Category: Analysis

Introduction

Benihana of Tokyo (BOT), a Japanese style steakhouse restaurant chain has risen to victory in the USA market in food industry. Rocky (the founder of Benihana, USA) converted his dream into certainty by executing well thought out the restaurant model wherein he incorporated Japanese spirit with American food style. The restaurant has grown and then financial statements indicate that the restaurant is enjoying health financial status since it was established in 1972. Benihana has experienced an exceptional niche in the market, with traditional Japanese style restaurant providing American style food. Their central allure is providing to its client’s accustomed food, high touch consumer service and new concept of serving and preparation food, which has been attributed to the increasing technological changes and the excellent management approaches. The novel idea of Hibachi table not only abridged the overheads related with conventional kitchen however also gave patron an inimitable food preparation show with infrequent quantity of attentive service. Few restaurants attempted to copy Benihana’s business ideal, however, they failed (Klug et al, 1998).

Recommendation

The analysis of Benihana indicates that the following remedies must be undertaken so that it will increase the demographics and markets to cater to:

  • Remodel the restaurant flow as follows:
  1. The restaurant has the responsibility to remodel and setup the sitting arrangement of seats. This means that the restaurant will need to purchase more so that they are arranged in a manner in which it will surround the cooking area thus serving the multiple groups at one moment. This will keep the chef’s downtime to a minimum (Guile et al, 1988).
  2. In addition, the restaurant should ensure that they avail more seats around the cooking area for the patrons to serve the customers within the shortest time possible. This will in turn keep the turnover of the restaurant low.
  • Restructure the restaurants’ marketing strategies to ensure that all the age groups are catered for. The restaurant marketing department, therefore, has the responsibility of stressing the aspect of excitement and swiftness, which Benihana delivers in the target market (Klug et al, 1998). 

Problem

Presently, the restaurants’ senior management as the feeling limited in undertaking expansion strategies into second-tier urban centers as a result of considerable minimum cost linked with the opening a new site for business. This implies that the company has a problem of opening their business in new locations since it will incur more expenses which the management believes  they lack at the moment. The present operations structure of the restaurant makes it hard for the restaurant to undertake its expansion strategies into smaller market niches in which they will serve less predictable and smaller groups (Guile et al, 1988).

Therefore, the restaurant management does not have the capacity to venture into these smaller markets because this will not bring to the restaurant the anticipated benefits. Furthermore, the company apart from not being able to venture into smaller markets, they have found it difficult to cater for the youthful generation that makes the majority of the population. They have not laid the necessary strategies that will see the restaurant lure the young generation to their restaurants, which has become a major challenge. The present work flow of the restaurant needs that a set of 7-8 individuals are settled at a table prior to cooking. This seating arrangement creates a wait for individuals who visit the restaurant in a smaller size groups that in return may create a much sluggish turnover in the restaurant. Each seat at the table is a prospective income, and when they are empty the restaurant is likely to lose some money hence affecting the company’s financial stability. The restaurant’s present sitting arrangement does not cater for irregular arrival of patrons. In the very busy downtown setting where the restaurants’ patrons are consistently arriving in the door, it is simple to have them to wait for at least 5-10 minutes until the right arrangement can fill the hibachi table. Regrettably, this is not the situation in the smaller market niches, which has made the company’s management be reluctant to venturing into these smaller markets. This is also attributed to the fact that in smaller markets the waiting time will considerably raise, or the seats will remain vacant as a result of smaller traffic visiting the restaurant. Additionally, as a result of insufficient setup to accommodate the smaller and less expectable groups, the restaurant is having a difficult time attracting the youth. If the restaurant can attract this generation that represents a larger segment of the market then the productivity and profitability of the business will increase drastically, and the incapacity to attract this market segment will decrease the restaurants revenue considerably (Klug et. al., 1998).

Solution

Based on the above problem, it calls for the restaurant’s management to restructure its marketing strategies to accommodate all the market segments, particularly, the younger generation that represents the highest market segment. This implies a restaurant to venture into smaller markets, there is a need for a redesign of the restaurant to cater for the less predictable influx of the patrons. The restaurant’s present design indicates that when smaller groups of 3-5 individuals visit the restaurant, it may leave seats hard to fill or unoccupied unless a perfect size group  visits it at the same time, then at least all the seats will be occupied. If the restaurant implements the proposed design, it can accommodate multiple groups, having diverse sizes, visit the restaurant and can still get similar service that if they  visit the facility as large groups with previous design (Guile et al, 1988).

Therefore, the workflow of the smaller market Benihama will be much similar as that of the larger Benihama. This means that the patrons will visit the restaurant where they will be greeted by the restaurant’s front men. After the patrons have been received by the front men they can precede to where they can wait to be seated at the hibachi table or they can proceed and enter into the lounge region of the restaurant. After they are seated at their respective table, the waitress will serve them with beverages and entrée orders. In the bigger market setup, the chef in the restaurant will then come out with a cart of food that has been typically prepped in back and start his show. The chef will cook himself and serve the patrons to their tables, giving every table a recommendable deal of attention to guarantee customer satisfaction and hence develop loyal customers. Differently from other restaurants, Benihama delivers complete customer service to every table in the restaurant, as opposed to other restaurants in the same food industry where, every waiter has to serve 4-5 or more tables and the clients in these restaurants do not get a chance to meet the chef (Klug et al, 1998). 

