The crazy, bitter battle over Benihana

March 4, 2015, 6:05 PM UTC
Keiko Ono Aoki, Benihana
Photograph by Reed Young for Fortune

If you want to pinpoint the moment when the battle over Benihana escalated from mere belligerence to full-on absurdity, it would be when a federal court issued an injunction to block the Beni Burger.

It was not, to be sure, the first point of contention in the fight over the global restaurant brand, nor the only one to make it to litigation. Other issues still to be resolved by judicial organs include the use of garlic butter, the proper way to beat out a rhythm with salt and pepper shakers, and whether the authenticity of a chain that made its name through “eatertainment”—its red-chef’s-hat-wearing tableside cooks are famous for twirling and flipping forks and spatulas while dispensing a stream of corny jokes—is diminished by having hip-hop dancers in chefs’ outfits perform in one of its restaurants.

Still, you could say the beef over the Beni Burger is when the fight got personal. The item was conceived by Keiko Ono Aoki, widow of the chain’s founder, Rocky Aoki. (We’ll refer to her as Ono to avoid confusion.) Her company, Benihana of Tokyo, owns or franchises 18 restaurants from Europe to Asia and also manages the Benihana at the Hilton Hawaiian Village Waikiki hotel. Ono thought that selling a burger—this one is topped with shrimp tempura and special sauce—from a cart near the beach at Waikiki would capture foot traffic and attract some extra lunchtime revenues.

Not so fast, countered Benihana Inc., a separate entity that owns 79 Benihanas in the U.S. and South America—including, awkwardly, the Waikiki restaurant managed by Ono’s group. Benihana Inc., which is owned by investment firm Angelo Gordon, contended that Benihana bylaws prohibit something as pedestrian as a burger, that the notion of selling meat on a bun was most un-Benihana, and that Ono was cheapening the brand.

Ono isn’t one to be pushed around. She went to court seeking an order to defend her right to sell the Beni Burger—only to lose. How did she react? She kept right on selling the sandwich, now relabeled the Tokyo Burger. Benihana Inc. returned to the court in which Ono had filed her action, and in February 2014 an annoyed-sounding judge issued an injunction forbidding the sale of any burgers—Beni, Tokyo, or otherwise.

It all makes Ono sigh. She was Aoki’s third wife and thinks of herself as having his entrepreneurial spirit. (She also dreamed up the idea for the hip-hop dancers, whom she dubbed the Beni Girls.) She sees herself as dedicated to his legacy, and she’s particularly irked by the spat over the burger, a product she views as embodying the sort of creative thinking her husband excelled at. As she puts it, “The hamburger is going to hurt the Benihana brand, they say. I don’t think so.”

Beni Girls, Benihana
A publicity still for the Beni Girls Courtesy of Benihana of Tokyo
Courtesy of Benihana of Tokyo

Ono dismisses Angelo Gordon as “investment bankers.” She adds, “I’m not sure they understand Rocky’s concept.” Ono is sitting in her airy 34th-floor apartment, which looks down on Saint Patrick’s Cathedral in Manhattan. Petite, energetic, and charming, she doesn’t look anywhere close to her 59 years. She is attended by a lawyer and her Wheaten terrier, Mugi, which interrupts Ono with even more frequency than the attorney.

A former runner-up for Miss Tokyo, Ono came to the U.S. to make her fortune. As a consultant, she has advised giant corporations such as Bayer and was credited with bringing the Wonderbra to Japan. She also has a history of nasty schisms and litigation in her business ventures.

Ono’s clash over the Beni Burger is downright friendly (and recent, having begun in 2013) compared with her ongoing war with six of Aoki’s seven children. Two of those younger-generation Aokis are locked in litigation with her for the trust that controls Benihana of Tokyo. That case has been inching its way through the legal system since 2008. (The two litigants are actually the ones who had better relations with their dad; four of their siblings and half-siblings were disinherited, and the final one, born out of wedlock, was never in Aoki’s will.) The battles, it seems, will continue for years.

As in any dispute, the various parties blame one another:

The kids’ betrayals broke Rocky’s heart!

No, that schemer Ono broke up the family!

Corporate suits are crushing Benihana’s soul!

No, it’s Ono who knows nothing about restaurants and is ruining the business!

