Assignment 1:

Benihana of Tokyo

Members:
D023 Goutham Venkatesh K
D026 Niranjan Zalake
1. What is this Benihana concept? Why are they successful globally?
Answer: Benihana Concept- We may refer to Benihana as a steakhouse (restaurant where steaks are
served) but with a twist, the food was cooked in front of the customer and the ambience of the restaurant
is authentic Japanese.

They are globally successful because of the following reasons:-

->There was no need of a conventional kitchen due to the hibachi table arrangement which decreased back
house area requirement to 22% and increased the productive dining area which increased the revenue.

->Also the hibachi table arrangement facilitated the maximum attention to the customer and decreased
the labor cost to 10-12% of gross sales.

->Quality, Presentation, Preparation, Taste of the food. Authenticity of construction and decor, unusual
publicity concept, moderate pricings.

->The model of the Benihana is difficult to be replicated which minimizes the competition.

->Minimal wastage of food.

->Unique services- Japanese chefs and interiors.

2. What are the differences between Benihana and any Typical Restaurant - be in production
process, Cost Structure, Marketing strategy, Customer Management?
Answer: The differences between the Benihana and Typical restaurant lie in almost every area of the
restaurant business as stated below-

Production process:
In Benihana restaurants the food preparation is done in front of the customers which customers
like but in other restaurants food is cooked in the kitchen which is present dedicatedly in these
restaurants and is not the case in Benihana restaurants.

Highly skilled and trained labor is provided to the restaurant; all the chefs were young, single and
certified.

All the restaurants had simple management structure which consisted of manager, assistant
manager, 2-3 front men (potential managers in training).

Customer Management:
In typical restaurants the managers/other staff need to give time to the customers individually
which increases the labor cost but in Benihana concept the waitresses provide the appetizers at
first and then the chefs attend the customers directly by providing with whatever they order which
reduces the labor because less number of people are required in staff.

Also this decreases the throughput time and work in progress as the customers are served fast and
they move out of the restaurant quickly which in turn increases the throughput rate, sales.

Cost Structure:
 Labour: - A benihana restaurant keeps its labour cost at 10-12% which is much higher in case of
the other restaurants.

Food and beverage costs:- In a typical restaurant, the food and beverage costs ranges between, 38-
40% and 25-30% respectively, whereas in a benihana food costs are as low as 30% and beverage costs
ran around 20%. The limited menu options aids in bringing down the food costs.

Advertising: - Advertising was a substantial investment for Benihana as they believed in the power of
creative advertisement in reaching the people. They spent around 8-10% of their sales on advertising
whereas that value ranges around a paltry 0.75 -2% for conventional restaurants.

Rent: - The Hibachi system ensured optimal utilization of available area, they could minimize land
required and thus the rent, without compromising on the profits. Their rent expenditure was as low as
5% of the sales and for a conventional restaurant it ranged between 4.5-9%.

Management salaries: - Benihana had a simple management structure but its expenditure on salaries
lied in the range of that of typical restaurants at 4%. For typical restaurants it varied between 2-6%.

Marketing strategy:
The benihana uses different and original marketing tricks like not placing the advertisements on
the typical entertainment pages which contain the ads from all other normal restaurants, they use
visuals for marketing, they use the qualities which makes them stand out of the clutter to market,
also considerable amount of market study is done to identify the customers.
They invested a significant percentage of the sales at about 8-10% on advertising.

3. Examine the production process in detail. What are the major design choices which generate
operating efficiencies?
Answer: Benihana uses the Hibachi table concept in its operations, which does away with the idea of a
conventional kitchen. The food is prepared in teppanyaki style, on a gas-fired steel girdle plate, around
which the customers dine in groups of eight. Therefore, the customers watch the food being prepared in
front of them along with the tricks performed by the chef. These factors increase the appeal of the
restaurant in general.

The customers feel attended to, and the labour costs are also reduced in the process. The dining area is
the actual productive area of restaurant and the Hibachi system ensures maximization of the same.

The chef exhibits fine showmanship in his work. Each table is attended to by a chef and a waitress, with
each such team handling two tables.

The interior dcor is based on authentic Japanese style and the materials are sourced from Japan and
assembled in America by Japanese carpenters.
The menu just consisted of basic items, steak, filet mignon, chicken and shrimp, which reduces the amount
of waste drastically, in addition to cutting down food costs. It could be accompanied by bean sprouts,
zucchini, fresh mushrooms, onions and rice.

Average time spent by a customer at the time was about an hour. When a table of eight gets filled, a
waitress would take the order and bring the beverages and soups following which the chef wheels in the
food items after which proceeds to cook in front of them.

So in a hibachi system the customer may have had to wait until his table of eight gets filled, but considering
the popularity of the restaurant the wait time would have been minimal.

Only superior grade boneless meat was sourced which was further trimmed in house.

The design choices which generated operating efficiencies can be summarized as follows:-

The Hibachi concept increased the proportion of productive dining area in the total floor area.
Only 22% of the total area was dedicated to kitchen, storage, etc as opposed to 30% in a
conventional restaurant.
Benihana has limited menu of just four options which helps in cutting down waste as well as the
storage and food costs.
Labour costs are only 10-12% of gross sales as in a Hibachi system the chef is with the customers
which eliminates the need for servers in addition to providing extra attention to the customers.
The marketing with appealing visuals, Impressive quotes like 'Theatre of the Stomach', 'Go forth
and cook amongst the Americans', 'The two philosophies of steak', 'The mission of Rocky Aoki'.
The revenue generated from lunch was more as compared to dinner, which created a criteria for
high traffic sites which were business district areas, easy access to residential areas, shopping
center locations.