No kaizen here: Benihana of Tokyo case study

29 Jan

The heyday of the Benihana of Tokyo restaurant chain was the late 1970s and early 1980s. Back then, Benihana was glamorous, exotic and chi-chi. How do I know? I grew up in San Francisco, and precisely recall my experiences at the original location in that city, the chain’s fourth restaurant. The distinctive, finely crafted exterior. The tiled eaves. Its semi-cryptic Asian sign. Its heavy wooden front door. The dim, alluring interior. The private dining rooms with sliding Shoji screens. During its glory days, the era when this case study was written, Benihana was really something. I’ll never forget it.

You can still see a few telltale architectural details by searching for 740 Taylor Street on Google Maps Street View. The building was long ago converted into classrooms for the Academy of Art University, but it’s still distinctly Japonesque. The current Benihana in San Francisco was moved several miles to the West, to Japantown. I’ve never been to the newer version, but I’m fairly certain this newer outpost was not assembled by an imported crew of Japanese carpenters reassembling authentic materials from Japan.
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I have several memories of eating at Benihana in my late pre-adulthood, circa the early ‘80s. Some involved Japanese businessmen. My father worked in the computer industry, and commuted to a suburb called Santa Clara – it wasn’t even called Silicon Valley then – and occasionally we socialized as a family with his business contacts from Japan. Another memory involves a family celebration and my now long-dead grandmother. And the most specific memory was having dinner at Benihana with some guy whose name I can’t remember before his Saint Ignatius High School senior prom. We were served alcohol with dinner – score!

Here’s another thing I know about the restaurant industry in San Francisco in the late ‘70s: Don’t do it. During those Benihana halcyon days, my mother owned a public relations business in San Francisco. Several of her major clients were prominent restaurants of the day: the Graf Zeppelin in Ghirardelli Square, MacArthur Park. She also opened all the original Chuck E. Cheese Pizza Time Theaters, as Nolan Bushnell, the founder of Atari, was also her client. If there’s one mantra my mother drilled into my head, it’s that there’s no faster way to lose your shirt than to go into the restaurant business. Even back then, the margins were slender to none.

I can’t help but bring my childhood into this 30-plus-year-old case study. Geez, I even remember the Benihana of Tokyo print ads. Why am I including my recollections in a supply-chain analysis paper? Because this case study calls up my memories of what Benihana was once like, and its strengths – and also uncovers the weaknesses I can easily spot now from a supply-chain perspective. Any credible supply-chain consultant would visit his client, and if possible, experience the service for himself before completing a detailed analysis for the client. Knowing what I know about Benihana’s history, it would be unprofessional to exclude my observations.

Based on those observations, I can’t envision the restaurant as effective or efficient, at least based on what’s in the case study. I can’t evaluate the success, because all I see in the case study is the expense. Its operations obviously aren’t efficient. And since we don’t have complete financials, we can’t truly say it’s effective either. Since I know a little of the real company’s history – including what a showboater Rocky Aoki was – my analysis is colored, dyed bright red if you will, by my real-world knowledge.

We even get a little Rocky Aoki showmanship in the financials included with this case study. We don’t get profit figures – we get gross revenues. The Benihana budget for advertising is 8 to 10 percent of gross sales – way higher than the typical restaurant according to the operating statistics in Exhibit 1. And Benihana’s rents are quoted as 5 to 7 percent of sales, which is much higher than the standard 4 to 5 percent of fixed operating expenses.

In reading the case study, I identified four major supply-chain issues:

  • The chefs, staff and management imported from Japan
  • The restaurant construction and décor, also imported from Japan
  • The floor plans and table layout
  • The table turns

Chefs, staff and management imported from Japan

Rocky says in the case study “One of the things I learned in my analysis was that the number one problem of the restaurant industry in the United States is the availability and cost of labor.” Umm, something tells me that recruiting highly trained chefs in Japan, teaching them English for six months and then importing them to the U.S. is a lot more expensive and a lot less readily available than labor in this country.

The basic linear programming doesn’t work out favorably. Linear programming is a technique used to allocate limited resources among competing demands in an optimal way. Imported Japanese chefs are obviously a limited resource, especially since in the original way Rocky set up his business they had to return to Japan eventually. If the goal is to maximize profit, it’s easy to envision that a typical Benihana restaurant, which requires six to eight Japanese chefs, is going to be much less profitable than a restaurant which keeps its cooks in the kitchen and can probably just hire one imported chef from Japan who can then train the other staff needed.

