Learning Team #1

Kar Lyle Constantino

Angelica Licuanan
Yohana Setiabudi
Nripesh Tamrakar
Kei Miki

Operations Management
Benihana of Tokyo
Process Flow Chart:

Considering the facts given in the case, we have formulated the process flow chart of Benihana.
See Appendix 1 for the diagram. The diagram takes into account the time it takes a customer to
enter the restaurant until the time he/she exits which is on the average, 45 minutes excluding the
time he/she spent at the bar as waiting time to be served if the capacity is at full. This 45 minutes
is therefore assumed as our throughput time of the whole process of one customer entering until
the time of exit.

Service Delivery Process Description:

The quality of Benihana’s performance is pretty excellent and was proven by the result of
customers’ survey in which the majority of customers assessed Benihana’s food, portion and
service as excellent. In this case our team also made an analysis on how the service had a good
impact for customers based on estimations that we made.

From our analysis, bottlenecks in the process are dependent on the arrival time between
customers and the availability of tables. If the arrival time between customers is 3 minutes which
was based on our estimate, then there will be no waiting time and no bottleneck for the
customers. In this situation, the 8th customer can be seated and served by the 1st chef. The 15th
customer on the other hand, can replace the 1st customer in the 1st table and be served by the 1st
chef. Arrival time between customers that is less than 3 minutes will cause some waiting time. If
for instance the arrival time interval is 2 minutes, the 15th customer will have to wait for 17
minutes. Based on the chart, we also made an estimate operating time during lunch to which
Benihana is opened for a span of three hours starting at 11:00 a.m. to 2:00 p.m. Kindly see the
chart below which describes a sample simulation of customer arrival time.

Customer 1 2 3 4 5 6 7
#
Arrival 11:00 11:02 11:04 11:06 11:08 11:10 11:12
time
Table # 1 2 3 4 5 6 7
Table 11:40 11:42 11:44 11:46 11:48 11:50 11:52
finished
time
Chef # 1 2 3 4 5 6 7

Customer 8 9 10 11 12 13 14
#
Arrival 11:14 11:16 11:18 11:20 11:22 11:24 11:26
time
 Table # 8 9 10 11 12 13 14
Table 11:54 11:56 11:58 12:00 12:02 12:04 12:06
finished
time
Chef # 1 2 3 4 5 6 7

Customer 15 16 17 18 19 20 21
#
Arrival 11:28 11:30 11:32 11:34 11:36 11:38 11:40
time
Table # 1 2 3 4 5 6 7
Waiting 00:17 00:17 00:17 00:17 00:17 00:17 00:17
time for
table
from the
1st batch
Chef # 1 2 3 4 5 6 7

Key Process / Operating System Design Decisions:

Benihana had chosen to use the hibachi table in their process which lowers the cost of
hiring more waiters. Since in this model the grill is the hibachi table and the food is served
directly from the grill to the plates of the customers as opposed to having a conventional kitchen
wherein the delivery time from kitchen to table take more time. This ensures the quality for
Benihana’s food that it is served fresh from the grill as well as a unique experience that satisfies
their customers because it is also one reason for choosing to dine in Benihana as per the market
study.

Benihana’s strategy was also to provide a simple menu with three to four Middle
American entrees: steak, fillet mignon, chicken and shrimp that goes together with a
complementary option of vegetables. This benefits the company whenever they purchase their
produce especially if they order in bulk which is offered at a higher discount. And since they
have only three items, the storage of food is minimal and as well as food wastage which also
contribute to lower costs.

On the other hand, the bar setup assists in reduced waiting times for customers together
with generating additional revenue since customers can order drinks while waiting for their
tables to be prepared. In terms of wait time, there is also the availability of a lounge to
accommodate a number of people reducing the risk of unattended customers who may have the
option to go to another restaurant.
 The setup for the tables also produces efficiency in aiding for decreased waiting time for
the customers with the benefit of having two tables facing each other and one chef to
accommodate both because while the chef attends to one table, the other table could be cleaned
and prepared for the next group of customers. This process saves set up time because it can be
done by a waiter, assuming he/she is idle, in parallel while the chef is attending to one table. This
process also helps reduce labor cost of having one chef for each of the 14 tables.

