Topics: Earnings before interest and taxes, Generally Accepted Accounting Principles, Operating expense Pages: 6 (1159 words) Published: June 23, 2013



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What is the Benihana concept?

Benihana restaurants are traditional Japanese hibachi steakhouses, which feature the Japanese cooking method known as teppanyaki. There are key attributes that separate Benihana from other restaurants. One is true Japanese authenticity. Every item that is used in construction of a restaurant is 100% authentic and imported from Japan. In addition, each restaurant is built by Japanese carpenters. All chefs at Benihana are native Japanese with three year formal apprenticeship. The second major differentiating factor is the way food is prepared. Unlike traditional restaurants, where the food is cooked in the kitchen and brought out to customers, at Benihana the food is cooked in front of the customer by Japanese chefs. Benihana’s operating concept is based on maximizing efficiency and reducing operating cost. As Benihana does not have a traditional kitchen, with all cooking done on the hibachi table, a great amount of attentive service can be given to customers. At the same time, the labor cost is kept at 10-12% of gross sales. Benihana’s menu includes three simple choices: steak, chicken and shrimp. There is virtually no waste and the cost of food is cut between 30% and 35% of food sales. Due to limited menu and fast cooking time, the average turnover at each teppanyaki station is one hour (relatively fast table turnover). Turnover is further helped by eliminating waiters carrying food from the kitchen to the customer. As sales from bar represent high percentage of total sales, Benihana’s cocktail lounge areas are larger than in a typical restaurant. Based on Exhibit 2, cocktail lounge area represents significant percentage of total restaurant area. Based on Exhibit 3, Benihana has a very simple organizational structure that eliminates middle management and thus additional cost. Each restaurant has a manager, an assistant manager, two or three front men who have potential of becoming future managers. All managers report to manager of operations who reports to vice president in charge of operations and business development. Lastly, in order to convey the message to Americans that exotic food is safe and delicious, Benihana spends 8%-10% of its gross sales on advertising. Company’s advertisements are contemporary and offbeat. In addition, Benihana conducts a considerable amount of research to understand who its customers are and what is important to them. Benihana concept can be summarized as a unique authentic Japanese restaurant with great food, attentive service, entertaining ‘in your face’ food preparation with Japanese ambiance.

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Is Benihana a successful operation? How successful?

Benihana is most certainly a successful operation with a chain of 15 restaurants that grossed over $12 million per year. However, there are additional operational efficiencies that Benihana can put in place to be even more profitable. As mentioned earlier, Benihana has a unique business model that is not only attractive to the customer, but at the same time optimizes day to day operations. Benihana is able to keep labor costs low at 10%-12 of gross sales by eliminating the need for conventional kitchen with the hibachi arrangement and elimination of waiters traveling from kitchen to the customer. Elimination of kitchen area results in tremendous increase in the proportion of floor area devoted to productive dining space. Benihana’s limited menu eliminates waste and cuts food cost to between 30% and 35% of food sales. Restaurant layout with large cocktail lounge area that all customers pass through is optimize to generate sales from beverages and...

References: Sasser, W. Earl, Jr.; Klug, John R. Benihana of Tokyo. Published 11/01/1972, Revised 07/20/2004. Harvard Business School Publishing
[ 1 ].
[ 2 ]. Benihana of Tokyo, page 5
[ 3 ]. Benihana of Tokyo, page 6
[ 4 ]. Benihana of Tokyo, page 8
[ 5 ]. Benihana of Tokyo. Exhibit 2 Floor Plan, page 14
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