BENIHANA OF TOKYO

Group 3
Swagata Khargharia 19021141120
Lakshmi Lavanya Pagallu 19021141059
PVL Sravanthi 19021141075
Akhil Dosapati 19021141010

1|Page
Table of contents
1. Challenge ............................................................................. 3
2. Benihana .............................................................................. 3
2.1 Evolution ..................................................................... 3
2.2 Timeline ....................................................................... 3
2.3 Key Takeaways ........................................................... 3
2.4 Pillars of being the best ............................................... 4
2.5 Units……….. ...................................................... ……...4
2.5.1 Primarily .................................................................. 4
2.5.2 Later ........................................................................ 4
2.6 Process Flow ........................................................... …..4
2.7 SERVQUAL Model................................................... ..…5
2.8 Service Triangle……………………………………………..6
2.9 Gaps…………………………………………………..………7
2.9.1 Service performance gap ......................... ………….7
2.9.2 Knowledge gap ....................................................... 7
2.9.3 Communication gap……………………………………7
2.9.4 Service Design Gap……………………………………7
2.10 Restaurant structure………………………………………..8
3. Management ......................................................................... 8
3.1 Objective ...................................................................... 8
3.2 How does it differ ........................................................... 8
3.3 Training ........................................................................ 8
3.4 Management Structure ................................................. 9
3.5 Management Strategy……………………………………..9
4. Advertising Policy .................................................................. 9
4.1 Publicity ......................................................................... 10
5. Constraints for future expansion ............................................. 10
6. Future diversification plans ..................................................... 10
7. Recommendations...................................................................11

2|Page
1.Challenge
The challenge for Benihana was on how to expand their restaurant chain
in the United States and overseas, but at the same time retain their
authenticity of Benihana.

2.Benihana

2.1 Evolution
Rocky, the son of Yunosuke Aoki came to the United States and
enrolled in School of Restaurant Management at City College where, he
did an in-depth analysis of the U.S Restaurant market - consumer
interest w.r.t Japanese food. He found out that not many people were
familiar with it as to Chinese. He saw this as a best opportunity to
change the minds of the Americans w.r.t Japanese food by introducing
Hibachi culture.

2.2 Timeline

1935 Benihana of Tokyo is launched by Yunosuke Aoki in Japan

1958 Due to the rising costs and increased competition, the hibachi
table concept was introduced.
1964 First unit in United States is opened in West Side
1966 Second unit is opened on the East Side, called Benihana East
1967 Third unit is opened in Chicago
1969 Fourth and Fifth unit was opened in San Francisco and Las
Vegas respectively
1970 Franchises were granted in Puerto Rico, Harrisburg, Fort
Lauderdale, Portland, Seattle, Beverly hills and Boston.

2.3 Study’s (Rocky) key takeaways

1. Biggest problem in the industry was the availability and cost of
labour
2. Food storage and Wastage contribute significantly to the
overheads.
3. Need for Historical Authenticity

3|Page
2.4 Pillars of being the best
1. High Quality food
2. Food’s freshness
3. The cooking Process (live cooking)

2.5 Units

2.5.1 Primarily
 1st Unit on the Westside: It was an immediate success and was
able to pay for itself in six months
 2nd Unit on the Eastside: Built in 1966, basically to cater to the
overflow of the Benihana West which quickly developed into a
separate clientele and prospered.
 3rd Unit in Chicago: An instant success that grossed
approximately $1.3 million dollars per year and consequently
proved to the company's largest money-maker.
 4th Unit in San Francisco: Set up in 1969
 5th Unit in Las Vegas: Joint venture started in 1969

Franchises that were granted but later withdrawn:

Puerto Rico, Harrisburg, Fort Lauderdale, Portland, Seattle, Beverly
Hills, Boston.

2.5.2 Later
15 working units that had different operational hours varied according to
local requirements. All were open for lunch and dinner though not
necessarily every day.

2.6 Process flow

The process flow on a typical day is in the following pattern:
 Customer enters into the restaurant area
 Enter into the bar/lounge area, order some drinks if required and
spend some time before dining
 Moves to the dining area and takes a seat
 After a group of eight customers are seated, the waitress would
take the order and bring soup, salad and beverages that are
requested
 The Chef then appears to the table with his food items cart and
the cooking process begins
 The order is prepared in front of the customers and served
 The customer enjoys the meal
 Payment for the meal is made and the customers leave

4|Page
The whole process takes about 45 minutes, excluding the time a
customer spends in the bar.

