Business Process Flows

Business Process Flows & Benihana – Victor Araman

Benihana of Tokyo

Business Process Flows & Benihana – Victor Araman

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Preliminary Questions

 What are the differences between Benihana production system

and that of a typical restaurant?

 Examine the production system in detail: What are the major

design choices that generate operating efficiency?

Business Process Flows & Benihana – Victor Araman

How it Looks

Recently reopens in Chicago Benihana in Atlanta

Business Process Flows & Benihana – Victor Araman

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Benihana of Tokyo: The Concept

Business Operations

Business Process Flows & Benihana – Victor Araman

Benihana of Tokyo: The Concept

“Benihana offers a combination of American food, entertainment,
and Japanese atmosphere using a Hibachi cooking table”

Business Operations

American Food in a Japanese Atmosphere

Hibachi Table Remove Traditional Kitchen
Entertainment
Reduced Menu Low Inventory and wastage
Chef Concentrated Skill Labor
Advertisement Demand Level and Capacity
Service Materialization Expectation vs. Perception
Expansion Restaurant setup

Food | “Eatertainment” | Moderate prices | quick meal

| good space utilization
Business Process Flows & Benihana – Victor Araman

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Comparison of Operating Statistics
Typical Restaurant Benihana
Sales Ranges Ranges
Food 70.0% 80.0%
Beverage 20.0% 30.0%

Cost of Sales
Food cost (% of food sales) 38.0% 48.0%
Beverage (% of beverage sales) 25.0% 30.0%

Cost of total Sales 35.0% 45.0%

Gross Profit 55.0% 65.0%

Operating Expenses
Labor Cost 34.0% 42.0%
Advertising 0.8% 2.0%
Rent 4.5% 9.0%
Others 16.0% 33.0% 16.0% 33.0%

Total Operating Expenses 55.3% 65.0%

Net Profit Before Income Tax 0.5% 9.0%

Business Process Flows & Benihana – Victor Araman

Comparison of Operating Statistics

Typical Restaurant Benihana
Sales Ranges Ranges
Food 70.0% 80.0% 70.0%
Beverage 20.0% 30.0% 30.0%

Cost of Sales
Food cost (% of food sales) 38.0% 48.0% 30.0% 35.0%
Beverage (% of beverage sales) 25.0% 30.0% 20.0%

Cost of total Sales 35.0% 45.0% 27.0%

Gross Profit 55.0% 65.0% 73.0%

Operating Expenses
Labor Cost 34.0% 42.0% 10.0% 12.0%
Advertising 0.8% 2.0% 10.0%
Rent 4.5% 9.0% 5.0%
Others 16.0% 33.0% 16.0% 33.0%

Total Operating Expenses 55.3% 65.0% 41.0%

Net Profit Before Income Tax 0.5% 9.0% 32.0%

Business Process Flows & Benihana – Victor Araman

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Transformation Process
Processes
Operations:
 Layout Distribution
• Bar/Dinning Area
Inputs Outputs
• “Back Office/Room”
 Food & Beverages  Hibachi Cooking / Show  Skilled Chefs
 Employees:  Bar Service  Low Food Inv.
• Chefs  Food Purchase & Storage  Utilization rate of
• Managers  Food Preprocessing Bar/Dinning Area
• Carpenters  Quality Control  Customer Service
• Waitress  Employee Training • Entertainment
 Building Materials Marketing: • Food & Drinks
 Market Information  Advertising / Public Relations • Social Environ
 Benihana Concept
 Site Selection / Decoration
Finance:

Business Process Flows & Benihana – Victor Araman Feedback

Process Flow Diagram

Customers

Food
Reception Bar Other Flows:
• Information Flow
No Storage • Cash Flow
• Chef Training Flow
Group of 8? Drinks
Preprocessing
yes

WIP
Diners seated

Chef Main meal

Orders taken Soup served
show

Checkout
Business Process Flows & Benihana – Victor Araman

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Three Measures of Performance for Process Flow

 Throughput, R = the rate (unit/unit time) at which a process produces goods or services
– e.g., Restaurant: # of (satisfied) customers per unit of time (hour, day, month, year)

 Flow Time, T = Average Time a job spends in the process

could include buffer time

 Inventory, I = Average number of units “in process” could include units in buffer.
(e.g. batch size)

R
Previous Process Next
stage Buffer stage

Business Process Flows & Benihana – Victor Araman

Process Flow Performance…

Simple Tool:
Little’s Law

I
Previous Next
Process
stage Buffer stage
R

T
 Cost/Price
I : Average Inventory or units in process  Quality
R : Throughput
T : Flow Time time spent IN the system
I=RxT 

Time
Flexibility
 Environment

Business Process Flows & Benihana – Victor Araman

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For Benihana….

