Managing Service Operations

Managing Service Operations increase in Tokyo, Hiroaki Aoki managed to launch his depression line of products in the United States. victorious advantage of his origin, he opened a Chinese- Nipp unriv all in alledse cuisine eatery oblation a unique go against to its guests. The feed process was transformed to an transc destructionent food scram and with the open up of a chain of in keep down 15 eating places Hiroaki Aoki proved to be a pioneer in the eatery industry.The way he managed to succeed this, was through and through with(predicate) revolutionary moves regarding eaterys environment, fiscal performances and value structure. By decorating his eating place with Japanese factors and employing Japanese chefs as showmen, the fill outledge of dine at Benihana changed. This new perspective was further supported by reducing the kitchen- path as to mystify more s footmark for t fits and fully lodge the Japanese philosophy as rise up as creating an unpar altogeth ereled digit for his traffic.Due to the uniqueness of the Benihana restaurants, franchise as a growth dodging brought upon many problems starting from a lack of communication betwixt managers and the Japanese speaking personnel, to inexperienced managers in franchised businesses abroad. This led Hiroaki Aoki to reconsider his options and deciding to blow a f work pop through early(a)(a) models (joint-venture and hotel-corporation) and in other areas of food industry (retail and agile assistant food sector). Whether this is a carry suit adapted move or non ordain be identified within this report.Benihanas thought is based on an authentic Japanese atmosphere. The economic consumption of Ameri nominate food favourites (chicken, steak, etc.) combined with the hibatchi regularity of presentation makes this restaurant really distinguish able-bodied from others (Sasser, 2004). Glushko and Tabas (2008) state that service counsel and programme success search on the inte raction between employees and clients. in that locationfore the quality of the service experience relies on the strawman stage activities displayed in a restaurant. Furthermore, Frei (2006) adds that the line of profile is the factor that separates the front stage and the rear stage (cecal appendage 3). If Benihana was to compare with a McDonalds and a Gourmet restaurant the service encounters would be really opposite (Appendix 4) (Frei, 2006). In the show window of McDonalds the line of profile for the front-stage is very small and depends on wait lines and self-service, whereas all the outturn lines materialize in the dorsum stage, hence the customers experience is very check (ibid.). A customers experience in a gourmet restaurant has a relaxation between the front-stage, eat way experience, and the kitchen-backstage-area (ibid.). Compared to both of these, Benihana enhances the experience of their customers by treating the chef as a showman and having a different production line to service (ibid.). The front stage is the largest sort out of the operations with the chef training and serving the dishes together with the waiter, whereas the kitchen formulation is a very small tell apart of their process (Sasser, 2004). This different concept increases customer merriment 9As come upn in watch 2, customer bangment is rated as excellent, which implies that the Benihana service concept is flourishing. In purchase say to further develop this aspect of their business, Benihana in any case developed several other concepts in congener to their architectural plan, their saloon and their customer batching in aggroups, which leave be further discussed in Chapter 3.2.2 Benihanas Restaurant Design. 10Benihana created a concept that includes food, atmosphere, merriment and hospitality, while trying to be consistent, with their Japanese heritage. Furthermore, the owner is planning elaborateness steps to appeal to a wider range of cliente le. However, Hiroaki Aoki has two major concerns. The first issue is how to sustainably dilate and upgrade his product and services to cater a wider range of audience, while keeping the quality and the Japanese traditional atmosphere. The uphold issue is how to define what Benihana is commercializeing.Data AnalysisBenihanas StrategyConsidering the growth of Benihana from a humble 40-seat unit to a chain of 15 units across the country, Hiroaki Aoki had a very boffo strategic planning behind the concept of his restaurant ( watch 1) (Sasser, 2004). Strategic planning tin be defined as an organisational process of allocating its re semens in order to pursue a strategy that includes its capital, employees and just about important its clients (Haines Schmidt, 2005). The owner, Rocky, approached a combination of inputs (operations), customers satisfaction and outcomes (financial results) in order to fork out a new idea behind the strategy of a design restaurant, maximizing its st rengths and diminishing its weaknesses (Appendix 2) (Heskett, Sasser Schlesinger, 1997). ikon 1 Benihana Strategic Planning name Adapted from Heskett, Sasser Schlesinger, 1997Benihanas strategic planning took into consideration five important aspects Construction, Finance, Marketing, homosexual Resources and Operations (Heskett, Sasser Schlesinger, 1997). They provide the framework for at a lower placestanding how the firms operational investment is translated into its profit. Furthermore, Benihanas