The company’s VP of operations admits one of its biggest constraints is staff, especially since “each unit requires approximately 30 people who are all Oriental.” In addition to importing many members of the team, Benihana at the time was also offering the same “obligations” to staff as companies in Japan would, further decreasing effectiveness in the U.S. market.

The restaurant construction and décor

The most inefficient practice has got to be the construction and décor. At the time of the case study, the walls, ceilings, beams and other materials for the 16 restaurants were all gathered in Japan. Further compounding the expense, they were reassembled and constructed in the U.S. by Japanese craftsmen overseen by American unionized construction workers.

Now, going back to my childhood experiences, I have to admit that San Francisco’s Benihana was a standout, at least to a teenager, in a city known for its distinctive restaurants. But couldn’t Benihana just copy the décor from the first few restaurants – which were located in big cities like New York and Chicago, where the clientele is more sophisticated and harder to please – to all the succeeding restaurants? Did it all really have to be imported from Japan, with extremely expensive Japanese construction labor imported to go along with it? Couldn’t they just find a clever architect and a talented builder and copy it? The average customer would never know the difference. The company’s own data shows the average customer is NOT from Japan.

Much of the case study focuses on the company’s prospects for growth. At the time of the case study, the company could only open five units a year, because that’s as fast as the two crews of Japanese carpenters could work!

The floor plans and table layout

Rocky describes 22 percent of a Benihana operation as back of house, while the standard restaurant requires 30 percent. First of all, eight percent more front-of-the-house space is not radically different from the norm he cites. And when you require a lot more intensive staffing to serve that front-of-the-house crowd, I fail to see where there is any efficiency with that model.

He says he “eliminated the need for a conventional kitchen,” but according to the floorplan, well, he still has a regular kitchen with regular kitchen equipment, along with 14 mini-kitchens with stoves! Just in fuel consumption alone that will cost more, especially since the chef has to turn stoves on and off all night, versus running continuously in a regular kitchen.

Each table accommodates eight diners, with a chef-and-waitress team to serve every two tables. Most restaurants don’t have a chef, or a waitress, who serve only two tables at a time. That seems like an extremely high, extremely inefficient ratio. In a regular restaurant, one non-Japanese, non-imported chef, along with prep workers, might serve a whole restaurant, and a waitress might serve four to five tables simultaneously.

The table turns

What I remember most about Benihana was not the food, but the experience. And the type of occasions I ate there – special guests from out of town, family celebrations, proms – bore out that Benihana is experiential dining, not ordinary dining. I’m simply not buying that the average turnover at a table was an hour, as stated in the case study. First, due to the style of cooking, all the guests have to be seated together. So if you’re serving two parties of four at one table, you have to wait until all the guests have arrived until they can be seated. And people tend to talk more in this family-style arrangement, and drink more, and linger.

Second, when you are limited to tables of eight, you limit the number of turns you can perform in one night. Turns are an extremely important aspect of the restaurant business – I learned this from my mother. A turn is the number of times you can turn a table over in a night with new guests. The more table turns, the more revenue. Obviously, if you have table turns for alternating numbers – like two, or four, or six, or eight – over the course of an evening, all occurring at different times, you can generate a lot more revenue than if your operation is limited to groups of eight which can be seated only at limited time intervals. This could also be readily measured and evaluated with linear programming.

Seating guests in tables of eight also brings up an obvious customer service issue: What happens when one party of four has arrived, but the other has not? Now, the staff has to juggle to replace them quickly, so the table can be seated together and revenue can be generated. This is not a problem in ordinary restaurants, or even in family-style restaurants like Louis’ Basque Corner, simply because the food is not custom prepared at the table by the chef.

There’s also the related issue of job design for the chefs. In a regular restaurant, a chef keeps cooking until it’s time for a break. At Benihana, there is a lost opportunity in cooking time as a chef closes down and says goodnight to one table, and then has to move on to the next table.

What does hold up

One area of Rocky’s stated efficiency holds up: the menu. Reducing the menu to three basic, easily cooked entrees certainly eliminates waste, and allows Benihana to negotiate better agreements with suppliers. The limited menu keeps inventory low and reduces costs of inventory management.