Not since a different Ono was accused of breaking up the Beatles has one diminutive woman been blamed for so much turmoil. In truth, her late husband bears much of the responsibility. He was the one to divide his empire into separate entities with shared responsibility for the restaurant in Hawaii. That worked well enough when he was at the peak of his power but proved disastrous afterward. And Aoki was the one who repeatedly rewrote his will, sowing confusion and resentment.

Benihana restaurant
Benihana at the Hilton Hawaiian Village Waikiki hotelCourtesy of Benihana of Tokyo
Courtesy of Benihana of Tokyo

It’s no revelation that conflict often ensues when a founder leaves a business to a new generation. Nor is it a secret that the presence of a stepmother can rile non-blood relations. But that entropy is multiplied in the case of Rocky Aoki, whose charisma and audacious ability to turn personal PR to his company’s advantage make Richard Branson look like a self-denying hermit. Aoki was a striking success, an immigrant who made it onto the cover of Newsweek. He created a whole new dining concept, one that drew plaudits in an influential Harvard Business School case study. The problem was that Aoki was a lot better at inventing concepts than he was with more prosaic duties, such as planning and management.

Aoki died in 2008. He spent part of his ailing final years in depositions for the family litigation. He was firmly on Ono’s side. Here’s what he said about her and his kids (from two previous wives). He testified that they considered her a “gold digger” and mused, “I just simply don’t know why they are afraid of my wife. She happens to be a nice person. I think she has more knowledge of running a lot of things and companies. That’s probably what they’re afraid of. But she was nice to them.”

Rocky Aoki came by his showmanship naturally. Raised in Tokyo, he described his dad as a vaudeville performer and a tap dancer; his mom was a professional tango dancer. They ran a restaurant called Benihana, which means “red flower.” Rocky played in a rock band called Rowdy Sounds and wrestled for Japan’s Olympic team before moving to the U.S., where he wrestled (well enough to win three national titles), went to school, and sold ice cream out of a Mr. Softee truck in Harlem.

By 1964 he had saved $10,000, enough to open a small restaurant in Midtown Manhattan. Japanese food was exotic and rare in the U.S. at the time, so Aoki kept his menu tame; an early Benihana tag line was “No slithery, fishy things.” He realized he needed something extra to lure American audiences, which led him to conceive the chefs’ lively performances. It was dinner as theater, with cheerful cooks who sliced shrimp with panache, lit onions into fiery “volcanoes,” and seasoned it with a dash of humor—all for an intimate audience of eight or so people arrayed around a table that had a grill built into its center.

The experiment took off when a famous New York restaurant critic wrote a glowing review. Aoki, who had been sleeping on the floor of the restaurant’s bathroom, was suddenly the toast of the town. To deal with the resulting crush of customers, he opened a second Midtown restaurant and shuttled patrons between them in a Rolls Royce. By 1972 Benihana had nearly 20 restaurants and profits of $12 million.

Rocky Aoki, Benihana
From left: Aoki surrounded by his chefs; with women at the Benihana powerboat grand prix; with his Rolls-Royces.Photos, from left: Courtesy of Benihana of Tokyo; Eric Schweikardt—Sports Illustrated: Daniel Jacino—NY Daily News Archive/Getty Images
Photos, from left: Courtesy of Benihana of Tokyo; Eric Schweikardt—Sports Illustrated: Daniel Jacino—NY Daily News Archive/Getty Images

From the beginning, Aoki sensed how to use the media to his advantage. He cultivated his fame through a series of publicity stunts undertaken by air, land, and sea—all of them with the name “Benihana” visible in the largest possible letters. Five-foot-four and full of derring-do, Aoki raced speedboats and hosted the Benihana Grand Prix, which he himself won in 1979, sailing a 38-foot catamaran, and again in 1982. He piloted the first hot-air balloon to cross the Pacific, won the maiden Moscow-to-Milan car rally, and took the title at the 1974 World Leisure Backgammon Championship. He produced Broadway plays, tried to buy the San Francisco Giants, and launched Genesis, a porn magazine that still exists.

