Case Study on

Success of Benihana

Group-01, NMP-30, MDI Gurgaon

Value Proposition of Benihana
Introduced hibachi table
arrangement
 Keep labor cost low at a level of
10-12%
 Minimize flow time resulted
to higher turnover rate
 Higher utilization and
throughput due to high turnover
rate
Creating unique business model is the key for Benihana to win the market!!!
Simplified menu (Middle
American entrees)
Virtually no waste
Lower overhead costs
Cut food costs to between 30-
35% depending on the price of
meatn
Japanese historical
authenticity
Hire two crews of Japanese
carpenters to keep authenticity
Decorations, foods, and chefs
are all Japanese
Cost Efficiency Factors

Increase
profit margin

Reduce
food cost to
30-35% of
food sales

No waste + reduce
labour cost
Chef’s Annual Wages for Chicago unit

Benihana (Chicago unit)

No's
Chicago unit revenue $13,00,000
Total Labor 30
Labor cost 10% of sales = $.13million
Manager 1 $15,000
Assistant manager 1 $12,000
Front men 3 3*$9000 = $27000
Total $54,000
Remaining (chef, waitress staff & dishwashers ) 25 $76,000
Annual wage for chef $3,040
production process of Benihana
Customer Food Chef’s Customer
Food Served
Entry Ordering Performance Involvement

• Customer • Customer • Chef appears • Customer • Food is served

Enters to the Orders the with the feedback is to the
Restaurant food among wheeling cart taken and a customers
• Offered a available carrying food feeling of • It takes
seat across choices: Steak, items association in average 45
Hibachi Filet Mignon, • Chef prepares the entire Mins to finish
Table, Bar or Chicken and the food in cooking the dinner for
Lounge area Shrimp front of process is a typical
• Waitress takes customers created to customer
the order and • The food ensure the • Bar and
brings the starts with unique Lounge time is
requested Shrimp as customer excluded
items Starter and experience
can be either
one choice or
a combination
of three
Comparison of Benihana with a typical US restaurant
Comparison of Benihana with a typical US restaurant
 Sno Details $

profit after tax of Chicago unit of Benihana

1 Income 13,00,000
a Food( 70 %) 9,10,000
b Beverage ( 30 %) 3,90,000
2 Cost of Sales
a Food Cost ( 30 %) 2,73,000
b Beverage Cost ( 20 %) 78,000
3 Cost of Total Sales 3,51,000
4 Gross Profit 9,49,000
5 Operating Expenses
a Labor( 10 %) 1,30,000
b Replacements( 1%) 13,000
c Supplies (1.5%) 19,500
d Menu( 0.5%) 6,500
e Utiliteis (2%) 26,000
f Administrative Expense( 2%) 26,000
g Miscellaneous(2%) 26,000
h Music( 1%) 13,000
i Laundry,Linen ,Uniform( 2%) 26,000
j Advertising ( 10 %) 1,30,000
k Management ( 4%) 52,000
l Repairs( 2%) 26,000
m Rent( 5%) 65,000
n Insurance and Interest( 2%) 26,000
o Depreciation( 4%) 52,000
6 Total Operating Expenses 6,37,000
7 Net Profit before Income Tax 3,12,000
8 Income Tax Assumption ( 1.5%) 4,680
9 Net Profit after Income Tax 3,07,320
Recommendations
Revenue Increase Measures Cost Reduction Measures

• Lean
• Hilton Hotels & Canadian Pacific Hotels Organisational Structure
Joint ventures

• Controlled at 5/year • Efficient as per industry standards

New outlets Space utilisation • Flexible layout to increase Lounge
area when required
• Tier- 1, 2 & 3 cities. • Local manpower - carpenters
Expansion
Resource Localisation • Artifacts local purchase
• Managerial staff 4-5 can be
• Semi cooked food for packaged SKUs optimised
Quick Service operation • Only three entrees
Waste Reduction • Spot cooking
• Advertisement and awareness campaigns
Mobile Food Vans • Spot ordering and quick food alternative • Franchisee model being relooked
Business Model • Inefficient operation & lack of
• Tele- booking and home delivery services control
Home Delivery • Lunchpacks delivery to offices
• Already efficient as per local labor
Payrolls norms
• Offsite locations for complete Japanese
Resort- longer stay culture & cuisine
Employee Attrition- very • Employee loyalty due to intangible
• Cross country tours with food theme and low benefits
Mobile Catering team beverages