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Background

• Benihana of Tokyo has been started by Rocky in 1964. rocky came to America with his
university wrestling team that America would give him more opportunity than his native
nation japan.
• Rocky started his business in 1964 with his initial savings of 10000$ and borrowing of
20000$ a firm with chain of 15 restaurants and net worth of 12$ million.
• Site selection: as lunch was given importance the sites were being selected where there
was high traffic.
• Training: all chefs were highly trained. All were young and certified.
• Control: Papasan and rocky were at the top of the management level. Under there was
on V.P. operations, Controller, operations manager and advertising manager used to
report him.
• The company spends about 8-10% of its gross sales on creative advertising and public
relationship.
Initial Analysis Of Rocky
• Americans enjoy eating in exotic
surrounding but they are deeply
mistrustful of exotic food.
• Also people very much enjoy watching
their food being prepared.
• The biggest problem in this industry in
US was scarcity of skilled labor.
• Food storage and wastage contribute
significantly to the overhead of any
typical.
Initial Strategy
1. Introduce of Hibachi to:
• Provide greater attention and service to the customer while
still keeping costs low.
• Increase the proportion of the productive area.
2. Limit the main menu to 3 entrees to reduce wastage and cut costs.
3. Insist on historical authenticity.
Operational Strategy
1. Selected high traffic sites in business districts for setting up a
restaurant.
2. Brought in highly trained chefs from Japan.
3. Provided good incentives to the employees and created a
connection with them, thus helping reduce the employee turnover.
4. Low management expenses
Marketing Strategy
1. Invested heavily 8-10% of operating expenses on marketing.
2. Promoted the entire Benihana experience.
3. Used outstanding visuals and offbeat themes.
Constraints in Future Expansion
• Franchisee business failure: because many owners do not know about
the restaurant business.
• Staff: biggest problem was staff, there were only two carpenters and
each unit required 30 staffs out of that 8-10 were trained staff
• It gives the customer a unique experience where they interact with the
cook and waiter rather than just waiter like in most restaurants. It helps to
improve customer intimacy and adds a positive experience.
• Limited menu - Food storage/inventory and waste management costs
contribute significantly to the overheads of restaurant business and
Benihana is efficiently able to reduce these costs by having a very limited
menu of just 3 choices. It helps in reducing inventory. By this it was able to
save 30-35% of costs.
• Located in High Traffic Places – Benihana chooses their sites in high traffic
places like central business districts with easy access to residential areas
because of their high focus on lunch and dinner time business.
• Simple management structure – Benihana has a very simple management
structure that includes a Manager, an assistant manager and 2-3 front men.
Production System
• Arrival – Cocktail Lounge, batches of 8 in hibachi table
• Request - 3 Food item menu
• Capability – Chef prepares food directly with customers within the
encounter, reducing variability from waitress and customer capability
to communicate menu.
• Effort- Participate in the cooking process
• Subjective Reference – Customers suggest preferences while chef is
cooking allowing customer more control of product.
Major Design Choices
• Advertising - 10% of sales vs. 0.75 to 2%, focus on creative and
innovative advertising style
• Staff – Japanese , well trained chefs, reduced no. of waiters, labour
cost 10-12% vs. .30-35% of sales.
• Location – Heavily populated areas to attract for both lunch & dinner.
Services Kind
• Core Benefit – Food
• Basic Service – Hospitality
• Expected Service – Customization
• Augmented Service – Hibachi Table Concept
• Potential Service – Food Processors
Activity Diagram