Number of major izakaya Japanese pubs down by 12.5% in year

The Yomiuri Shimbun

9:30 JST, March 29, 2021

Izakaya pub chain outlets have been closing at an accelerated pace amid the prolonged coronavirus crisis, with 12.5% fewer of the Japanese-style pubs open at the end of 2020 than a year earlier. Although the emergency declaration covering Tokyo and three prefectures was lifted Sunday, the pace of izakaya closures is unlikely to slow, and an early recovery in business performance is unlikely.

According to a summary by Tokyo Shoko Research Ltd., the number of outlets of the 13 major izakaya chains totaled 7,009 at the end of December 2019. Three months later, as of the end of March 2020, the number of outlets had decreased by 45. Then, the pace of closures accelerated when the emergency declaration was issued in April and May 2020.

At the end of June, 516 more outlets had closed, followed by 145 more by the end of September and 167 more by the end of December, for a total of 873 closures, reducing the number of still-operating izakaya to 6,136.

Of the 13 companies, Sanko Marketing Foods Co., which operates Kinnokura, had the highest rate of decline at 42%. JFLA Holdings Inc., which sold off its Yakiniku chain Gyu-Kaku, had the second-highest rate of decline, down 33%. The only izakaya chain that increased its number of outlets over the past year is Kushikatsu Tanaka Holdings Co., with an increase of three stores.

Many of the outlets that were closed were located near terminal stations of the three major metropolitan areas of Tokyo, Osaka, and Nagoya. With the declaration of a state of emergency, people were encouraged to refrain from outings and holding parties. The accompanying government requests to shorten business hours compounded the impact on the number of customers and sales.

An official of Tokyo Shoko Research said: “Major chain outlets occupy a large area and need a large number of staff. The cost of maintenance has become a huge burden, and they have given up on the idea of continuing to operate [their stores].”

The pace of closures is not expected to slow down, given the January emergency declaration and its extension.

Watami Co., which operates Miraizaka and other restaurants, continues to face a serious situation, with same-store sales at its restaurants down 62% in January and 53% in February from the same months last year. Miki Watanabe, chairman of the company, said, “The restaurant business is getting tougher day by day, and I think there will be many business closures.”

In the areas covered by the just-lifted emergency declaration, restaurants that cooperated with the request for shorter hours until 8:00 p.m. had been paid up to ¥1.86 million per outlet per month (¥60,000 per day) as cooperation money.

From Monday, after the declaration was lifted in Tokyo and the three prefectures, the request for shorter hours was relaxed to 9 p.m., while the cooperation money will be reduced to ¥40,000 per day.

There is a strong sense of dissatisfaction on the part of chain restaurants, saying that they cannot sufficiently cover their rent and labor costs.

The number of employees working in restaurants nationwide is 2.63 million, accounting for about 4% of all industries. If the number of restaurant closures continues at this rate, it could have a serious impact on employment.