Benihana of Tokyo

2. Operations Strategy and Processes Ren Caldentey

How it Looks

Recently reopened Benihana in Atlanta, GA

Benihana in Utah

2. Operations Strategy and Processes Ren Caldentey

Benihana of Tokyo: The Concept

Business Operations

2. Operations Strategy and Processes Ren Caldentey

Flow Process
Process architecture Inputs & outputs Flow units Activities and buffers Resources Information Process: Transformation of inputs into outputs

Information Process Input

Buffer 1
2. Operations Strategy and Processes Ren Caldentey

Activity 1

Activity 2 Buffer 2

Output

Resources

Transformation Process
Processes
Operations:
Layout Distribution Bar/Dinning Area Back Office/Room Hibachi Cooking / Show Bar Service Food Purchase & Storage Food Preprocessing Quality Control Employee Training

Inputs
Food & Beverages Employees: Chefs Managers Carpenters Waitress Building Materials Market Information

Outputs
Skilled Chefs
Low Food Inv. Utilization rate of Bar/Dinning Area Customer Service - Entertainment - Food & Drinks - Social Environ.

Marketing:
Advertising / Public Relations Benihana Concept Site Selection / Decoration

Finance:

Feedback
2. Operations Strategy and Processes Ren Caldentey

Process Flow Diagram

Customers Food

Reception

Bar Storage

Group of 8? yes Diners seated

Other Flows: Information Flow Cash Flow Chef Training Flow

Drinks Preprocessing WIP

Orders taken

Soup served

Chef show

Main meal
Checkout

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Comparison of Operating Statistics

Sales Food Beverage Cost of Sales Food cost (% of food sales) Beverage (% of beverage sales) Cost of total Sales Gross Profit Operating Expenses Labor Cost Advertising Rent Others Total Operating Expenses Net Profit Before Income Tax
2. Operations Strategy and Processes Ren Caldentey

Typical Restaurant Ranges 70.0% 80.0% 20.0% 30.0%

Benihana Ranges

38.0% 25.0% 35.0% 55.0%

48.0% 30.0% 45.0% 65.0%

34.0% 0.8% 4.5% 16.0% 55.3% 0.5%

42.0% 2.0% 9.0% 33.0% 65.0% 9.0%

16.0%

33.0%

Process Management Definitions

Activity: Is a value-adding stage on the business process. Buffer: Is a stage in which units are stored waiting for the next
activity on the process

Throughput: Is the rate (unit/unit time) at which a process

(system, work area, machine) produces goods or services.
Benihana: # of (satisfied) customers per unit of time (hour, day, month, year)

Capacity: Maximum throughput of a system

Previous stage Next stage

Buffer

Process

2. Operations Strategy and Processes Ren Caldentey

Process Management Definitions

Flow

time: Time spent by a typical order, job or customer in a

buffer, activity, or the entire system.

Capacity

utilization: Throughput divided by total capacity

available.

Example: A GM plant has a capacity of 3600 cars/week, and

actually produces at a rate 2700 cars/week. Its utilization is:

r = 2700/3600 = 75%
2. Operations Strategy and Processes Ren Caldentey

For Benihana.
Parameters that influence throughput:
Layout
Training Process Reduced Menu

Food Pre-processing
Food Quality Control Capacity Management Advertisement

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An Example of Flow Analysis

Find the relationship between # of tables in the dinning room and # of seats in the bar if we want an average customer to stay 24 min. in the bar (assume full capacity).
Customers

Bar
n p # of customersper table (8 pers). NT # of tables (14 tables).

Dinning Area

S Processing(Run) time at the dinning area (1 hour).

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An Example of Flow Analysis (cont..)

Littles Law:
R System R

I units
Flow Time (Waiting Time) = T

I=RT
Let I = # of seat in the bar (Inventory) T = Waiting time in the bar (24 min). Then from Littles Law:

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Inventory Build-Up Chart

Consider a Benihana operation with 45 seats in the bar area and 14 Hibachi tables (with 8 seats each). Assume also that processing time at the dinning area is 1 hour. Suppose the restaurant starts it operations at 6pm and closes the door for new customers at 10pm. During these five hours, customers arrive at a rate of 150 customers per hour. Assume that if a new customer arrives and the bar is full then the customer walks away.
a) Use an Inventory Build-Up chart to represent the number of customers at the bar and at the dinning area over time. At what time the bar will be empty? At what time there will be no more customers in the restaurant?

b) What is the flow time (for the entire process bar+dinning) of a customer that enters the system at 8pm? What is the utilization of the bar and the dinning area?
1. Introduction and Operations Strategy Ren Caldentey

Inventory Build-Up Chart

Inventory 45 30 15 6 Inventory 112 84 56 28 6 7 8 9 10 11 12 time 7 8 9 10 11 12 time

Bar

Dinning

2. Operations Strategy and Processes Ren Caldentey

Business Flows
Relating Flow Time, Throughput and Inventory Inventory = Throughput Flow Time I = R T (The IRT Rule)

The Turnover Relationship

Turnover = Throughput / Inventory TO = R / I = 1 / T

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Business Flow Examples

Customer Flow: Taco Bell processes on average 1,500 customers per day (15 hours). On average there are 75 customers in the restaurant (waiting to place the order, waiting for the order to arrive, eating, etc.). How long does an average customer spend at Taco Bell and what is the average customer turnover?

Job Flow: The Travelers Insurance Company processes 10,000 claims per year. The average processing time is 3 weeks. Assuming 50 weeks in a year, what is the average number of claims in process. Material Flow: Wendys processes an average of 5,000lb. Of hamburgers per week. The typical inventory of raw meat is 2,500lb. What is the average hamburgers flow time and Wendys turnover?

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Wal-Mart vs. Kmart (1999)

Sales COS Cash Inventories AR Margins KM $33,674.00 $26,319.00 $710.00 $6,536.00 $584.00 28% WM $137,634.00 $108,725.00 $1,879.00 $17,076.00 $1,118.00 27%

Flow time (weeks) Cash 1.35 0.86 Inventories 12.42 7.85 AR 0.87 0.41

2. Operations Strategy and Processes Ren Caldentey

The Benihana Case Illustrates

Well-designed service operating system Cost advantages and operations choices Process analysis concepts
Process flow diagram

Batching
Inventory Flow time / Cycle Time Capacity / Throughput / Utilization

Littles Law : I = R T
Inventory Turns Weeks of Inventory
2. Operations Strategy and Processes Ren Caldentey