concept and cost-structure will be presented in relation to this model in order to understand the true authenticity behind this different restaurant wariness approach.Benihanas ConceptBenihanas concept is based on an authentic Japanese atmosphere. The use of Ameri groundwork food favourites (chicken, steak, etc.) combined with the hibatchi method of presentation makes this restaurant very different from others (Sasser, 2004). Glushko and Tabas (2008) state that service heed and d esign success depend on the interaction between employees and customers. then the quality of the service experience relies on the front stage activities displayed in a restaurant. Furthermore, Frei (2006) adds that the line of visibility is the factor that separates the front stage and the back stage (Appendix 3). If Benihana was to compare with a McDonalds and a Gourmet Restaurant the service encounters would be very different (Appendix 4) (Frei, 2006). In the case of McDonalds the line of visibility for the front-stage is very small and depends on waiting lines and self-service, whereas all the production lines occur in the back stage, thus the customers experience is very limited (ibid.). A customers experience in a gourmet restaurant has a balance between the front-stage, dining room experience, and the kitchen-backstage-area (ibid.). Compared to both of these, Benihana enhances the experience of their customers by treating the chef as a showman and having a different productio n line to service (ibid.). The front stage is the largest part of the operations with the chef readiness and serving the dishes together with the waiter, whereas the kitchen preparation is a very small part of their process (Sasser, 2004). This different concept increases customer satisfactionFigure 2 Customer Satisfaction parentage Own design according to Exhibit 4, Sasser, 2004As seen in Figure 2, customer satisfaction is rated as excellent, which implies that the Benihana service concept is successful. In order to further develop this aspect of their business, Benihana to a fault developed several other concepts in relation to their design, their break off and their customer batching in groups, which will be further discussed in Chapter 3.2.2 Benihanas Restaurant Design.Benihanas Cost StructureIn terms of Benihanas cost understanding the owner implemented a strategic cost structure to the business by lowering the cost of poke and food and drink. The cooking push back is co st efficient due to the cost reduction that was done through their chefs they did non sole(prenominal) coif the food, but also served it (Sasser, 2004). With concerns to the food and beverage cost, due to their limited menu, inventory reduction also occurred (ibid.). Taking into grade all the mentioned measures, the results have a direct impact on the financial statement of the restaurant.Figure 3 Benihanas Partial Income Statement score Sasser, 2004 Bank of America, 1968As seen in Figure 3, Benihanas Earnings onwards Income Tax and Depreciation (EBITDA) is on just between 15 and 35% higher(prenominal)er than ones of a typical service restaurant (Sasser, 2004). It is observed that there are two factors, which increase profitability lower food and beverage cost (limited menu, fewer inventories) as well as lower labour cost. The lower labour cost is the influential reason behind this high difference in marginal profit.Analyzing the employee that plays the most important role i n the restaurant, the Benihana chef, an employee profile was created (Appendix 5). PayScale (2010) provides an immediate accurate snapshot of the job market place and gives facts of employees net data in the world. Thus it was utilize as a source to calculate the annual average salaries of the food and beverage segment as well as the job specification of a chef in 1964 (Appendix 6) (ibid.). The average annual salary of a Benihana chef backside be analyzed through the figure below.Figure 4 Benihanas Chef Annual Average Salaries 1964Note PayScale, 2010It can be noticed that the Benihana master-chefs have a slightly in a higher place average income compared to the market. As the success and the reputation of the restaurant depend on these employees, it is very important to keep them cause and this further demonstrates that the owner, Rocky, also has a human resources operation strategic planning as seen in Figure 1.Benihanas Restaurant CapacityManagers are continuously challenge d with balancing customer operate and service capacitor (Klassen Rohleder, 2002). The capacity of a business can be seen as their ability to meet the demand for the production of goods this can be easily done, but for services it is very difficult as cardinal critical factors have to be interpreted into account season, labour, infrastructure and equipment (ibid.). Thus capacity has to be planned ahead in order to contact cost effectiveness and the customer satisfaction. In the case of Benihana, an estimation of the utmost demand rate for an evening dinner period was calculated in order to foresee the capacity to sustain itFigure 5 Benihanas Capacity vs. Demand RateNote Own design Sasser, 2004It can be noted from Figure 5 that in a case of maximum demand rate, Benihanas capacity will not be able to fit 360 clients in one night. Although the restaurant has already a limited menu, Benihana also took into consideration a decrease in dining time. The chefs also plays an important part by offering the guests the ultimate gastronomic experience and politely annoucing them that their dinner is over by bowing at the end of the meal-presentation (Sasser, 2004).Benihanas Production subprogram SystemBefore a company can actually decide on which customer target market it will serve, it has to define its value pro arrangement and its position in the market (Kotler Armstrong, 2010). The spot of a company is defined as a consumers insight of the product compared to competing products (ibid.). As one can see in Appendix 7, Benihana has a high customer value and a differentiated position in the market. Hiroaki Aoki achieved this position, through an unprecedented service experience and design (Sasser, 2004), which will be highlighted in the following chapter.Benihanas Service Design all service idea starts with a service concept, where the purpose, target market and the customer experience are defined (Russell Taylor, 2009). By opening an authenticable Japanese res taurant in the United States, Hiroaki Aoki focused on two primary(prenominal) criteria, Americans enjoy when they are going out for dinner an exotic surrounding and a place where they can watch the preparation of their food (Sasser, 2004). Referring to the previous chapter, out of this observation, he created a completely new service concept the Benihana dining concept, where the food is prepared by professional chefs on hibachi tables cover in front of the guests. This newly developed concept was both, revenue- and cost-effective (Heskett, Sasser Schlesinger, 1997).A service package is a mixture of physical items, sensual benefits, and mental benefits (Russell Taylor, 2009). The specialty of a Benihana restaurant is their design according to historical authenticity. tout ensemble the physical items (walls, ceilings, lights, etc.) are from Japan and the materials are originally shipped to the United States (Sasser, 2004). sultry benefits are supported by the highly trained na tive Japanese chefs whose form of cooking is master(prenominal)ly showmanship (ibid.). The psychological benefits in a Benihana restaurant are the exotic surroundings and authenticity of the place. The combination of all troika components concludes in an effective service design (Russell Taylor, 2009). Therefore, the connection is presented in the service design processFigure 6 The Service Design ProcessNote Adapted from Russell Taylor, 2009Derived from the service package, specifications for performance, design and delivery are specified. ground on the customer expectations (exotic surrounding), the design (original materials from Japan) and delivery (downtown Manhattan) are created (Russell Taylor, 2009).Benihanas Restaurant DesignThe design of a typical Benihana restaurant is created to increase ability and profitability. A typical Benihana restaurant design, which presents the floor plan of the Benihana West restaurant on West 56th Street in Manhattan (Sasser, 2004), is s hown in Figure 7. It is comprised of 112 to cxx seats in the dining area as well as 55 to 60 seats in the cocktail lounge and the typical operation has between 5,000 and 6,000 square feet (ibid.).Figure 7 A typical Benihana story PlanNote Sasser, 2004Once guests unload the restaurant, they first pass the cocktail lounge. The bar in the first Benihana restaurant solely seated eight guests as the design was concentrated on food-service gross sales (Sasser, 2004). Along the openings of new restaurants, the split up realized, that the small space was insufficient and enlarged the bar space with all opening. He found out, that in peak times, the bar is well used as a buffer and indeed increases the beverage sales (ibid.). When all the 14 tables in the dining area are occupied, the guests are waiting here for an aperitif, until there are seats available. In the bar, the guests are batched in groups of 8 and are leaded to the dining area. The main attractions in the dining area are the teppanyaki tables, which cover eight diners per table and are served by one chef and a waitress (Sasser, 2004). Due to the hibachi tables, the conventional back-stage kitchen can be reduced as the cooking itself takes place front-stage at the customers table. This leads to shorter serving distances and one team of chef and waitress can grapple two tables at once. The arrangement of the tables (see also Figure 6), also results in lower cost of labour (Sasser, 2004).Examination of the Production SystemThe design of the production process comes along with the design of the restaurant space. The whole production line moves towards the service of the customer. It starts in the bar, where the guests are grouped together in batches of eight before having their dinner (Verweire Van den Berghe, 2005). It has to be taken into consideration that the combination of batches is satisfactory for smaller groups arriving, since they do not know each other (Appendix 8). This batch concept leads to higher beverage sales and allows using the whole provided capacity in the restaurant. correspond to Russell and Taylor (2009) design decrease reduces the number of parts, subassemblies, and options in a product. Benihanas menu consists of four main food items (filet mignon, steak, chicken and shrimp) accompanied by unvaried side dishes (zucchini, onions, dome sprouts, fresh mushrooms and rice), which can be combined as entrees or main dishes (Sasser, 2004). As seen in Figure 4 this standardization of ingredients cuts the food costs down to 30-35% of food sales and leaves nearly no waste (Sasser, 2004 Russell Taylor, 2009). This also minimizes the space for food storage, which results in less space in the back stage of the restaurant.Since services are defined as front-stage activities, the dining room of a restaurant is the service part, whereas the kitchen is classified as the production part (Teboul, 2006). by the preparation of the meal in front of the customer, not only the service experience is greater, but also a conventional kitchen is not necessary anymore. This enlarges the productive dining area and reduces the back area (preparation areas, stuffing rooms, storage and office space) of about 22% of the total space (Sasser, 2004).According to Verma and Boyer (2010), the aim of successful process design is to maximize the output. To identify viable limitations, a bottleneck analysis is helpful. A bottleneck in a process is the step with the slowest cycle time in a given process (Verma Boyer, 2010) and verifies the process productivity.Figure 8 Process race Diagram of the first Benihana Restaurant in Manhattan, 1964Note Adapted from Verma Boyer, 2010 plot analyzing the process flow diagram (Figure 8) of a Benihana restaurant, one can see that the bottleneck hereby is the dining time of 60 transactions. This bottleneck determines the pace of the whole system even though the waiting time at the bar in peak times is only 12 minutes (Verma Boy er, 2010).As identified in Chapter 3.1.3, Figure 9 the demand of a Benihana restaurant exceeds capacity. To crock up the problem of the bottle neck, Benihana decreased the dining time and enlarged the bar capacity to cover more waiting customers. all over the years, Benihana first doubled the bar area to 16 seats and finally reached up to 55-60 seats (Sasser, 2004). Figure 9 shows some scenarios for different bar and dining area arrangements and waiting times. The maximum dining capacity of cxx seats allows a bar capacity of 48 seats (Figure 9).Figure 9 Scenarios for different Bar and Dining Area Arrangements and Waiting timesNote Own CalculationsConcerns regarding Diversification PlansAccording to Ansoffs development and Expansion Matrix, one can find four different options of discipline market ripening, diversification, market penetration and product development (Campbell Craig, 2005). Benihana took into consideration the following strategiesFigure 10 Expansion Plan of BenihanaNote Adapted from Campbell Craig, 2005The first one, market development (1), is the growth of an existing product into new market sectors (Campbell Craig, 2005). Regarding their diversification plans, Benihanas go about is to expand in other countries where they have to take into consideration the customs duty of each nation, its rules and regulations. The same principles cannot be applied for all regions, so in order to develop successfully the restaurant chain these concerns should be well evaluated. Furthermore, it is very difficult for the company to be franchised, since not all owners have previous experience in the restaurant business (Sasser, 2004). Communication with the ply is also very difficult, since the majority is Japanese. Moreover, it is very demanding to supervise and keep soften of what is happening in restaurants around the world. Hence, Rocky stubborn for the near future, or else of attempting to franchise his restaurant business, to move either i nto a joint-venture or into hotel-corporations and expand in two areas Japan and overseas (ibid.).Diversification (2) is known as an approach of involving new products in new markets (Campbell Craig, 2005). Rocky also decided to widen his business into other fields connected to the food industry. A first attempt in the retail production and selling is under discussion. Entering the retail-sale-market is time consuming and has high advertising costs, so Benihana should credibly re-evaluate their advertisement budget and more likely reduce the promotion currency for the restaurants, which is a risky move (Restaurant Worx, 2010). If someone is not satisfied by the quality of the product he/she will probably create a negative idea about the company and never visit a Benihana restaurant. It is also uncertain how unique the product is or how likely it is for other similar products to be created in the near future (ibid.).Product development (3) is known as increasing the market share by evolution new products (Campbell Craig, 2005). In general Benihana restaurants have middle-income customers as its target group (Sassa, 2004). This is linked directly to the quality of the services offered, restaurants atmosphere and prices. Alternatively, they have no young audience in Benihana restaurants. This is one of the reasons why Rocky is considering of opening a quick service restaurant as to be able to satisfy younger crowds needs as well (ibid.). To put this redact into action, firstly a market research was do about the restaurant needs of the people, the food that will be provided in these restaurants, deciding on a combination of Asian cuisine Chinese and Japanese and their location. Furthermore, cooperation between Rocky and an oil company will be formed as to provide small gas units to his new restaurants (ibid.). Even though a thorough research was conducted for this expanding upon a very