Session 2 - Benihana - Students

2. Operations Strategy and Processes – René Caldentey

Benihana of Tokyo


Recently reopened Benihana in Atlanta, GA

Benihana in Utah

How it Looks


Benihana of Tokyo: The Concept

Business Operations


Flow Process

Process architecture

– Inputs & outputs

– Flow units

– Activities and buffers

– Resources

– Information

Input

Buffer 1

Activity 1 Activity 2Output

Buffer 2

Process

Resources

Information

Process: Transformatio

n of inputs into

outputs


Transformation Process

• Food & Beverages• Employees:

• Chefs• Managers• Carpenters• Waitress

• Building Materials• Market Information

Operations:• Layout Distribution

• Bar/Dinning Area• “Back Office/Room”

• Hibachi Cooking / Show• Bar Service• Food Purchase & Storage• Food Preprocessing• Quality Control• Employee TrainingMarketing:• Advertising / Public Relations• Benihana Concept• Site Selection / DecorationFinance:

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

Feedback

Inputs

Processes

Outputs


Process Flow Diagram

Reception

Bar

Group of 8?

yes

Customers

Diners seated

Orders taken

Soup served

Chefshow

Main meal

Checkout

Food

Preprocessing

Storage

Drinks

Other Flows:• Information Flow• Cash Flow• Chef Training Flow

WIP


Comparison of Operating StatisticsTypical Restaurant

SalesFood 70.0% 80.0%Beverage 20.0% 30.0%

Cost of SalesFood cost (% of food sales) 38.0% 48.0%Beverage (% of beverage sales) 25.0% 30.0%

Cost of total Sales 35.0% 45.0%

Gross Profit 55.0% 65.0%

Operating ExpensesLabor Cost 34.0% 42.0%Advertising 0.8% 2.0%Rent 4.5% 9.0%Others 16.0% 33.0% 16.0% 33.0%

Total Operating Expenses 55.3% 65.0%

Net Profit Before Income Tax 0.5% 9.0%

RangesRangesBenihana


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

Buffer ProcessPreviousstage

Nextstage


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:

= 2700/3600 = 75%


For Benihana….

Parameters that influence throughput:

Layout

Training Process

Reduced Menu

Food Pre-processing

Food Quality Control

Capacity Management

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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).

CustomersDinning Area

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

tables).(14 tablesof #

pers). (8 per table customers of #

S

N

n

T

p

RBar


An Example of Flow Analysis (cont..)

Little’s Law:System

R R…

I units

Flow Time (Waiting Time) = T

I = R T

Let I = # of seat in the bar (Inventory) T = Waiting time in the bar (24 min).Then from Little’s Law:

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?

Inventory Build-Up Chart

1. Introduction and Operations Strategy – René Caldentey


Inventory Build-Up Chart

6 7 8 9 10 11 12time

BarInventory

15

30

45

6 7 8 9 10 11 12time

DinningInventory

28

56

112

84


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


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: Wendy’s processes an average of 5,000lb. Of hamburgers per week. The typical inventory of raw meat is 2,500lb. What is the average hamburger’s flow time and Wendy’s turnover?


Wal-Mart vs. Kmart (1999)

KM WMSales $33,674.00 $137,634.00COS $26,319.00 $108,725.00Cash $710.00 $1,879.00Inventories $6,536.00 $17,076.00AR $584.00 $1,118.00

Margins 28% 27%

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


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

Little’s Law : I = R T Inventory Turns Weeks of Inventory

Session 2 - Benihana - Students

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