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Benihana Simulation Analysis - Best Strategy

Introduction:

The goal of this simulation was to maximize utilization, throughput time and the nightly
profit for the evening hours of operation (6pm to 10:30pm) using different batching, bar
sizing, hours of operation, advertising strategies. The first five challenges are individual
challenges where only one or two factors can be changed to gain maximum nightly
profit. The final challenge is to design the best strategy, using factors from the previous
challenges, in order to maximize the overall profit.

Strategy:

Our strategy for the final challenge was to use the best strategies from the previous
challenges in order to maximize the overall nightly profit. Contrary to what we thought,
this strategy did not work, leading us to change different factors. In our first challenge,
we immediately noticed that batching strategy worked far greater than the non-batching
strategy in profit maximization. Batching maximized dinner room utilization to 55%,
whereas non-batching only used 42% of the dinner room capacity. Batching allows the
restaurant to use less chefs which in turn lowers their fixed costs and maximizes their
profits. The second variable was select how many bar seats versus dinner tables we
want to be open in the restaurant. Maximizing the number of bar seats to 79 and 12
dinner tables increased the nightly profit o $476. Even though dinners bring in more
revenue than drinks, our analysis showed that maximizing the number of dinner tables
increased our fixed costs. This led us to believe that using more bar seats was the way
to go to increase nightly profits. This also increased dinner table utilization to 71% and
gave us dinner revenues of $2,707 and bar revenues of $1,007. The third challenge was
to select the optimum wait time for pre-peak, peak and post-peak hours. Our strategy for
this scenario was to minimize wait times and decrease costs. The strategy of 45 mins
(pre-peak), 45 mins (peak) and 70 mins (post-peak) worked the best for us and gave us
a nightly profit of $429. This allowed the customers to for pre-peak, and peak to be in
and out of the restaurant the fastest, increasing our throughput time and having the
post-peak customers wait a little longer for their experience and allowing the restaurant
to use 52% of its dining room capacity. The fourth scenario asked us to pick the best
advertising scenario. The best scenario was when we spent less on advertising (only
0.2x the normal budget), while using building awareness and opening the restaurant at
5pm. This led us to a nightly profit of $607. Our advertising budget was decreased to
$81. This made sense because the less we spent on advertising, the less we spent on
costs, therefore the higher our profits. The final challenge was to pick different batching
schemes for the pre-peak, peak and post-peak hours. The one that proved to maximize
our profits was to use tables of 8, 8 and 4 to 8 for the respective times. This gave us a
nightly profit of $355.
 Sarah Zaman

Best Overall Strategy:

The best overall strategy that proved to give us the highest nightly profit was if we used
79 bar seats, 11 dinner tables, batching of 8, 8 and 4 to 8 for pre-peak, peak and post-
peak hours respectively, average dining times of 55, 45 and 55 mins, and use 0.2x the
normal advertising budget using building awareness and opening the restaurant at 5pm.
This gave us a nightly profit of $761 and allowed us to use our dining room capacity of
52%. Using this strategy, our bar revenues increased to $637 and our dinner revenue
increased to $2,920. Our total cost incurred was $2,797. With this strategy, we didn’t
lose any customers because they had a wait time of approximately 12 minutes.

Our analysis showed that increasing the dining time for pre-peak hours to 60 mins
increased our dining room utilization to 55%, but it decreased our throughput time. It
took longer for the dinner to get out and customers to served, resulting in a lower nigh
tly profit (Scenario 7, Figure 1). One variance we saw in our strategies was that for
challenge 3, our best strategy was to pick dining timings of 45 mins, 45 mins and 70
mins. This proved to be inefficient and gave a nightly profit of only $640. This showed
that we needed to increase our dining time for pre-customers and lower the dining time
for post-peak customers. This maximized our throughput time, utilization and our profits.

The short term implications for our strategy are that it maximizes profit for the present
only. Since it was shown in class that the profit could be as high as $800, this shows
that our strategy is not an optimal one. Benihana could increase their throughput time.
The faster the dining experience, the more customers Benihana can serve maximizing
their operations capacity and decreasing their idle time. Although a lower dining time
has its upside, it also has a downside. I think 45 minutes is long enough for such an
experience, but any shorter, the customer might feel rushed and not get to enjoy the full
experience. Dining experience is an important decision factor in an service-based
industry. This is why the simulation showed timing of 55 mins for the pre-peak and post-
peak hours to be the most profitable. This allows the customer to appreciate the
experience with minimum idle time. Perhaps they can look at batching of 8 to 10 or 12
in order to minimize their fixed cost (chefs).

Since this strategy is not the optimal strategy, using this strategy could have negative
effects on profits in the long term. Again, capacity utilitzation, idle time, throughput times
are extremely important relative to profits. I believe the long term implications of our
strategy rely on the advertising of Benihana. The restaurant needs to plan their
advertising budget which will get their name out there in the most effective and efficient
manner. Their longevity also depends on their business model and their operations
management system. Although advertising suggests that the restaurant should open at
5pm in order for maximum profit, perhaps they could open only open their bar and have
the chefs come and prepare at 5:30 for dinners shows at 6pm. They could offer
appetizers at the bar to increase bar revenue from just drinks to food and drink. A lot of
customers who would come to the restaurant at 5pm would come there in a “happy-
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hour” situation and they would want something to eat. But again, this is contingent on
their business model and their brand image (whether or not they want to do happy
hour). This simulation shows a strong correlation between operations management and
profits! Therefore, Benihana would need to find an optimal operations strategy for their
restaurant in order to be profitable.
 Sarah Zaman

Figure 1: Nightly Profits for 20 Scenarios

Figure 2: Nightly Bar Revenues

misha
 Sarah Zaman

Figure 3: Nightly Dinner Revenues

Profit Dining Room Bar Revenue Total Dinner Revenue

Utilization
Sce $738 58% $1,011 $2,713
nari
o1
Sce $723 52% $600 $2,880
nari
o 10
Sce $754 49% $540 $2,956
nari
o2
Sce $698 43% $366 $2,970
nari
o3
Sce $566 53% $489 $2,845
nari
o4
Sce $759 52% $635 $2,919
nari
o5
Sce $704 55% $732 $2,790
nari
o6
Sce $703 55% $721 $2,793
nari
o7
Sce $721 52% $599 $2,877
nari
o8
Sce $680 53% $622 $2,803
nari
o9
Sce $736 51% $584 $2,907
nari
o 12
Sce $739 52% $659 $2,877
nari
o 13
Sce $761 52% $637 $2,920
nari
o 14
Sce $741 52% $481 $2,962
nari
o 15
Sce $761 52% $637 $2,920
nari
o 16
Sce $759 52% $635 $2,919
nari
o 17
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Sce $761 50% $577 $2,949

nari
o 18
Sce $754 49% $540 $2,956
nari
o 19
Sce $723 52% $600 $2,880
nari
o 20
Sce $319 50% $577 $2,507
nari
o 21