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Case Study Analysis 
Benihana of Tokyo 
Binus Business School, 
MM Executive Batch 20 
Presented by Group I 
Alexander Chr...
Table of Contents 
7/28/2014 
2 
The Story of Benihana 
The 70’s Benihana Facing Issues 
Detailed Analysis 
Conclusion & R...
Table of Contents 
7/28/2014 
3 
The Story of Benihana 
The 70’s Benihana Facing Issues 
Detailed Analysis 
Conclusion & R...
Benihana of Tokyo in Years 
7/28/2014 
Case Analysis – Benihana of Tokyo 
4 
• 1935 1st Benihana’s restaurant chain in Jap...
Americans and Their Eating Behavior 
Enjoyed eating in 
exotic surroundings 
Case Analysis – Benihana of Tokyo 7/28/2014 
...
Problems at the Restaurant Industry in the United States 
Case Analysis – Benihana of Tokyo 7/28/2014 
6 
High labor 
cost...
How Benihana responded Americans’ eating behavior and 
problems faced by the restaurant industry in the United States 
Cas...
Case Analysis – Benihana of Tokyo 7/28/2014 
8 
The 70’s Benihana Business Model 
Unique positioning is reflected on its c...
The 70’s Benihana Business Model 
Unique positioning is reflected on its chosen business model 
Case Analysis – Benihana o...
Case Analysis – Benihana of Tokyo 7/28/2014 
10 
The 70’s Benihana Business Model 
Unique positioning is reflected on its ...
Table of Contents 
7/28/2014 
11 
The Story of Benihana 
The 70’s Benihana Facing Issues 
Detailed Analysis 
Conclusion & ...
Benihana’s Issues in 1970s 
Case Analysis – Benihana of Tokyo 7/28/2014 
12 
Limited supply of skilful staff 
Benihana’s b...
Our Hypothesis 
Case Analysis – Benihana of Tokyo 7/28/2014 
13 
Capacity problem 
due to authentic 
Japanese materials 
a...
Table of Contents 
7/28/2014 
14 
The Story of Benihana 
The 70’s Benihana Facing Issues 
Detailed Analysis 
Conclusion & ...
Benihana’s footprint in the restaurant industry in the United States 
Steakhouse with a difference: grossed over $12 milli...
Benihana’s Operating Statistics 
Operates more efficient compared to the other typical US restaurants 
Case Analysis – Ben...
Winning Strategy behind Benihana’s Success 
Case Analysis – Benihana of Tokyo 7/28/2014 
17 
Implemen-tation 
Strategy 
Be...
Winning Strategy behind Benihana’s Success 
Implementation Strategy 
Case Analysis – Benihana of Tokyo 7/28/2014 
18 
Ambi...
Case Analysis – Benihana of Tokyo 7/28/2014 
19 
Winning Strategy behind Benihana’s Success 
Effective Training 
Implemen-...
Case Analysis – Benihana of Tokyo 7/28/2014 
20 
Winning Strategy behind Benihana’s Success 
Employee Satisfaction/Motivat...
Case Analysis – Benihana of Tokyo 7/28/2014 
21 
Winning Strategy behind Benihana’s Success 
Effective & Aggressive Market...
Case Analysis – Benihana of Tokyo 7/28/2014 
22 
Winning Strategy behind Benihana’s Success 
Customer Satisfaction 
Knows ...
What’s more for the future? 
Aimed to grow faster; however some constraints limited Benihana to do so 
Case Analysis – Ben...
Table of Contents 
7/28/2014 
24 
The Story of Benihana 
The 70’s Benihana Facing Issues 
Detailed Analysis 
Conclusion & ...
Unique business model helped Benihana stood out from the 
competition in the restaurant industry in the U.S. 
Case Analysi...
Efficient process flow is one of the keys of its winning strategy 
7/28/2014 
BACK END 
FRONT END 
Customer 
arrives 
Seat...
Economized menu choices helped Benihana to reduce labor costs 
and total overhead costs 
Case Analysis – Benihana of Tokyo...
Introduction of hibachi table arrangement gave a huge impact in 
efficiency of the back-end process 
Case Analysis – Benih...