Furthermore, the smaller market Benihama will continue to offer that complete service to the patrons, which will be much similar to the service offered in the larger market Benihama. This will be instead of a single group, it will comprise of several smaller groups seated in the hibachi table. In the process where the table cannot be filled to its capacity, the chef will have an option of starting cooking for a few groups’ orders seated at the table or in some cases the single groups’ orders in order for the downtime to be reduced for the chef. Therefore, this implies that this will permit dedicated and fast service even in situations where the business is volatile.

Moreover, further to maintaining the flow of the customers to the restaurant, Benihama has to establish strategies that will ensure that it cater for all the market segments, specifically, the younger generation. This is because the younger generation constitutes the largest market segment in the market thus will give the restaurant a higher customer base hence increases its revenue. Benihama wants to attract young customers who are well-known for their eccentric marketing strategies and an atmosphere of entertainment. This generation will be an important segment for the restaurant because they are large in terms of numbers and the largest spenders in the market. Therefore, the restaurant has the responsibility of capitalizing on this image so that it can attract the young generation. This means that in order for the restaurant to undertake the marketing strategy to attract this generation, they must market its ads to young college-aged adults and professionals because these groups are mostly in the employment sector. The restaurant’s present nontraditional advertising already awards the company an advantage; it is basically a concern of getting the product message in the ads specifically to the targeted groups (Guile et al, 1988).

In addition, these advertisements targeting the young people must emphasize the greater bar areas accessible so that they can stress Benihama as an experience than is more than just a mere restaurant. This will be effective in targeting the younger generation in the market hence increasing the reputation of the business as well as the sales.  This also implies that targeting  younger generation and possibly kids will bring families to the restaurant. The  entertaining environment already exists, so the restaurant must concentrate on primarily getting the younger generation to try Benihama with the hopes and aspirations that once they experience the outstanding atmosphere at the restaurant, they will desire to return. Therefore, the strategy of using entertainment to attract the younger generation is effective since this generation fashion music. The restaurant during their advertisement must use celebrities to catch the eyes of the generation who will want to be associated with the advertising product. This will boost the sales of the restaurant as the customer base (Klug et al, 1998).

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Analysis of the Present Operations and Risks of New Operations

The restaurant’s operation ratios are promising as they are positive and some apparent differences can be spotted between the restaurant’s key ratios and that of the restaurants in California. The California restaurants are a considerable contrast because they have many large cities that are a market for the restaurants located there. Therefore, this offers a large market for the restaurants. This means that when contrasting the ratios from the California restaurants in 2010 to those of Benihama in 1968, the largest variance is the payroll costs that were incurred in the restaurants. Therefore, when the payroll costs are factored in to analyze the differences, in California they are higher as compared to those of Benihama (Guile et al, 1988). This is probably attributed to the reality that the restaurants in California must pay more in their payroll because they pay multiple skilled chefs rather than couple chefs with some wait and help staff. Hence, this becomes the main reason of the huge difference that exists in the two restaurants when compared. Nearly all the elements of the operating ratios in restaurants are nearly comparable, which means that it is imperative for Benihama to manage and control their payroll expenses to ensure that they are operating within their budget hence their profitability in the food industry.  Therefore, the labor costs should be checked regularly to ensure that the operating costs are high thus decreasing the revenues of the restaurant. So that they succeed in the smaller markets, the labor expenses should be highly assessed to ensure that they are not too high. It is imperative to understand that the higher labor costs for the restaurant are the main reason Benihama is so distinctive and also the reason why the restaurant’s tables get more personal experience. It is advisable that the management should continue maintaining the labor costs by closely examining the trends and correct any indication that the costs will shoot (Klug et. al., 1998).

Furthermore, in the larger markets it is simple to maintain the personnel to be busy with a constant flow of clients to the restaurant; however, in smaller markets it will be hard to maintain the same by frequently keeping them to cook since the flow of customers is not constant.  This means that it is advisable that in smaller markets, the number of personnel should be kept at a minimum number, particularly the chefs who are highly paid. The model of seating in the restaurant must be designed to ensure that lit accommodate the odd-size sets to be served at the equal moment, however, this will need more coordination on the side personnel and management to make sure that the clients are all seated in an effective manner that will optimize the number of customers per assigned chef.  The restaurant  should ensure to undertake quick service by not keeping the patrons waiting for too long. In addition, in smaller segments of the market, it is harder to forecast when the clients are visiting the restaurant, and the number they will be arriving at the restaurant. The restaurant should attract as many clients as possible thus assisting the restaurant achieve its marketing and business objectives in the new market. This means that the restaurant should attract as numerous demographics as possible (Klug et al, 1998). These demographics that the restaurant must concentrate on are the younger generation. Thus, being in a position to attract families with their kids into the restaurant and creating an experience that will keep them wanting to visit the restaurant will assist the restaurant to be effective and productive. At present, the restaurant has issues in attracting young generation, and without this important group of people in their market, the restaurant will find it difficult to achieve its business objectives. 

Conclusion

Benihama has emerged as a very successful restaurant in large urban centers and in potential market segments where they can attract more customers regularly. However, the restaurant should direct its marketing strategies and resources to smaller markets by venturing into unexploited markets. Moreover, the restaurant must attract the younger generation as well as their families with their excitement filled environment with full of advertisement. This can be done through the use of advertisements that are catchy for the young generation. In addition, through redesigning the structure of their restaurants and the process of doing business, it is possible for the restaurant to be successful in smaller markets. Lastly, the restaurant should check their labor costs do ensure that their operation costs are low (Klug et al, 1998).

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