Posts Tagged ‘restaurant business’

Labor shortage cutting across all industries

Friday, May 9th, 2014

A recent report in the Mainichi Shimbun says that Japan’s number one gyudon (beef bowl) chain has seen its business suffer due to lack of workers. Sukiya’s policy is 24-hour service, but in many areas the company can’t find part-timers who are willing to come in during the wee hours. The company has shortened operating hours at about 250 outlets, and a few have even been closed altogether due to the labor shortage. The Mainichi reporter talked to some former Sukiya part-timers who said when they worked the midnight shift they often ended up all by themselves, meaning they had to do everything — cook, wait on customers, clean up, etc. — alone. Besides being nerve-wracking, the job wasn’t worth the wage that Sukiya was paying, so they quit.

Sukiya in Tokyo

Sukiya in Tokyo

Sukiya isn’t the only restaurant company that’s having this problem. Watami, the popular izakaya (drinking establishment) chain that has been called by some a burakku kigyo (a “black company” that exploits its workers), has announced it will close about 60 outlets by the end of the year, which represents 10 percent of all their stores, though the company characterizes this move as being more about rationalization. More personnel will be employed at the remaining outlets in order “to improve the work environment.”

There’s a certain self-relexive irony at work here since the success of chain restaurants in the past 10 years or so was built on a greater reliance on part-time workers, for whom companies don’t have to provide benefits and whose hours and wages can be managed more flexibly. Invariably, the point is to save money so that the chain can be more competitive in terms of prices, but with the labor shortage expanding into other industries, part-timers don’t have to work for restaurants, which notoriously don’t pay well and usually involve evening and night work.

Consequently, to keep the part-timers it wants, restaurant chains are having to increase wage offers in want ads, a move that runs counter to the part-time strategy.

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McDonald’s smells the coffee: Limited expectations are here to stay

Friday, December 27th, 2013

Fill 'er up: Customer using self-service coffee maker at 7-11.

Fill ‘er up: Customer using self-service coffee maker at 7-11.

If the central point of Abenomics is to boost prices and thus wages and consumption — the old “raise all boats” metaphor — then to a certain extent the plan has succeeded over the last year. Consumers don’t seem to be fixated on cheap goods and services any more, though, to be honest, it’s difficult to tell if this willingness to spend more is a function of anticipation for April’s consumption tax hike. But for the time being there seems to be that old desire for high quality stuff, regardless of how much it costs; which isn’t to say consumers aren’t looking for cheap things, only that they aren’t making it a priority any more.

This paradox seems to have had a bad effect on the fortunes of a company that some once thought was invincible: McDonald’s. Since August, the fast food behemoth’s Japanese operation has had to lower its sales projection for fiscal 2013 twice. Profits are expected to be around ¥5 billion, or a whopping ¥6.7 billion lower than originally thought. Sales have decreased five months in row, with the number of customers dropping for 7 consecutive months. The company is telling the media that the reason is “no hit product” this year, thus making it sound like a PR failure, but according to Asahi Shimbun, and almost every other Japanese media that has reported the story, McDonalds’ poor showing seems to be more systemic, an indication of a sea change in consumer sentiment.

The company’s response has been to bring in new blood. Sarah Casanova, a Canadian, was appointed president of McDonald’s Japan last summer, and, again, it seems to be more a matter of an image makeover. The announced new strategy is to target women as a demographic, since it is younger females who have tended to resist McD’s charms the most during its two straight years of falling revenues. The plan reinforces “healthy menu” items, which to a company like McDonald’s means offering more things with chicken in them.

Though it doesn’t sound like much, it’s actually quite a turnaround. When the previous president, Eiko Harada, was appointed in 2004 his big move was pushing the so-called ¥100 Mac, the cheap hamburger that was always going to be McDonald’s mainstay, and it worked. For the next six years profits grew.