Entire space were being used effectively, including cocktail lounge 
area. Functioned as temporary waiting area as well as...
Proposed Recommendation 
To address management concerns, consider to improve current operating model as well 
as to furthe...
Benihana’s nowadays 
The 70’s business model has been adjusted to catch up a massive growth 
Case Analysis – Benihana of T...
Benihana’s nowadays 
Menu has been also adjusted to cater more customer segments 
Case Analysis – Benihana of Tokyo 7/28/2...
Benihana’s nowadays 
Changes in operating model and menu selection required look & feel as well as space 
layout adjustmen...
Table of Contents 
7/28/2014 
34 
The Story of Benihana 
The 70’s Benihana Facing Issues 
Detailed Analysis 
Conclusion & ...
Key Takeaways from Benihana’s Case 
Case Analysis – Benihana of Tokyo 7/28/2014 
35 
1 
• Have a dream 
2 
• Do the homewo...
Case Analysis – Benihana of Tokyo 7/28/2014 
36
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Harvard case analysis on Benihana

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OSCM_Harvard Business Case_Benihana

  1. 1. Case Study Analysis Benihana of Tokyo Binus Business School, MM Executive Batch 20 Presented by Group I Alexander Christian Dina Sandri Fani Jenna Widyawati Ridwan Martawidjaja
  2. 2. Table of Contents 7/28/2014 2 The Story of Benihana The 70’s Benihana Facing Issues Detailed Analysis Conclusion & Recommendation Key Takeaways 1 2 3 4 5 Case Analysis – Benihana of Tokyo
  3. 3. Table of Contents 7/28/2014 3 The Story of Benihana The 70’s Benihana Facing Issues Detailed Analysis Conclusion & Recommendation Key Takeaways 1 2 3 4 5 Case Analysis – Benihana of Tokyo
  4. 4. Benihana of Tokyo in Years 7/28/2014 Case Analysis – Benihana of Tokyo 4 • 1935 1st Benihana’s restaurant chain in Japan • 1958 Introduction of Hibachi table arrangement • 1964 Entry in US at West Side, NY • 1966 2nd restaurant chain at East Side, NY • 1967 3rd restaurant in Chicago; Big Blockbuster • 1969 4th & 5th restaurant opened in SF and Las Vegas. Started franchising the unit • 1970 Opened Benihana Palace. Discontinued franchising scheme • 1971 Bill Susha joined Benihana’s management • 1972 15 units in US (9 owned, 5 franchised, & 1 JV). Grossed revenue over $12 mio per year. Considered future expansion
  5. 5. Americans and Their Eating Behavior Enjoyed eating in exotic surroundings Case Analysis – Benihana of Tokyo 7/28/2014 5 1 Deeply mistrustful of exotic foods 2 Enjoyed watching their foods being prepared 3
  6. 6. Problems at the Restaurant Industry in the United States Case Analysis – Benihana of Tokyo 7/28/2014 6 High labor cost Contributed 30-35% to total operating expense Availability Limited seating capacity Food storage and food wastage Contribute significantly to the overhead cost of the typical restaurant
  7. 7. How Benihana responded Americans’ eating behavior and problems faced by the restaurant industry in the United States Case Analysis – Benihana of Tokyo 7/28/2014 7 Introduced hibachi table arrangement Simplified menu (Middle American entrees) Japanese historical authenticity  Keep labor cost low at a level of 10-12%  Minimize flow time resulted to higher turnover rate  Higher utilization and throughput due to high turnover rate  Virtually no waste  Lower overhead costs  Cut food costs to between 30-35% depending on the price of meat  Hire two crews of Japanese carpenters to keep authenticity  Decorations, foods, and chefs are all Japanese Creating unique business model is the key for Benihana to win the market!!!
