Benihana, Inc. - Company Profile, Information, Business Description, History, Background Information on Benihana, Inc.
Miami, Florida 33166
U.S.A.
Company Perspectives:
Our restaurants are a place to meet new friends, celebrate special oc casions or just to enjoy an entertaining meal in our communal dining style while being thoroughly entertained by your own personal chef. H ighly skilled teppanyaki chefs slice and dice, toss and shake your me al in such a way as to "eatertain" you while enjoying traditional Jap anese cooking using American favorites like steak, chicken, seafood a nd vegetables. Benihana pioneered the communal dining concept in the early 1960's where up to eight people are seated around a steel hibac hi grill waiting anxiously for their personal show to begin. Currentl y, Benihana holds the record for the longest running dinner show in t he world.
History of Benihana, Inc.
Benihana, Inc., operates as one of the largest chains of Asian restau rants in the United States. Benihana restaurants specialize in an exh ibition-style of Japanese cooking called teppanyaki. Customers sit ar ound a communal table at which a Benihana chef slices their seafood, steak, chicken, and vegetables with lightning speed, grills their mea l right in front of them, and then tosses it accurately onto their pl ates. The company operates 56 Benihana locations, has 22 franchised B enihana locations in 12 different countries, and also runs six Haru r estaurants in New York City, eight RA Sushi restaurants, and one Dora ku restaurant in Miami, Florida. Benihana of Tokyo, a private company owned by founder Rocky Aoki and his family, owns approximately half of all shareholder votes in Benihana.
Early History from Tokyo to New York
The founder of Benihana, Inc., was a 25-year-old Olympic wrestler fro m Japan named Hiroaki Rocky Aoki. He got his start in the restaurant business by working after school in his family's coffee shop in downt own Tokyo. His mother named the family business Benihana after a red flower that survived the bombing of Tokyo during World War II. Rocky was a scrapper, defending himself in the streets and schoolyards agai nst bigger boys. He got hooked on wrestling, became a national univer sity champion, and earned a place on the 1960 Olympic team. Although he did not compete because he was over his weight limit, he did fall in love with New York when the plane stopped there on the way to the Games in Rome. That fall he left Japan for the United States.
In 1964, Aoki graduated from New York Community College's School of H otel and Restaurant Management. During the summer he earned money dri ving the only ice cream truck in Harlem. The job was not easy, as he explained in an article in Management Review. "Every time I ro bbed, I get up earlier the next day and work later to make up. Every time I lose money, I get more challenge." With that philosophy, he ma naged to save $10,000 during the summer, which, along with a loan , was enough to start his first restaurant, Benihana of Tokyo.
Aoki's concept for his new restaurant, derived from specialty restaur ants he knew of in Japan, was part entertainment and part foodservice . He wanted to offer Americans food with which they were familiar, su ch as chicken, steak, and shrimp, prepared in a novel setting. He cho se the teppanyaki table--a stainless steel grill surrounded by a wood en eating surface--where customers could watch a knife-wielding, joke -telling chef prepare and serve their food. His parents and brothers came from Japan to help him get started.
Unfortunately, New Yorkers equated Japanese food with raw fish and we re not comfortable sitting at a table with strangers. They ignored th e midtown Manhattan eatery until the restaurant critic of the New York Herald Tribune gave it a glowing review.
Suddenly, everyone in New York, including the Beatles and Muhammad Al i, wanted to sit around one of Benihana of Tokyo's four teppanyaki ta bles. Within six months after the review the restaurant had paid for itself, and Aoki quickly opened another restaurant in a larger, fanci er building. The new location provided the same teppanyaki-style cook ing but was decorated with valuable art, Samurai armor, heavy wooden ceiling beams brought from Japan by Aoki's father, and sliding Shoji screens to provide some privacy.
1965-80: Building a Company
The Benihana concept combined reasonable prices with good food and, b y preparing what was eaten right at the table, held waste to a minimu m. Profits were good, and, in 1968, Aoki opened his first Benihana of Tokyo outside New York City--in downtown Chicago. That location made $700,000 in its first year and continued to be one of the compan y's top-earning outlets.
Between 1969 and 1972, the company opened six more of its own restaur ants and licensed franchisees to open another ten. In a joint venture with the Las Vegas Hilton, the company developed Benihana Village, a 38,000-square-foot complex of restaurants, bars, and other entertain ment venues. In 1972, the company grossed $12 million and the Har vard Business School selected Benihana of Tokyo as a case study of an entrepreneurial success story.
