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Contents

Executive Summary................................................................................................................1 Service concept ......................................................................................................................2 What is a service concept? .......................................................................................................... 2 Service Concept at Benihana ....................................................................................................... 2 Benihana vs. Typical restaurant ..............................................................................................3 Operating focus............................................................................................................................ 3 Sources of Competitive Advantage .............................................................................................. 5 Operating figures ......................................................................................................................... 7 Benihana Production Process .................................................................................................8 Service Design .............................................................................................................................. 8 Analysis of the Service Design at Benihana ............................................................................. 9 Customer Processing Operations Framework ........................................................................... 11 Major design choices which generate operating efficiencies.................................................... 15 Long Term Expansion Strategy .............................................................................................. 20 Current Issues faced by Benihana .............................................................................................. 20 Future Options ........................................................................................................................... 21 Option Evaluation ...................................................................................................................... 22 Prioritization .............................................................................................................................. 24 Conclusion ........................................................................................................................... 26 Appendix A: Service map ........................................................................................................... 27 Appendix B: Summary of Benihanas approach to Promotions................................................. 28 Summary of the Advertising policy ........................................................................................ 28 Summary of the common points in the Advertising Messages ............................................. 28 Appendix C: Key Operating figures ............................................................................................ 30 Appendix D: Bar vs. Food sales .................................................................................................. 31 Appendix E: Process performance metrics ................................................................................ 32

Executive Summary
The origins of Benihana of Tokyo date back to 1935 when Yunosuke (Papasan) Aoki opened the first of his chain of restaurants in Japan. However, the foundation for the establishment of the restaurant in the United States (US) was laid in 1959 when the current President and son of founder, Hiroaki (Rocky) Aoki came on a tour to the US with his university wrestling team. A 03 year systematic analysis of the US restaurant market convinced Rocky of potential opportunities in the US. Thus, the first unit was opened in 1964 and since then the US operation has expanded to a chain of 15 restaurants by 1972 09 company-owned, 05 franchised units and one Joint Venture. Benihana of Tokyo is based on the unique restaurant concept known as the hibachi table concept (cooking on a grill located in the middle of the diners table). By adopting this concept the restaurant was able to provide its customers with an unusual amount of attentive service whilst keeping costs, especially labour, at a low level. Glen Simoes, Director of Advertising and Public relations says, We reassure folks that they will get wholesome, familiar food, with unusual, unique and delicious preparation, served in a fun atmosphere. Well at Benihana of Tokyo its about having fun and enjoying the experience. The Mission of Rocky Aoki was expressed in a statement made by him as, Ill consider my mission accomplished when everyone in America has tried hibachi cooking at least once. Looking into the future the restaurant is faced with the following constraints. Limited success of franchise operation which is also less profitable Own unit expansion limited to 05 per year Staff each new unit requires approx. 30 Oriental staff Investment each new unit costs a minimum of $ 300,000 Keeping the above in mind the restaurant is contemplating growth in 03 principal areas: the US, overseas and Japan. A number of diversification plans are also being considered.
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Service concept
What is a service concept?
The service concept plays a key role when designing and developing a service system. It defines the how (How do we differentiate our service in the market?) and the what (What service package do we offer?) of service design, and helps mediate between customer needs and an organizations strategic intent. There are 03 critical elements to consider when developing a service concept. Facilitating goods raw materials and other tangibles Explicit intangibles what is directly apprehended by the human senses, but cannot be touched such as taste, smell, staff attitudes Implicit intangibles such as status, security, comfort

Service Concept at Benihana


The service concept at Benihana as detailed out by both Glen Simoes and Rocky Aoki is as follows. Wholesome, familiar food (No icky, sticky, slimy stuff) Unusual and unique preparation style (Hibachi cooking) Served in an authentic Japanese environment themed restaurant Atmosphere of fun Providing all Americans with a unique dining experience Thus, the core differentiators are; American food served in a Japanese environment Diners have the opportunity to observe the chef preparing their food orders
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Benihana vs. Typical restaurant


The service strategy begins by selecting the operating focus the performance priorities by which the service firm will compete.

