This document provides an analysis of Benihana, a Japanese teppanyaki restaurant chain known for its communal dining experience. It summarizes Benihana's business strategy, which focuses on reducing costs through process standardization, simplified menus, and multi-tasking chefs. This allows Benihana to achieve lower food, labor and operating costs than traditional restaurants. The document also analyzes Benihana's demand management, process management, strengths, weaknesses, and provides recommendations.

1. CASE ANALYSIS
Christine – Graig – Kirt - Tamayo

2. AGENDA
1. Executive Summary
2. Framework
3. Benihana’s Strategy
4. Demand Management
5. Process Management
6. Business Analysis
7. Key Issues Determined
8. Recommendations

3. EXECUTIVE SUMMARY
 Benihana is a successful Japanese-themed teppanyaki restaurant chain with units in
various countries including the US.
 Benihana pioneered the communal dining concept in the US in the early 1960s where
up to eight diners sit around a steel hibachi grill and wait anxiously for their personal
cooking show to begin. The food is prepared in front of the seated diners and is
delivered to them with personalized service; at the same time ensuring that high
quality standards of food production are met.
 Benihana has utilised several tactics to manage demand and process variability
resulting in the reduction of food costs and operational costs while simultaneously
turning dining into a unique entertainment event resulting in higher margins than the
traditional restaurant.
 These unique characteristics which drive its success make the model difficult to
replicate, whether for franchising or duplication.

4. FRAMEWORK
Layout
Planning
Business
Strategy
Process
Variability
Management
Business
Environment
Demand
Variability
Management
Low Cost
Structure
Customer Preferences
Customer Flow rate
Process Design
Processing Throughput
Human Resources
Capability and Utilization
Inventory Management
Layout
Vision Mission Values
Competitors SWOT

5. BENIHANA’S STRATEGY
 The overall strategy deducted was to lower all costs, reduce non-essential processes and maximize
process throughput of operations.
 Restaurants were established in high traffic areas, with more being spent on advertising as a
percentage of gross margin than the typical restaurant.
 The tables were set up for 8 resulting in multiple parties sitting together at one table, something that
differed from the typical restaurant. One chef and one waitress were assigned for every two tables,
supporting the design process and at the same time reducing typical restaurant labor costs.
 Benihana recruited staff from Japan to highlight the Japanese culture. Chefs were trained to
perform great Japanese culinary entertainment. In addition to the Benihana style cooking, the
training also included six months of learning English language and American manners. The paternal
attitude towards employees, investment in training, Intrinsic motivational factors, and compensation
practices helped Benihana in attaining low employees’ turnover.
 The menu at Benihana was designed to reduce waste and food costs (30% to 35 %) by keeping the
menu simplified to steak, chicken and shrimp.

6. BENIHANA’S STRATEGY
Comparison of Benihana’s cost structure to typical restaurant structure
Labour Cost (% of
Operating Expenses)
Food Cost ( % of Sales) Beverage Cost ( % of Sales)
Typical US Restaurant Benihana
10 -12
30-35
38-48
25-30
30-35
20

7. DEMAND MANAGEMENT
DEMAND MANAGEMENT TRADITIONAL VERSUS BENIHANA
Traditional
Benihana
Individual parties arrive
Parties may wait in the
waiting area to be
seated
Parties escorted to
table to dine in private
Individual parties arrive
Parties may be escorted to the
bar to wait
Parties escorted to table to dine
communally when designated
batch of people arrive

8. DEMAND MANAGEMENT
VARIABLE IMPACT OF VARIATION
Customer Flow Rate Customers arrive at a variety of rates based on when they choose to patronize the
firm. This variation will result in the restaurant’s reaction to meet this fluctuating
demand through the deployment of its resources. However, labour is the largest
operating expense for restaurants and needs to be appropriately utilised to maximise
profit. The greater customer flow rate variability the more likely they are to have the
following scenarios to manage:
1.Excess labour capacity resulting in excess operating cost as a percentage of sales
revenue.
2.Insufficient labour capacity resulting in an inability to generate revenue at the
maximum rate because of a failure to turn over customers, as well as sustainability
through revenue loss over the long term from failing to meet customer expectations.

9. DEMAND MANAGEMENT
VARIABLE BENIHANA STRATEGY TRADITIONAL STRATEGY FINANCIAL BENEFIT
Customer
Flow Rate
In order to manage the customers’
flow rate variability, Benihana buffers
and then batches its customers to eat
together communally.
Customers arrive at varying times and
in parties of different sizes. However,
the flow rate is controlled by directing
customers to the bar to have a few
drinks if they need to wait.
Additionally, different parties may be
seated together if necessary, to
create communal groups of 4, 6 or 8
as demand dictates.
Parties are seated as soon as
accommodations suitable
for the party’s size becomes
available.
Restaurants seat parties
separately.
Staff cost 30-35% of gross
food sales
1. Operation cost
reduction as a result of
standardization of
dining requirements
per party regardless of
size – labour and
accessories.
2. Faster turnaround of
customers likely as a
result of the batching
process.
Staff cost 10-12%

10. DEMAND MANAGEMET
VARIABLE IMPACT OF VARIATION
Customer Preferences Customers request various meal and beverage options from the restaurant’s menu,
which require a variety of components. These selections are random and may
provide challenges to meet, particularly as the number of possible options is
increased. The greater the customer’s preference variability the more difficult it is to
manage the following:
1. Cost of spoilage of perishables and holding costs from overstock.
2. Opportunity cost, long-term survival from customer dissatisfaction as a result of
understock.
3. Larger percentage of space allocated to storage as opposed to value adding
task reducing earning potential per area.

