Benihana of TokyoCase submission by Group 8

Agenda

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

Case overview

Benihana of Tokyo

Founded in 1964, Hiroaki Aoki (Rocky)

Started franchising in 1969 15 units till 1972

Site selection

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

Training

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

Organization and control

A simple management structure a manager, assistant manager 2-3 front men

Reporting structure managers reported to the manager of operations Manager operations reported to VP of operations

Individual quota figures allotted based upon overall sales goals and budget Bonus plan for performance over quota Accounting staff and controller to monitor costs

Advertising Policy

Benihana’s 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

Future Expansion/ Problems

Self operated restaurants vs. franchisees Franchisees owner were not experienced in hotel business but

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

One of the biggest constraints is authenticate Japanese staff

Cost factor Fixed cost vs. demand turn up

Is it worth to import construction items from Japan? Survey says that people did not come for look and feel but food

Design choices & Business model

Benihana Business Model

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

Design choices

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

Ingredients for success

Success Parameters

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

Cost Structure

Cost structure

Cost Head Industrial std. Benihana

Raw Material Cost of COGS

Food Cost (% of food sales) 38 – 48% 30%

Beverages Cost (% of beverages sales) 25 – 30% 20%

Wages and Salaries

Labor Cost out of Operating Expense (including other heads of employee benefits)

30 – 42% 10 %

Management Salaries 2 – 6% 4%

Rent out of Operating Expense 4.5 – 9% 5 – 7%

Space occupancy 30% 22%

Promotional and Advertisement Cost 0.75 – 2% 10%

Construction cost Lower Higher

Contribution of design to Benihana’s success

Design Parameters => Benihana Success

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

THANK YOU