Operating focus
The performance priorities which a service organization such as Benihana could assume include; Treatment of the customer Speed and the convenience of service delivery Price of the service Variety of services Quality of the tangible goods which accompany the service The unique skill that constitute the service offering

Benihanas marketing and promotions attempt to highlight the experience which the customers get with the hibachi cooking which differentiates it from an American steak house which also offers similar food.

Operating focus Treatment of customer Speed Convenience Price Variety Quality of tangible goods Unique skills

Benihana

Typical restaurant

Table 1: Operating focus Benihana vs. Typical restaurant

Benihana is a themed restaurant and thus its competitive priorities include; Treatment of the customer By ensuring a high level of contact between the customer and the chef Benihana itself provides a unique dining experience. The hibachi table arrangement has facilitated a great deal of attentive service to their customers with a minimum number of resources. By having the chef prepare food at the customers table, it enables the customer to communicate exactly what they want, whilst providing entertainment. Unique skills The hibachi style of cooking is an art in itself. Thus, mastering it requires considerable training and effort. Thereby, the chefs are recruited from Japan, who has to go through a three year formal apprenticeship. Further they need to attend the Benihana College of Chefs in Tokyo, where the master chef would graduate them once the chefs are fluent with the Benihana style of cooking. After the Chefs are allocated to Benihana restaurants in U.S. they still have a continuous process of training.

On the other hand a typical American restaurant would focus on; Variety A typical American restaurant offers a wider menu and the customers would have a greater choice. Benihana of course limits the menu to 03 simple entrees and one appetizer. Convenience Another factor which a typical restaurant focuses on is creating a comfortable, noice-free environment. In that sense Benihana presents more of a busy atmosphere where unknown parties sit in batches of 08 at the teppanyaki table which some people may not be comfortable with.

Some of the common factors amongst the 02 types of restaurants include; Quality Being in the restaurant business means that the quality of the meals and beverages is critical whatever the restaurant concept. In otherwords, its a prerequisite or Order Qualifier. Speed It should be noted that speed remains a competitive priority in the case of Quick service or Fast food restaurants. Basically both Benihana and the typical restaurant does not emphasize on speed. However, a reasonable speed of service needs to be maintained. Price Yet again price would be more of a decisive factor when it comes to fast food restaurants. As far as Benihana and a typical American restaurant is concerned its the same food that is served, but with a significantly lower variety at Benihana. Hence, price is not a competitive priority.

Appendix A shows the service process for a Benihana restaurant and that of a typical American restaurant. This would be elaborately examined in the next section of the report Service Design at Benihana.

Sources of Competitive Advantage

An overview of the production process at Benihana revealed the following Critical Competitive Advantages in terms of its operations.

Hibachi table arrangement reduces the need for a conventional kitchen and also helps to provide customers with an unusual amount of attentive service.
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Significantly lower labour cost 10% to 12% of gross sales as opposed to the 30%35% incurred by a typical American restaurant, due to elimination of the need for a conventional kitchen. Increased proportion of floor area devoted to dining Only 22% of space devoted to back of the house operations compared to 30% in a typical restaurant. Virtually no waste and lower food costs This is because Benihana provides limited variety, i.e. steak, filet mignon, chicken and shrimp. As such less storage and thereby less wastage since food is a perishable good. Food costs are 30%-35% of food sales, whereas a typical restaurant bears a cost of 38%-48%. Historical authenticity Familiar food offered in an exotic environment. "Show" of hibachi Its an experience and creates an atmosphere of fun. Also, Americans are able to enjoy their food being cooked, which also removes the mistrust over exotic foods/ restaurants. Highly trained and certified chefs from Japan perfected the art of hibachi Located in predominantly business districts This is where the majority of the earners, who also have a need/desire to eat-out, are prevalent. High level of commitment amongst Chefs and other personnel due to the rapidity with which they could rise in the American Benihana operation and also the paternal attitude towards all its employees. Creative advertising Appendix B summarizes the jist of Benihanas Marketing philosophy. Based on this it could be concluded that it offers an experience, as some of its recent advertisements did not contain the word restaurant.

