Benihana Case Presentation 27 Jan 2013

8/13/2019 Benihana Case Presentation 27 Jan 2013

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Service Operations Management

Benihana of TokyoCase analysis

By

Group 1

Lokesh Kumar - 30

Shijo Joshua - 51

Abhijeet Kumar-02

Marri Vivekanand Yadav-32

Faculty:

Prof. Narain Gupta


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Customer Need & Service Concept

Customer Needs Americans enjoyed eating in exotic surroundings

They were deeply mistrustful of exotic foods

People very much enjoy watching their food prepared

Service Concept (Q1)

SteakHouse with a difference

Food is cooked in front of the customer

Cooked only by Oriental Japanese chefs

Authentic Japanese country inn dcor by Japanesecarpenter


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Benihana Competitive advantages

Hibachi table concept

Reduced cost of labour(10%-12% of sales)

Increased dining space (by 8%)

Historical Japanese Authenticity

Limited Menu (reduced food costs to 30%)

Increased bar/lounge area


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Hibachi table concept


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Benihana Competitive advantages

High traffic site: location

Specialized training of chefs (3 yr apprenticeship)

Paternal attitude towards employees(low turnover)

Effective Bonus plan

Creative & Extensive advertising (8%-10% of sales)

Simple management structure


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Future Expansion Strategies

Franchising :

Problems:

The franchises are businessmen and does not knowrestaurant business

The franchisee could not honor Japanese staff

More profitable to own and operate than to franchise.

Deals with hotels:

Problems: Clear and strict agreements are required, so that they

are not at the mercy of hotel management.


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Future Expansion Strategies

Own and Operate by themselves :

Problems:

Limited to opening only 5 units per year - only 2Japanese carpenter crew (can be overcome by usingother materials ,not 100% authentic)

Constraints in staff : requires 30 people

Cost factor:$300000 per new unit.

Investment by International banking Organisation:Problems:

Must give up large amount of control and autonomy.


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Prinicpal areas of growth

United states:

Primary marketing areas

Secondary marketing areas

Suburbia

Further penetration into existing markets

Overseas:

JV with Royal York Hotel, Canada

New unit in Mexico city, or build and operate new unitin the hotel to be built

JV with David Paradine limited in Great Britain.

.


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Diversification plans

Producing a line of Japanese foods under the

Benihana label

Targeting young customers

Japanese quick service operation( Chinese- Japaneseoperation) at gas stations

Taking over a chain of beer halls in Japan.


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Process flow of Benihana (Q2)


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Pine & Gilmore Economic Progressio

Economy Agrarian Industrial Service Experience

Offering Commodities Goods Services Experiences

Function Extract Make Deliver Stage

Nature of offering Fungible Tangible Intangible Memorable

Key attribute Natural Standardize Customize Personal

Method of supply Stored in bulk Inventoried Delivered on

demand

Revealed over time

Seller Trader Manufacturer Provider Stager

Buyer Market User Client Guest

Factors of demand Characteristics Features Benefits sensations


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Operating Statistics for a Typical Service Restaurant (Q3) Chicago Unit

Sales Ranges (%) avg %

Food 70 80 75 70

Beverage 20 30 25 30

Total Sales 100 100 100 100

Cost of sales

Food cost (% of food sales) 38 48 43 30

Beverage cost (% of beverage sales) 25 30 27.5 20

Cost of total sales 35 45 40 27

Gross profit 65 55 60 73

Operating expenses

Controllable expense

Payroll 30 35 32.5

10

Employee benefits 3 5 4

Employee meals 1 2 1.5

Laundry, linen, uniforms 1.5 2 1.75 1.75

Replacements 0.5 1 0.75 0.75

Supplies (guest) 1 1.5 1.25 1.25

Menus and printing 0.25 0.5 0.375 0.375

extermination, equipment rental) 1 2 1.5 1.5Music and entertainment (where applicable) 0.5 1 0.75 0.75

Advertising and promotion 0.75 2 1.375 10

Utilities 1 2 1.5 1.5

Management salary 2 6 4 4

Administration expense (including legal and accounting) 0.75 2 1.375 1.375

Repairs and maintenance 1 2 1.5 1.5

44.25 64 54.125 34.75

Occupation expense

rent 4.5 9 6.75 5

Taxes (real estate and personal property) 0.5 1.5 1 1

Insurance 0.75 1 0.875 0.875

Interest 0.3 1 0.65 0.65

Depreciation 2 4 3 3

Franchise royalties (where applicable) 3 6 4.5

11.05 22.5 16.775 10.525

55.3 86.5 70.9 45.275

Gross profit 65 55 73

Total operating expenses 55 65 45Net profit before income tax 10 -10 28

9.5 0.5


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Cost Typical rest.. Benihana

Food cost(% of food sales) 38-48% 30%

Beverages cost(% of beverages sales) 25-30% 20%

Labor cost out of operating expenses 30-42% 10%

Management Salaries 2-6% 4%

Rent out of operating Expense 4.5-9% 5-7%

Space occupancy 30% 22%

promotional and Advertisemet cost .75-2% 10%

Construction cost lower Higher

Benihana Cost structure compared to typical sit down restaurant(Q4)


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Service Characteristics (Q5) Perishability: Unoccupied seats, food ,unused manpower

Inseparability: Both customer and service provider must be present

Simultaneity: Service is delivered an consumed simultaneously

Variability: Limited, but customized

Intangibility: Food is tangible, but experience & ambience is intangible


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Recommendations

Go public: To raise Capital

Large scale training of staff

Stop import of Japanese dcor and use local

material and carpenter Increase of Bar/Lounge space

Happy hours for young generation.

Dont diversity into mass production(leads tobrand dilution)

No franchisee and No small units at gas stations

Benihana Case Presentation 27 Jan 2013

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