With business going so well, Rocky Aoki could devote time to his othe r interests, which included racing balloons and powerboats, collectin g items ranging from vintage cars to slot machines, and learning back gammon. "Rocky wanted to play," Joel Schwartz, the company's presiden t, explained in a 1989 Forbes article. To help oversee the cha in's operations and expansion, Aoki brought in a management company, Hardwicke Cos., as a partner in 1976. The relationship lasted only fo ur years and, in 1980, Aoki ended the partnership, paying $3.7 mi llion to break the contract. As Rod Willis of Management Review explained in a 1986 article, "He [Aoki] felt the company's manageme nt style clashed with his predominately Oriental workforce, and he wa nted to maintain control over each restaurant's quality." The followi ng year Aoki settled, without admitting any guilt, a Securities and E xchange Commission charge that he had improperly traded in Hardwicke stock while serving as vice-president of Hardwicke.
The 1980s: Ups and Downs
To help pay off the debt incurred in the split with Hardwicke, Aoki d ecided to take part of the company public. He accomplished this by ha ving Benihana of Tokyo (BOT) form Benihana National Corporation (BNC) in 1982 and then taking the latter company public the following year . Investors paid the Miami-based BNC $11 for a unit consisting of two common shares and a warrant to buy another at $6. With the & #36;5.5 million raised by selling half a million of these units, BNC bought 11 restaurants from Aoki in exchange for 60 percent of the BNC common stock and $2.5 million to pay BOT's debt. Later in the ye ar, BNC bought another three restaurants from BOT for $7 million.
In spite of the new corporate structure, Benihana of Tokyo and Beniha na National Corporation remained under the management of the same gro up of executives. As corporate president, Joel Schwartz continued to oversee the day-to-day operation of both companies. Aoki, who served as chairman of both entities, retained 51 percent of the common stock in BNC and kept about 30 restaurants in the privately held BOT. Aoki developed new concepts for the Benihana food chain but he also conti nued to play hard, becoming a championship-level backgammon player an d setting a world record in off-shore powerboat racing. The Double Ea gle V, a 400,000-cubic-foot gas balloon, displayed the Benihana logo as it became the first crewed balloon to successfully cross the Pacif ic Ocean, with Aoki as one of the crew members.
One of Aoki's new concepts was Benihana National Classics, a line of Chinese gourmet frozen foods, introduced in 1984 and sold in supermar kets. Chinese cuisine was chosen when the company found that Japanese food did not freeze well. Within a year the Classics were the best-s elling Oriental frozen foods in the United States, with sales in one quarter alone reaching more than $40 million and profits climbing to more than $4 million. The company's stock took off, going as high as $21.50 in 1985. In December of that year, Restaurant a nd Institution magazine named Benihana of Tokyo the most popular family-style restaurant in America. At that time, Benihana of Tokyo a nd Benihana National together operated or franchised restaurants in 6 0 locations, from Seattle to New Jersey, serving a total of 25,000 cu stomers a day.
Benihana National's frozen food success quickly attracted the attenti on of major food companies. When Campbell Soup and Stouffer's began o ffering their own lines of Oriental frozen foods, however, Benihana c ould not compete. The company lost $11 million on frozen foods be tween 1985 and 1987 and finally sold the business, for $4.5 milli on, to the small company that had been producing the dinners for them .
Frozen food, however, was not Aoki's only new idea. In 1985, Benihana National opened its first seafood restaurant, The Big Splash, just n orth of Miami. Aoki believed the sea would be the primary supplier of food in the future, and, borrowing an idea from a Malaysian fish mar ket, came up with the concept of a seafood marketplace/restaurant. Cu stomers could choose from hundreds of varieties of fresh seafood, dec ide how they wanted it cooked, and watch it being prepared. The idea was so popular initially that a second Big Splash was opened. The sea food restaurants soon experienced difficulty, however, registering lo sses of $2.7 million during 1987. The wide variety of options ran completely counter to the tight focus and minimal waste of the Benih ana steakhouses. At the Miami location, the majority of customers wer e retirees who resented the high prices and preferred to eat fish wit h which they were familiar. "All we sold was salmon and red snapper," Aoki told Eric Schmukler in a March 1989 Forbes article. The company closed its Big Splash outlets in March 1988. The 1988 fiscal year was a hard one for Benihana, as the company recorded a loss of n early $7 million.