Operating figures
A summary of the key operating figures for the Benihana Chicago operation, the companys largest money-maker, has been compared with that of a typical American restaurant in Appendix C. Due to the aforesaid competitive advantages Benihana enjoys a minimum 16% higher margin over the typical American restaurant, all other costs remaining same. It could also be noted that the wider variety of menu items in a typical restaurant has resulted in a greater variability in the operating results.

Benihana Production Process


Service Design
Three contrasting approaches to delivering on-site services are: Production Line Approach The Production line approach has been beneficially used in manufacturing companies to yield consistent-quality standard products at relatively low cost. For this reason, service firms have also employed this approach, which embodies a division of labor, sequential flow processes, and standardization of services. It treats the service operation as a manufacturing process rather than as a service process. Today's customers, however, are demanding customized services and shorter cycle times outcomes that the production line approach finds difficult to achieve. Degree of customer contact: face-to-face tight specs

Self Service Approach Self-service enables customers to take back some of the responsibility for the management of their affairs. This has a number of potential benefits. It enhances customer satisfaction through a sense of real control, a feeling that their opinions and requirements actually do make a difference. And almost as a side product, call centre and service centre traffic is significantly reduced. By relaxing this pressure on the existing customer care environment, self-service can provide an opportunity to redirect resources to managing customer issues that demand human input, such as disputes or business critical service down time--or whatever the customer highlights as the issues they want to be handled by an expert. Degree of customer contact: Internet and on-site technology

The Personal Attention Approach Personal attention approach is where the customer gets a customized product or service, in order to suite his or her needs. This approach deals with the different variations that a customer would require when using a product or service. Eg: Nordstrom Dept Stores and Ritz Carlton. Degree of customer contact: Nordstrom face-to-face total customization (relationship between salesperson and customer) Ritz Carlton face-to-face loose specs (process virtually scripted IS keeps track of guest rather than the employee)

Analysis of the Service Design at Benihana

Based on the above definitions Benihana seems to adopt a Product Line approach to service. The following are 03 important features of such an approach.

Division of Labour Sequential flow Processes Standardization of Services

Let us analyze Benihana based on the above 3 characteristics in order to assess whether the restaurant has these features.

Division of Labour at Benihana The service of the Restaurant is such that there is One Chef and One Waitress operating Two tables. In general practice at a Teppanyaki Restaurant the waitress will first take the order for Beverages, Soup and Salad. On average a diner takes 45 minutes to dine at the restaurant and this process (Beverages, Soup and Salad) could be assumed to take 20 minutes in total, leaving the balance 25 minutes for the chef to put on a show and do his/her cooking. This process works well for the restaurant because while the table of customer is being served their initial menu (Beverages, Soup and Salad) the other table is already being served their hot meal.

Sequential flow processes at Benihana Any customer that enters the Benihana restaurant goes through the below process. Enter to the restaurant Bar/Lounge waiting area Food ordering Initial Menu & Main Menu Food arriving Live Cooking Payment Exit Hence, it could said that said that the customer is fine tuned to a sequential flow within the restaurant and it is highly streamlined so that there will not be any delays in between the process.
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Standardization of Services at Benihana Benihana offers a standardized limited menu for both lunch and dinner. This allows the restaurant to reduce storage costs and cut on wastage, whilst ensuring a faster turnaround time for customers. Another important point is that the food items are standardized to a high level so that the customers get the same experience time after time. Eg: - The meat used at the restaurant was Prime Grade, tightly specified Tenderloin and boneless strip lions. This meat was then further trimmed leaving a piece of fat for the chef to chop off, during his show cooking time.

Based on the above analysis it could be said that Benihana posses the characteristics of Division of Labor, Sequential flow processes and Standardization of services. Hence, it could be concluded that the Benihana restaurant adopts a Production Line Approach.

Customer Processing Operations Framework


The Customer Processing Operations Framework is a useful tool when it comes to examining the Benihana production process in detail.

