Case Study on Success of Benihana of Tokyo Group 4

Evolution of Benihana of Tokyo

Year 1935 1958 Event First restaurant Japan Introduction of Hibachi table

1964
1966 1967 1970

Entry in US, Manhattan

East side restaurant, Manhattan Chicago unit, Big Block buster

Benihana Palace, Third unit in Manhattan

Total 15 units in US (9 owned, 5 Franchised and 1 JV
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1972

Benihanas Operating Statistics

38-48 30-35 30-35 25-30 20 10 -12

Labour Cost (% of Operating Expenses)

Food Cost ( % of Sales)

Beverage Cost ( % of Sales)

Typical US Restaurant

Benihana
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Winning Strategy behind Benihanas Success

Implementation Strategy

Competence based positioning

Effective Training

Comparatively Lower Expenditure

Employee Satisfaction / Motivation

Customer Satisfaction

Effective & Aggressive marketing

Implementation Strategy
Effective implementation strategy helped Benihana in Effective Hibachi / Utilization of Tappanyaki Penetration in US Space table concept market Positioning: Appealing to Implementation a different customer Strategy Economized need Menu Site Selection Choices Successful cost reduction
Simple management structure Collaboration

Ambience Historically authentic

Effective Training
Three years formal apprenticeship training with certification in Benihana form of Cooking Three to Six months course in English language and for American Manners Training was continuous process

Employee Satisfaction and Motivation

Chances of growth in organization Paternal attitude - Cultural bonding with management Good salaries and perks like bonus plan Intangible benefits like job security and well being of employees Pride serves as a motivating factor
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Effective and Aggressive Marketing

Investment up to 8 10 % of gross sales in advertising Promoted as an experience vis--vis an eatery Innovative advertising approach More visuals in advertisement Word of Mouth Publicity

Customer Satisfaction
Food Quality liked by 98 % - use of prime grade food Service liked by 93 % Overall Atmosphere liked by 93 % of people
Atmosphere Food and Potions

Service and Cost of food

Customer Satisfaction

Management Concerns
Franchising No knowledge of native Japanese style No experience of Investors w.r.t. restaurant business Future expansion Fund availability / concern about loosing autonomy by taking loans Manpower constraints Higher cost and lead time for Japanese construction material Limited carpenter crew Catering need of younger generation Limited to primary markets only Diversification
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Analysis
Franchisee
No experience of investors w.r.t restaurant business

Expansion
Funds Reluctance to take loan from financial institutions

Operations
No quick service option

Scarcity of surplus trained staff

No knowledge of Japanese culture and Benihana style of cooking

High advertisement cost & specifically target towards food

Limited Variation in Menu

Productivity & limitation with 2 carpenters

Not analyzed the potential of secondary markets & markets outside USA

Scope for Improvement : Our recommendations

Explore potential areas for further expansions Can go for collaborations instead of Franchisee Take funds from financial institutions Employ more staff, train them and utilize them for expansion Improve Franchisee selection

Expansion

Cost

Economize advertisement cost Use locally available material for giving shape of Japanese architecture Use local available manpower for carpentry work or employ more carpenters from Japan

Operations

Can go for add on business of selling traditional Japanese stuff in a dedicated area of restaurant Introduce variations in menu Expand & redesign bar & Lounge Area keeping in mind young generation Introduce Quick service option Introduce Flexible seating arrangements No need to wait for minimum 8 customers Introduce attractive schemes for Females and older generation

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References
MDP ELPM course content in Introduction to Manufacturing Management by Prof. Saji Gopinath Operations Management By Richard Chase, Robert Jacobs, Nicholas Aquilano and Nitin Agarwal Images from www.google.com

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