Parameters that influence throughput (R)

– External: Advertisement/location/pricing

– Internal: Capacity Management

• Space design/Layout/utilization
• Training Process
• Process design: Limited Menu
• Food Pre-processing
• Food Quality Control

Business Process Flows & Benihana – Victor Araman

Process Flow Definitions

 Capacity, Rs is the maximum throughput of a system

 Capacity Utilization, u = Throughput / Capacity = R / Rs

Example
A GM plant has a capacity of Rs = 3600 cars/week, and is currently producing
at a rate R = 2700 cars/week. Its utilization is:

u = 2700 / 3600 = 75%

Business Process Flows & Benihana – Victor Araman

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An Example of Flow Analysis

Find the relationship between # of tables in the dinning room and # of seats in the bar if
we want an average customer to stay 24 min. in the bar (assume full capacity).

Customers R
Bar Dinning Area

n p  # of customers per table (8 pers).

NT  # of tables (14 tables).
S  Processing (Run) time at the dinning area (1 hour).

np NT 8  14
 Throughput  R    112 (cust/hour)
S 1
 1.87 (cust/min)
Business Process Flows & Benihana – Victor Araman

Little’s Law – Flow Analysis

process
R … R

I
T

I = # of seats at the bar (Inventory)

T = Waiting time at the bar (24 min).

Little’s Law I=RT

np  NT  T I T  np 24  8
I  R T      3.2(bar seats/table)
S NT S 60
I  44.8 (seats)
Business Process Flows & Benihana – Victor Araman

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Business Flows – Little’s Law

 Relating Flow Time, Throughput and Inventory

Inventory = Throughput  Flow Time

I = R  T (The IRT Rule)

 The Turnover Relationship

Turnover = Throughput / Inventory

TO = R / I = 1 / T

Business Process Flows & Benihana – Victor Araman

Business Flows

 Customer Flow: Taco Bell processes on average 1,500 customers per day (15 hours). On
average there are 75 customers in the restaurant (waiting to place the order, waiting for the order
to arrive, eating, etc.). How long does an average customer spend at Taco Bell and what is the
average customer turnover?

 Job Flow: The Travelers Insurance Company processes 10,000 claims per year. The average
processing time is 3 weeks. Assuming 50 weeks in a year, what is the average number of claims
“in process”.

 Material Flow: Wendy’s processes an average of 5,000lb. Of hamburgers per week. The typical
inventory of raw meat is 2,500lb. What is the average hamburger’s flow time and Wendy’s
turnover?

Business Process Flows & Benihana – Victor Araman

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Wal-Mart vs. Kmart/Sears (2009)

Sears/KM WM WM 2018
Sales $44,043 $414,904 $500,343
COGS 31,824 $310,092 $373,396

Margin 28% 25% 25%

Cash $1,700 $10,195

AR $652 $4,531
$43,783
Inventory $8,705 $34,793

Flow Time (weeks)

Cash 1.93 1.23
AR 0.74 0.54
Inventory 13.68 5.61

* The numbers are in $K Turns 3.66 8.91 8.61

Business Process Flows & Benihana – Victor Araman

Wal-Mart vs. Kmart (1999)

KM WM
Sales $33,674.00 $137,634.00
COS $26,319.00 $108,725.00
* Cash $710.00 $1,879.00
Inventories $6,536.00 $17,076.00
AR $584.00 $1,118.00

Margins 28% 27%

Flow time (weeks)

Cash 1.35 0.86
Inventories 12.42 7.85
AR 0.87 0.41

* The numbers are in $K

Business Process Flows & Benihana – Victor Araman

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The Benihana Case Illustrates

 Well-designed operating system that

– supports the business strategy
– is closely aligned with the technology choice and the product

 Operations help deliver superior performance

– cost structure: competitive advantage

 Process analysis concepts

– Process flow diagram
– Batching
– Inventory
– Flow time
– Throughput
 Little’s Law, I = R x T

Business Process Flows & Benihana – Victor Araman

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