Lastly, the location selection offers a higher chance of increase in sales because of the
accessibility it has to accommodate office workers especially during peak hours (lunch time)
given that most branches are situated near business districts. Some locations are also found in
partner hotels, which also provide advantage in location and accessibility.

Given these, we can therefore relate each of these factors to the industry average income
statement and see how these factors give support to each cost percentage Benihana has against
the industry. First, Cost of sales is considerably lower at a 27% average compared to 63% of
industry average because of their limited menu strategy. Another is that salaries expense of only
10% as opposed to industry average of 30% is due to the fact there is no need for hiring more
waiters even at peak hours. Advertising is definitely at a higher percentage of 10% compared to
0.75% for industry average because as discussed in the case, Benihana invested in aggressive
marketing and advertising to gain revenues. Management costs are at a higher 4% compare to
2% for industry due to factors such as training and hiring employees from Japan. Lastly, rent
expense was at a close proximity of 5% compare to industry’s 4.5% which has the least impact.

Capacity and Annual Revenue:

To compute for the efficiency of Benihana at a $1,300,000 revenue level, below are the
assumptions we made:

1. There are 8 seats per table. Given a 112-seat restaurant, the total number of tables is 14.
2. 30% of the total sales comes from lunch sales and 70% from dinner sales.
3. On average, 5 people are served per table.
4. Benihana operates 365 days a year.
5. Following the value stream map above, throughput time (from the time the customer sat in
the table to the time they have paid the bill) is 33.5 minutes.
6. Operating hours during lunch is 11:00am to 2:00pm for a total of 3 hours.
7. Operating hours during dinner is 5:00pm to 10:00pm for a total of 5 hours.
8. Average spend per person is $6 during lunch and $10 during dinner.
 Lunch Dinner Total
Revenue 390,000 910,000 1,300,000
Persons served
annually 65,000 91,000 156,000
Tables Served
annually 13,000 18,200 31,200
Tables Served daily 35.62 49.86 85
Daily Capacity 75.22 125.37 201
Table Utilization 47.35% 39.77% 42.61%

Looking at the table above, Benihana’s capacity is underutilized given a 112-seat

restaurant and a $1,300,000 revenue level. This does not suggest however that the tables must be
reduced. If tables are reduced, then floor space will be the one that is underutilized. Also, if most
of the customers arrive at approximately the same time, then the 14 tables might just be enough
to minimize the wait time of the customers and avoid customer defection. The challenge for
Benihana then is how to attract customers to come during times when most tables are available.
One way of doing this is by providing customers some incentives, by way of discounts or
promotions for example, so as to motivate them to come to the restaurant even during its slow
periods.

Looking at labor utilization, one can expect that chefs are underutilized in this scenario
since after cooking, chefs have to wait for customers to finish eating before a chef can work
again. If the restaurant serves 85 tables per day, total cooking time for the 7 chefs is 637.5
minutes (7.5 preparation and cooking minutes times 85 groups of customers served). The labor
utilization of chefs is approximately 19% (637.5 minutes divided by total working minutes for
the 7 chefs, which is 3,360 minutes). The challenge then really is how to maximize the use of the
tables rather than how to maximize the chefs.

The factors for the lower labor cost can be related to the “Paternal culture” and intangible
assets that the company provides for its employees as added compensation aside from having
well paid wages. Because of this, there is lower employee turnover due to the ability of Benihana
in providing job security, faster promotion and a family oriented culture which is attractive to
Japanese employees.

Summary:

To summarize, Benihana is performing well in its comparison with the industry average
percentage for its net income and their strategy seems to be sound with regards to revenue
generation and their cost reduction. On the other hand, the capacity utilization is what needs to
be improved given that it only falls under the average of 42.61% at lunch and dinner. As
mentioned, they can therefore invest more in marketing by giving out incentives, promotions, or
customer loyalty programs which rewards its customers especially focusing during the times
when there is availability of tables to be able to maximize capacity and generate higher sales. To
compensate for this cost, they can lessen their advertising and focus more on customer centric
strategies for repeat sales which is one of the company's weakness according to the market
survey as well as attract other market segments other than the high income and white collar
segments. Giving opportunity to promotions and less advertising will not be detrimental in this
case because as per the market survey the main source of awareness for the restaurant is word of
mouth.
Appendix 1: