Japan’s izakaya pub numbers decrease by 20% in FY2020

The Yomiuri Shimbun

November 8, 2021

The ubiquitous izakaya, the Japanese-style pubs that are common after-work destinations for people seeking some alcohol and light food, dropped in number by 20% in the fiscal year that ended March 2021, compared to the previous year.

The prolonged requests by local governments for closures to prevent the spread of the novel coronavirus have led many chains to close outlets where sales have deteriorated, according to the Japan Franchise Association.

Of the chains that responded to the association’s survey, the number of izakaya and pubs was 5,134 in fiscal 2020, down 20.4% from the previous year. This was largely due to the fact that they could not serve alcoholic beverages, resulting in a 40% decrease in sales from the previous year. Chinese restaurants also struggled, down 20.8%, while Japanese and sushi restaurants decreased 10.4%.

In contrast, hamburger chains fared well, up 1%, even though the number of outlets in the overall restaurant industry decreased. As people spent more time at home, these shops could meet takeout demand. Similarly, the number of pizza delivery outlets also increased, by 6.5%.

Some izakaya have recently been adjusting their business model to cope with pandemic-related demand. In the middle of this month, the operator of Kushikatsu Tanaka will open a takeout-only shop in Tokyo selling ready-made items such as pork cutlet sandwiches and menchi-katsu minced meat cutlets. The chain has not been able to maintain sales at its conventional restaurants where customers enjoy kushi-katsu deep-fried skewered meat and vegetables while drinking alcohol.

Major izakaya chain operator Watami Co. is planning to start another new business at the end of the year, following its kara-age fried chicken and yakiniku grilled meat ventures.

“The izakaya market will likely converge to 70% [compared to before the COVID-19 disaster] as the number of drinking parties decreases and teleworkers increases,” said Miki Watanabe, chairman and president of the company.

The latest state of emergency declared in Tokyo and some other areas expired at the end of September and alcoholic beverages could be served in these areas from October. Despite this tailwind for izakaya, there is uncertainty about the future.

According to a survey conducted by Tokyo Shoko Research in October among companies nationwide, 70% of respondents said they had no plans to hold year-end or New Year’s parties.

Also, many stores have been closed for long periods of time and are unable to secure employees who will work late at night, meaning that some have been unable to resume operations due to a lack of staff.

A representative of the Japan Foodservice Association, an industry group for restaurants, said: “While the return of customers has been insufficient, restaurants have also been directly hit by the rising cost of materials. It will take a long time for restaurant numbers to return to the level before the pandemic.”