Restaurant chains think outside box to blunt hit from soaring prices
6:03 JST, June 7, 2022
It was another busy day at popular udon restaurant chain Marugame Seimen’s Kanpachi Heiwadai branch, located along a main boulevard in Tokyo’s Nerima Ward. The place was filled as usual with families and groups of students.
When a customer places an order for one of the most popular items, beef udon, the staff member goes into action and starts cooking the beef and onions easily within sight. The aroma further entices the appetite.
Marugame Seimen used to simmer the beef in advance, but from March, when it changed its cooking method for some dishes, it now cooks only the amount needed to fill the order. The aim is to reduce food loss and time eliminate unnecessary time for meal preparation.
It is part of a recent trend among major restaurant chains, already hit hard by the economic impact of the pandemic, to come up with ways to stay competitive amid spiraling costs for basic foodstuffs such as flour and beef, without resorting to raising menu prices.
The measures appear to be working, as the chains have recovered to about 90% of their pre-pandemic sales.
Like Marugame Seimen, the family restaurant chain Gusto has also altered the cooking method for a popular menu item, in this case its hamburger steak. Instead of using a mold to form the raw meat patty, the firm opted for a hand-kneading-like style that makes it plumper.
Gusto also increased the volume in April and, although the price of ¥598 (tax included) is ¥50 higher than before, sales have increased.
“We started questioning the concept of family restaurants providing dishes with a wide range of prices,” said Makoto Tani, chairman and president of Skylark Holdings Co. operating Gusto. “It is important to provide dishes at a price and quality that will make the customers want to try them.”
Recovery of sales
Restaurants’ sales in April were 8.1% less than those recorded in the same month in pre-pandemic 2019, according to statistics compiled by the Japan Food Service Association, an organization for restaurant chains.
While down, it marks a substantial recovery for the industry, given that sales for April 2020 saw a 39.6% plunge compared to April 2019.
Among the types of businesses, family restaurants and Japanese-style izakaya pub chains continue to face hard times, while sales of fast food that can be taken out are doing well.
“Families are generating the demand for eating out, especially during school vacations and on weekends and holidays,” the association explained.
Since the lifting of the quasi-emergency priority measures to prevent spread of the coronavirus in late March, customers have gradually been returning to restaurants, which had been forced to close temporarily or shorten business hours over a two-year span.
Restaurant chains turned their focus to takeout, frozen foods and home delivery services to survive the difficult times — only to now be faced with soaring food costs.
Paying the price
Sometimes tweaking the menu to make it more attractive to customers can do the trick.
In March, the Saizeriya restaurant chain offered a “lamb rump steak” for ¥1,000 (tax included) for a limited time period. Although relatively high for a chain that has made a name for being inexpensive, the amount spent per customer increased 5% from the same period of the previous year.
Likewise, the Mos Burger hamburger chain started from May to offer a special rice burger termed the “Yoru Mos” (night Mos) for purchase only after 3 p.m.
The customer has a choice between a beef hamburger or kinmedai fish and seafood kakiage tempura sandwiched between the rice patties, and with larger portions than usual, it makes for a filling dinner meal.
Conversely, some chains have gone all in on cutting prices.
Starting in March, the Yakiniku no Watami barbeque restaurant chain reduced the prices of its galbi and beef loin portions to ¥429 (tax included). Overall menu items were reduced 20% on average.
The chain says that it has established a joint venture with a company that produces and processes beef, enabling it to purchase beef at lower prices.
It remains unclear how much each restaurant chain can absorb the higher costs through their own ingenuity alone. According to research firm Teikoku Databank, Ltd., costs of foodstuffs and others ate up 37.5% of sales at restaurants in fiscal 2021, an increase of 1.2 percentage points from the previous fiscal year.
And prices of imported foodstuffs are expected to only rise further due to the weakening of the yen.
“From this summer, procurement of supplies will become even more drastic,” said an executive of a major restaurant chain in sounding the alarm. “There is only so much we can do by just changing the menu.”
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