As one of the leading brands in the Japanese fast food industry, Yoshinoya has a history of more than 100 years today. At present, it operates 2 brands under the umbrella of Yoshinoya and has more than 2,800 stores worldwide.
What is Yoshinoya's history and secret of success? What kind of difficulties and challenges is this century-old brand facing today?
Rice, as one of the world's most widely grown crops and one of the world's highest yields and consumption, occupies a very important position in the diets of East Asia, South Asia and even the Near East and Africa - as the first staple food in China, most of the daily diets of Chinese are inseparable from rice; in Japan and South Korea, which are more similar to The Chinese diet, rice is also the most common food on their dinner table; looking at the entire Southeast Asian region, rice is almost the only staple food for locals.
In China, rice accounts for nearly two-thirds of the consumption of staple grain, and rice has naturally become the protagonist of the well-deserved staple food in the Chinese catering market, and the two major categories of meals and fast food have been derived around staple foods such as rice. Compared with the heavy mode of dinner, rice fast food is obviously much friendlier to entrepreneurs, attracting a large number of entrepreneurs to gather on this track.
From food stalls and fast food restaurants around the world, to Yonghe Dawang and Dalai from Hong Kong and Taiwan, Yoshinoya and Shiqijia from Japan, and then to chain brands such as Zhen Kung Fu, Village Ji and Laoxiang Chicken in the mainland, many forces meet at the rice fast food track. Although the two rising brands in the mainland, Cunji and Laoxiang Chicken, have become the "new double males of Chinese rice fast food", if we want to talk about the forerunners of global rice fast food brands, it is Yoshinoya, which has a brand history of hundreds of years.
△Image source: Yoshinoya official website
In Japan and South Korea, which also love rice, there is also a deep tradition of rice fast food. Both sushi, which appeared in the early days of Edo, and tempura rice ("tengo") that became popular in the 19th century, are typical examples of Japanese rice fast food in history. In the first half of the 20th century, Japan began the process of industrialization, but in the context of turmoil, the Japanese catering industry can only be difficult to maintain for a long time, and the scale development is impossible to talk about. It was not until the 1950s after the war, as the Japanese economy ushered in a new period of prosperity, that the Japanese restaurant industry had real room for long-term operation and development.
Against the backdrop of this era, the Yoshinoya at the time stood out among the Japanese restaurant brands with a staple of beef rice ("beef bowl") and quickly became the head brand of Japanese fast food.
Since then, Yoshinoya has begun to go global, not only in the United States to open up the market, but also in the early 1990s has entered China, as a typical representative of Japanese fast food chinese consumers are well known.
<h1 class="pgc-h-arrow-right" data-track="10" >1 Yoshinoya in Japan: A Century-Old Struggle from Small Shop to Listed Company</h1>
In Japan, Yoshinoya, along with two other brands that also specialize in beef rice, Shichiya and Matsuya, are known as the "Ushikasa Sansa". Among the three brands, Yoshinoya has the longest history and the most tortuous development process. From a self-employed small restaurant to a chain of nearly 3,000 stores, Yoshinoya's development history can be described as a twist and turn.
1. In the difficult history of entrepreneurship
At the end of the 19th century, Eiki Matsuda, who was born in Osaka, came to Tokyo to learn how to cook at a fine dining restaurant known as the "Kitei". After some time, Matsuda Eiyoshi decided to leave the restaurant to set himself up and open a small restaurant at the fish market in Tokyo's Nihonbashi area, which was the first store in the history of Yoshinoya. Eiyoshi Matsuda modified the rice bowl that Japanese people often eat at home at that time, changing the toppings to boiled beef slices and sauces - this is the prototype of Yoshinoya's special "beef bowl". This rich, generous beef rice won over local consumers as soon as it was launched, and soon Matsuda Eiki's restaurant gained a foothold in the fish market.
In 1923, the Great Kanto Earthquake struck Japan, with a magnitude of 7.9 on the Richter scale, causing heavy losses. The hotel that Matsuda Eiyoshi had been operating for decades was also destroyed in a natural disaster. A few years later, the fish market in the Nihonbashi area was relocated to the Tsukiji area of Tokyo City to rebuild, which is the origin of the later famous Tsukiji Seafood Market. The Yoshinoya also followed the fish market to Tsukiji, where Matsuda Eiyoshi laid a 30-square-meter paving near the Tsukiji Market, which can accommodate about 20 seats, and still specializes in beef rice.
More than a decade later, the hurricane of the times once again struck a relentless blow to The tenacious man Matsuda Eiyoshi. The Tsukiji Market was reduced to rubble in the war, and the Yoshino family struggled in the depression until the post-war order was restored, and the Yoshino family breathed a sigh of relief.
The Yoshino family, which was reborn twice, ushered in the first rapid development opportunity in the 1950s. At this time, Matsuda Eiyoshi's son, Mizuho Matsuda, began to take over the operation of the hotel. The university-educated Mizuho Matsuda had a great idea of management, and he was determined to develop the Yoshinoya into a modern company, and after taking over the management, he reformed the Yoshinoya family.