Despite the company's financial problems with Classics and Big Splash , the Benihana restaurants themselves were still popular. By the end of fiscal 1989, the publicly owned Benihana National Corp. reported p rofits of some $1.8 million on sales of $34 million at its 20 restaurants, with Aoki's privately held Benihana of Tokyo taking in similar revenues.
1990-94: Making a Turnaround
Rocky Aoki kicked off the new decade by opening a gallery in one of t he Miami Benihana restaurants to display a portion of what was becomi ng known in the art world as the Rocky Aoki Collection. Having spent more than a year consolidating his diverse collections, Aoki told Antiques & Collecting, "I think it's a natural to have a gall ery here. More than 90,000 people eat in this restaurant every year; why not provide them with something beautiful to look at, not to ment ion buy, if they so desire." In a 300-square-foot space that had been the restaurant's gift shop, diners could view etchings by Icarts, la mps by Tiffany and Handel, and bronzes by Remington.
The publicity about Aoki's collection helped generate business for th e restaurant, and overall company revenues continued to grow. Profits , however, were less than a million dollars a year, and BNC stock fel l below $1 a share. Angry at the situation, some shareholders sue d. As Marilyn Alva reported in a 1992 Restaurant Business arti cle, the shareholders claimed Aoki and his management team were in a conflict of interest by managing the two companies. The complainants further maintained that Benihana management had misappropriated the a ssets of Benihana National Corporation, passing them through Benihana of Tokyo for their personal benefit. The shareholders, however, were ultimately unsuccessful in trying to take control of the company awa y from Aoki.
Meanwhile, Benihana management took advantage of a health-conscious A merican public's growing interest in Japanese food and entertainment. With the tag line, "We have been the restaurant of the '90s since th e '60s," Aoki and Schwartz instituted a major advertising campaign st ressing the fact that Benihana had always offered healthful food. Soo n afterward, in 1993, the Atlanta Benihana of Tokyo restaurant added an 18-seat sushi bar and 35-seat Karaoke dining room to draw more cus tomers on weekday nights. Despite the higher labor and food costs ass ociated with sushi, the company reported an increase in beverage sale s, and a lot of sampling of the $.99 sushi pieces by people waiti ng to eat at the traditional teppanyaki tables.
Learning from its experience a decade earlier, in 1994 Benihana Natio nal Corp. decided to get into the frozen food business again. This ti me, however, by entering into a licensing agreement with Campbell Sou p Co., the company hooked up with a major marketer rather than trying to compete with the big names. The new product was a line of frozen stir-fry kits featuring the Benihana trademark. The dinners served si x people and sold for about $8.00. As Peter McMullin, an analyst with Southeast Research Partners, told Florida Review.Net, "Th is time the strategy makes sense because it is linking with a high pr ofile food company to help strengthen the distribution side and offse tting the razor-thin margins of retail by manufacturing with a low co st producer like Campbell." By the end of the fiscal year, revenues w ere more than $70 million, with profits up 41 percent to $2.4 million.
1995: A New Company
At the beginning of 1995, Benihana National announced that it would b uy Aoki's 21 Benihana of Tokyo restaurants on the U.S. mainland, alon g with the U.S. rights to the Benihana trademark, for about $6.15 million. On May 16, a newly created subsidiary, Benihana, Inc., acqu ired the BOT restaurants and, through a merger, simultaneously acquir ed Benihana National. BNC shareholders received one share in the new holding company for each of their shares of Benihana National. Aoki c ontinued to serve as chairman of the new company, with Schwartz as pr esident.
Benihana, Inc. now owned or licensed the 43 Benihana restaurants in t he continental United States along with a franchise in Honolulu. It a lso had the rights to develop or license Benihana restaurants in Cent ral and South America and the Caribbean Islands. Aoki kept private hi s Benihana of Tokyo restaurants in Hawaii, Britain, and Thailand.