  8. 8. Case Analysis – Benihana of Tokyo 7/28/2014 8 The 70’s Benihana Business Model Unique positioning is reflected on its chosen business model Customer Segment • Business travellers • Leisure customers Value Proposition • Theatre of Stomach • Japan historical authenticity • Simplicity in operational Channels • Owned restaurant and franchise (later stopped in 1970) • Outstanding visual ads through newspaper and magazines
  9. 9. The 70’s Benihana Business Model Unique positioning is reflected on its chosen business model Case Analysis – Benihana of Tokyo 7/28/2014 9 Customer Relationship • Personal assistance through full service restaurant system • Co-creation by using customer feedback Revenue Streams • Beverage sale through lounge and Food sell from Hibachi • Franchise system Key Resources • Restaurant physical asset • Human resources: Japanese chefs and other staffs
  10. 10. Case Analysis – Benihana of Tokyo 7/28/2014 10 The 70’s Benihana Business Model Unique positioning is reflected on its chosen business model Key Activities • Restaurant operation and management • People development • Competitive compensation and benefit • Creative marketing Key Partnership • Raw material vendors • Japanese carpenter Cost Structure • Restaurant cost: raw material, salary, bonuses, creative marketing • Initial investment on Japanese style interior
  11. 11. Table of Contents 7/28/2014 11 The Story of Benihana The 70’s Benihana Facing Issues Detailed Analysis Conclusion & Recommendation Key Takeaways 1 2 3 4 5 Case Analysis – Benihana of Tokyo
  12. 12. Benihana’s Issues in 1970s Case Analysis – Benihana of Tokyo 7/28/2014 12 Limited supply of skilful staff Benihana’s business model required approximately 30 people who are all Oriental 1 High initial investment Each new unit costs Benihana a minimum of $300,000. Use of Japanese authentic material High construction costs. Every items used on construction were imported from Japan 3 1. What is the right formula for future expansion of Benihana? • Branching out into the new products concept? • Branching out into new geographic areas 2. Is Benihana really on the forefront of a trend of the future? Or in other words, should Benihana emphasize restaurant operations only? 2 Future expansion Find the right formula for future expansion was a difficult task for Benihana 4
  13. 13. Our Hypothesis Case Analysis – Benihana of Tokyo 7/28/2014 13 Capacity problem due to authentic Japanese materials and people The Restaurant as a process Benihana Value Proposition: food as a Broadway Show
  14. 14. Table of Contents 7/28/2014 14 The Story of Benihana The 70’s Benihana Facing Issues Detailed Analysis Conclusion & Recommendation Key Takeaways 1 2 3 4 5 Case Analysis – Benihana of Tokyo
  15. 15. Benihana’s footprint in the restaurant industry in the United States Steakhouse with a difference: grossed over $12 million per year Case Analysis – Benihana of Tokyo 7/28/2014 15 1 Benihana Restaurant Chain Development 2 Period of 1935 to 1972 3 4 5 6 15 1935 1958 1964 1966 1967 1970 1972 • Three years of making a systematic analysis of the U.S. restaurant market before decided to entry the U.S. market • One basic criterion for site selection – high traffic!!!
  16. 16. Benihana’s Operating Statistics Operates more efficient compared to the other typical US restaurants Case Analysis – Benihana of Tokyo 7/28/2014 16 Labor Cost (% of Operating Expense) 30-35% 10-12% US Restaurant Benihana Food Cost (% of Food Sales) 38-48% 30-35% US Restaurant Benihana Beverage Cost (% of Beverage Sales) 30-35% 20% US Restaurant Benihana Low labor cost was driven by eliminating the need for a conventional kitchen Simple menu resulted no waste. Cut food costs to between 30-35% . Managed to get an average of 20% of the beverage sales Being efficient in operationalizing its restaurant units!!!