Selection

Point of Entry

Response Time

Point of impact

Follow up

Point of Departure

Delivery

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Selection Matching image to Operations abilities The restaurants were designed with a sense of Showmanship and Interaction, especially to suite the American palate of eating in exotic surroundings and enjoy watching their Food being prepared. The whole concept of Benihana Restaurants is based on the Hibachi Table Concept (where the food is been prepared / cooked in front of Customers). A Benihana Chef is an Artist who Acts for the theatre of Stomach. The Chef walks right up to the Hibachi Table and lets the Customer choose the stage which they need the steak to be cooked (rare, medium or well done). Then he cuts the steak begins a Snappy rhythmic attack on the onions, slams the paper shaker against the grilletc. and the cooking continues. The main focus in selecting Hibachi is to cope up with rising costs and increased competition in Restaurant operations. Since the cooking of food takes place in front of Customers, this saves the space of a Conventional Kitchen which needs a larger area allocation. To facilitate the operation of Restaurant without tarnishing Benihana image, it has allocated around 22% of the total space as the back of the house (which includes food preparation area, dry / refrigerated storage, employee dressing rooms & office area) but in contrast a standard Restaurant requires around 30% of its total space as back of the house.

Point of Entry Benihana Restaurants are located in predominant business districts where it gives easy access to businessmen. Some of the Benihana Restaurants even had easy access to residential areas.
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As derived from the Questionnaire (Exhibit 4 Case study) 81% of customers who patronize the Restaurant actually work in that area, which clearly indicates that Location is a prime concern for the majority of the Customers. Although they have a considerable amount of repeat clientele (65.7% of Customers said that this is not their first visit to the restaurant Qs. 6) the frequency of visiting is low (Qs. 13. How frequently do you come to Benihana? The majority stated that they come once a year or more 55.6%). From an Operations Management point of view, this has to be changed as the frequency of visits should increase in order to enhance the Operations effectiveness which will result in improved profitability at the end.

Response Time Normally a customer would spend approx. 45 minutes (excluding the time spent in the bar) dining at the restaurant. This would be the Service time. The average turnover at the teppanyaki table was an hour and 1 hours in slow periods. This would be the Rate of Arrival for each batch of 08 customers.

Point of Impact As stated earlier the image of Benihana Restaurants is The Chef and it is their key to Success. All these Chefs are young, single, and Native Japanese. To present / cook in front of a Hibachi Table, a Chef has to go through an Intensive Training which includes, 2 years apprenticeship in Japan Entering to Benihana Collage of Chefs and undergo a 15 grueling weeks of training under Master Chef Shinji Fujisaku.

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Getting graduated finally once the Chefs are able to show the Master Chef that they have become an absolute whiz at Benihanas special style of Hibachi Cooking. Once they become Masters of Hibachi Cooking, they have to undergo an English language programme which goes up to Three of Six months. Once they arrive in US, training process will continue to keep up the required standards. A Travelling chef inspects each unit periodically while other Chefs compete among themselves to become the Chief Chef. The main concerns of any customer who visit a Restaurant will be the Quality of Food, Cleanliness of Food preparation and Quality of Service. As per the questionnaire, the Food (38.2%), Preparation (24.6%) and the Service (16.3%) have been ranked top as most highlighting aspects of the Restaurant which shows the recognition of Customer requirements and concerns.

Delivery One of the Competitive Advantages that Benihana has over other Restaurants is the close interaction between Customers and the Chef which ultimately delivers a unique Experience to customers. Familiar American food in an exotic setting has been offered using three basic menus and freshly prepared food for Customers, which provides a fabulous memorable dining experience for diners. Each chef has his own unique style which he uses to amaze customers and thereby create an atmosphere of fun. E.g., it could be a spin of the rice bowl or skilled cutting of the shrimp. In the end its all about creating an enjoyable experience.

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Departure First impressions last long, will cease to be a valid statement unless you give the same attention at the Departure of your Client. In Benihana, the Chef comes to the table and bows as per traditional Japanese Customs to the Customers. Then he starts his performance. The same way once he ends the show, he again bows and thanks them and then leaves the place.