2.7 SERVQUAL Model

The five core components of service quality and their evaluation on
Benihana are:

I. Tangibles: One of their unique selling point was their unique

approach of the teppanyaki table. It consisted of a gas fired steel
griddle plate with a 9 ½ wooden ledge bordering it to hold the
customer plates and silverware. Every table had an exhaust hood
to remove cooking steam and odour. Every table was handled by a
chef and a waitress. Both of them are of authentic Japanese origin
and dressed accordingly to maintain authenticity and they are
highly trained.

II. Reliability: They emphasize on providing better service quality

and the process involves the customers in the cooking process. As
the whole cooking process is being performed in front of the
customer and in accordance with their likes, the service is
delivered with accuracy, is reliable and the customers are often
satisfied with the service quality.

III. Responsiveness: The whole process involves the customers, the

chef is willing to take customers’ opinions into consideration and
acknowledge their needs there and then. The waitress assigned to
each table for their entire dining period responds to any additional
demands of the customers.

IV. Assurance: Benihana always focused on their main priority i.e.

food. They were dedicated in making sure that the customers have
a unique dining experience with them by creating a fun
atmosphere, the chefs showing their skills in the preparations of
the meals and the overall ambience of the place.

V. Empathy: Each table was handled by a chef and a waitress and

individualized service being provided to the customers.

5|Page
 2.8 Service Triangle

COMPANY

INTERNAL EXTERNAL
MARKETING MARKETING

SERVICE
TRIANGLE

EMPLOYEE CUSTOMER

INTERACTIVE MARKETING

Internal Marketing:
1. All the employees were well paid and given good incentives.
2. They had job security and hence, the employee turnover was very
low.
3. They are committed to the well- being of all their employees.
4. Paternal attitude- cultural bonding with the management.

External Marketing:
1. The customers were communicated about introduction to a unique
dining experience which the Americans had never experienced
before.
2. They were dedicated in providing a fun atmosphere to all the diners
and it was expressed in their advertisements.
3. The advertisements had outstanding visuals and highlighted their
Authentic Japanese legacy right from their cooking to the restaurant
décor which was dedicatedly maintained across all their branches.
4. They chose high traffic areas in order to have more people coming
both for lunch and dinner in order to spike their sales rapidly.
5. Persuasive advertisements, appearing in city entertainment guides,
working with convention and visiting bureaus to reach to the tourist-
visitors and all- embracing public relations were maintained.

6|Page
 Interactive Marketing:
1. Considerable amount of market research was done in order to
identify what the customers really want.
2. A friendly environment and presence of the chef and a waitress
throughout the time they spend dining.
3. Customer feedbacks and preferences could be addressed instantly
which improves customer intimacy and adds a positive environment.

2.9 Gaps
2.9.1 Service performance gap: A lot of customer’s feedback
mentioned how dirty the overall appearance of the restaurant was, lack
of proper maintenance.

2.9.2 Knowledge gap: Investors who had no restaurant experience

2.9.3 Communication gap:

Difficulty for the American investors to relate to a predominantly native
Japanese staff

2.9.4 Service Design Gap: Difficulty in terms of control and

management in franchising

2.10 Restaurant structure

Rocky was persistent in implementing historical authenticity. Every inch
of the restaurant was set up by the gatherings from Japan, also the
building materials were gathered from the old houses there, they were
carefully disassembled and shipped in pieces to the United States which
were then assembled by crews of Japanese carpenters.

3. Management

3.1 Objective
 Establish a control system by introducing sales goals and budgets
 Project the sales goals first on an annual basis, then breaking it
out by months and weeks and consequently by day.

3.2 How does it differ

1. Food: 30%-35% (effective reduction of food waste) as compared to
38%-48% of food in other restaurants, minimum number of items
in the menu is three.
2. Beverage: 20% as compared to other typical restaurants (25% to
7|Page
 30%), because people spend a lot of time in lounge to wait while
drinking, this way Benihana could sell a large amount of beverages
and gain profit from sales
3. Labor: 10% to 12% of the whole cost structure
4. Rent: 5%-7% of sales - 5000 to 6000 sq. floor space.
5. Interior: The restaurant has authentic Japanese atmosphere which
gives them a unique identity and that cannot be replicated.
6. Hibachi and Teppanyaki Table: Tables are designed such that the
chef prepares food right in front of the customer. This helps the
customers in participating in the cooking process

3.3 Training
Benihana had highly trained chefs as the chefs were considered as one
of the keys for their success. All the chefs were native Japanese, young
and single.
Before coming to the U.S -
 They all completed a three-year formal apprenticeship and got
certified.
 They were given a three-to-six months course in the English
Language, American manners as well as Benihana form of
cooking.

