Benihana Of Tokyo Analysis Of Case y4u21

Benihana of Tokyo Question 1: Assume that the dinning process takes 60 minutes; can we calculate the cycle time of a dinner? Answer: The dining process takes 60 minutes and there are 112 seats and each sitting is of eight people so, 112  14 8 60  4.2 14

So 4.2 is the cycle time. Question 2: How many minutes do customer have to wait in the cocktail lounge on a busy night? Answer: On the busy night a dining process takes about 30 minutes so the customer will have to wait for 30 minutes in the lounge for the dinner to be served. Question 3: Are the financial statements of Benihana attractive? Assume the Chicago unit cost $300,000 to renovate as a Benihana unit. What are the returns on this investment? Answer: Yes the financial statement of benihana is very attractive. The Chicago unit is the unit which is most profitable. The profit margin of this unit is 41%. Following is the financial statement of this unit

Million

s Sale -Cogs Gross profit Less operating expenses Labor Advertising Management Rent Net Profit Margin Payback(months )

1.3 0.39 0.91

0.13 0.13 0.052 0.065 0.533 0.41 6.84803

It will take approximately 6.8 months to get total investment of 300000 back. Question 4: Can the Benihana concept be copied? What are the barriers to entry? Answer: No it can’t be copied, because like benihana making the hotel 100% authentic to Japanese culture was difficult and expensive. Benihana used original décor imported from Japan and labor from Japan also carpenters from Japan, so it is difficult to do that. Also it was also difficult for investors to take care of Japanese chefs like benihana. Benihana gives the feel like they are living in Japan. In 1970 many investors did try to copy but wrapped up in year. Question 5: what are the real risks for benihana? A.

Diversifying too quickly

B.

Losing control over cost

C.

Lack of management talent at top for growth

D.

Rocky! Dillettante

E.

Danger they will become training center of chefs for imitators

Answer: Firstly the problem is that they are losing the control over their costs because each unit they are opening they make it 100% authentic. It is not necessary to use material, labor and chefs of Japan only, they can use American material which can cut costs. Secondly when chefs come for training in benihana, imitators or other restaurants can with them and the chef can leave benihana after getting excellent training on cooking and showmanship. So it is potential danger that Also Rocky is diversifying the operations for example he want to make Chinese-Japanese combination of food also want to go in the business of food processing. So this will need a lot of time and will change operations so it can be dangerous. Rocky was also investing in other businesses like broadway shows etc due to which he was not properly focusing on the restaurants.