Follow up Benihana doesnt have a standard system of colleting Customer feedback, which would give immense support in the Management decision making process to move the business forward. The only stated Customer feedback was from a Questionnaire filled out sometime back. The problem here is lack of consistent feedback and also the fact that we are relying on past data how reliable are they over time?

Major design choices which generate operating efficiencies


In summary lets look at some of the service design choices which Benihana has made and how these have resulted in operating efficiencies. Degree of customer contact This is very high in order to match its promise of a unique dining experience. As a result, the process ensures a high level of contact between the Chef and the customers. Facility location Located in high traffic business districts. The ideal target audience for an exotic restaurant, since they are more prone to eat out. Worker skills The chefs are considered the key to Benihanas success. As such they are given a thorough training in language, mannerism and the hibachi style. They are perfectionists and master the art of entertaining while cooking.
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QC by limiting the menu to 03 simple items Benihana has been able to cut on food costs, whilst virtually eliminating waste. Product design standard portions available especially rice which is wholesome (as stated by customers in the Questionnaire) and pre-determined mix of items for various dishes. This helps to provide customers with greater value for money, as food costs would also be low. Process design As discussed earlier Benihana adopts more of a Production Line approach to service by providing limited variety, standard portions and batching of customers. The benefits of batching would be discussed under Production planning.

Facility layout Using Fresh food items (such as raw meat & fish) will decrease the usage of Refrigerators which will help to reduce the space requirements of Back of the House.

In addition, the hibachi style of cooking eliminates the need to have a conventional kitchen.

The Bar/Lounge area The Bar/Lounge has two main purposes:

1) Waiting area for customers 2) Profit generating segment of the business

It appears that the greater the bar area with respect to the total floor area, higher the bar sales. This is evident from the following figures.

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Beverage sales as a % of total sales Benihana West 18% Benihana East 20%-22% Benihana Palace 30%-33% Table 2: Beverage sales of the Manhattan operations

However, the beverage cost remains at a constant 20% of beverage sales which means that it is able earn a higher margin on such sales.

Appendix D compares the Bar to Food sales ratio in order to determine the number of customers of each during lunch and dinner respectively. Benihanas largest moneymaker, the Chicago unit, has been used for the illustration.

It could be seen that there is a greater footfall (56% vs. 44%) when it comes to the bar, which also provides a larger margin. However, the throughput time is much longer when it comes to the restaurant.

The space allocation is as follows: Dining area 2/3 Bar 1/3 Based on this it is possible to state that the average processing time at the bar is supposedly much faster than the restaurant.

Benihana should look to achieve a standard ratio of bar/lounge area: dining area amongst all its restaurants. It could probably do a layout change in some of its older restaurants such as the Benihana West and Benihana East without expanding the whole restaurant, thereby shifting the sales mix and enhancing profitability. This is because Americans primarily prefer to have a drink every now and then.

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Production and Capacity planning

Important points to note include the following.

The batching of diners into groups of 08 as opposed to a typical restaurant. Use of the bar/lounge area primarily as a waiting area to control the flow of diners

Using the formula for Average waiting time (TTq),

TTq =

Ca + Ce 2

u 1-u

te

Where, Ca = Variability in the rate of arrival/demand Ce = Variability of the process or service time u= Utilization

te = Actual average service time (Effective processing time)


Assuming a Poisson distribution, the rate of arrival is taken to be one batch of 08 customers per hour at each teppanyaki table. The rate of service as stated would 45 min per batch of 08 customers.

Appendix E compares the Process performance figures of a typical restaurant with that of Benihana.

Typical restaurant: If you take a typical restaurant the flow of customers is random and hence the distribution is a Single Channel, Poisson Arrival, Exponential Service Time.
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Benihana: What Benihana has actually tried to achieve by batching customers is to reduce the variability in demand (Ca) since the variability in service (Ce) would anyway be low since the Chefs are highly trained. Thus, the distribution at Benihana is that of a
Single Channel, Poisson Arrival, Constant Service Time.