The next big coup was ¥100 coffee, which effectively challenged coffee shops and coffee chains like Starbucks. Then the company made over their restaurants with more attractive decor. These various gambits were predicated on boosting the brand, but actually it was the price and the speed of service that mattered to customers. People buy McDonald’s hamburgers not because of the taste or the atmosphere, but because they’re cheap, and the same went for the coffee, which was pretty good considering but not as good as Starbucks, for what it’s worth.

To make matters worse, McDonald’s raised prices in the past year, thinking that the economy justified the change, and in a way it did, but people don’t think that way about McDonald’s. They aren’t willing to pay more for fast food, no matter how well it’s presented or how nice the decor is.

In the era of Abenomics, that means any competition can eat into McDonald’s sales more easily. Just as McD stole customers away from Starbucks when it launched its ¥100 coffee, now convenience stores are taking business away from McD with their own cheap coffee. About a year ago 7-11 put self-service coffee machines, which grind beans and brew coffee while you wait, in 16,000 stores, and by September they had sold 200 million cups. It only costs ¥100, and other CS have followed suit, though Lawson’s coffee is a bit more expensive at ¥150.

The market has grown so much that the consumer report magazine Nikkei Trendy named convenience store coffee the #1 hitto shohin (hit merchandise) of the year. It should be noted that Japan is a formidable coffee market, number 4 in the world in terms of consumption — 50 percent more than green tea, in fact. Even sushi restaurants are now serving fresh coffee. More significantly, 7-11 reports that its new coffee service does not subtract from other in-store coffee-related sales, such as canned coffee or chilled pack coffees. It’s simply gravy.

But someone has to lose in this equation, and it seems to be McDonald’s, which has a lot to lose. After all, ¥260 billion, which is McD’s projected revenue this year, is still a great deal of money. The problem is that McD is associated with hamburgers, whose traction on the Japanese imagination has always been tentative. Older people don’t really eat them as much, and Japan, as everyone knows, is the fastest aging society in the world.

Also, the tendency to eat out is becoming weaker in Japan as the population ages. Restaurant sales have decreased by 20 percent since they peaked in 1997. The weekly magazine Gendai, in typical hyperbolic fashion, has predicted the end of McDonald’s in Japan after reporting that the company will have closed 160 outlets by the end of this fiscal year.

Small businesses ask for restraint with the self-restraint

Saturday, April 2nd, 2011

Normally this time of year people are in a party mood, what with the cherry trees blooming, temperatures rising and students on spring break. That mood has been effectively dampened by the enormous suffering up north, but recreation in general is being discouraged by several related factors, such as the call for energy conservation and reduced public transportation. Small businesses, especially restaurants, bars and events promoters, are being hit the hardest, even if their enterprises were not affected directly by the earthquake.

Sign in Ueno Park says that the cherry blossom festival is "canceled," asks for "self-restraint."

They certainly don’t appreciate the well-meaning but short-sighted official requests for jishuku, or self-restraint. Making such a request sounds paradoxical: Can self-restraint be compelled from above? At a press conference on April 1, Renho, the Democratic Party of Japan lawmaker who was put in charge of energy conservation, blasted Tokyo governor Shintaro Ishihara for a remark he made implying that it’s unseemly for people to want to “drink and chat” at a time like this. Renho said that Ishihara shouldn’t use his political platform to “restrain people’s freedoms and social activities,” which have negative economic consequences.

According to the Fuji TV morning show, “Toku Da Ne,” as of April 1, 1,320 concerts and other events featuring foreign performers had been canceled due to fears of radiation from the damaged Fukushima power plant. In fact, one events company has already gone out of business as a result, and that company is headquartered in Fukuoka.

Those cancellations can’t be helped. What’s more problematic is that many Japanese are being made to feel guilty about going out and spending money. Fuji TV cited a survey of 301 small businesses in Tokyo. Eighty percent said that their business has fallen off sharply since March 11. So one French restaurant decided to buck the whole jishuku movement and started advertising a 30 percent discount on all meals for the time being. They’ve been packed ever since.

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