Benihana Case Study

Engineering Management Masters Program

College of Engineering

EMP 504 – Process Improvement Techniques

Fall 2016

BENIHANA

1. Analyze Benihana’s concept on each one of the following dimensions: food, entertainment, prices, space utilization, and meal time. How does its operations strategy affect these dimensions and differentiate Benihana from a typical restaurant. Provide concrete examples with numbers.

Food: Benihana reduced the menu to 3 simple middle east entrees: Steak, chicken, and shrimp. The food cost is cut to between 30%-35% depending on the price of meat. All the chiefs were young, single, native Japanese that were highly trained and certified completing 3 to 6 months in language, manner, and cooking. There were also travelling chiefs who inspected periodically the process of the units. According to Benihana surveys, food was the most highlighted aspect by the customers contributing to 38.2%. Due to specialization, the quality of food is kept high, the restaurant can benefit from economies of scales for raw materials and the supply and demand can be highly controlled.

Entertainment: Benihana restaurant main concept was the “Teppanyaki” table arrangement as it gives an unusual amount of attentive service and keep the labor cost to 10%-12% of gross sales as a waitress and a chef can serve 8 customers, two regular tables within a limited time frame. The historical authenticity of the restaurant contributes greatly to the guest’s entertainment. The walls, ceilings, beams, articrafts and decorative lights are all from Japan. This new concept was introduced in the United States for the first time and allowed the restaurant to gain a unique identity. Typical service restaurants dedicate 0.5-1.0% of their expenses to entertainment while Benihana maintains a high level of entertainment with zero cost.

Space Utilization:  Benihana increased the proportion of floor area devoted to productive dining space as only 22% of the total space of a unit is back of the house including preparation areas, dry and refrigerated storage, employee dressing rooms and office space while normally a restaurant requires 30% of its space as back of the house. Moreover, Benihana was in predominantly business districts to be sure that a lot of people were nearby or going by both lunch and dinner.

Price: The average check including food and beverages ran about $6 at lunch, about $10 at dinner, an average one-plus at dinner. Benihana offered lower menu price average at lunch for business due to its importance as it contributed to 30%-40% of the total dollar volume. The highest percentage of Benihana customers fall under the category of 15,000-20,000$ income, in this case, the price is not the main concern of the guest but the quality.