BENIHANA OF TOKYOBy – Himanshu Saigal

Aamir Ansari

Ahmed Atif Abdulla

Case summary

• Benihana of Tokyo has been started by Rocky in 1964. rocky came to America with his university wrestling team that America would give him more opportunity than his native nation japan.

• Rocky started his business in 1964 with his initial savings of 10000$ and borrowing of 20000$ a firm with chain of 15 restaurants and net worth of 12$ million.

Case summary

• Initial analysis of Rocky: Americans enjoy eating in exotic surrounding but they are deeply

mistrustful of exotic food.

Also people very much enjoy watching their food being prepared.

The biggest problem in this industry in US was scarcity of skilled labor.

Food storage and wastage contribute significantly to the overhead of any typical.

Case summary

• Site selection: as lunch was given importance the sites were being selected where there was high traffic.

• Training: all chefs were highly trained. All were young and certified.

• Control: Papasan and rocky were at the top of the management level. Under there was on V.P. operations, Controller, operations manager and advertising manager used to report him.

• The company spends about 8-10% of its gross sales on creative advertising and public relationship.

Constraints in Future

Expansion

• Franchisee business failure: because many owners do not know about the restaurant business.

• Staff: biggest problem was staff, there were only two carpenters and each unit required 30 staffs out of that 8-10 were trained staff

Difference between Benihana

production and other typical

restaurant?

The “Hibachi Table” concept

Historical authenticity for the building material

Use of space for kitchen is only 22%

Presenting dynamic cooking show to the customers

High number of recommendations and word of mouth

publicity (67%)

Benihana model difficult to replicate.

It gives the customer a unique experience where they interact with the cook and waiter rather than just waiter like in most restaurants. It helps to improve customer intimacy and adds a positive experience.

Limited menu - Food storage/inventory and waste management

costs contribute significantly to the overheads of restaurant

business and Benihana is efficiently able to reduce these costs by

having a very limited menu of just 3 choices. It helps in

reducing inventory. By this it was able to save 30-35% of costs.

Located in High Traffic Places – Benihana chooses their sites in

high traffic places like central business districts with easy

access to residential areas because of their high focus on

lunch and dinner time business.

Simple management structure – Benihana has a very simple

management structure that includes a Manager, an assistant

manager and 2-3 front men.

Benihana’s Operating Statistics

Labour Cost (% of Operating

Expenses)

Food Cost ( % of Sales) Beverage Cost ( % of Sales)

Typical US Restaurant Benihana

10 -12

30-35

38-48

30-3525-30

20

An operational view.

Lounge seatingGetting drinks ready

Handling over menu

Serving drinks

Taking orders

Chef setup

(in kitchen)

Chef wheel Preparation

at tableFood

servedDesert served

Cheque delivered

Payment collected

Production System

• Arrival – Cocktail Lounge, batches of 8 in hibachi table

• Request - 3 Food item menu

• Capability – Chef prepares food directly with customers

within the encounter, reducing variability from waitress

and customer capability to communicate menu.

• Effort- Participate in the cooking process

• Subjective Reference – Customers suggest preferences

while chef is cooking allowing customer more control of

product.

Major Design Choices

• Waiting Time (Bar/ Lounge area) - Increases beverage sales and reduces cost. Convenient waiting time, creates revenue generation from Inventory. 8 sitting together filling up empty seats.

• Cooking - Eliminates needs for conventional kitchen. Needs only 22% of total space vs. 30% of typical restaurant. Hibachi table concept reduced the need of the waiter. Due to this, the labor cost has gone down to 10-12% of gross sale.

• Ordering Food (Reduced menu) - Avoid wasting of food, cutting food cost to 30-35% vs. 38-48%

Major Design Choices

• Advertising - 10% of sales vs. 0.75 to 2%, focus on creative and innovative advertising style

• Staff – Japanese , well trained chefs, reduced no. of

waiters, labour cost 10-12% vs. .30-35% of sales.

• Location – Heavily populated areas to attract for both

lunch & dinner.

Services Kind

• Core Benefit – Food

• Basic Service – Hospitality

• Expected Service – Customization

• Augmented Service – Hibachi Table Concept

• Potential Service – Food Processors

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