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Benihana of Tokyo “Benihana of Tokycf’ Recommendation Analysis of Benihana of Tokyo reflects that the company should take the following actions to help improve its future and growth as a company. Don’t expand to fast Start by expanding to secondary markets such as Harrisburg Pennsylvania, and Portland, Oregon. Secondly, expand to hotels. Advertising should mainly focus on the experience that the costumers will have at Benihana. Expand its target market from a middle-income audience to a bigger market including the younger generation.

Problem Hiroaki (Rocky) Aoki is the youthful president of Benihana of Tokyo. Benihana is a steakhouse with the food cooked right in front of the customer by Japanese chefs. Benihana, a restaurant, needs a set plan for growth and expansion in their company, so that it does not allow other competitors to get ahead of them in the market. It needs to focus on advertising and expanding their target market. Benihana needs to reach out to a wider target market so that it may expand at a faster pace without causing a disruption in the flow of their operations.

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Analysis of Benihana of Tokyo The Service Benihana provides is not Just serving food, but also entertainment. Benihana is a steakhouse with food that is cooked in front of the customer by Japanese chefs. The d?©cor is also that of an authentically detailed Japanese country inn. The heart of the company is centered around the teppanyaki table which consists of a gas-fired steel griddle plate, and a 9h” wooden ledge bordering the griddle to hold the customers’ plates and silverware. Each table entertains and feeds eight diners at a time.

The flows of the restaurant include the well though-out layout, and the simple menu. The layout changed from unit to unit. When Rocky opened his first unit, he aw the business as primarily food-service sales. The Benihana West, the first unit, had a tiny bar that seated eight and had no lounge area. He quickly discovered that he needed a more sufficient bar and lounge and his second unit, Benihana East, had double the size bar/lounge area as the first. The third Manhattan operation, called Benihana Palace, opened in 1970 and had an enormous bar/lounge area in ratio to the size.

The average layout of the Benihana today is the front door opening into the lounge and bar area with a dining room containing, on average, 14 teppanyaki tables, nd the prep tables and food storage in the very back of the restaurant. Benihana would also not flow without its simple menu. Rocky discovered that food storage and wastage contributes significantly to the overhead of a typical restaurant. Because of this Rocky reduced the menu to only three simple Middle American entrees: steak, chicken, and shrimp. He cut down his waste to virtually none and cut three entrees, does have four options.

These options are steak, filet mignon, chicken and shrimp. These can be chosen as a single entr?©e or in a combination, and is ccompanied with foods such as: bean sprouts, zucchini, fresh mushrooms, onions, and rice. For the list of prices see Exhibit 1. The inventories are held in the back of the restaurant, this includes dry storage shelving, walk-in coolers, freezers, employee dressing rooms, and office space. By using the hibachi style table arrangement the total space in the back of the house is 22% of the entire unit.

In a conventional restaurant the back of the house requires a minimum of 30% of the entire unit. Benihana Success Benihana’s success comes from two key ingredients. The first ingredient is the president. Hiroaki Aoki opened his first location in 1964, and by 1972 had accumulated 15 restaurants that grossed over $12 million per year. Rocky was a former Olympic wrestler, and he went to the School of Restaurant Management at City College. His father, Yunosuke Aoki was also a restaurateur and was the inspiration to Rocky to open a restaurant.

Rocky also borrowed the method of the hibachi table concept from his father. Rocky spent three years making a systematic analysis of the U. S. restaurant market and that is why he is such a huge part of Benihana’s success. During those three years he discovered that Americans enjoy ating in exotic surroundings but are deeply mistrusting of exotic foods, he discovered that people very much enjoy watching their food being prepared and he also learned that the number one problem of the restaurant industry in the U. S. is the availability and cost of labor.

He was able to apply the things he learned to keep labor costs between 10% and 12%. To see a list of the expense percentages see Exhibit 2. The second key ingredient to Benihana’s success is its well-trained chefs. All of the chefs were highly trained, young, single, native Japanese, and all were certified, which eant that they had completed a three-year formal apprenticeship. These requirements for their chefs made it relatively difficult to attract chefs from Japan. They found that once they got the workers to the U. S. , however, they were generally not anxious to leave.

Since employees are a major key to Benihana’s success they had a major factor with the paternal attitude Benihana took toward its employees. The personnel were well paid, but also had Job security and a total commitment of Benihana to the well-being for its employees. To view the employee organizational hart see Exhibit 3. To view the management structure see Exhibit 4. Future Expansion Benihana has many options for expanding. Their biggest problem is deciding which options they should choose to expand. They tried to franchise Benihana, but they found it more profitable to own and operate the restaurants themselves.

