Essay About Cost Of Labor And Average Turnover

Benihana
Benihana
Background:
Chain of 15 restaurants that grossed over $12 million per year
Started by Hiroaki (Rocky) Aoki, President of Benihana of Tokyo
Philosophy of the restaurant business is: Simply to make people happy
Why is Benihana successful:
Historical Authenticity:
Availability and Cost of Labor in USA
Hibachi table arrangement: Eliminate need for a conventional kitchen
Provide unusual amount of attentive service
Keep labor cost to 10%-12% of gross sales
Usage of restaurant space
Increase proportion of floor area devoted to productive dining space
22% of total space of a unit is “Back of the House”:
Includes preparation areas, dry and refrigerated storage, employee dressing rooms, and office space. (Normal is 30%)
No waste concept
Reduce menu to only 3 simple entrees: Steak, Chicken, and Shrimp.
Cut food costs to between 30% and 35% of food sales
Advertising: Substantial investment in creative advertising and PR
Company invested 8%-10% of its gross sales
Different and original in approach
Visual product to sell, Benihana uses contemporary copy(text), sometimes offbeat
Know who customers really are, they conduct a considerable amount of market research
Location, location, locaton:
Main criteria for site selection: high traffic & locate in predominant business districts
Showmanship factor:
Chef training is key to success
Restaurant breakdown:
3 units: Chicago (largest money-maker – instant success, grossed approximately $1.3mil/year)
4th unit: San Francisco
5th unit: Joint venture in Las Vegas in 1969
Franchises: 6 (Harrisburg, Fort Lauderdale, Portland, Seattle, Beverly Hills, Boston)
Expense Breakdown:
Food and beverage split was 70/30
Food (30%),
Labor (10%),
Advertising (10%),
Management (4%)
Rent (5%).
Average turnover
1 hour – Teppanyaki table was an hour
1 hour to 1 and half in slow periods
Average check: including food and beverage, $6 at lunch, $10 at dinner
Lunch business important, accounting 30%-40% of the total dollar volume
Beverage sales: West – about 18% of total sales; East, about 20%-22%
Palace, they ran a handsome 30%-33% of total sales
Beverage cost averaged 20% of beverage sales
Benihana Challenges:
Rent normally ran 5%-7% of sales for 5,000-6,000 square feet of floor space.
Difficult to attract chefs and other personnel from Japan
Low Organization and Control
Each restaurant carried simple management structure:
Manager (salary of $15,000/year),
Assistant manager ($12,000/year),
or 3 front men ($9,000/year)
Staff is biggest constraints
Each unit requires 30 people
Six to eight of them are highly trained chefs
Same number of waitresses
4 to 5 managers and front men, 2 to 3 people in the bar
Remainder are bus staff and dishwashers
Future Expansion problem:
Prefer not to do franchising
Uniqueness of operation in the hands of novices made control more difficult
More profitable to own and operate the restaurants
Problems:
Franchisees have no restaurant experience
Difficult for the American investors to relate to predominantly native Japanese staff
Difficult to Control
Limited to opening only five units a year
Only 2 crews of Japanese carpenters who can do the work
Cost factor – each new unit costs a minimum of $300,000
Do they need to import from Japan every item for construction, 100% authentic.
Need to decide: advantages and disadvantages of going into hotels
Presently in 2 Hilton Hotels (Las Vegas and Honolulu)
Signed an agreement with Canadian Pacific Hotels
Other areas tapped for growth:
United States – need to expand into the primary marketing areas through