Rocky Aoki, Benihana
From left: One of the speedboats Aoki liked to race; the balloon that he flew across the Pacific; after a wrestling victoryPhotos, from left: Eric Schweikardt—Sports Illustrated; Courtesy of Benihana of Tokyo (2)
Photos, from left: Eric Schweikardt—Sports Illustrated; Courtesy of Benihana of Tokyo (2)

During this period Aoki fathered seven children with three women. He kept this information on a need-to-know basis: He didn’t think the mothers needed to know about one another. His then-wife discovered the existence of his girlfriend and child at Aoki’s bedside in a Hawaiian hospital, where he was recuperating from 24 broken bones and other injuries he sustained in a powerboat accident in 1979. (Aoki divorced the wife, with whom he had three children; he then married the girlfriend, had two more kids with her, then divorced her too. His seventh child came from another nonmarital relationship.)

Aoki’s relationships weren’t the only complicated part of his life: His business began to grow more baroque too. In 1983 he separated his holdings to raise cash for expansion. Aoki’s original entity, Benihana of Tokyo, kept 39 restaurants, and the other 11 shifted into what would later be called Benihana Inc.  Aoki then sold 49.1% of Benihana Inc. to the public and kept the rest inside his original company. (He tinkered more later: Although Benihana of Tokyo no longer owned U.S. restaurants, Aoki carved out an exception for the rights to manage the Hawaiian restaurant because it was the most lucrative Benihana and he had a sentimental attachment to it.)

There were now two companies, but they continued to operate from the same headquarters, and Aoki remained chairman of both. He was bursting with ideas. As Americans took to sushi in the ’80s, Benihana began offering the “fishy” fare it had once avoided. Later it began selling frozen dinners, which thrived—until Stouffer’s and Campbell’s entered the market and crushed Benihana’s offerings.

Aoki brushed off such occasional setbacks. Benihana was healthy, and he was the quintessential glamorous jet setter, with his own trademark look: Jheri curls, mustache, and a comely woman on his arm. Sales continued to rise, from $69 million in 1994 to $100 million in 1998.

Aoki’s career had reached its apex. He just didn’t know it yet. The fall began with a serious mistake, whose consequences would become more dire over time. In 1999 he pleaded guilty to insider trading after being accused of paying $10,000 for a tip on a stock called Spectrum Information Technologies. He avoided prison, receiving probation and a $500,000 fine instead. The judge acknowledged Aoki’s philanthropy and incipient health problems: He was suffering from diabetes and hepatitis C.

Aoki faced one other potentially dire consequence from the case: The revocation of his liquor licenses. To avoid that, he resigned from all his company positions. (He was allowed to remain a paid consultant.) He transferred his interest in Benihana of Tokyo—which, remember, held his 50.9% stake in Benihana Inc.—to a trust, to be managed by three of his children and his personal lawyer.

Aoki had given up the rights to his creation. But he could count on the loyalty of his kids. They’d never let him down, would they?

Ono and Aoki had gotten to know each other through the Japanese community in New York. Her ambitions had taken her from being a secretary for a politician in Japan to becoming an entrepreneur in New York. She moved to Manhattan in 1988 and founded Altesse, which imported and exported jewelry and furs. Ono divorced, then in 1990 added a new partner to Altesse: the prominent, wealthy politician she had worked for in Japan, a former lover with whom she would rekindle a relationship.

Rocky Aoki, Keiko Ono Aoki, Benihana
Aoki and Ono at a restaurant opening in 2006Photograph by Jamie McCarthy—WireImage
Photograph by Jamie McCarthy—WireImage

It didn’t go well. She sued him in 1994, claiming he tried to ruin Altesse and make her financially dependent on him. The suit was settled, according to Joseph Manson, a onetime lawyer for Ono who now represents Benihana of Tokyo.

Ono remade herself as a consultant who advised clients—including Starwood Hotels, some lingerie makers, and, in 2000, Benihana—on doing business in Asia. “Rocky was a very nice guy,” says Ono. He was the sort who hated saying no; she would become the person who helped him do that.

Their business relationship blossomed into romance. His kids, mostly adults by then, seemed to like Ono. “I was actually happy he met somebody that he loved,” his eldest daughter, Kana, would later testify. She and her siblings liked Ono the girlfriend; Ono the wife would be a different matter.

Aoki had vowed never to marry again, but his resistance evaporated. The two wed without notifying their families—the day was prompted by a divination from Ono’s astrologer—at New York’s City Hall in 2002.