In both cases the system utilization is 75%, but at Benihana where more of a Production Line approach is followed it could be observed. Shorter average number in line (1.125 vs. 2.25) Shorter average number in system (1.875 vs. 3.00) Shorter average time in line (0.1406 hours vs. 0.2813 hours) Shorter average time in system (0.2344 hours vs. 0.375 hours) Thus, Benihana is able to provide a better level of service to its customers.

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Long Term Expansion Strategy


Current Issues faced by Benihana
Difficulty in attracting chef & other personnel Benihana require a minimum of 30 Oriental staff for each new unit. But presently they find it difficult to attract chefs and other personnel due to the general level of prosperity enjoyed in Japan as well as competition from other restaurants bidding for their talents.

Out of the 30 staff, 06 to 08 would have to be trained chefs and as discussed earlier a chef requires a rigorous training of 03 years formal apprenticeship plus another 03 to 06 months course in English language, American manners and the hibachi style of cooking.

How to expand? Benihana grew very fast in US. Vice president Bill Susha now thinks where Benihana is and what they want to do.

The franchise operations have been of limited success due to 04 main reasons, Investors had no restaurant experience American investors didn't care about the welfare of the Japanese employees Lack of control over franchise operations It is more profitable to run own business rather than franchising

This was faced by Benihana merely due to lack of research on franchising operations.

Further own expansion is limited to opening only 05 units a year, as this the maximum speed the two crews of Japanese carpenters could build the units.

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Cost constraints Each new unit requires a minimum of $300,000. Almost all the interior items are imported from Japan which involves a significant cost. (Both the Japanese carpenters to re-assemble and the union carpenters to sit and watch)

Youth market segment Presently Benihana is enjoying business from a middle-income audience (As per Qs 17 of the Questionnaire 50.2% of the customers earned a salary of between $15,000 and $40,000. It fails to attract the younger generation (10-25years) which currently constitute less than 25% of its customer base. Will this younger generation be attracted by the Hibachi style of cooking? Will they be happy with the only 03 items menu? More research will be required on this target market.

Future Options
Below is a list of future expansion options which Rocky Aoki is considering. US Primary marketing areas Atlanta, Dallas, St Louis Secondary markets fewer headaches and nice margins (Cincinnati and Indianapolis) Suburbs not yet present Penetration saturation not a problem Joint Ventures (Overseas) 04 deals have not been consummated as yet. Canada Royal York Hotel (Toronto) Mexico build and operate unit or take over management (Acapulco, Mexico City) Great Britain and across Europe (Paradine group) One in US
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Japan negotiating to take over a chain of beer halls

Diversification Line of Japanese food products under Benihana label for retail sale Japanese quick service operation (combined Chinese-Japanese operation) in US Negotiating with an oil company to put small units in gas stations Negotiating for a site on Guam

Going public

Option Evaluation
Expansion in US Market

It has been identified that functioning in secondary markets such as Harrisburg, Pennsylvania, Portland etc are profitable. These markets consume less administration cost and make good profits.

However, primary markets are highly concentrated with people who actually eatout and also have the spending potential.

Hence the cost-benefit of both markets must be analyzed.

Further Benihana does not have any issues penetrating to existing markets as saturation does not seem to be an issue. Nevertheless more customer surveys are required to confirm the saturation level before penetrating. Moreover the existing places are already known for Benihana and its goodwill is very high. Hence, there will not be an additional promotional cost for the new units.

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Suburbia carries good potential for restaurants but the acceptance of the hibachi style of cooking and its ability to blend with the lifestyle needs to be researched.

Going Public Good option to raise funds, nevertheless cost of issues must be concerned. Further abiding by government regulations, stock exchange regulations, financials, delighting the shareholders, maintaining stakeholders satisfaction with their requirements so on and so forth will be a main concern. As the way presently Benihana functions i.e. main board runs by Rocky, Bill Susha and Allen Saito; will going public make them accountable for the shareholders. If Benihana is not happy about lack of control with franchisees they will not be happy about shareholders managing or controlling them. Moreover can Benihana carry out business the way they carry out now?