  17. 17. Winning Strategy behind Benihana’s Success Case Analysis – Benihana of Tokyo 7/28/2014 17 Implemen-tation Strategy Benihana Effective Training Employee Satisfaction/ Motivation Effective & Aggressive Marketing Competence -based positioning Customer Satisfaction Compara-tively lower expenditure “Ensuring Benihana’s success by implementing 7 winning recipes consistently”
  18. 18. Winning Strategy behind Benihana’s Success Implementation Strategy Case Analysis – Benihana of Tokyo 7/28/2014 18 Ambience – historically authentic Implementation Strategy Hibachi/ teppanyaki table arrangement Economized menu choices Collaboration Effective utilization of Simple space management structure Site Selection Effective implementation strategy Helped Benihana in:  Penetration in U.S. market  Positioning: appealing to a different customer need  Successful cost reduction
  19. 19. Case Analysis – Benihana of Tokyo 7/28/2014 19 Winning Strategy behind Benihana’s Success Effective Training Implemen-tation Strategy Benihana Effective Training Employee Satisfaction/ Motivation Effective & Aggressive Marketing Competence -based positioning Customer Satisfaction Compara-tively lower expenditure Heavily invest on training program for chefs  Three years formal apprenticeship training with certification in Benihana form of cooking  Three to six months course in English language and for American manners  Training was a continuous process
  20. 20. Case Analysis – Benihana of Tokyo 7/28/2014 20 Winning Strategy behind Benihana’s Success Employee Satisfaction/Motivation Implemen-tation Strategy Benihana Effective Training Employee Satisfaction/ Motivation Effective & Aggressive Marketing Competence -based positioning Customer Satisfaction Compara-tively lower expenditure Supportive ecosystem available for all employees  Chances of growth in organization  Paternal attitude – cultural bonding with management  Good salaries & perks  like bonus plan Intangible benefits like job security & well-being of employees  Pride serves as a motivator factor
  21. 21. Case Analysis – Benihana of Tokyo 7/28/2014 21 Winning Strategy behind Benihana’s Success Effective & Aggressive Marketing Implemen-tation Strategy Benihana Effective Training Employee Satisfaction/ Motivation Effective & Aggressive Marketing Competence -based positioning Customer Satisfaction Compara-tively lower expenditure Substantial investment in creative ads & public relations  Invested 8-10% of gross sales in advertising  Promoted as an experience vis-á-vis an eatery  Innovative advertising  approach Outstanding, contemporary, off-beat visuals in advertisement  Consistent word of mouth policy
  22. 22. Case Analysis – Benihana of Tokyo 7/28/2014 22 Winning Strategy behind Benihana’s Success Customer Satisfaction Knows who customers really are and what they really want  Conduct a considerable amount of market research  Food quality drives the satisfaction the most – use of prime grade food  Service & atmosphere are the other key drivers for satisfaction Implemen-tation Strategy Benihana Effective Training Employee Satisfaction/ Motivation Effective & Aggressive Marketing Competence -based positioning Customer Satisfaction Compara-tively lower expenditure
  23. 23. What’s more for the future? Aimed to grow faster; however some constraints limited Benihana to do so Case Analysis – Benihana of Tokyo 7/28/2014 23 Franchisee No experience of investors with regards to restaurant business No knowledge of Japanese culture and Benihana style of cooking Does not have full control towards operational Expansion Funds – reluctance to take loan from financial institutions Scarcity of surplus trained staff Productivity & limitation with 2 carpenters Operations No quick service option High advertisement cost & specifically target towards food Limited to primary market in USA Limited variation in menu
  24. 24. Table of Contents 7/28/2014 24 The Story of Benihana The 70’s Benihana Facing Issues Detailed Analysis Conclusion & Recommendation Key Takeaways 1 2 3 4 5 Case Analysis – Benihana of Tokyo
  25. 25. Unique business model helped Benihana stood out from the competition in the restaurant industry in the U.S. Case Analysis – Benihana of Tokyo 7/28/2014 25 Japanese historical authenticity Use of 100% authentic Japanese material. Hibachi table arrangement keep turnover rate high. Theatre of the Stomach Making Japanese cooking tangible. Customers watch their food cooked/fun and in time experience.