All along, because the fish market operates from early morning to noon, the business hours of the Yoshinoya family are set accordingly from 5 a.m. to 1 p.m. However, with the rapid development of Tokyo after the war, the flow of people in Tsukiji Market increased significantly, and in fact people had a demand for meals in the afternoon and even in the evening.
Therefore, in order to make full use of the opening hours of the store, Yoshinoya, which was still a single store operation at the time, began to operate 24 hours a day from 1952. With good production and unique management skills, Yoshinoya quickly reached the level of 1,000 people in a single day.
In 1958, Yoshino Corporation was officially established, with Mizuho Matsuda as president, and Yoshinoya began to manage the enterprise. Subsequently, Matsuda Mizuho set a target of "annual sales of 100 million yen", while Yoshinoya at that time had only one store and only about 28 million yen in annual sales. In Matsuda's view, this goal can ultimately be achieved by increasing the efficiency and increasing the turnover rate.
In order to improve efficiency, Yoshinoya decided to start with streamlining production first. At that time, the vast majority of Yoshinoya's customers were vendors in the Tsukiji market, truck drivers, or buyers who came to the market to buy goods. These people are very busy, and the purpose of coming to the store is very clear, that is, they want to simply fill up the rice bowl, quickly finish the checkout, and then return to their own work.
Based on this observation, Mizuho Matsuda drastically streamlined the menu, removing the side dishes such as konjac shreds, bamboo shoots, and tofu from the previous menu, and retaining only the core beef slices, eggs, and onions—to be precise, the only dish Yoshinoya offered at this time was standardized beef rice. While streamlining the products, it also saves the link between guests entering the store and ordering by the clerk, and the single dish also ensures the speed of the back kitchen. In this way, through this extreme streamlining of operations, after seven years of hard work, Yoshinoya achieved an annual sales target of 100 million yen with one store in 1965.
A few years later, Yoshinoya, which had set its annual sales at 200 million yen, opened a second Yoshinoya store in Shinbashi Station, Tokyo, successfully replicating the single-store business model. Subsequently, more stores were opened one after another. At this time, Mizuho Matsuda already had the idea of making Yoshinoya a chain brand.
Looking back at the early development process of Yoshinoya, it can be seen that improving efficiency and making small profits and selling high profits is a business philosophy that Yoshinoya has formed and put into practice from an early stage. To this day, the Yoshinoya family has essentially been practicing this philosophy. This concept has contributed to the rapid development of the Yoshinoya family, but it has also brought many constraints and hidden dangers to it.
2. A modern chain of prosperity and crisis
From the mid-1960s to the 1970s, it was the first period of rapid economic development in Japan after the war, and a large number of children born in the post-war baby boom era gradually became adults and entered the ranks of work. In this context, Japan's catering industry has also ushered in an unprecedented boom, and a series of American chain catering brands such as McDonald's have also begun to enter the Japanese market at this time.
Yoshinoya also sees great potential for chained restaurants. In 1973, the first Yoshinoya chain franchise store opened in Odawara City, Kanagawa, which also marked the process of Yoshinoya's chaining and standardization of enterprises - gradually transitioning to modern chain restaurant management through the introduction of SOP process.
First of all, Yoshinoya introduced a system of unified VI design for stores. In the 1970s, during Matsuda's visit to the United States, Mizuho Matsuda saw the orange-red roof of a local café and thought it was very suitable as the main color of the Yoshinoya store, and then used orange red as the VI main color of the Yoshinoya, and this color has been used to this day.
At the same time, Yoshinoya has also introduced a series of system designs for chain restaurants - the target source of customers is no longer limited to industrial workers and vendors around the store, but will design products for mainstream wage-earners, students and other large groups; build a stable logistics and warehousing system; set up a store manager in each store, comprehensively manage the daily affairs of the store, set up annual bonus incentive work for the store manager; organize regular training within the staff, and promote middle and high-level cadres from within the staff...
With the help of both institutional innovation and market prosperity, Yoshinoya entered the fast lane of development, opening more and more stores, and by 1978 it had 200 stores in Japan. At the same time, the store has also expanded from Tokyo all the way to all parts of Japan, and regional headquarters such as Nagoya, Sendai, Hiroshima, and Kyushu have been established one after another. During this period, Yoshinoya entered the United States, started a Japanese-style chain restaurant chain in the birthplace of the catering chain in the United States, and also proposed the goal of opening 200 stores in the United States.
At this point, Yoshinoya can be said to have grown into a modern, beginning-to-scale chain catering enterprise.
Just as everything seemed to be moving forward in an orderly manner, in the late 1970s, a sudden crisis made the Yoshinoya's rise to the sky, and in July 1980, the Yoshinoya Co., Ltd. suddenly applied to the Tokyo District Court for bankruptcy and reorganization procedures.
The reasons for this bankruptcy crisis are manifold. First, at the end of the 1970s, Yoshinoya's exhibition store was too fast, and the existing operation management system could not meet the needs of the new store. Until 1977, Yoshinoya had only 100 stores, and by mid-1978, the number of stores had surged to 200. The goal of opening 200 stores in the United States is undoubtedly far beyond the actual ability of Yoshinoya at that time, in 1979, the number of Yoshinoya's Stores in the United States was only 13, and to this day, Yoshinoya only maintains about 100 stores in the United States.