A few months later the newlyweds met Aoki’s two eldest children, Kana and Kevin, for dinner at Babbo, the Manhattan Italian restaurant then frequented by the likes of Leonardo DiCaprio. Ono was expecting wedding gifts and a celebration. Instead, over dessert, Kana suggested her stepmother sign a postnuptial agreement. It was something her father wanted, she later testified. Ono responded that Japanese people don’t sign such documents. The discussion grew heated. Through it all, the normally garrulous Aoki sat silent, pretending he couldn’t hear what was being said. “He just kept eating,” Ono later testified. “It was a very awkward dinner.”

That was only the beginning of the maneuvering. The kids’ next move was shrewd. They persuaded Aoki to sign an irrevocable amendment to the trust, which would make them its sole beneficiaries. Ono would get nothing from the entity that owned Benihana of Tokyo and the vast majority of Aoki’s assets.

The agreement was drafted by Aoki’s own lawyer. But almost immediately Aoki began insisting that he had no inkling of what he had agreed to. Now the documents really began to fly. Aoki began revising his will—four times when all was said and done. Each adjustment ceded more control to Ono.

Aoki was growing increasingly exasperated with his kids, several of whom worked for the two Benihana companies. Then came what he viewed as the dagger. In 2004, Benihana Inc.’s board, motivated in part by fears of Ono’s future power, issued new stock, thereby reducing the Aoki family stake from 50.9% to 36.5%. Rocky blamed this development on his eldest son, Kevin, who sat on Benihana Inc.’s board and had briefly allied himself with the architects of the plan.

The founder had lost any control of the biggest part of Benihana—and he was devastated. He sued Benihana Inc. but couldn’t bring himself to include his son in the suit. By 2006, when three of his children sold more shares and further diluted the trust’s holdings, Aoki couldn’t take it any longer. He sued them and a fourth child for breach of fiduciary duty and sought to have them removed as trustees. Aoki disinherited the four and accused them of destroying Benihana. In addition, he was barely speaking to two other kids. (A lawyer for the children did not respond to requests for comment.)

The conflict had reached bizarre—and poignant—heights. Aoki no longer consulted for Benihana Inc. and thus had lost that income. Despite the family fracas, he was reduced to asking his estranged children to approve his withdrawing money from the trust he had created out of his own business. He requested $1.5 million on one occasion; they gave him $150,000.

Around this time Aoki executed yet another new will, leaving his assets to Ono’s trust, for her to distribute among his descendents as she saw fit. Aoki had managed to reach a place of nearly perfect contradiction: Depending on which document you looked at, two kids were guaranteed Aoki’s assets—or Ono could make all the decisions and keep a quarter for herself. Which directive would be deemed valid?

By this point, questions of inheritance were no longer abstract. Aoki had been diagnosed with liver cancer in 2007. He was dying, and everybody knew it.

Aoki not only was estranged from much of his family but also was becoming distant from old friends. Some claimed Ono was controlling access to him, and the Aoki kids blamed their father’s actions on her. “He was like a puppet,” Kana testified. Asked about her sway, Ono gets particularly animated: “Of course the wife influences the husband! The husband influences the wife! That’s why I got married. Even the girlfriend influences. But it’s not putting a gun to a head—that’s not the relationship we had.”

Aoki’s health was declining, which delayed the suit against his children. Despite the litigation, he longed to restore peace within the family. In October 2007 he temporarily got his wish: Five of his kids and two grandchildren joined Aoki and Ono for a celebration of his 69th birthday in the private room of an Indian restaurant. For a night they put their grievances aside. The family sang to Aoki and presented him with gifts and cards, which he happily read aloud. Eight months later, in July 2008, Aoki was dead.

Aoki’s death altered the balance of power between his children and Ono—in her favor. The trust that had given them control of Benihana of Tokyo was terminated when he died. That change meant Aoki’s kids were no longer trustees. Once the will went through probate in 2010, Ono became the sole trustee, and she appointed herself CEO of Benihana of Tokyo. (She also inherited Aoki’s 2006 case against four of his kids, which remains unresolved.) She set about trying to refresh the operation. She revamped its website and opened new locations in places such as New Delhi and Riyadh.

