Marketing Plan of Japanese Steakhouse Benihana

Marketing Plan of Japanese Steakhouse BenihanaBenihana a Japanese steakhouse restaurant with grill concept commenced in 1964 in West Side, New York. This restaurant was founded by Hiroaki (Rocky) Aoki, an opportunity seeker, who identified the untapped pick outs in the Ameri keep restaurant exertion afterwards having done a thorough analysis of the market. His concept serve the unfulfilled needs of the market especially the middle-income backupmen by providing exotic surroundings, the true Japanese standard pressure, as well as offering reinvigorated-made experience by having chefs cooked in front of customers. The idea quickly gained the popularity resulted in high meshing and rapid expansion.This utility concept brought forth the competitive advantage to Benihana restaurant. By having chefs outside cooking it allows the restaurant to keep childbed salutes and offer more(prenominal) than attentive services. The menu limitation also lowers the costs. The space was fu lly utilized to maximize the emoluments. The costs structure and utilization of space exit be explained in detailed. Moreover, the highly trained skilled chefs and creative PR and marketing campaign were also the key contribution to the success of the restaurant.Despite the success, the rapid expansion can often time be a problem since, company may not have the resources and the solid plan for the growth strategy. Rocky wanted to broaden his business into retail and fast sustenance chain. In addition, this new mod service concept may cause confusion as to what the restaurant impression product or services really are. This report aims to address the issues mentioned by evaluating Rockys diversification plan, identify the internality products and services, come up with alternatives which were first to open new Beni Trendy restaurant which coffin nail younger generation and After Benis for dessert and come up with action plan.Issue StatementRocky Aika is a world of great dream s but his dreams may be too big for him to be able to achieve it. He plans to grow his business to other sections of the market especially the younger generation but in order for Rocky to be able to grow his business and to maximize the pro come acrosss, the expansion plans need to be strategically revised and planned. Currently, Rocky is planning his diversification strategy, but this has to be evaluated and for the purpose of successfully growing Rocky needs to first understand his business and market. info AnalysisBenihana, a Teppanyaki Japanese restaurant with grill concept was a major success. The service concept was new and unique to the market which differentiated itself from the veritable(prenominal) existing restaurants. The major differences of the concept wereThe restaurant eliminated the tooshie of house conventional kitchen while instead providing hibachi tables with well-trained chefs cooking in front of customers. This concept allows the moil cost to be cut down t o 10-12% of gross sales and attentive service.Benihana provided limited menus, which resulted in reduction of fodder storage and wastage costs.The authentic Japanese ambiance or Japanese touch was brought to the restaurant through importing all furniture from Japan including walls, ceilings, beams and decorations.Benihana better utilize their space. Normal restaurants require 30-35% space for back of the house meanwhile Benihana needed only 22% of the entire space.By focusing on the above mentioned points, Benihana was able to reduce their costs, thus become more profitable. For instance, Chicago branch was the most profitable unit with the gross profit around 1.3 million per year. The reason for this was that the managements ability to keep their expenses to a minimal with nutrition 30%, labor 10%, advertising 10%, management 4%, and rent 5 %.Benihana Cost and Typical eatery Cost StructureThe above income statement repoints the profits that Benihana in Chicago was making during the year 1972. Some of the amounts were already occurn including the gross sales, food and beverage sales, the percentage of food cost, labor cost, advertising costs, management cost, and rent. However, some other items needed to be calculate or assumed such as the percentage of beverage cost, the total sales and the income tax.The gross sales were given to be $1,300,000, thus the food and beverage would be $910,000 and $390,000 respectively. The food costs that are 30% of food sales would give an amount of $273,000 and the beverage costs that was averaged to be 20% of the beverage sales would equal to $78,000. Therefore, the gross profit would equal to gross sales negatively charged total costs of goods sold which is equal to $949,000. The labor, advertising, management and rent expenses are expected to be 10%, 10%, 4% and 5% of gross sales respectively. The expenses were calculated to be $130,000, $130,000, $52,000, and $65,000 which totalled to $377,000 or total operat ing costs.The net profit before income tax on the other hand is equal to gross profit minus total operating expenses or $949,000 minus $377,000 which gives the value of $572,000. To calculate the net profit after tax, the assumption was made that the income tax was 14% which is based on the percentage of tax that needs to be charged must be given but the case does not give any such information, so for the purpose the assumption assume that the income tax was at 14% so in this case the value would be $80,080 which is $572,000*20/100. So the net profit after tax will be $572,000 minus $80,080 which calculates to $491,920.In order to have a clearer picture of the difference between Benihana and typical restaurant the percentages of separately item were compared. The food and beverages sales percentages of Benihana are simlar to that of a typical restaurant which were around 70% for food and 30% for beverages. Nevertheless, the major difference lies in the food and beverage costs which was approximately 50% in Benihana whereas in typical restaurant would be equivalent to 73-88% or about 23-38% higher. The total expenses percentages of Benihana comes up to 29% which composed of labor, advertising, management and rent, meanwhile the operating expenses percentages of a typical restaurant total to 42.25-57%.It is apparent that Benihanas service concept, service operation and its delivery system change the restaurant to significantly reduce costs and gain higher profits, thereby became more competitive than its competitors.The Chefs SalaryChefs were vital element to the success of the Benihana. Therefore, it is extremely chief(prenominal) to estimate the influence of their salaries on the restaurant profitability. The case provided that in one unit there were approximately 30 faculty which were 6-8 chefs, 6-8 waitresses, 4-5 managers, 2-3 barman, and about 8-11 bus staff and dishwashers. The total labor cost as calculated above was 10% of gross sales which is equiv alent to $130,000 which must be divided among all the employees excluding the managers.In order to estimate the chefs salaries, each employee salaries will be first estimated. The assumption is made that waitresses and barmen would have roughly the uniform amount of salary which is approximate $3,000-4,000 per person per year or about 2-3% of total labor cost. The 6-11 bus staff and dishwashers could earn around $1,500-3,000 per person per year or 1-2% of total labor cost for each person. Given the assumptions above, the chefs salary would be around $10,000-12,000/year.Benihana Production SystemBenihana has an efficient process hang from that of the return process to the service delivered to the customer, providing them with the ultimate eat experience. The average dining time period is one hour which does not include the bar time. This identifies the efficiency of the employees, the hibachi style of cooking and seating arrangement. The food is prepared in front of the seated g uest and is delivered to them with a personalised service at the same time ensuring that high tone standards of food production are met.The restaurant has a well-organized layout plan which enhances their service delivery. It has been designed in a very systematic so as to facilitate the smooth flow of the staff and the guest entering the restaurant. The production system has been focused, which can be interpreted to mean, the entire production service within the restaurant from time of convey the guest and staff together , seating them, taking their order, delivering the food, preparing the food till the time of guest leaving the restaurant.On carefully examination of the layout for the Benihana, it can be seen that the entrance leads directly to the lallygag. See Figure 1. The guest can relax and have a drink in the lounge which has a seating capacitance of about 50, while a table is being organised for them as the turnover time period ranges to about an hour. They are then e scorted to the dining airfield in batches 4, 8 or 16. The 112 seat restaurant has again been planned with great efficiency. There is one chef and one waitress for every two hibachi tables, thus the designing process has been made keeping this in mind and at the same time this reduces the labour costs. The back area space has been efficiently utilised. The kitchen includes a pre-preparation area, hot area and post production area, which are separated to avoid confusion and chaos. The washing area is close to the kitchen and the restaurant to avoid tick of service. The storage area has nice space to cater to two the kitchen and the beverage areas in addition are designed to be easy access to both the areas.At the same time there are a few alterations that can be made to further enhance the process. The entrance for the restaurant consumes a lot of space and can be modified to take on more guests in the