Overseas markets These are beneficial as the domestic company knows the cultural aspects and target markets and Benihana has the know how of running a restaurant. Since extensive negotiations are carried out prior to entering into agreement, it is vital that a clear agreement is arrived upon the respective responsibilities of each party to the venture. However other political, economical, social and technical factors must be considered.

Diversification As shown above Benihana has looked upon a number of related diversification opportunities. In an industry where barriers to entry are low competition is high, and arises not only from Japanese restaurants, but from other Asian cuisines such as Chinese, Korean, Singaporean, Thai, etc. This is because most of the time they compete for the same need. Thus, diversification into related areas could prove fruitful, but particular attention must be paid with regard whether the new business fits the current Operating strategy and Competitive advantages.

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Benihana must concentrate more on research in to these types of arrangements as they have already failed in franchising. Further it also must understand for what reasons it wants to diversify. Is it a risk mitigating strategy? Profit sharing? Cost reduction? Unless the aim is clear the operation may not be smooth and successful. Moreover what will happen to the name gained as 'Hibachi, authentic Japanese, after the diversification?

Prioritization
First important point to consider is that payback is very low. For example, if you take Benihanas largest unit (Chicago) the payback would have been around 03 months (300,000/1,300,000*12 months). Secondly, the concept of a Plant-Within-a-Plant (PWP) needs to be kept in mind when developing an Operations strategy. As such Benihana could run different types of operations under the same company. Each operation is managed according to its own strategy to minimize the confusion associated from shifting from one type of strategy to another.

We recommend Benihana to adopt the following sequence when exploiting its strategic options. Open up small units in gas stations since the investment would be less, and as it would also enable some kind of test marketing. Enter into franchise agreements to expand only in secondary markets This is because success has been observed with regard to franchising in secondary markets. Franchising means no overhead cost and no burden of managing operations. Only the control aspect needs to be focused upon.

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Joint ventures also look a more feasible in that it shares both risk and resources. In addition, it helps Benihana to obtain a global presence, whilst enabling it to get exposure in different markets. Since anyway the agreements are almost concluded its better to make use of the opportunity. First obtain a listing in the main board and raise some funds probably to expand the US operation. (Suburbia and Penetration of existing markets) Going public with IPO the objective should be to finance solid expansion Expansion into other primary markets in the US acquisition or otherwise Based on the PWP concept, introduce 02 new service concepts. Quick service restaurant targeting both the busy executives (junior and middle) and the younger eat outs. Should serve inventive Japanese cuisine ranging from sushi, sashimi and creative salads to signature dishes like carpaccios, ceviches, tartares, filet mignon, grilled spicy shrimp and specialty rolls. Most importantly it should also provide delivery and catering services, and a vibrant bar scene at most locations. Sushi restaurant to appeal to the younger crowds. This would feature imaginative sushi, fusion cuisine and specialty cocktails. It would also offer a playful and award-winning dining experience, complete with music and a stimulating atmosphere. Introduction of a line of Japanese foods easiest way to reach the most important person in the consumer decision making process, i.e. the housewives. It would help Benihana to touch the typical American family.

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Conclusion
In conclusion, Benihana needs to adopt the following measures in the future. Maintain a consistent bar/lounge area: dining area probably a ratio similar to that of the Manhattan Palace.

Implement the strategic future options in the order discussed above. Develop a means by which the top management could get regular feedback on customer service and customer profiles. Probably a diners questionnaire given monthly. As far as expansion into hotels is concerned what Benihana should ideally do is own the hotel and allow the other party to manage, rather than run the hotel themselves. As per the Questionnaire only 13% of customers highlighted the authentic Japanese atmosphere. Hence, Benihana should use material available in the US and achieve substantially the same effect as stated by Bill Susha. Ensure that its advertisements keep on emphasizing the Experience factor and avoid pitching functional advertisements.

