Benihana of Tokyo

BENIHANA - CASE QUESTIONS / DISCUSSION

_WHAT ARE THE DIFFERENCES BETWEEN THE BENIHANA PRODUCTION PROCESS AND THAT OF A TYPICAL RESTAURANT?_

The key difference was the way in which food was prepared. During the time period of the case Teppanyaki style dining was unknown in the United States. In this model, food was prepped table side by a chef instead of a kitchen in back. In this setup, customers were entertained with a "dinner show" and were able to see their (foreign/exotic) meal being prepared, something which Rocky Aoki felt would alleviate some of the reservations Americans held for "exotic foods."

The Benihana concept also allowed for guests to experience the benefits of having 'made-to-order ' products instead of 'made-to-stock ' without the higher costs associated with that level of service.

From a customer-focused perspective, the more intimate the experience or relationship between provider and customer, the perceived value gained in significantly increased. Benihana was able to provide a unique, high quality meal at a good perceived value.

_EXAMINE THE PRODUCTION SYSTEM IN DETAIL. WHAT ARE THE MAJOR DESIGN CHOICES WHICH GENERATED OPERATING EFFICIENCIES?_

The use of the hibachi tables in food production allowed for the back kitchen to be significantly smaller than a typical restaurant. Relative to total floor space, this design required only ~22% of the restaurant to be used as the prep kitchen as opposed to ~30% in a traditional kitchen. This allowed for much greater utilization of the restaurant building (a fixed cost). Being able to serve a higher number of customers as compared to traditional restaurants having a similar amount of total floor space helps Benihana to drive efficiencies such as scale economies (the more you make the cheaper everything gets).

The teppanyaki style restaurant also allowed for the reduction in labor without sacrificing customer service. The customers are being entertained and attended to by their chef for the majority of their dining experience. In this setup, a team consisting of a chef and a waitress are able to serve two tables of eight and still provide an "unusual amount of attention."

Because of the higher efficiency of the staff to take care of customers, we might infer additional (profitable) benefits. This model also eliminates the task of waiters and waitresses bringing food out to the tables (with the exception of the simple appetizers of salad and soup) since it 's brought out uncooked and then served by the chef, this way the wait staff can better focus on taking and serving drink orders. If this assumption were to hold true, the restaurants are able to sell a higher ratio of drinks to food which increases profitability. Food generally costs about 40% of the menu price, in contrast alcoholic drinks cost around 20% of selling price and soda only 8%! (1, 2, 3).

The "golden ratio" of restaurant food service is 45:55 food to drink sales (4). This is the target that restaurateurs try to achieve. Benihana was able to achieve a 30:70 food to drink sales ratio, something that would be very enviable for any fine dining establishment. This evidence supports the aforementioned inference.

Rocky also made it a point to have a very limited menu with only 3 main entrees choices consisting of steak, chicken and shrimp. A 2013 study shows that the average number of menu items at the top 500 restaurant chains exceeds 75 items. Specifically at full-service restaurants this number is over 60 (5). The number of ingredients and storage space required to sustain that many items is very costly. Having drastically fewer menu offerings and ingredients allowed Benihana to greatly reduce food waste. A typical restaurant has food costs of 40% of food sales, but due to reduction in waste Benihana was able to operate at 30%-35% (1). Here the saying that "less is more" definitely holds true.

At Benihana, the dining experience usually doesn 't begin until all 8 seats at the dining table are occupied. This coupled with there being very few entrée options (c) allows for Benihana to operate as a batch operation to further improve its operating efficiency as compared to other traditional restaurants. There is a high probability that 2 or more guests will order the same item (or at least a version of it, ex. rare vs med-well filet mignon), allowing for the chef to prepare meals for the guests with very little additional labor. In a conventional restaurant the likelihood of a chef being able to prepare two of more meals simultaneously is remote. In this comparison a standard restaurant is something more akin to a 'job-shop ' in the sense that several different items need to be made in with minimal control over the particular order.

_SUMMARY_

There were several unique benefits of the teppanyaki style restaurant innovated by Rocky Aoki when he created the Benihana restaurants. Increased asset utilization in floor space and cooking space being semi-combined, efficient use of labor allowing for more value-added activities, reduction in production material waste by minimizing the ingredients and menu offerings and finally, the batch processing-like operations allowing for significantly increased production efficiency all allowed the restaurant to operate very successfully. Coupled with Benihana 's unique aesthetic appeal and exotic offerings, all of things allowed for huge successes for the restaurant concept.

_REFERENCES_

http://smallbusiness.chron.com/successful-profit-margins-restaurant-business-23578.html

http://www.examiner.com/article/why-soft-drinks-are-huge-profits-for-fast-food-restaurants

http://yourbusiness.azcentral.com/ideal-profit-margin-bar-drinks-25544.html

http://rvanews.com/features/behind-abcs-food-to-alcohol-ratio/108958

http://www.usatoday.com/story/money/business/2014/08/24/restaurants-casual-dining-fast-food-ihop-tony-romas-bjs/14297487/

References: http://smallbusiness.chron.com/successful-profit-margins-restaurant-business-23578.html http://www.examiner.com/article/why-soft-drinks-are-huge-profits-for-fast-food-restaurants http://yourbusiness.azcentral.com/ideal-profit-margin-bar-drinks-25544.html http://rvanews.com/features/behind-abcs-food-to-alcohol-ratio/108958 http://www.usatoday.com/story/money/business/2014/08/24/restaurants-casual-dining-fast-food-ihop-tony-romas-bjs/14297487/