11. DEMAND MANAGEMENT
VARIABLE MANAGEMENT STRATEGY TRADITIONAL STRATEGY FINANCIAL BENEFIT
Customer
Preferences
In order to manage the
customers’ preference
variability, Benihana reduced
the number of choices that
were available on their menu.
For both lunch and dinner,
there were only 3 meat options
– steak, chicken and shrimp.
The accompaniments were
also limited to 5 options – bean
sprouts, zucchini, mushrooms,
onions and rice.
Restaurants traditionally
provide as many variations
as possible in order to satisfy
as wide a market as
possible.
Food cost 38 - 48% of gross
sales
1.Reduction in wastage of
meat and
accompaniments as a
result of standardization.
2.Reduction in training cost
of chefs to prepare dishes.
Food cost 30-35% of gross
sales

12. PROCESS MANAGEMENT
Seating Ordering Preparation Cooking Plating Serving
Bill
Payment
Seating Ordering Preparation Cooking Plating Serving
Bill
Payment
Maître D Waiter Sous Chef Chef Waiter Waiter
Fewer dishes at any one time, Use of greater resources along the process, Greater material handling
Maître D Chef
Waiter
More dishes at any one time, Use of less resources along the process, Less material handling
Sous Chef
PROCESS DESIGN TRADITIONAL VERSUS BENIHANA

13. PROCESS MANAGEMENT
VARIABLE IMPACT OF VARIATION
Process Design Process design is highly influenced by the number and sequence of process steps.
The greater the number of steps the greater the possible variation. Rapid changes in
process design may occur based on changes in demand as well as challenges in
human resource capabilities. Steps may be eliminated, added, lengthened or
shortened, which may result in quality issues on one hand or customer dissatisfaction
from long waiting on the other.

14. PROCESS MANAGEMENT
VARIABLE BENIHANA STRATEGY TRADITIONAL
STRATEGY
FINANCIAL BENEFIT
Process
Design
Process design adopted by Benihana, but in a
different way to the traditional restaurant.
Benihana’s process goes beyond just grouping
work stations by activity, but also grouping many
activities to be performed by one person.
A simplified 3 step Benihana process was created
by grouping several steps in the traditional
restaurant service process into one step. Customer
orders, food preparation, cooking, plating, serving
performed by one person, the chef.
Hibachi table arrangement (Exhibit 2) puts chefs
back to back. This enables chefs to assist if the
need arises and learn from each other - layout
resembles a U-shaped cell layout.
Typical restaurant
service process
comprises Seat
Customer, Take
Order, Prep food,
Cook food, Plate
food, Serve food,
Customer payment.
1. Reduced labour cost as less
employees are required for the
process
2. Less material handling costs.
3. Benihana enhanced process
layout produces very high volumes
of output increasing revenue
earnings per process cycle.
4. Reduced time from customer
order to food service – reduces
process cycle times and increases
the number of revenue cycles
possible.

15. PROCESS MANAGEMENT
VARIABLE IMPACT OF VARIATION
Layout Variations in process layout/setup will be required based on the meal demanded.
For example the processing of meats may require a separate layout and spacing
requirements from the processing of beef or shrimp. Change in demand will result in
cost to change the layout to adjust accordingly.

16. PROCESS MANAGEMENT
VARIABLE BENIHANA STRATEGY TRADITIONAL
STRATEGY
FINANCIAL BENEFIT
Layout One space (the hibachi table) for food
preparation, cooking, plating, serving by the
chef. The Benihana communal dining
layout in tables of 8 persons allows for a
controlled flow of dishes along the Benihana
process that can be managed by one
person - the chef.
Use multipurpose spaces - the hibachi table
combines customer dining and food
preparation spaces, thereby bringing the
product closer to the customer in the
process. This was in line with Rocky’s market
research which showed that people
enjoyed watching their food being
prepared
Separate
areas in the
back of the
restaurant
designated for
preparations,
cooking,
plating and
serving.
Cooking and
dining spaces
are
maintained
separately.
Square footage needed for activities
performed at the back of the restaurant
was reduced by 8%. This space was
used to generate revenue by increasing
the restaurant's customer bar and dining
capacity. This resulted in increased
revenue per square foot.

17. PROCESS MANAGEMENT
VARIABLE IMPACT OF VARIATION
Inventory Management Inventory management variability may result in either the storage of too much
or too little product. This may result in increased cost through storage waste,
wastage of food as it is a perishable commodity. On the other hand there may
also be customer dissatisfaction and possible opportunity costs if inventory
management is inadequate.

