The Benihana simulation allows you to become the ultimate decision maker with many of the large aspects of the restaurant. The simulation forces you to think about the size of the bar and seating area, whether or not you will batch the patrons, how quickly you would like to get your patrons in and out of the restaurant, how much money you should spend on advertising and how to spend that money. I think this simulation was a great way to help one focus on how to optimize the factors involved in making a final decision and how each decision impacts the other.
The best strategy I came up with resulted in the highest total revenue, despite having a lower nightly profit than other options. This strategy batched the restaurant patrons in groups of eight from open to 7pm and 7pm to 8pm. From 8pm to 10:30pm, patrons were batched in groups of four to eight. This strategy helped keep customers in the bar longer in the earlier hours, resulting in increased drinks revenues. Not batching customers decreases the efficiency of the restaurant, thus decreasing overall revenues.
Batching allows customers to take advantage of the bar while waiting for enough people to form a group of eight, increasing drink and overall revenues. The next decision made was to determine the number of seats at the bar and the number of tables in the seating area. I decided to go with a bar that contained 71 seats and a seating area with 12 tables. This also encourages customers to experience the bar comfortably while waiting to be seated. This may also increase the likelihood of customers that only come to the restaurant to for the bar experience.
To further increase drink revenue, I decided to spend 3x the advertising budget to have a Happy Hour period with a restaurant opening time of 5:00pm. It is widely known in the restaurant/bar industry that drinks have a large profit margin. By encouraging this Happy Hour period, the restaurant will experience excellent sales in both the dinner and bar revenue. Though the restaurant sees a loss in customers later in the evening, the restaurant still sees an overall benefit as a result.
I decided that during the period from the opening of the restaurant to :00pm, the average dining time would be 50 minutes. This allows the early customers a few extra minutes to wind down from work, but also be able to take advantage of the Happy Hour. The period from 7:00pm to 8:00pm has a shorter dining time of 45 minutes. This is one of the periods that typically sees the most dinner traffic, and allows the restaurant to turn over as many tables as possible, increasing dinner revenues. The customers who wish to take advantage of the Happy Hour period may also want to spend additional time in the bar and this would be the time that they would come into the restaurant.
The later period would see a dining time of 60 minutes. Keeping these customers in the restaurant longer may result in will likely aid in increasing dinner revenues. These strategy results in nearly 600 drinks served and almost 400 dinners served each night, while only losing about 40 customers. Bar revenue would average $870. 34 and dinner revenue would average $4,386. 00 per night. The total revenue in this simulation would be $5,236. 34, more than any other simulation that was run.
Though the total nightly profit is $480. 7, lower than several other simulations, the revenue was the largest and seemed to be the most logical option. In the restaurant business you need to look at long term revenue, not short term profits. Overall, I decided to find the right balance between the bar area and the dining area. Promoting drink sales and encouraging more customers to use the bar seemed to make the most logical sense. As customers spend more time in the restaurant drinking, they are likely to dine in the restaurant as well.
The increase in advertising for the Happy Hour further aided the goal of bringing more customers into the bar. If you assume that the Happy Hour is not just drink specials, but also appetizers or a limited menu, you could also assume that this is one of the reasons that dinner revenues were the highest of other simulations as well. When determining the optimal service process design, one must first think about the goal of the restaurant. If I strictly draw from the simulation, I learned that short term, nightly profits are not the ultimate goal of the business.
The restaurant wants to see long term revenues to ensure that it will not fail. This is why I sought to find the right balance between the bar and dining area. Encouraging customers to order drinks at the bar prior to dining or while waiting for a group of eight to form, ultimately resulted in higher drink and higher dining revenues. I think you could also look at the case and see that long term revenues were Rocky’s goals as well. From Exhibit 4 in the case, we can see that 67% of customers came to the restaurant because it was recommended to them.
This shows that advertising was not doing a very good job of growing the business. This is the reason that I decided to spend 3 times the budget on the Happy Hour. Customers enjoy reduced prices on food and drinks and luring them in this way is likely to increase the number of customers that recommend the restaurant to others. Understanding your key market in critical here. 66. 9% of customers come from white collar and managerial occupations. These customers are more likely to listen to a recommendation that taking the time to pay attention to a form of advertising.
In this case I wanted to draw people into the restaurant by offering the excellent service at some reduced rate, thus encouraging the largest demographic to bring along more customers after work, increasing the pool of customers that can recommend the restaurant to others. As long as the quality of the food and atmosphere, which account for 60% of responses on what persuaded customers to come to the restaurant, maintain the high standards, customers will continue to recommend the restaurant to others. This ultimately provides a greater amount of advertising than increasing the budget to build awareness of institute a discount program.