Benihana: Restaurant and Food Cost

1. What are the differences between Benihana's production process and that of a typical restaurant? How do these differences affect a customer's dining experience?

Method

Typical American food: you order form the menu and the bus boy will bring to your table

Food is prepared table-side. Provides unique “dinner and a show” type of experience.

Floor plan: Allows more floor area for dining (only 22% of space is for preparation, storage and office space)

Small bar/lounge area

- Attentive: reduces labor cost and improves quality of service

-Show: Chef (like samurai warrior with perfect cutting skills) makes a show of cutting fat off of meat, demonstrating quality cut of meat

-Authentic Japanese décor from Japan provides an exotic surrounding

-Only three food choices: shrimp, chicken and steak

-reduces food cost

-minimizes wasted food

-Large focus on lunch business. Experience is quick, allowing high table turnover. Located in high traffic areas (business districts)

-Affordable prices

- Chefs are well trained in Benihana presentation, as well as American manners and English language: provides a consistent and quality experience

-Major Advertising investment: shows Benihana as a unique experience, not advertised in a typical way: not in entertainment section, doesn’t refer to “restaurant”

2. Compare the operating statistics for a typical restaurant (see Exhibit 1) with those of Benihana for major categories such as food cost, beverage cost, payroll, rent, etc.. Why, for example, does Benihana have a food cost of 30-35%, whereas a typical restaurant has a food cost of 38-48%?

- Rent (5-7) is consistent with industry (4.5-9). However, Benihana maximizes use of space by removing large kitchen requirements, allowing more dining room

- Advertising (8-10) widely exceeds industry (.75-2). Unique PR campaign is a pillar of Benihana strategy

- Food/Beverage ratio (bev range @ 18-33% of sales) covers entire spectrum of industry (20-30% of sales). This is dependent on size of bar.

- Labor (10-12) was below industry (30-35) due to having food prepared at the hibachi table. Two tables of 8 are tended by one chef and one server. Eliminating conventional kitchen allows this sacrifice without sacrificing service quality

- Food cost (30-35) is below industry (38-48), due to reducing menu selection to three options: minimizes waste and food cost

| |Benihana | |Typical |
| | |% of costs |
|Labor Cost |10-12% | |
|Food | |30% |38-48% |
|Labor Cost |10% |30-35% |
|Advertising |10% |0.75-2% |
|Management |4% |2-6% |
|Rent | |5% |4.5-9% |

Very lean management. Org char: only 3 main men.

3. Examine the design of Benihana's operating system in detail. What major technology and design choices allow a typical meal to be served within one hour?

- Bar lounge area to entertain people while they wait
- Chefs go through extensive training to provide a unique experience, as well as a fast and efficient meal.
- Food prepared tableside reduces transit time
- Only three choices eliminates extensive thought on menu selection
Waitress quickly bring salad and miso soup and drinks
- Standardized accompaniment provides streamlined meal preparation
- Chefs prepare all foods in the same way: repetition of the same action leads to mastery of the action, and ability to complete the action in a shorter time

4) More seats per table / target dif age groups
Another technique of increasing the revenue is surveying the area before opening a restaurant, understanding the culture, habits, likes and dislikes of the reside