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Appendix A: Service map


Benihana service process

VS.
Customer arrives

Typical American restaurant

Customer arrives

Bar

Lounge

Bar

Lounge

Batching of customers into groups of 08

Enter restaurant

Food ordering Group of 08 at Teppanyaki table Serve starters and beverages Food ordering Food prepared in kitchen Serve starters and beverages Waiter appears Chef appears Food served and consumed Live cooking Payment Food served and consumed Exit Payment

Exit
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Appendix B: Summary of Benihanas approach to Promotions


Summary of the Advertising policy
Ads are characterized by a bold headline statement & eye catching illustration. (Ex. Go forth now & cook amongst the Americans, theatre of the stomach, two philosophies of the steak, and the mission of Rocky Aoki.) Benihana was never advertised on the entertainment pages of newspapers among the other restaurant ads. Benihana takes a full page advertisement which creates an impact, on national publications once in a while, not follow a regular schedule of small ads. Benihana advertises on magazines read by its target audience (New York Times, Womans Wear Daily, New York Magazine etc.) Engaging ads that will make the reader read till the end & visit Benihana. Ads target both residents of the area & tourists to the area as well. The word restaurant was never used in its advertising messages to describe Benihana. Involves its self in varied promotions; catering to celebrities, hosting youth groups, sending matchboxes to conventions, scheduling interviews for Rocky etc. Through its P. R. machine, Benihana is made to be mentioned through T. V. radio or magazines in some way at least once every day.

Summary of the common points in the Advertising Messages


The hibachi style of cooking cooking on the table grill The concept (Cooking in front of the customer) Speed of delivery (direct to your plate) The showmanship of the chef (knife movements, choreography of body movements in adding seasoning etc.) The menu- available meat items; shrimp, poultry, sirloin, steak & vegetables.
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The seasoning used (pepper, sesame, etc.) The taste of the food Mention of the Japanese element in Benihana (bowing, samurai warrior, chopsticks etc.) The joy & excitement of the atmosphere (the chefs attitude etc.)

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Appendix C: Key Operating figures


Typical restaurant Ranges (%) Sales Food Beverage Total Sales 70.0% 30.0% 100.0% 80.0% 20.0% 100.0% 70.0% 30.0% 100.0% Benihana (Chicago)

Cost of sales Food cost (% of food sales) Beverage cost (% of beverage sales) Cost of total sales Gross profit 38.0% 25.0% 35.0% 65.0% 48.0% 30.0% 45.0% 55.0% 30.0% 20.0% 27.0% 73.0%

Key Operating expenses Labour Advertising and promotion Management salary Rent Shadow margin 30.0% 0.75% 2.0% 4.5% 27.75% 35.0% 2.0% 6.0% 9.0% 3.00% 10.0% 10.0% 4.0% 5.0% 44.00%

Highest possible scenario

Lowest possible scenario

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Appendix D: Bar vs. Food sales

Total revenue per annum % of total dollar volume Lunch (p.a.) Food Average check Annual customers Beverage Average check Annual customers 30% $1.5 70% $4.5

$1,300,000 30% $390,000 $273,000 40% $520,000 $364,000

Total revenue per annum % of total dollar volume Dinner (p.a.) Food Average check 70% $7.5

$1,300,000 60% $780,000 $546,000 70% $910,000 $637,000

60,667 117,000

80,889 156,000 Beverage Average check 30% $2.5

72,800 234,000

84,933 273,000

78,000

104,000

93,600

109,200

Customers per day Food Beverage 166 214 222 285 44% 56%

Customers per day Food Beverage 199 256 233 299 44% 56%

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Appendix E: Process performance metrics


Typical restaurant: Single Channel, Poisson Arrival, Exponential Service Time

Arrival rate Service rate

= =

8 10 2/3

Interarrival Time Service time System Utilization Probability system is empty Average number in line Average number in system Average time in line Average time in system

1/ = 1/ = = P0 = Lq = Ls = Wq = Ws =

0.1250 0.0938 0.7500 0.2500 2.2500 3.0000 0.2813 0.3750

Benihana: Single Channel, Poisson Arrival, Constant Service Time

Arrival rate Service rate

= =

8 10 2/3

Interarrival Time Service time System Utilization Average number in line Average number in system Average time in line Average time in system

1/ = 1/ = = Lq = Ls = Wq = Ws =

0.1250 0.0938 0.7500 1.1250 1.8750 0.1406 0.2344

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