  26. 26. Efficient process flow is one of the keys of its winning strategy 7/28/2014 BACK END FRONT END Customer arrives Seated @ hibachi table Wait in lounge Customer orders drinks Drinks are served Chef's cart Chef arrive with cart Waitress takes order Salad, soup, rice & beverages served Cooking show Customer eats Check is prepared Customer pays Customer leaves Food Storage Cleaning Cooking Precook rice & soup Preparation Salad bar Case Analysis – Benihana of Tokyo 26
  27. 27. Economized menu choices helped Benihana to reduce labor costs and total overhead costs Case Analysis – Benihana of Tokyo 7/28/2014 27 BENIHANA OF TOKYO – ONLY OFFER FOUR ENTREES No waste + reduce labour cost Reduce food cost to 30-35% of food sales Increase profit margin
  28. 28. Introduction of hibachi table arrangement gave a huge impact in efficiency of the back-end process Case Analysis – Benihana of Tokyo 7/28/2014 28 Bigger dining room Combining storage, task and flow of information in one Smaller back space size required Only about 22% of unit total space is back of the house (vs. 30% in typical the U.S. restaurants) Efficient kitchen arrangement Maximizing space usage through careful selection of kitchen equipment
  29. 29. Entire space were being used effectively, including cocktail lounge area. Functioned as temporary waiting area as well as revenue generator Case Analysis – Benihana of Tokyo 7/28/2014 Bar/Lounge Temporary waiting area Sell beverage while waiting Enlarge restaurant capacity 29
  30. 30. Proposed Recommendation To address management concerns, consider to improve current operating model as well as to further implement cost reduction in several areas Case Analysis – Benihana of Tokyo 7/28/2014 30 Expansion • Explore potential areas for further expansions, e.g. suburb areas • Can go for joint ventures instead of franchisee (e.g. with international hotel chain) • Take funds from financial institutions. Cash flows were not an issue for Benihana at that time • Expanding to international market mostly South East Asia market. Focus on mid to upper class segment • Develop several brands with different value proposition e.g. Benihana Signature, Benihana Oriental Express, and Benihana of Tokyo Cost • Reduce site cost by expanding to the suburb areas • Economize advertisement cost • Use local building material for giving shape of Japanese architecture • Use local available manpower for carpentry work • Purchase in bulk for decoration material to get more discount • Build workshops in 3rd country, e.g. Thailand or Indonesia to produce Japanese décor craft as a new line of business. Operations • Go for quick-service operation to cater younger segment • Can go for add-on business of selling traditional Japanese stuff in a dedicated area of restaurant • Introduce variations in menu, e.g. sushi-on-the-go, robatayaki, or even udon • Introduce attractive schemes for females and older generation • Introduce a complimentary membership card to offer special offer package to its loyal customers • Build local training center to train local staff
  31. 31. Benihana’s nowadays The 70’s business model has been adjusted to catch up a massive growth Case Analysis – Benihana of Tokyo 7/28/2014 31 BUSINESS OPERATIONAL COMPARISON: 1970s & 2014 1970s Employ only Japanese chef trained in Japan Stop franchise Affordable price for mainly business segment 2014 Local chefs are allowed Allow more franchise Middle up pricing for middle up class customers
  32. 32. Benihana’s nowadays Menu has been also adjusted to cater more customer segments Case Analysis – Benihana of Tokyo 7/28/2014 32 MENU COMPARISON: 1970s & 2014 1970s Familiar Middle America entrees mainly hibachi steak Limited number of menu choice (4 main dish) 2014 Traditional & fusion Japanese food e.g. sushi, udon, robatayaki and kaiseki Vast array of menu choice (more than 60 menu items)
  33. 33. Benihana’s nowadays Changes in operating model and menu selection required look & feel as well as space layout adjustment Case Analysis – Benihana of Tokyo 7/28/2014 33 LAYOUT AND LOOK & FEEL COMPARISON: 1970s & 2014 1970s Keep authenticity of Japanese style and material Simple and efficient kitchen 2014 Modern Japanese style without necessarily Japanese material Require additional sushi station, noodle & robatayaki equipment and cold kitchen
  34. 34. Table of Contents 7/28/2014 34 The Story of Benihana The 70’s Benihana Facing Issues Detailed Analysis Conclusion & Recommendation Key Takeaways 1 2 3 4 5 Case Analysis – Benihana of Tokyo
  35. 35. Key Takeaways from Benihana’s Case Case Analysis – Benihana of Tokyo 7/28/2014 35 1 • Have a dream 2 • Do the homework seriously – making systematic analysis for the market 3 • Reduce costs on smart way that give more advantages
  36. 36. Case Analysis – Benihana of Tokyo 7/28/2014 36

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