significant element was neglected the culture of the locals. Maybe the proposal of a Chinese-Japanese quick service restaurant was innovative for that time, but not all the neighbourhoods were prepared to gratifying that idea (ibid.).The last one, market penetration (4), is known as the use of existing products in existing markets, which are already served (Campbell Craig, 2005). The United States therefore give three areas for growth primary markets ( unseasoned York, Los Angeles), secondary markets (Pennsylvania, Harresburg, etc) and Suburbia. Due to the already mentioned inefficient franchise strategy, Benihana will not only expand internationally but also domestically through joint-ventures and hotel-affiliations (Sasser, 2004).Concerns regarding the loss of identityBenihana is selling to its customers a whole new perception of food consumption. Starting its business in 1964 in the U.S., it introduced to the market an innovative procedure of food preparation and presentation to the customers (Sasser, 2004). Instead of cooking the food inside a large-minded kitchen, they used more room for the restaurant area as to prepare meals in front of the customers on a teppanyaki table with the hibachi cooking method. Benihana created a culture for the chain based on Japanese cooking method by well trained chefs and Japanese design. The environment of Benihana restaurants typewriter ribbon and atmosphere is of vast importance for the company, since the philosophy of Benihana is to make people bright through the food experience (Bitner, 1992 Sasser, 2004). However, the environment is important not only for the customers who should feel satisfied, but also for the employees. In turn for the employees to feel motivated and perform their best, their working surroundings should support their needs, as to be able to enhance companys values to the customers (ibid.). Consequently, Benihana should continue providing such services and facilities to its customers and employees as to sustain the chemistry between them and therefore continue to be a successful company.Presentation of Solution and RecommendationsBenihana had a very successful strategy so far due to its construction, finance, marketing, human resources and operations management. They were able to translate market trends into their concepts and adapt them efficiently. Furthermore, they managed to reduce the back stage kitchen area into a front stage environment that displayed cooking and entertaining as one. The concept was so innovative that Rocky was actually able to reduce expenses.According to the diversification plan, Rocky intended to expand his business into more fields of the food industry. To develop his company, he tried to take advantage of the Benihana recognition, as to enter further markets, but on the other hand this step would be risky, because if the new concepts would fail, it could damage Benihanas reputation.Sasser (1976) states, that good planning is the key to successful management of supply and demand in service industries. As discu ssed in this makeup one of the biggest problems that Benihana is facing, is how it will sustainably expand, while keeping their quality and their concept (limited menu, chef as a showman, Japanese atmosphere). Furthermore, as seen in Figure 10, Rocky has made a lot of plans regarding the growth and diversification of the Benihana restaurant. It is recommended that before attempting to implement all his ideas, a development strategic plan should be developed in order to best fit this expansion. Therefore the supply and demand twinned concept should be taken into considerationFigure 11 Strategies for interconnected Supply and Demand for Benihanas servicesNote Adapted from Wisner, Leong, Tan, 2005Lovelock (1994) further states that this can be accomplished through shifting demand to match capacity or adjusting capacity to meet demand (Appendix 9).In order to resolve the second issue, Benihana should focus on selling Japanese food and promoting their philosophy. genius of the main key points of Benihanas achievements is the unique food experience it sells to its customers. Therefore, the basic elements of this successful recipe should be included in any other expansion step the company and Rocky decide to take. Without the fear of being imitated, they should take advantage of their uniqueness and develop in other areas of food industry. Through this move they would also be able to focus on other target groups, such as younger audience, which currently are not part of Benihanas targeted clientele. In this way Rocky will be able to launch his restaurant name and not only become a current trend, but also establish his brand in the hospitality industry, by providing Japanese authentic services.Action PlanEvidence Of winner Evaluation Process Increase in DemandIncrease in ProfitabilityCustomer Satisfaction SurveyEmployee Satisfaction SurveyReferencesBenihana (2010). somewhat Benihana. Retrieved 18.09.2010, from http//www.benihana.com/aboutBenihana Training ev anesce (2004). Benihana Training Guide. Al Bustan Rotana HotelBitner, M. J. (1992). Servicescapes The Impact of natural Surroundings on Customers and Employees. Retrieved 18.09.2010, from http//proquest.umi.com/pqdweb?did=585119sid=3Fmt=3clientId=45065RQT=309VName=PQDuserid=008BW87KK7passwd=WELCOMECampbell, D.J. Craig, T. (2005). 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