Benihana is a steakhouse with food cooked in front of the customers by Japanese chefs and the decorated in an authentic Japanese setting. Operation advantages: Benihana has several operation advantages: firstly, by eliminating the need for a conventional kitchen with hibachi table arrangement, the restaurant keep labor cost low while providing attentive service.
Secondly, the dining space was increased. Thirdly, by reducing the menu to three simple Middle American entrees, the restaurant solved the problem of food storage and wastage. Introduction: Benihana now has a chain of 15 units across the country.Nine were company-owned and five were franchised. The decision to stop franchising was made because franchise investors are novice and they have problems relate to native Japanese staff. It is also more difficult to maintain control over the franchisee. Sales and training: Benihana also included the bar/lounge in the restaurant. The beverage sales accounts for 30%-33% in the Benihana East.
Benihana choose business location with high traffic. There are around 30 orient employees in each unit. Benihana took a paternal attitude toward all its employees which results in a low turnover rate of staff.Advertising policy: Rocky consider creative advertising and public relations vital to the success of business. They invested 8%-10% of gross sales on advertising. Future expansion: The company’s biggest concern is how to expand. They are constrained by availability of staff since they need lots of Asian servants in the restaurant. They also concerned about the cost factor.
Thus the firm is considering secondary markets as those smaller units offer fewer headaches and generate nice profits. The firm is also considering going public, but they have to consider the amount of control and autonomy they have to give up when going public.They are also having overseas expansion mainly in the form of joint venture. Benihana has signed agreement to open up branches in Toronto, Mexico city and Britian. They have also entered into agreement producing Benihaha food products under retail sales.
The firm is also expanding its customer group by appealing to the younger generation. Quick service seemed to be a good test out idea. Russ Caroenter, the consultant posed two main concerns over its prospects. Firstly is the vague concept of Benihana’s core competitiveness.
Secondly, is Benihana’s business idea and operation model sustainable?