18. PROCESS MANAGEMENT
VARIABLE BENIHANA STRATEGY TRADITIONAL STRATEGY FINANCIAL BENEFIT
Inventory
Management
Benihana simplified its menu to
restrict the number of products
moving along its process.
Benihana limited its main course
dishes to 3 items - steak, chicken
and shrimp. This enables Benihana
to group many activities into one
step for the chef to perform. With a
focus on product quality as
inventory reordering was more
frequent.
The typical restaurant
would have upwards of
5 main course dishes.
Typical restaurants have
a wide variety of dishes
available; this
contributes to higher
levels of wastage and
requires more storage.
Reduced inventory holding
cost .
Reduced man hours need for
purchasing and managing
inventory.
Improved inventory
management because of
limited stock items needed
for simplified menu. This
resulted in savings from less
wastage.

19. PROCESS MANAGEMENT
VARIABLE IMPACT OF VARIATION
Human Resources Human resource variation may be a challenge, as there are multiple
personnel with varying skill levels and deliverables. Personnel are more
specialized and focus on individual task assignments, hence reducing flexibility.
Additionally, this specialization will also contribute to a greater number of
employees needed. Managing operations will be a challenge:
1.How many total employees are necessary?
2.How many employees are needed for each process?

20. PROCESS MANAGEMENT
VARIABLE BENIHANA STRATEGY TRADITIONAL STRATEGY FINANCIAL BENEFIT
Human
Resources
Process designed for fewer persons
performing multiple activities.
More employees are hired for the critical
activity of the process, that is, chefs for
cooking. This is made feasible by having
chefs perform additional activities within the
process, thereby reducing manpower in
other areas, such as food preparation,
plating and serving.
Chefs are highly trained in multiple functions
– customer engagement/entertainment,
food preparation, cooking, plating and
serving.
Chefs at standard
restaurants have varying
degrees of training and
do not have Benihana’s
rigorous training
requirements.
Chefs in standard
restaurants perform single
task within the process –
cooking, and cannot
control quality in other
activities within the
process.
Reduction in labour
requirements and
management and
hence costs.
There is however, a
weakness here as
staff availability is a
challenge and
training is more
sophisticated
making turnover
costs unusually
high.

21. PROCESS MANAGEMENT
VARIABLE IMPACT OF VARIATION
Processing Throughput As a result of different process lengths based on customer demand, traditional
restaurants struggle with maintaining a consistent cycle time with the limited
resources. Some customers may experience longer waiting times than others,
more popular items may be processed faster than others. This may result in
customer dissatisfaction.

22. PROCESS MANAGEMENT
VARIABLE BENIHANA STRATEGY TRADITIONAL STRATEGY FINANCIAL BENEFIT
Processing
Throughput
Benihana’s process allows for a greater
number of dishes to be produced at any
one time and at a faster rate. The faster
process rate is achieved by reducing the
number workstations and persons that dishes
must move to within the process. It takes
time to move the dish between workstations
and persons. A greater number of dishes
can be produced as there is a
concentration of highly skilled resources
(chefs) at the most critical and lengthy
activity within the process, that is, cooking.
The chef performs multiple activities at a
time, such as preparing one ingredient while
cooking another. Cooking while plating
and serving.
Output times vary
depending on the type
of dishes ordered and
bottlenecks occurring
along the process.
Likely increased
sales from higher
customer
satisfaction .
Increased sales
from quicker
turnaround times.

23. BUSINESS ANALYSIS
STRENGTHS
 Minimized menu and staff to reduce major operational costs.
 Increased process flexibility to match demand and supply.
 Unique product delivery process help distinguish Benihana from competitors.
 A strong brand name, which is maximized from greater advertising per sales than traditional
restaurants.
WEAKNESSES
 High startup costs as specialized unique building materials and key staff are imported from
Japan at high costs.
 Menu variety limited and may impact market share as well as long term customer retention.

24. BUSINESS ANALYSIS
OPPORTUNITIES
 New markets for expansion of the business if the formula for duplication can be
improved.
 Bar entertainment to improve the customers’ batching experience and maximize
revenue per customer.
THREATS
 Intense competition from franchises that are able to expand more easily.
 Change in consumer expectations, such as greater variety or non-communal dining
would be very difficult for Benihana to adjust to.

25. KEY ISSUES DETERMINED
 Human resource is extremely critical for business sustainability. Chefs are difficult to
recruit, costly to train and must be managed to minimize turnover.
 Infrastructure difficult and expensive to acquire as there are many components
indigenous to Japan.
 Food raw materials must be pre-processed in order to minimize portioning and process
times, as a result supply chain management is also critical to operations efficiency.
 Limited menu in this age of greater market segmentation and information is a major
threat to business model sustainability.

26. RECOMMENDATIONS
 Benihana could possibly create new restaurant brands using different cultural foods
while using the same business model to diversify the risk in obtaining niche staffing and
infrastructure components.
 Benihana should consider using local crews and materials for expansion since the raw
materials could be sourced in the US and also more carpentry crews would mean
units could be built at a faster rate.
 Benihana may consider upstream investment to have greater control of the supply
chain.
 Benihana should consider more frequent menu changes, while maintaining limited
options on each change.