Case submission by Group 8

Introduction of Benihana of Tokyo Case overview Design choices for operational efficiencies Ingredients of Benihana success Operating ratios Process design=> Benihana success

Founded in 1964, Hiroaki Aoki (Rocky) Started franchising in 1969 15 units till 1972

Target high traffic area Rent normally 5%-7% of sales for 5000-6000 square feet of floor space Primarily located in business district, though easy access to residential area

Highly trained chefs

 3 yr formal apprenticeship  3-6 months course in English language and

American manners  Training chefs used continuously

Paternal attitude towards all its employees Unique combination of Japanese paternalism in an American setting

A simple management structure

 a manager,  assistant manager  2-3 front men

Reporting structure Individual quota figures allotted based upon overall sales goals and budget
 Bonus plan for performance over quota  Accounting staff and controller to monitor costs  managers reported to the manager of operations  Manager operations reported to VP of operations

Benihanas success different and original in our advertising approach Outstanding visuals in ads
 Theater of the stomach wait for the chef  A Benihana chef is an artist, not a butcher

The advertising policy is different and it makes them seem different to people
 Come in and give a nice Japanese boy a break

Rocky Aoki

Self operated restaurants vs. franchisees

 Franchisees owner were not experienced in hotel business

One of the biggest constraints is authenticate Japanese staff Cost factor

but only investors  Cultural difference in owner and native Japanese staff  Control on franchisee was difficult

Is it worth to import construction items from Japan?

 Survey says that people did not come for look and feel but

 Fixed cost vs. demand turn up

food

Three principle areas of growth The US, overseas and Japan Diversification plans Make people happy What is Benihana really selling? Is it food, atmosphere, hospitality or what? Appeal to the younger generation

Limited Menu
 Keeps cost of food and wastages to bare minimum

Minimize Flow time

 Keeps turnover rate high thus high utilization and throughput

Minimize Waste Minimize Inventory Optimal site selection

 High traffic area  Keep an optimal mix to meet the business district and residential flow

Minimize Space Highly trained, skilled and motivated workforce

Making Japanese cooking tangible

 People feel good about the cooking process and not

food only

Personal Training
 Highly trained personal

Reducing Risk
 Market research and setup at highly populated area

Controlling quality
 Making the customer look what they are being

cooked

Availability Convenience Personalization Price Quality Speed Visibility of service to the customer Sense of pride in sheaf to work

Cost Head Raw Material Cost of COGS Food Cost (% of food sales) Beverages Cost (% of beverages sales) Wages and Salaries Labor Cost out of Operating Expense (including other heads of employee benefits) Management Salaries Rent out of Operating Expense Space occupancy Promotional and Advertisement Cost Construction cost

Industrial std. 38 48% 25 30% 30 42% 2 6% 4.5 9% 30% 0.75 2% Lower

Benihana 30% 20% 10 % 4% 5 7% 22% 10% Higher

Customers view point

 Most people came there recommended  Repeat business 65.7%  Attracted to food and atmosphere  Expectations seemed to have meet  Frequency was less ( but aligned to the vision of

founder)

Statistics
 Gross profit 1.3 million per year