lounge. The Lounge area setup can be reorganized to accommodate more guest so that if the guests dining in the dining area want to spend some more time in the restaurant by having a few drinks they can thus be escorted to the lounge area, this in turn would also further reduce the turnover time period. The washrooms have been dictated quite close to the bar and near the entrance which is extremely far from the dining area so if they are placed in between the lounge and the dining area it would be more convenient for the guest to walk to the location than to go from the dining area and through the lounge at last reaching the washroom. The three poles in between the lounge area can also be an obstacle for the people seated in the area as well as for the employees while delivering their services.Presentation of SolutionsThe major concerns that were raised by both internal and external scatteries regarding Benihana business were the expansion strategy, understanding its core business and the sustainability of the business. In order to come up with solutions, one needs to understand the core business by first understanding the market.According to the survey, the main(prenominal) manoeuvre market of Benihana was middle-income businessmen. The survey also revealed that the number one reason that persuades customers to come to the restaurant is good food or about 46.7% and atmosphere and preparation together came up to about 26.4%. The first time visit percentage is about 34.4%. Thereby, it is led to believe that first time visitors may come because the restaurant provides them with new exotic experiences. Consequently, as they have experienced the food they were satisfied with the taste, hence second visit. Customers also rated that they would highlight the food 38.2% and preparation 24.6%. From this, one could conclude that the main core products and services of Benihana are the food and the experiences.The sustainability of business issue was also raised by Russ Carpenter. Due to the concept of the restaurant and the limited menus, the long-term scrap is questioned. As the business grows, so did the competitors. If new competitors with different concepts come into scene, the sustainability is raised. The limited menu options which although Benihana gave an advantage by reducing the food costs, but would it be enough the changing trends to get in the customers.Once the restaurateur knows that the restaurant is already successful, the management should consider the sustainability of the products and services. Time changes, trends change and people change, thus businesses should come up with innovative plan as a pioneer or boom out the line of product for the business growth. If Benihana is considered to be fashionable due to the trend, then they will need to develop a concept for service jibe to help Benihana to become sustainable.According to Rockys, he planned to diversify into retail sale of Benihana- judgeed food label and quick-service operation. designate Express, their new product lines will be quite in novative and a great potential plan for the future. The Benihana label will enhance the incorporated brand, yet increase the brand awareness among the people who have never experienced Benihana. Figure 3 shows Rockys growth strategy.One core product/service and one marketBenihana Restaurant Chain for middle-income businessmanSell existing products/service in new geographic market portionExpanding Benihana Restaurants to different part of US through JV and wholly-ownedSell existing core service out of countryExpanding Benihana Restaurants to different part of world amass diversificationExpanding to retail and fast food chain, Orient ExpressRocky intentionally aimed to appeal the younger generation by investing in the new small units called Orient Express which would be located in gas stations. However, the quick-service units in gas stations did not necessary target the younger generation. Since the gas station is a place that people stop to fill gasoline, use the restrooms or take a rest after a long journey.According Rockys concerns and issued raised by Russ Carpenter the following solutions are suggested (1) To open a new Benihana which directly targets the younger generation. (2) To diversify the Benihana business to the other business such as Benihana restaurant that sells purely the Japanese style dessert. By doing so, Rocky could direct his business towards the group he wanted to attract, at the same utilize the companys core competencies which were the quality food and authentic Japanese experience. The dessert restaurant would allow Benihana to diversify into the potential market which is females which currently only constituted only 28.6% of Benihana restaurant according to the survey. The costs of training and staff would be reduced as the operation would be similar to that of the existing ones.Figure Proposed growth strategy. Adapted from Carmen