As a model of kaizen, as a model of continuous process improvement, Benihana fails. If the company was about kaizen, it would have realized early on that many of its processes were inefficient and wasteful. Benihana’s success was due to clever advertising and savvy promotion by Rocky Aoki, who was known for wacky stunts like having a hot tub in his Rolls-Royce and suing four of his seven children.[1] Rocky’s extensive quotes in the case study paint him as a visionary, not an operations or numbers guy. Yes, Rocky eliminated some food waste, but he created a lot of other waste in his operations and supply chain. It’s straightforward to deduce that the care and expense that went into the old San Francisco restaurant I recall fondly simply couldn’t be replicated past more than a handful of additional restaurants.

Benihana of Tokyo is in the entertainment business, not the restaurant business. That’s the lens through which Benihana should have been evaluated: it’s treated as a restaurant case study, not an entertainment case study. Some of the Benihana practices which make little sense in the restaurant business – high advertising costs; expensive, lavish “sets;” rarified, imported talent – make perfect business sense in the entertainment industry. We should be comparing it to those supply-chain norms, not the ones supplied.

[1] Read more about the interesting life of Rocky Aoki in a New York magazine profile, Rocky’s Family Horror Show


Get out of bed and blog

30 Sep

It’s the last day of September. Sigh. As I was lying in bed a few minutes ago at 10:54, trying to fall asleep, I realized to my chagrin that I had not written a single post in September, despite my best intentions. It’s the new job — director of marketing for Saint Mary’s Regional Medical Center — which I started Aug. 23. I can blame most of it on that. And the new semester in the MBA program. And my daughter going away to college yet still needing her mom, at least by phone once in a while. And needing care packages. And wanting to enjoy what time is left over for movies, dinners and day trips with my husband.
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So rather than looking at September as a lost blogging opportunity, I got out of bed and wrote a quick post instead. Opportunity is always present.

Grace, providence and my new job

10 Aug

“Providence.” That’s how Sister Mary Kieffer, OP, explained it.

The moment that word left her lips, I knew it was exactly the word I was seeking, had been struggling to put my finger on, but had yet to identify. The explanation. Providence.

Sister Mary is a member of the community of Dominican Sisters of San Rafael. She works in the Spiritual Care department of Saint Mary’s Regional Medical Center in Reno, Nev., where I just accepted the position of director of marketing. Saint Mary’s, now part of Catholic Healthcare West, was founded in 1908 by the Dominican Sisters.[tweetmeme source=”KateEGrey” only_single=false]

From the very beginning of my journey toward this specific job, which I begin Aug. 23, I had a sense that this was meant to be, that I was going to be at Saint Mary’s for a reason – a reason beyond my background and abilities.

One of those reasons is my connection to the Dominican Sisters of San Rafael. I am an alumna of one of their high schools, Saint Rose Academy, once the oldest private girls’ school in San Francisco. Saint Rose was a happy, formative place for me, although I had a different background from the typical girl there: I’m not Catholic, and had not progressed through the parochial elementary schools of San Francisco like just about every other student. Well, technically I did, but it was a Lutheran school, not Catholic.

Drawing of Saint Rose Academy

Saint Rose's building on the corner of Pierce and Pine was destroyed in the 1989 San Francisco earthquake.

My once-lovely high school was “killed” in the great Loma Prieta earthquake in San Francisco in 1989. The stately white building, which was located on the corner of Pierce and Pine streets, was damaged so severely it had to be closed. And sadly, the demographics and economics of San Francisco did not support the Sisters rebuilding or even continuing. The students were folded into the Jesuits’ St. Ignatius College Prep, formerly an all-boys school, and the site became a parking lot for St. Dominic’s Church next door.

I didn’t know until recently that there was anything left of Saint Rose, when I discovered this online trying to reconnect with classmates:

… a remnant of St. Rose Academy can still be found in Our Lady of Lourdes Grotto—but the beloved shrine barely survived the wrecking ball. Sitting amidst the rubble that surrounded St. Rose Academy following the 1989 earthquake, the grotto gradually became overgrown by the gnarly decorative vines that surrounded it. Crews that arrived to demolish the damaged school were about to bulldoze the overgrown mound when St. Dominic’s Father Martin Walsh realized what was happening and hurried to the site to throw himself in front of the bulldozers and save the shrine. Thanks to his rescue, it remains intact to provide a peaceful oasis rising amidst the asphalt of today’s parking lot.