3.4 Management Structure

Each restaurant carried a simple management structure.

MANAGER OF OPERATIONS (ALLEN SAITO)

↑
RESTAURANT MANAGER ($15000)
↑
ASSISTANT MANAGER ($12000)
↑
FRONT MEN ($9000)

3.5 Strategy
Primary Strategy:
 Maintain Historical Authenticity
 Reducing the main menu to 3-4 items in order to minimize food
waste and cut food costs
 Increasing the proportion of productive area

Operational Strategy:
 Selection of high traffic areas in business districts to set up their
8|Page
 branches
 Highly trained chefs brought in from Japan
 Providing good incentives to the employees as well as intangible
benefits in terms of taking care of their well-being, job security etc.
that reduced employee turnover
 Low management expenses

Marketing Strategy:
 Substantial investment, 8-10% of gross sales into advertising and
marketing
 Promotion of the entire Benihana experience
 Use of outstanding visuals and offbeat themes as they considered it
to be more of a visual business.

4. Advertising Policy
Vital factor that contributed to the success of Benihana was substantial
investment into creative advertising and public relations. They always
tried to keep an original and different approach to their advertisements.
Keeping in mind an impact philosophy, they would often go for full
page ads in national publications rather than putting out small ads.
They emphasized on utilizing outstanding visuals in their ads to create
an impact. Their advertisements included visuals of their hibachi
cooking process.

4.1Publicity
Their publicity took forms of media stories and television
demonstrations. It involved department store demonstrations, catering to
celebrities, hosting youth groups, sending matchboxes to conventions
and chopsticks to ladies’ clubs.

5.Constraints in Future Expansion

A) Franchising
Benihana tried franchising with a view to expand quicker but
decided to discontinue shortly thereafter due to a number of
reasons-
1. Their franchisees were mostly businessmen who did not
have much knowledge and understanding of the business as
well as the Japanese ethnicity.
2. The franchisees were merely looking for investment
opportunities
B) Staff
Each Benihana unit requires about 30 employees and all of them
9|Page
have to be Oriental.

C) Cost
Each new Benihana unit costed a minimum of $300,000 which
restricts their setup plan to major cities like Atlanta, Dallas, St. Louis etc
in the future and later use these units to expand to the suburbs.

D) Historical authenticity
Importing every construction item from Japan in order to make Benihana
100% authentic increased the costs to a considerable extent. Also, using
Japanese carpenters and paying union carpenters to sit and watch
accounts to additional costs.

6.Future diversification plans

 They have entered into an agreement and about to close a deal

with a firm that is researching and contacting large food
processors, making efforts to have them interested in producing a
line of Japanese food products under Benihana label for retail sale.

 The present services of Benihana cater to the middle-class

audience. They usually charge more; provide a better atmosphere
and better service quality. But they are planning to expand their
operations with appeal to the younger generation like starting
quick- service operations in the country.

 They planned to go into a Chinese- Japanese operation like that

and call it Orient Express. They planned to put such small units in
gas stations.

7.RECOMMENDATIONS

 They can use more rigorous training for the staff i.e the waiters
and the cooks in order to make the tasks more time-efficient
Lounge wait time Calculation
Average time spent in Benihana = 1 -1.5 hrs
Time spent on food consumption = 45 mins
Non - busy nights = 60 mins - 45 mins = 15 mins
Busy nights = 90min - 45mins = 45 mins
As per above calculations its waiting time is still low as the
customers have to still wait for long before they can enjoy their
meal. There is a space for improvement.
 They can use locally available building materials and hire local
10 | P a g
e
 carpenters and have the Japanese carpenters watch over their
work in order to perfect their job
 Explore potential areas for business. For e.g. the suburb areas
 Introduce attractive schemes for women and older people to
appeal to that segment.
 Add more variety to the menu which might be more
appealing to the younger generation which they are
planning to target in the future

11 | P a g
e