Langeard (1986)One core product/service and one marketBenihana Restaurant Chain for middle-income bus inessmanSell existing products/service in new geographic market segmentExpanding Benihana Restaurants to different part of US through JV and wholly-ownedSell existing core service out of countryExpanding Benihana Restaurants to different part of worldConglomerate diversificationExpanding to retail, but NO ORIENT EXPRESSConcentric diversificationBeni Trendy targets 18-30 peopleAfter Benis desserts penetrate into younger and female market good wordThe alternative to the solution mentioned above is opening a new unit which targets only the young generation (18-30 years old) as a separate line of work from existing Benihana. The unit will be remarkd Benihana Trendy. This unit will create a completely different experience from original Benihana, but at the same time the customers still can perceive the feeling that this is Benihana.Benihana Trendy would still sell grilled steaks, however of different price and quality. The atmosphere would be created to attract new generation who seek for thrill and exotic experiences at lower prices. For example, the customer can cook with chef upon reservation. The menu of self-cooking might be added in the menu. The indoor will be designed to facilitate the trendy atmosphere that appeals the young generation. The furniture did not have to be imported from Japan, hence cost saving. some other diversified alternative is creating a separate dessert unit which is called After Benis. The name comes from the idea that people can come to have dessert after having main course from Benihana or Benihana Trendy The ideal is the location of After Benis should be located as near as possible to Benihana, otherwise the name would not be quite suitable. The concept of this unit would also be the cooking show but the chef is not allocated at each table. The cooking show from chef will be set in the area that everyone can see, so the tables are not equipped with the hot stove. The dessert menu will be designed to incorporate the cooking show f or instance, the pancake, the fried ice-cream (mixing two or more ice-cream in one dish), and etc. As Japanese food civilisation is very delicate, the menu will be deliberately invented by design of Japanese chef. This also aims to attract younger generation as well as females segment. The decoration would be homely, but keep the trendy element.By having these two new concepts, it is believed that Rocky can best utilize his resources and core competency. This would help him save costs. In addition, he can tailor these new products and services to the new market segments which he had not yet tapped into. This will provide the opportunity for him to expand his business or concentric diversification, which is believe to be less risky than conglomerate diversification which he had initially planned. It is believed that this would be a good investment and diversification plan for Benihana.Action PlanFor Benihana Trendy and After BenisGoalsTo open Beni Trendy within 1 year with the budg et of approximately around $US 210,000To open After Benis within 1 year with the budget of approximately around $US 150,000This is from the assumption that to open up new Beni Trendy will cost 70% and After Benis will cost 50% of set up cost for Benihana unit which is $US 300,000.ActionsMarket researchDefine tail fin Ps of servicesProcurers, (customers)Product, (service concept)Policies Practice (operation strategy)Place Plant (service delivery system)Providers (servers)Actual Construction of the siteConstructionHireThe thorough concept is defined to serve the target market. Key factors are identified. 1. What products to sell. 2. What should the ambiance of the restaurant?3. What should be on the menunoneDefine (Policies and Practices) Operation StrategyWithin 1 monthRocky, menu Susha, Allen SaitoTimeConcrete concept formed. Eg. The rules and regulations of the company that is accepted by all partiesnone finding (Place and Plant) Restaurant locationWithin 2 monthsRockyTime, conn ections with people, outstandingTo find the right location to have the restaurant and to negotiate and sign contract with the landlord.noneDesign of the restaurantWithin 3 months however alternations could be made within the project period.Rocky, Glen Simones and Interior DesignerFloor planTo come up with the floor plan and interior design concept that fit the service concept$US50,000Construction of restaurantWithin 3 monthsExternal contractorsTime and financesFind the right contractor and construct the restaurant$US120,000Find SuppliersWithin 2 monthBill Susha and Allen SaitoTimeFound the best suppliers of the raw materials which the price reflects the qualitynoneHire staffWithin 2 monthsRestaurant ManagerTimeTo find the quality staff that match the culture of the restaurant.noneTrain staffWithin 1 monthRestaurant managerTime and finance$US 2,000