When I was in San Francisco a few weeks ago, I felt drawn to visit the grotto, which indeed is a lovely oasis surrounded by small plantings.

As I sat in reflection among the lavender and roses, I noticed a hummingbird hovering nearby. At first, I purely marveled at its beauty, and at seeing one in the city in the middle of a parking lot. Several days later, though, I was hit with a realization that it really meant something else.

It was grace.

Two great quotes from healthTap

8 Aug

Two quotes from healthTap‘s blog caught my attention this week. Both Esther Dyson and Thomas Goetz are big names in their fields, obviously, and what they have to say speaks to my interests and purpose:[tweetmeme source=”KateEGrey” only_single=false]

It turns out that understanding and promoting health is a great application of information technology. Health increasingly involves numbers.
− Esther Dyson

The editor of Wired sees possibility:

The potential for individuals, armed with good information and clear advice, to act a little smarter and live a little better.
Thomas Goetz

Next up: Reading their Ron Gutman entries.

p.s. Oh, and healthTap, noticed you on #hcsm tonight too. Welcome.

Delivering happiness in health care

7 Aug

“Envision, create and believe in your own universe.”

I received an advance blogger copy of Tony Hsieh’s Delivering Happiness: A Path to Profits, Passion, and Purpose in June. Hsieh is best known as CEO of, the online shoe source he grew from nothing to more than $1 billion in gross sales, now owned by Amazon. Originally, I planned to review as a general business book. Now that I’ve repurposed and refocused, I’m re-reviewing in light of the lessons it holds for health care marketers.

book cover image

Delivering Happiness is perhaps the most charming business book ever – at least of those I’ve read. Hsieh’s strength as an author is his storytelling, beginning with the worm-farm yarn in Chapter 1. Unlike most business writers, by the end of the book we know about Hsieh’s childhood entrepreneurial ventures (and failures), how he took advantage of crowdsourcing as a Harvard student to get good grades with little effort on his part and his one-time love of serious poker. It’s probably the only book that’s turned the PLUR principle Hsieh learned at raves – Peace, Love, Unity, Respect – into a business mantra.

[tweetmeme source=”KateEGrey” only_single=false]And the stories he tells in the first portion of the book make the final third sing. Quite frankly, if Hsieh had just regurgitated his business vision, and thoughts on culture and customer service, in book form there would be no reason to listen. I mean, come on, who would pay just to read about another company’s vision? But because the reader knows Zappos’, and Hsieh’s, story by the time we get to that part of the book, his talk about the importance of brand and culture hits some high notes.

Hsieh’s biggest point isn’t about business, but life: There has to be meaning behind what you do.  Money alone isn’t enough – as he discovered after he walked away with $30 million in his pocket at age 24 after selling a company he co-founded, LinkExchange, to Microsoft. Without passion, there’s no satisfaction. Hsieh’s underlying message: What companies should be doing is implementing core values, focusing more on customer service, company culture and employee happiness. Those companies that do, according to Hsieh, actually improve their financial performance as well.

Health care is perfectly enabled to deliver the kind of passion Hsieh refers to. Like Hsieh, I’m also a sometime student of the burgeoning science of happiness. According to Hsieh, research from the field is confirming that the combination of physical synchrony with other humans and being part of something bigger than oneself leads to a greater sense of happiness. Isn’t that what health care is all about?

In the final chapter of the book, Hsieh turns his efforts personally to the reader and outlines what is known about the science of happiness. Happiness is really about four things: perceived control, perceived progress, connectedness and being part of something bigger than yourself. One of health care’s weaknesses, at least in the acute care environment, is perceived control. I think that’s behind a lot of nurse, allied health professional and caregiver burnout.

One could say Delivering Happiness is completely choppy – the first third is really Hseih’s story, from Harvard to LinkExchange to venture capitalist and Zappos. The middle third, which is mostly about Zappos, is not really written by Hsieh – he includes segments from at least 12 guest contributors. And the very last chapter is about positive psychology and how to apply it to your life. However, given what we learn about Hsieh starting on page 1, it holds together. It makes sense. That’s who he is, what he stands for and what he believes in – the underlying message of the book. It’s the universe he wanted to create.

e-Patient Dave on HIE’s marketing implications

6 Aug

One of the joys of active social-media involvement is quickly and readily connecting with people – interesting, generous, accomplished people. Three days after I first noticed “e-Patient Dave” deBronkart’s tweets, and admired his perspective, knowledge and good humor, I was interviewing him on the phone.

e-Patient Dave deBronkart

Although my beloved AP Stylebook demands I refer to him as “deBronkart” on second reference, I can’t help but call him anything but e-Patient Dave.

