Benihana Answers 2012
1. Where do you see Benihana has the most advantage? And what allows it to achieve such advantages?
Percentages Dollars/yr. Typical Benihana restaurant $1,300,000 $910,000 $390,000 $273,000 $78,000 $949,000 $130,000 $130,000 $65,000 $162,500* $461,500 $30,000 $431,500 $215,750 $215,750 $245,750 1.2 years
Sales and costs (percentages are relative to gross sales, unless stated otherwise) Gross sales Food sales Beverage sales Food cost, % of food sales Beverage cost, % of beverage sales Gross profit Labor, benefits Advertising Rent
Other (supplies, misc., utilities, admin, maint, Insurance, royalties)
Typical restaurant 100% 70-80% 20-30% 38-48% 25-30% 55-65% 35-40% 0.75-2% 4.5-9% 10-20% 3-14% 2.5-5% 0.5-9% 0.25-4.5% 0.25-4.5% – –
Typical Benihana restaurant 100% 70% 30% 30% 20% 73% 10% 10% 5% 10-15% (no royalties) 35.5% 2.3% 33.2% 16.6% 16.6% – –
Pre-tax profit (before depreciation) Depreciation Pre-tax profit Tax (assume 50% tax rate) After tax profit Cash flow (add back the depreciation) Payback (years)
*12.5% Assumed
Areas of advantage for Benihana (BH) include: • Food and beverage costs – Savings on food costs are facilitated by the limited menu that BH offers, which reduces required inventory and inventory perishing (waste). The limited menu also reduces errors in preparation, and reduces food costs as BH is able to bulk order fewer items, rather than paying a premium for a large number of specialty items. Offering a limited menu also lowers variability in terms of customer orders. Labor & Benefits – Teppanyaki style of cooking reduces need for auxiliary wait staff as chefs deliver food directly to customers. Front of house staff responsibilities are reduced, number of non-tipped employees are reduced, both working to lower salary requirements. Chefs are not required to be excellent at cooking, but good at performing. This may reduce their salary requirements. From the Case: “A large part of the compensation was intangible, based on job
Percentages Dollars/yr. Typical Benihana restaurant $1,300,000 $910,000 $390,000 $273,000 $78,000 $949,000 $130,000 $130,000 $65,000 $162,500* $461,500 $30,000 $431,500 $215,750 $215,750 $245,750 1.2 years
Sales and costs (percentages are relative to gross sales, unless stated otherwise) Gross sales Food sales Beverage sales Food cost, % of food sales Beverage cost, % of beverage sales Gross profit Labor, benefits Advertising Rent
Other (supplies, misc., utilities, admin, maint, Insurance, royalties)
Typical restaurant 100% 70-80% 20-30% 38-48% 25-30% 55-65% 35-40% 0.75-2% 4.5-9% 10-20% 3-14% 2.5-5% 0.5-9% 0.25-4.5% 0.25-4.5% – –
Typical Benihana restaurant 100% 70% 30% 30% 20% 73% 10% 10% 5% 10-15% (no royalties) 35.5% 2.3% 33.2% 16.6% 16.6% – –
Pre-tax profit (before depreciation) Depreciation Pre-tax profit Tax (assume 50% tax rate) After tax profit Cash flow (add back the depreciation) Payback (years)
*12.5% Assumed
Areas of advantage for Benihana (BH) include: • Food and beverage costs – Savings on food costs are facilitated by the limited menu that BH offers, which reduces required inventory and inventory perishing (waste). The limited menu also reduces errors in preparation, and reduces food costs as BH is able to bulk order fewer items, rather than paying a premium for a large number of specialty items. Offering a limited menu also lowers variability in terms of customer orders. Labor & Benefits – Teppanyaki style of cooking reduces need for auxiliary wait staff as chefs deliver food directly to customers. Front of house staff responsibilities are reduced, number of non-tipped employees are reduced, both working to lower salary requirements. Chefs are not required to be excellent at cooking, but good at performing. This may reduce their salary requirements. From the Case: “A large part of the compensation was intangible, based on job