Japan Restaurant Challenges:

 https://the-japan-news.com/news/article/0007581098

Article:

The closure of restaurants hit by the novel coronavirus crisis is accelerating. According to Tokyo Shoko Research, Ltd., the number of locations of 11 major restaurant chain companies fell by 7.4% over a yearlong period.

If the fourth declaration of a state of emergency in Tokyo leads to more people refraining from eating out, the number of restaurant closures could increase further, and the employment situation could worsen.

Ideas:

Its a very sad situation that the Japanese government can't or won't increase the subsidies as needed to help struggling restaurants. 

But maybe the feeling its not their job to help everyone in a market economy as there are always "winners and losers" in a market economy.

And of this writing, a little later than the publication of the original article, it is now estimated that upwards of 40 percent of restaurants in the Tokyo area are not following the government's suggestions to close and or not serve alcohol after 8 PM, as the article suggests restaurant owners can't survive if they follow the government suggestions.

Article:

■ Izakaya first, but not only

Tokyo Shoko Research tallied the number of locations as of either the end of December 2020 or the end of February 2021, depending on when each company’s fiscal year ended.

The total figure was 8,437 locations, meaning that 678 locations had closed, compared with the 9,115 locations counted a year earlier. The pace of decline had been slow until last summer, but in the last three months of the yearlong period the number of locations fell by 316. The pace of closures had accelerated.

Izakaya pubs, many of which are located in front of train stations or in busy shopping areas, were among the first to close after the state of emergency was declared last spring. On the other hand, restaurants that also have locations in the suburbs suffered a slower deterioration in business than izakaya, which seems to have made their tempo of closures a little slower.

Ideas:

As per the previous article that estimated upwards of 40 percent of places are now not following the suggestions of the Japanese government to close early and or not serving alcohol, there could now be even more, especially if there are no penalties for staying open later than suggested.

And as more restaurant owners begin to see other restaurants are staying open, how many more are going to do the same thing.

But another problem is even if they do begin to stay open and not follow the suggestions of the Japanese government, are there or will there be enough customers for all of the restaurants that stay open past 8 PM.

And then there is also the idea of pandemic fatigue meaning people/consumers/customers are just tired of waiting and they will begin as maybe they have already done begin to just go back to their normal or favorite restaurants or Izakaya pubs.

Article:

■ Customers not returning

　An official of Joyfull Co., which operates family restaurants mainly in Kyushu, said: “Customers will not return in the numbers seen before the coronavirus disaster. We have no choice but to close restaurants based on profitability.” The company decided in June last year to restructure its operations by closing about 200 locations across the country, and it has gradually closed those. The number of locations has fallen by 21% in one year.

Atom Corp., which operates Steak Miya and other restaurants across Japan, saw its location count fall by 22% as it closed unprofitable locations and sold subsidiaries.

Seven & i Holdings Co., a subsidiary of which operates Denny’s, saw its shop count fall by 9.5%. Of the 11 major companies, only Saizeriya Co., which has a strategy of aggressively opening new restaurants to boost sales, increased the number of its locations, by seven.

Ideas:

Its unfortunate that these companies have to close some of the places. But even in a normal market economy, without the pandemic companies are always opening and closing places based on profitability.

But the problem of course is the workers at the places that have closed. Did the companies transfer the workers to the more profitable restaurants or did they just lay them off. 

Or did they give the workers a chance to decide. Do you want to transfer to a different location or do you a lay off package etc.

And it has been reported like during the spring of 2020 some companies were actually allowing their workers and or actually lending them out to other companies to work instead of just laying them off. 

Its interesting that only Saizeriya used the strategy, in order to increase sales, increased the number of restaurants to increase sales. The idea is, if they can control their fixed expenses and even their variable expenses, which salaries are part of, the more restaurants the more potential customers the more potential sales for the company.

Article:

■ Fears of more job loss

There is a growing sense of crisis in the restaurant industry. Shigeru Ishii, managing director of the Japan Foodservice Association, said: “There are many restaurants that have been operating on the edge of profitability, and there is no end to the number of restaurants that have no choice but to fold. The repeated declarations [of states of emergency] may lead to situations in which a business cannot be continued.”

Akiyoshi Niki at Tokyo Shoko Research said: “The chance to get spectators in the Tokyo area and elsewhere to visit [restaurants] during the Tokyo Olympic Games has disappeared. The restaurant industry provides jobs to people, including part-time workers. If a number of restaurants close, employment opportunities for a wide range of people could be lost.”z

Ideas:

Again is unfortunate that the Japanese government subsidies are not enough to help as many restaurants as needed.