During 1995, the new company took several steps to attract more custo mers. Benihana introduced weekend luncheon service and, following the success in Atlanta, opened sushi bars in seven locations. The compan y also instituted a national Karaoke contest for its patrons. In the fall, the company opened its first smaller format unit, called the Be nihana Grill, in Sacramento. At 3,800 square feet, the Grill format w as less than half the size of the traditional Benihana, and enabled t he company to open units in smaller locations, particularly in urban areas. Schwartz had been refining this format since 1989 as an altern ative to the company's more common free-standing, special use restaur ant buildings. The Benihana Grill was designed to accommodate ten to 12 teppanyaki tables, compared with the 18 tables in the typical Beni hana. Analyst Peter McMullin remarked, "Initial indications are encou raging even before the grand opening. With the lower capital costs of approximately $500,000 versus a stand-alone restaurant cost of & #36;2 million, this could become an enormous growth vehicle for Benih ana."
The new hours and offerings helped increase guest counts in existing restaurants by 8.7 percent and same-store sales by an average of 7.7 percent for fiscal 1996. This rise, plus the addition of the Benihana of Tokyo restaurants and the new Benihana Grill, resulted in annual revenues of more than $81 million.
Benihana's growth came primarily from increased traffic in its existi ng restaurants, and the company continued to support that strategy. E arly in 1996, in an effort to gain a larger share of the ethnic marke t, the company launched Spanish-language television advertisements in Miami and Los Angeles. In May, Benihana kicked off a two-year, $ 5 million ad campaign, focusing on the entertainment value of teppany aki cooking. "We want to bring the Benihana name to a different audie nce," company president Joel Schwartz told Nation's Restaurant New s in a May 6, 1996 article. "The ads show that Benihana is a plac e the entire family can come to and have a good time--a place they wi ll see the chef perform and flip shrimp." Individual restaurants also developed innovative marketing techniques. A visit and meal at the B enihana in Bethesda, Maryland, for example, is one of the activities in the county's social studies curriculum for third graders learning about Japan.
The company did not depend entirely on its existing restaurants for g rowth. During 1996, it also signed leases for several more Benihana G rills and expanded its franchise operations, including restaurants in Bogota, Columbia, and Aruba, Netherlands Antilles. Benihana's track record of steady growth in same-store sales, rising customer count, a nd profitability appeared to be continuing into the late 1990s as rev enues for the first half of fiscal 1997 were up more than 8 percent f rom the year before.
Focusing on Growth: Late 1990s and Beyond
Benihana entered the late 1990s focused on additional growth. In 1997 , it acquired nine teppanyaki locations from Rudy's Restaurant Group Inc. The $20 million deal included six Samurai and three Kyoto St eak and Seafood restaurants, and eased Benihana's entrance to the Was hington, D.C., Michigan, and Minneapolis, Minnesota, markets. The com pany also opened its first Sushi Doraku restaurant in Fort Lauderdale , Florida. That location was eventually closed in 2002 while one rema ined in operation in Miami, Florida. In 1999, the company purchased a n 80 percent stake in Haru Holding Corporation, an operator of two su shi restaurants in New York City with a third location under construc tion.
In the midst of its expansion efforts, Benihana was dealt a blow in 1 998 when founder Aoki resigned as chairman and CEO after being indict ed for insider trading. In August 1999, Aoki pleaded guilty to four c riminal counts of insider trading related to his purchases of Spectru m Information Technologies Inc. stock in 1993. Aoki was fined $50 0,000, received three months probation, and was barred from ever serv ing on the board of a public company; Aoki has remained a consultant to Benihana since leaving his post in 1998.
Despite the management shakeup, Benihana continued to forge ahead wit h Joel Schwartz at the helm as president and CEO. Schwartz commented on the scandal in a 1999 Forbes article claiming, "I thought i t was a sad, unfortunate event, but it had nothing to do with the com pany." Shareholders and business analysts agreed with Schwartz's asse ssment and the company moved forward with little interruption to dail y operations. As such, Benihana entered the new millennium on solid g round. New locations continued to open and in 2002, Benihana added th e RA Sushi Bar and Restaurant chain to its holdings.
During the early years of the new millennium revenues increased, risi ng from $163.2 million in fiscal 2001 to $218.3 million in fi scal 2005. Net income fluctuated, falling in 2002, rising in 2003, an d then falling off again over the next two years. Net income was $ ;7.8 million in 2005--its lowest point since 2001. During that fiscal year, the company opened one teppanyaki, one Haru, and one RA Sushi restaurant. The company remained focused on growth and anticipated fu rther expansion. It also launched a redesign of its teppanyaki restau rants. Locations in California and New York were refurbished with the new look and Benihana's new location in Miramar, Florida, was the fi rst restaurant to incorporate the new design during the building proc ess. Management was optimistic as it looked toward the future and bel ieved Benihana was well positioned for success in the competitive res taurant industry.