After beating Stage IV kidney cancer, e-Patient Dave became a full-time activist, advocating for health care transformation through participatory medicine and personal health data rights. Earlier this summer, e-Patient Dave participated in the policy meetings in Washington which helped define “meaningful use” for the Health Information Technology for Economic and Clinical Health Act, or HITECH. e-Patient Dave feels strongly that patients should be able to access their own medical data, check it for errors, question it, and take it with them to another care provider if necessary.
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I wanted to talk to e-Patient Dave about Health Information Exchange and Electronic Health Records, the changes they’ll bring to health care and, most of interest to me, the implications for marketers. He concurs: HIE and EHRs present a “terrific opportunity to transform health care marketing. If you resonate with this idea, you will be way ahead of people in your trade. People who understand will have an enormous advantage.”

One of the advantages he foresees is message targeting. According to e-Patient Dave, marketers and organizations that target messages to different patient segments will have a tremendous head start. e-Patients – shorthand for empowered, engaged, equipped and enabled patients – demand and need different information than patients like his dying father, who didn’t want to know anything about his condition, medications or treatments.

e-Patient Dave’s major concern about the HIE opportunity for marketers, not surprisingly, is privacy. In the view of the strictest privacy advocates, the arrival of an email or postcard could disclose to someone, maybe even your mail carrier, that you might have a particular condition. As HITECH rolls out, more discussions are going on in Washington about exactly what marketers will be allowed to do. Obviously, it’s clear that marketers should not, and will not, have access to a patient’s medical history solely for the purpose of marketing.

However, e-Patient Dave acknowledges there are borderline cases where a pharmacy knows you have particular condition, or take a particular medicine, and there are some gray areas in privacy regulations about whether an organization could then offer you something that’s reasonably related. This is exactly why I’m interested. Marketers, believe or not, have a role in fostering health, and an important role to play in America’s health care system: Helping patients find health resources, treatments, providers and technology.

IT: The Holy Grail of health care marketing?

3 Aug

Marketing health care is marketing a service – quite different than product marketing. Radically different, in fact, especially when it comes to health care.

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Services marketing is about delivering great service and then telling the story. To deliver on the promise, marketers need to manage the tangibles and elusive intangibles of the brand. This service delivery extends to just about every interaction with the organization – from how a patient was greeted at registration to how easy it is to follow the bill once the patient receives it. Great service in health care starts with the mission and vision, and works its way down.

Leonard Berry, author of Management Lessons from Mayo Clinic: Inside One of the World’s Most Admired Service Organizations, says:

When a company’s service is excellent, customers are more likely to perceive value in transactions, spread favorable word-of-mouth impressions, and respond positively to employee-cross-selling efforts.

Cover, Management Lessons from Mayo Clinic: Inside One of the World's Most Admired Service Organizations

So in health care, a marketer’s role becomes helping to manage those tangible and intangible elements. Websites and advertising are relatively easy – those are tangible. But just one hospital admission for one patient could result in hundreds of intangible interactions – with a person who is sick or injured. How sympathetic was the tech when he drew blood? How quickly did a staff member answer the call button? Was the food hot? Not so easy to manage.

That’s where healthcare IT, and health information exchange and electronic health records, could be the Holy Grail. By allowing greater automation of clinical processes, and less duplication, it can help health care providers deliver better service with greater accuracy. Greater data availability and tighter key performance indicators mean easier-to-spot, easier-to-fix problems.

The whole goal of HITECH, according to Dr. David Blumenthal, is “‘meaningful use’ of EHRs — that is, their use by providers to achieve significant improvements in care.” If a provider can report, in aggregate, better outcomes — fewer infections, fewer falls, fewer drug interactions — that’s better marketing.

Dr. Denis Cortese, retired Mayo Clinic president and CEO, alludes to the role health IT can play:

The best physicians and healthcare providers are part engineers and part artists. The engineer sees the problem and applies technology to fix it. … The artist knows when the patient needs a warm smile, reassuring words, or a gentle hug. It’s the artists who make every patient feel welcome, comfortable, secure, hopeful.