04 - Benihana - BC - ISC

Hiroaki Aoki. Born in Tokyo.

Analyzed american market --> Americans enjoy watching how the food is being prepared.

In 1964 he opens a restaurant in New York. named it Benihana (= Red flower)

1966 - Opened a second in NewYork and a third in Chicago.

Business model

Initial strategy

• Systematic analysus
• Identify flaws and waste work
  Lean principles:
• An experience, not just food
• Value stream
• Elimination of waste
• Pull/push system
  Control quality
• The organization
• Staff
• Pursue perfection
  Advertisement
• Market research --> costumer
• New creative type of ads
  • Figuring out who the costumer was
  • They always do ads
• Everyday of the year

Advantages

Brand identity
Control and quality
Customer experience
Operational efficiency

• High turnover
• Low cost

Customer experience

??

Operational efficiency

• Minimizing labor cost (10% of sales compared to usual 30/35%)
  • Chef is also server
• Reducing food waste (food cost = 30/35% compared to 38/48%
• Maximizing space
  • 22% total space is allocated to kitchen compared to 30%
• Focusing on staff training
  • Committed staff with low turnover reduces costs of recruitment and training

SWOT analysis

SWOT - Strength Weaknesses Opportunities and Threats

Strengths

• Unique concept, culture experience and entertainment
• Effective space management in the restaurant
• Limited menu to minimize required inventory
• Strong and recognizable branding thanks to creative visual ads

Weakness

• Dependent on qualified Japanese chefs
• Limited menu
• High investment costs for a new restaurant

Opportunities

• They could expand into new markets
• Experiment new concepts: orient express (also Chinese food)
• Going public in the stock market - Bring more capital and invest more

Threats

• Competitors can imitate Benihana's concept
• Change of trends and taste in industry
• Economic down term, inflation and increase in cost
• High dependence on a few key suppliers

Bottlenecks

Labor and specialized talent constraints

• Lots of experience required in the cooking
• Need cookers who are also entertainers
  Construction and authenticity requirements
• Brand identity came from authentic Japanese food
• Requires imported materials and Japanese carpenters
  High cost of establishing each unit
• Each restaurant requires a big investment (300000 $)
• Need to prioriteze profitable locations
  Training and operational complexity
• They require close oversight to maintain its distinct service quality
• They cannot standardize processes

Franchise or not

Dilemma: they want to expand so they used franchises. Then realized they may not want it.

Advantages of NOT using franchising:

• Control of quality
• Control of operations
• Control of the Brand

Disadvantages of NOT franchise

• More responsibility and work - every aspect of the business needs monitoring
• Difficulties with expansion - Limited by availability of capital and staff

Risk of franchising doesn't appear worth it for this business.
Some restaurants are franchiese. They realized that the people that have invested didn't really have the experience.

If we bought Benihana

• Reduce costs by localizing some decor elements
• Develop of Benihana Express concept for broader appeal
• Broaden the talent pool with local chef training