Principal Competitors: Brinker International Inc.; Carlson Res taurants Worldwide Inc.; P.F. Changs China Bistro Inc.
Chronology
- Key Dates:
- 1964: The first Benihana of Tokyo restaurant opens.
- 1968: Benihana enters the Chicago market.
- 1982: Benihana of Tokyo (BOT) forms Benihana National Corporat ion (BNC).
- 1983: BNC goes public.
- 1984: Benihana National Classics, a line of Chinese gourmet fr ozen foods, is introduced in supermarkets.
- 1994: The company enters into a licensing agreement with Campb ell Soup to launch a line of frozen stir-fry kits featuring the Benih ana trademark.
- 1995: BNC buys Aoki's 21 Benihana of Tokyo restaurants on the U.S. mainland and the U.S. rights to the Benihana trademark; Benihana , Inc., is created as part of the corporate restructuring.
- 1997: Nine teppanyaki restaurants are acquired from Rudy's Res taurant Group Inc.
- 1999: The company purchases the Haru Sushi restaurants.
- 2002: Benihana adds the RA Sushi Bar and Restaurant chain to i ts holdings.
Additional Details
- Public Company
- Incorporated: 1964 as Benihana of Tokyo
- Employees: 4,091
- Sales: $216.8 million (2005)
- Stock Exchanges: NASDAQ
- Ticker Symbol: BNHN
- NAIC: 722110 Full-Service Restaurants
Further Reference
- Alva, Marilyn, "Very Rocky Business: Aoki Besieged by Shareho lder Suits," Restaurant Business, February 10, 1992.
- "Benihana Buying Founder Aoki's Units," Nation's Restaurant Ne ws, January 16, 1995, p. 14.
- "Benihana Profits Rise 67% for First Nine Months of Fiscal '9 5," Nation's Restaurant News, February 12, 1996, p. 12.
- "Benihana Testing Stir-Fry Kits," Supermarket News, Octobe r 17, 1994, p. 28.
- Card, Keith A., "The Rocky Aoki Collection," Antiques & Co llecting, November 1990, p. 36.
- Hamstra, Mark, "Benihana Seeks to Expand Teppanyaki Empire With R udy's Buy," Nation's Restaurant News, August 4, 1997.
- Hayes, Jack, "Sushi Bar, Karaoke Boost Benihana's Midweek Traffic ," Nation's Restaurant News, March 15, 1993, p. 50.
- Kroll, Luisa, "Business As Usual," Forbes, November 1, 199 9.
- Lockyer, Sarah E., "Benihana Cooks Up Brand Refocus Plan," Nat ion's Restaurant News, February 16, 2004.
- "More Ticker Tape: Benihana National Corp.," Nation's Restaura nt News, May 29, 1995, p. 12.
- "Operators Up Ante for Hispanic Markets," Nation's Restaurant News, January 29, 1996, p. 18.
- Papiernik, Richard L., "Benihana Reports Profits Up 17% in Fi rst Quarter," Nation's Restaurant News, August 26, 1996, p. 12 .
- Peters, James, "Benihana Sees Raw Growth Potential in Recently Ac quired Sushi Concept," Nation's Restaurant News, June 2, 2003.
- Russo, Catherine, "Benihana Recovers from Frozen Foods," Flori da Review.Net, November 17, 1995.
- Schmukler, Eric, "Rocky's Road," Forbes, March 20, 1989, p . 80.
- Schroeder, Michael, "Aoki Admits Insider Trading in Spectrum Case ," Asian Wall Street Journal, August 25, 1999.
- "Shareholders OK Reorganization Plan for Benihana Corp.," Nati on's Restaurant News, May 15, 1995, p. 2.
- Willis, Rod, "Rocky Aoki: Samurai Restaurateur," Management Re view, May 1986, p. 17.
- Zuber, Amy, "Benihana's New Ad Campaign: A Slice of Theater," Nation's Restaurant News, May 6, 1996, p. 16.
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