Now is not the time for "let the market conditions decide" the winners and losers in the market.

These are not normal market times and the Japanese government and the Bank of Japan should do as much as needed to help as many restaurants survive as possible.

I talked to several individuals who work for investment companies in Japan and they are working the best they can to help Japanese restaurants survive.

Yes, the Olympic situation was not good as probably in the past, many customers would go to restaurants, with their big wide screen TV's on and eat dinner or drink and watch some sporting events, for example which is probably what happened in the fall of 2019 during the Rugby World Cup.

As I was visiting Yokohama in both September and October of 2019, it was a different world than now. People were out and about everywhere. And there was electricity in the air that fall during the Rugby World Cup. 

But  because of the pandemic, I doubt despite the Olympics being on TV, as I watched ?NHK and other channels on my computer, that many people actually went to any restaurants or their favorite drinking places to watch the Olympics.

And yes, its always about people. But again, if possible, are these restaurant companies able to transfer some or all of the workers to other places.

And most importantly can these people find similar or other jobs during the pandemic.

Article:

■ Sales fall more than ¥900 bil.

Total sales of 94 listed food service companies in Japan in fiscal 2020 (April 2020 to March 2021) fell by ¥909.1 billion from the previous year, according to a survey by Teikoku Databank Ltd. Around 90% of all companies saw a fall in sales due to restrictions on business following the government’s declaration of a state of emergency.

Restaurants that serve alcoholic drinks were hit hard. On the other hand, companies that have strengthened their takeout business have seen an increase in sales.

Ideas:

As of this writing, again which a little later than the original article on Mainichi, to be fair and honest and not to criticize the Japanese government's attempts to reduce the virus situation, the restrictions in place don't seem to be working.

And at the same time, in a neighboring country near Japan, despite similar restrictions they also don't seem to be working.

So if the restrictions supposedly are not working at new virus strains appear more and more, are restaurants for example, again as mentioned, in order to survive just going to try and stay open, especially if there are no financial penalties to stay open.

Some might say like the article mentioned the subsidies are not enough and we have no choice but to stay open in order to survive.

More and more Japanese restaurants should innovate and provide either take out service and or some kind of delivery service.

For example some restaurants are probably now using Ube Eats and or maybe a cheaper service instead of having their own scooters or drives for the take out service.

Here in the neighboring country I'm in the delivery service since the pandemic as sky-rocketed with more and more restaurants using different food or general delivery companies.

And the number of consumers who now order food online has also sky-rocketed in the past year. 

Article:

Sales totaled ¥3.98 trillion, down 18.6% from ¥4.89 trillion the previous year, with 84 companies reporting declines in sales, including venerable restaurant Seiyoken, which logged a 77.6% fall. British-style pub operator Hub Co., and Chimney, an izakaya pub chain, also saw sales fall sharply, by more than 60%. Sales fell by more than 50% at 19 companies.

On the other hand, 10 companies saw an increase in sales. The coronavirus crisis led to an increase in sales for companies that have strengthened their home delivery, takeout and drive-through offerings. KFC Holdings Japan, Ltd. posted a 12.6 % rise in sales, while Mos Food Services, Inc. and McDonald’s Holdings Company, Ltd. also posted increases.

An official of Teikoku Databank said: “The situation is expected to improve this fiscal year with the acceleration of vaccinations. However, the number of infected people is on the rise, and trends in business hours and restrictions on serving alcohol will be key.”

Ideas:

Yes, any company that was able to innovate and add some kind of delivery services or for those without take out service and now able to do it have a better chance to survive and or grow.

The regular restaurants, and or the family type restaurants, such as Royal Host, Denny, etc. need to have some kind of take out or delivery service if they haven't yet.

And can the Izakaya type places find a way to innovate with some kind of take out menu including an incentive like one free drink for take out of meal and or home delivery type services. 

But unfortunately there virus situation keeps getting worse so hopefully more restaurants can survive offering more take out menus and or incentives to customers to order online and come to the restaurant as needed. And or by using some kind of delivery type service. If Uber Eats is too expensive for the restaurant and customers, they can/should find a reliable service that is cheaper.

If a restaurant large or small doesn't have an online presence they might be losing some customers and or sales because of it.

Have a nice day and be safe!