Benihana's Service

Problem Identification – Benihana is a chain of widely successful steakhouses with a unique approach to serving their customers- the food is cooked right in front of them by Japanese chefs, and the décor replicates an authentically detailed Japanese country inn. Hiroaki (Rocky) Aoki opened the first location in Manhattan in 1964. Since then, Benihana has been constantly expanding and currently is comprised of 15 units across the country. The case explains the reasons for the restaurant's success and addresses their current challenge of how to effectively sustain their growth.

Analysis – Benihana's service delivery system dates back to 1935, when Yunosuke Aoki opened the first restaurant with a hibachi table. By eliminating the need for a conventional kitchen, the restaurant keeps labor costs low, allowing them to provide attentive service. The unique set-up permits them to reduce the total space needed for back of the house from the typical 30% to 22%, ultimately increasing the dining space. Moreover, by reducing the menu to three simple well-known entrees, the restaurant solved the problem of food storage and waste costs. The average turnover at the table is an hour (not including time at the bar), so the service is incredibly fast and the chefs appear with the food shortly after the waitress would takes the order. One of the major reasons the service is so exceptional is the highly trained staff. All chefs are required to complete a three-year formal apprenticeship and the company takes a paternal attitude toward them, resulting in low turnover rates. Rocky's first location did not have a big bar/lounge area. However, after including one in his second location, he realized that beverages could account for 30%-33% sales, proving to be a successful addition to the services offered. Exhibit A shows the serious effect these elements have on their operating costs. Although service is definitely one of the most crucial elements for their success, Exhibit 4 proves that the food itself is also critical. Not only is the cost of the food substantially low, but it accounts for 46.7% of the reason why customers are persuaded to come to the restaurant. Moreover, preparation of the food holds a greater importance in consumers' minds than the service or atmosphere. However, all the building materials used to construct the restaurants are from Japan and are often gathered from old houses. The company uses creative advertising and also has a simple management structure. Lastly, Rocky only selects high traffic sites mainly in business districts.

Rocky's first unit paid for itself in 6 months, his third unit grossed approximately $1.3 million, and after opening the fifth unit the company tried franchising and decided to discontinue the program for several reasons (see Exhibit B). The company's biggest concern is how to expand. Bill Shuma, Vice President is considering a number of possible