Please read and prepare the Benihana case and answer the following questions:

1. What are the differences between the Benihana production process and that of a typical restaurant?
- In Benihana, food is made in front of customer instead of preparing it in backstage.

2. How are the customer flows different?

Lounge Seating

Gettign drinks ready

Handing over mewnu

Serving drinks

Taking order

Chef setup ( in kitchen)

Chef wheel in stocks

Prepration at table

Food serviced , eaten at table

Desert serviced

Caheque delivered

Payment collected

Normally a customer can come, have dinner and go back in 45 minutes. The average customer
turnover time is an hour and in slow times it can go up to one hour and thirty minutes.

3. Where are the inventories held?

Backstage

4. Examine the production system in detail. What are the major design choices which generate operating
efficiencies?

The strategies used to achieve “Operational Excellence” have been listed below: -
1. Less number of offering - No frills menu reduced the variability of the food served. If a
formal look is given to the menu, it consisted only three items for main course food. As
Rocky analysed food wastage was a major problem in restaurant business, he decided to keep
 his menu short and concise. By doing this he almost turned it to a “No Waste” business. Also
he was able to cut food cost to 30-35% of food sales depending on the prices of the meat.
2. Increased Space Utilization -
Generally in normal restaurant, around 30% of the total restaurant area is used as „Back Area”. It
means that this area is not being used as revenue generating space. Being incorporated hibachi table
concept, the back area reduced up to 22% of the total restaurant area. This led to increased revenue
due to extra space added for main stream of the business.
3. Low Cost Operation -
Low labour cost: - By incorporation hibachi table concept, the need for waiter and convention
kitchen has been removed. Now the food is cooked in front of the customer who can cater two tables
each having maximum of eight customers. Due to this, the labour cost has gone down to 10-12% of
the gross sale.

Low Food Cost: - Keeping its menu up to three kinds of the meats, Benihana has been able to reduce
the variability of its services. Due to this, storage and freezing cost has been reduced. Also inventory
turnover would be very high leading to less wastage. Standardised services can be referred as
economy of scale as same kind of food is prepared time and again. This leads to decreases average
per unit food cost and hence reduced total cost. Benihana keeps its food cost around 30-35% of total
sale as compared to 38-48% of industry average (Exihibit1).

4. High Customer Turnover Rate -

There are many like removing the time taken by waiter to serve the food, time taken in ordering the
food, also order queuing as separate chefs at each table. This leads to reduced dining time and
increased revenue.
5. Use of Effective Advertising Policy -
So it spent 8-10% of gross sales on advertising. It had clear focus on creative and innovative
advertising style. Being in business of tangible goods, it focused its ads on intangible things like
publishing eye catching visuals. This led to better connectivity to consumers.

5. Compare Benihana’s operating ratios with those of a typical service restaurant.

6. How much does a typical Benihana restaurant make in 1 year?

7. Given the opportunities facing the firm now, which one or ones should it exploit?