It didn’t take long before she crossed swords with Benihana Inc.  The latter had steadily grown through the first years of the new century—till 2008, when, like a lot of businesses, it was pounded by the recession. The company brought in new management, which implemented a renewal program intended to revitalize the brand. Restaurants were spruced up and standardized with new touches, such as red linen napkins and lighting to showcase the Benihana blue-tile roof. The menu was updated to include finer wines and entrées like tofu steak and Colossal Mango Shrimp.

Ono disdained what she viewed as Benihana Inc.’s corporatization and almost instantly began throwing punches. Less than a year into her tenure, she sued for trademark infringement, and the two sides traded suits for unfair trade practices and defamation. In the middle of this, Angelo Gordon bought Benihana Inc. for $296 million in December 2012. (The investment firm, which manages $26.5 billion, responded to questions in writing on condition that the answers not be quoted. Benihana Inc. declined requests for comment.)

Soon after acquiring Benihana Inc., Ono says, Angelo Gordon approached her about buying her out and reuniting the company, which it plans to expand. Ono wasn’t interested. She claims the recent Benihana Inc. complaints, which also include quarrels over company websites and the like, are nothing more than attempts to get her to sell. She made that point in a new suit her company filed in December.

That brings us back to the Beni Burgers and the garlic butter. Ono says she was justified in her steps. For example, she allows a choice of butter at the Hawaii location because, she says, Asian tourists don’t always like the garlic version. She doesn’t see that as a perversion of the Benihana system—which she defines as the chef show at the hibachi table—but as a tweak, like offering more vegetarian options in India, that she is allowed to make to fit the franchise to the location. The proof that her initiatives are working? She says the Waikiki restaurant is more successful than ever. “We have different types of Benihana,” says Ono. “Each location should be slightly different.” She adds that’s only so long as adjustments “don’t hurt the Benihana brand.”

For all the years of family litigation, a definitive resolution seems far from imminent. One coming ruling could deem two of Aoki’s kids, Steve and Devon, the rightful beneficiaries of the trust. But even if they prevail in that case, Ono would remain a trustee—and thus in control of Benihana of Tokyo—until Devon turns 45, which is 13 years away.

Another campaign by Steve and Devon may be about to launch, according to Manson, Ono’s lawyer. The two are considering a suit to have Ono removed as trustee, Manson says. They will argue she has wasted money flying the Beni Girls around the globe and on litigation, thus not fulfilling her fiduciary duties. If they are successful, she would lose her position as CEO. (Steve and Devon are successful in their own right. Steve is a record producer who tours the world as a DJ. Devon is a model who used to be the face of Versace and is now also a movie actress. The two declined to be interviewed.)

DJ Steve Aoki, Devon Aoki, Rocky Aoki, Benihana
Aoki’s daughter Devon is a model and the former face of Versace; his son Steve is a globe-traveling DJDevon: Corey Sipkin—NY Daily News Archive/Getty Images; Steve: Pedro fiúza—demotix/corbis
Devon: Corey Sipkin—NY Daily News Archive/Getty Images; Steve: Pedro fiúza—demotix/corbis

Ono is unfazed. She prefers to talk about happy subjects, and interrupts one interview to show me a YouTube video of the Beni Girls dancing in London’s Piccadilly Circus. Later she invites me to a Manhattan noodle restaurant, named KOA after her initials, that she recently opened as her own venture. The evening I visited, Ono was testing the restaurant’s Valentine’s Day menu. Her scrutiny was exacting. She deemed the pork-belly-wrapped asparagus underseasoned and sent the tempura-battered brownie sundae—her invention, of course—back twice, the first time disappointed by the choice of plate, the second because the raspberry sauce had been drizzled too flamboyantly.

For all her optimism, Ono sometimes feels nostalgic for the old days. Every so often she ventures into enemy territory and eats at the original Benihana on West 56th Street in Manhattan. Only a few of the longtime chefs recognize her, she says, so she is not disturbed. The pilgrimages allow her to commune with the spirit of Rocky, she says.

There are other benefits too. Ono displays a wrinkled cocktail napkin she retrieved on her last visit. It includes a logo that she says infringes on her company’s trademarks. “My lawyers,” she says, “are going to like this.”

This story is from the March 15, 2015 issue of Fortune.

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