The problem Benihana faces is that it is limited to opening only five units a year, because that is as fast as the two crews of Japanese carpenters can work. The options Benihana has to expand are first they could go into hotels, secondly they can choose arkets such as Harrisburg, Pennsylvania, and Portland, Oregon, and lastly they can choose to expand into the suburbia area. Expanding seems like it would be easy, but there are many limitations that Benihana has such as each new unit requires approximately 30 people who are all Oriental and each new unit costs a minimum of $300,000.

Implementation Benihana’s expansion is crucial to their growth and they should not take on more than they can handle. Benihana should start by using an American carpenter crew as well as their two Japanese carpenter crews. This would allow them to expand faster han five units per year. Benihana should then first begin to expand into secondary markets such as Harrisburg, Pennsylvania, and Portland, Oregon. These secondary markets show great potential, and could majorly increase their popularity and revenue for the restaurant. Secondly Benihana should expand into hotels.

They are already in two Hilton Hotels one in Las Vegas, and one in Honolulu and they are very successful. This shows that Benihana would make a good decision going into other hotels around the world. Two other aspects the company should improve upon are advertising and expanding the target market. Advertising is a key component to any company and Benihana needs to get its brand out there so everyone knows who they are. The company invests 8% to 10% of its sales to advertising, and I believe that it should continue to do this and maybe even spend a little more on marketing their restaurant.

They need to incorporate that they aren’t Just a restaurant, but a place for entertainment. Benihana has a visual product to sell and that makes advertising easy. Lastly Benihana needs to reach out to a wider market segment. Right now Benihana caters to a middle-income audience, and not the younger generation. By eaching out and advertising to the younger generation they could widen their market segment and increase their sales greatly. Also by producing a line of Japanese food products under the Benihana label for retail sale, their market segment would become the mass market.

Anyone grocery shopping would see their brand and be able to purchase and taste Benihana without having to go to a restaurant. This should definitely be done. It would take Benihana and its brand to the next level. Other Issues and Risks Authentic Design One of the major issues that Benihana has is that it uses 100% authentic Japanese construction. Rocky insists that the walls, ceilings, beams, artifacts, and the decorative lights of a Benihana all be 100% authentic and are all from Japan. This is first of all expensive and does an American really appreciate it.

The cost of having this real d?©cor is not worth the cost. Benihana should start decorating their restaurants the same way, but with knock off items that are not 100% authentic. It is not worth it to use Japanese carpenters and pay union carpenters to sit and watch. Benihana should also start using a combination of Japanese and American Location There are many issues that Benihana has, but a main one is there location. They are located predominantly in business districts. The existing Benihanas are not an issue, but it needs to expand.

If Benihana wants to see growth and expansion then they need to expand further out into areas like residential areas and hotels. Other Benihana has issues with advertising as well. What is Benihana really selling? Is it food, atmosphere, hospitality or what? Benihana needs to pick one aspect and really focus on Just that aspect. Once it is perfected they can move on to the next aspect. Benihana should set goals for each unit and strive to achieve each one. Benihana’s ain source of revenue comes from lunch. There should be a goal set in place to get more people to come through the doors at dinner.

The prices (see Exhibit 1,) are higher during dinner, so if more people came at dinner instead of lunch they could make more in sales. Conclusion The company should implement moving into secondary markets and hotels for their growth and expansion. They should advertise about the experience consumers will have at Benihana, and Benihana should also expand its target market to the younger generation as well as the middle-income audience. Rockys first unit on the West Side was such a success that it paid for itself in six months.

Rocky knows how to run a business and should keep up the great work. His philosophy of the restaurant business is simply to make people happy. They do it many ways at Benihana. As they start different types of operations, they will try to do it in other ways. I believe with a few minor tweaks Rocky could make Benihana one of the most popular restaurants in the industry. EXHIBIT 1 – pnces The average check for each customer at Benihana Drink $1. 50 Lunch $6. 00 Dinner Figure 1 – The average check, including food and beverage for Benihana.

EXHIBIT 2 – Expense Percentages The expense percentages for Benihana Labor Advertising Management 4% Rent 5% Figure 2 – The expense percentages for food, labor, advertising, management, and rent at Benihana. EXHIBIT 3 – Organization Chart The top workers at Benihana Figure 3 – The Founder, President, and V. P. of Operations at Benihana. EXHIBIT 4 – Management Structure The list of positions and salaries Position Manager $1 5,000/ year Assistant Manager $12,000/ year Front Man $9,000/ year Figure 4- The list of positions and salaries for the manager, assistant manager, and frontman.

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