here is to balance the budget of advertising so as to the profit throughout the timings.

The fifth challenge is to do with usage of different types of batching but at different

dining hours. The batching in different number of parties is a plan that is strategic to arranging

seating in the restaurant so as optimize profit at the restaurant without affecting other variables.

Scenario Nightly Total Revenue Revenue Batching Batching Batching

Name profit Revenue Bar Dinner Type( ope type(open type(open

n 7pm) 7pm- 8pm-

8pm) 10.30pm)
BENIHANA SIMULATION ANALYSIS 10

Scenario $121.80 $3,155.34 $403.34 $2,752.00 Tables of Tables of Tables of 8

12 8 8
Scenario $19.29 $3,030.04 $463.54 $2,566.50 Tables of Tables of Tables of 8

11 4-8 4-8
Scenario10 -$162.81 $2,910.14 $761.14 $2,149.00 none none 4 share a table
Scenario 9 -$153.94 $2,852.78 $629.28 $2,223.50 none none Tables of 8
Scenario 8 -$157.26 $2,878.47 $686.47 $2,192.00 none none Tables of 4-8
Scenario 7 -$188.71 $2,929.95 $871.95 $2,058.00 4 share none none

table
Scenario 6 -$142.83 $2,977.92 $829.92 $2,148.00 Tables of none none

8
Scenario 5 -$165.19 $2,944.77 $832.27 $2,112.50 Tables of none none

4-8
Scenario 4 -$86.04 $3,060.43 $820.93 $2,239.50 none 4 share none

table
Scenario 3 $80.37 $3,258.72 $713.72 $2,545.00 none Tables of none

8
Scenario 2 -$2.16 $3,163.30 $772.30 $2,391.00 none Tables of none

4-8
Scenario 1 -$201.58 $2,909.82 $871.32 $2,038.50 none none none

Exhibit5: Type of batching during different dining hours (Sesser & Ernst, 2013).

In this simulation, no batching is a good idea because it ends up resulting into high losses.

When the tables of 8 are filled, the restaurant ends up making up profit in all of the timings.

However, if we critically analyze filling of tables of 8 from 7pm to 8pm, the restaurant will make

profit but this is at the end of the restaurant. The best deal here is to choose the table of 4 or no

batching because the restaurant needs to make profit and at the same time fill empty tables.
BENIHANA SIMULATION ANALYSIS 11

Presentation of the simulation results (best strategy)

Nightly profit $ 684.75

Total Revenue $ 4817.14
Revenue Bar $ 345.14
Revenue Dinner $ 4472.00
Bar Size 63
Dining Time(open to 7pm) 45 minutes
Ding time(7pm-8pm) 45 minutes
Dining Time(8pm- 65 minutes

10.30pm)
Budget 2.5
Advertising campaign Happy hour
Restaurant opening time 5.00pm
Batching type(open 7pm) Table of 8
Batching type (7pm-8pm) Table of 8
Batching type(8pm-10.30) Table of 8

Exhibit 6: A Scenario chosen as best strategy (Sesser & Ernst, 2013).

Analysis of simulation results

From the various exhibits as demonstrated in this paper, it is clear that there need to be

careful consideration in making various decisions in regards to different variables. In batching

decisions, I propose the opening of the restaurant to be made of 8 tables immediately after

opening of the restaurant.

It clear from the above statistics that the restaurant can make a lot of profit it batching people

into groups of 8 is made, as this would maximize profit at the same time saving space for chairs.

I go for different times with no batching, but if the restaurant adopts tables of 4 to 8 and 4 people

sharing a table there would be no profit. I have chosen different with no batching, tables of 4 to

8 and 4 share a table.

BENIHANA SIMULATION ANALYSIS 12

Coming to batching type from 7pm to 8pm, I propose for the adoption of 8 tables because

this time represents the peak time and there would be more people visiting. So, batching people

together in groups of 8 would result to the restaurant making a lot of profit. If by any case the

restaurant goes for other selections such as no batching or perhaps tables of 4 to 8, it is evident

from the above figures that it will make no profits.

In Batching timing from 8pm to 10:30pm, I propose the adoption of tables of 8 because

as observed from the above statistics, it will lead to profit maximization. If the restaurant decides

to for the other selections, it will end up not making any profit.

On bar decision, I propose that the restaurant need to balance between the bar and dinner

so as to maximize profits. However, I would propose that the size of the bar to be slightly

increased due to the fact its operations are quick and generate profit much quicker compared to

what is generated by a demanding dinner service. Dinning consumes a lot of space and time as

compared to what is spent on drinking at the bar. This is the reason why it is important to add

more chairs than tables in the bar than in the dining room.

Moving to making dinning decisions, I see it necessary for the restaurant to choose

minimum time in the opening hours so to make more profit as well as allowing more people to

dining together. Coming to peak hours, I propose 45 minutes so as to give more people a chance

to dinner together. From 8pm onwards, I propose the same amount of minutes so as to maintain

this kind of profit maximization.

On advertising Decision, the best decision for the restaurant is to try hard and keep the

budget on advertising at 2.5 X and maintain it on the happy hours at 5pm. Because in most cases

people finish work at 5pm, the restaurant is poised to receive more customers during this period
BENIHANA SIMULATION ANALYSIS 13

of time. So, it would be prudent for the restaurant to put more emphasis on this period so as to

attract more customers who are coming out of their jobs at about 4pm to 5pm.

Reflections on lessons learned

As seen in the simulation by Sesser & Ernst (20130, it is good to analyze and manipulate

different variables within a business enterprise so as to maximize profit. Though some of the

chosen decisions do not reach the highest results as desired, the deal represents a clever move

when looking at long-term objectives like maintain loyal customers. Graffin (2012) supports this

idea by pointing out that a business can’t be successful without the need to maintain loyal

customers happy.

The paper has also led to the opportunity to learn that Benahina restaurant is based on the

principal value added service to market their image, and at the same time be able to maintain

their customer base. The restaurant seem to borrow heavily from Frei and Hajim(2006) who

assert that it is of great importance for stuff members to show gratitude and high standards of

morals to customers. This is a strategy that attracts and retains customers.

References
Bates, D. (2011). Cheque please! New York restaurants cut waiting times by setting time limits

on diners. Daily mail [UK]. Retrieved March 8th, 2015, from

http://www.dailymail.co.uk/news/article-2030177/New-York-restaurants-tackle-wait-

times-setting-time-limits-diners.html
BENIHANA SIMULATION ANALYSIS 14

Cheng, V. (2013). Unique selling proposition vs. market differentiation. Retrieved March 8th,

2015, from

http://www.victorcheng.com/unique-selling-proposition

Griffin, A. H. (2012). Keeping new customer close, and your loyal customers even closer.

Retrieved March 8th, 2015, from

http://www.simplybusiness.co.uk/knowledge/articles/2012/08/2012-08-07-importance-

of-customer-loyalty/

Kimes, S. E., Mattila, A. S., Noone, B. M., & Wirtz, J. (2007). The effect of meal pace on

customer satisfaction. Cornell Hotel and Restaurant Administration Quarterly, 48(3),

231-245. Retrieved March 8th, 2015, from

http://bschool.nus.edu/departments/Marketing/Jochen%20papers/cq%202007.pdf

Maister, D. H. (2005). The psychology of waiting lines, 1-9. Retrieved March 8th, 2015, from

http://davidmaister.com/articles/the-psychology-of-waiting-lines/

Sasser, W. E., & Ernst, R. (2013). Operations Management Simulation: Benihana (version 2)

[Computer Simulation]. Boston, MA: Harvard Business School Publishing.