At the same time, due to the substantial expansion of stores, Yoshinoya's beef purchases have also increased sharply in a short period of time. In Japan, the beef used by the Yoshinoya family was imported from the United States, and at that time, Japan set an import quota for American beef, and the increase in the purchase of beef by Yoshinoya caused the price of imported beef to rise, which pushed up the cost of raw materials for beef rice. As a result, the Yoshino family had no choice but to raise the price of beef rice at that time.
The rapid opening of stores has led to a significant increase in Yoshinoya's expenditure, but at the same time, it has been accompanied by a price increase and quality decline. This has affected the reputation and turnover of the Yoshinoya family a lot. More importantly, the expansion of the Yoshinoya before this was based on a series of "risk-taking behaviors".
According to the later Yoshinoya Yoshinoya Yoshihito Yanebe shuhito in his book, when Yoshinoya needed to find a large number of shops to open a new store, a real estate company used land as a way to fund a joint venture with Yoshinoya to open a franchise store. The firm gradually became Yoshinoya's largest partner and the largest franchisee franchisee. In 1979, the Yoshinoya had financial difficulties, applied for emergency financing from the real estate company, and even finally had to take out the trademark rights of the Yoshinoya and the direct sales store as a guarantee to successfully raise funds, so that the largest partner also became the largest creditor.
Subsequently, the real estate company began to send management to the headquarters of the Yoshinoya, and many conflicts arose between these management and president Mizuho Matsuda. These contradictions further exacerbated the plight of the Yoshino family.
By 1980, President Mizuho Matsuda, in order to get rid of the debt quagmire and regain control of the company, finally formally filed for bankruptcy and reorganization.
3. From bankruptcy restructuring to listed companies
According to Japan's "Society Rehabilitation Law", enterprises that are currently unable to repay their debts and are facing bankruptcy, but have the hope of continuing to develop in the future, can apply to the court to enter the "corporate renewal" procedure, and the court will appoint relevant personnel to be responsible for debt restructuring for the purpose of resuming normal operations.
After the Yoshinoya proposed reorganization, in 1983 they introduced funds from Tsukiji's Saison Group. Seibu Circulation owns service entities such as Seibu Department Store and Seibu Catering, and Yoshinoya has achieved rapid development through its platform. In the following years, Yoshinoya resumed normal operations and increased profits, finally paying off all debts totaling 10 billion yen in 1987.
With the acquisition of shares in Seibu Circulation, Yoshinoya has truly transformed from a family business into a modern joint-stock company. Since then, the expansion of the Yoshino family's career has also entered a higher level. Throughout the 1990s, Yoshinoya was committed to expanding overseas markets, laying out a mature store network in various Asian market regions such as Hong Kong, Chinese mainland, South Korea, and Indonesia. At the same time, Yoshinoya also began to expand its brand array – in 1999, Yoshinoya completed the restructuring and acquisition of the sushi chain Keizuru, and in 2000, Yoshinoya opened the first store of its self-incubated chain udon shop brand Hanamaru (はなまる).
In 2000, Yoshinoya was successfully listed on the main board of the Tokyo Stock Exchange. At this point, Yoshinoya completely counterattacked from the debt crisis and became the head chain restaurant company in the Japanese fast food industry, and at the same time, as a multinational enterprise, it also has a relatively high reputation in the world.
<h1 class="pgc-h-arrow-right" data-track="48" >2 Yoshinoya's business secrets in China</h1>
As of July 2021, about 560 of Yoshinoya's more than 2,100 stores are located in the Chinese mainland market, and there is no doubt that the Chinese mainland market is in fact one of Yoshinoya's most important overseas markets. Yoshinoya first opened a store in Chinese mainland 29 years ago to seize the opportunity to bring Japanese fast food to new markets.
1. Thirty years of China at the Yoshinoya family
In the early 1990s, in the face of the opportunity-filled Chinese market, like other foreign chain restaurant brands, Yoshinoya also hoped to enter as early as possible to seize the opportunity. However, due to the lessons of landing in the United States in the 1970s and the restrictions of national policies at that time, Yoshinoya chose a more cautious path when entering the mainland market - cooperating with Hong Kong-funded companies familiar with the domestic market.
At that time, Hong Mingji of the Hong Kong Hung family returned to China from the United States university to start a business. According to him later, in the United States, where chicken steak burgers are every day, the best choice for eating a rice fast food at that time was Yoshinoya, so he had a special love for Yoshinoya. After returning to China, he saw the outlet for foreign chain brands to enter the mainland market, and at the same time, because he was familiar with Yoshinoya, he actively docked with them.
With the joint efforts of many parties, the Summer Domain Group, established by Hong's subsidiary, signed a long-term franchise agreement with Yoshinoya in Japan, which owns the exclusive franchise right of Yoshinoya in northern China to operate the Yoshinoya store in the franchise area by opening a restaurant management company in the mainland.
The Hong family is born in Shantou, Guangdong Province, since Mr. Hong Heyou founded the edible oil factory in the 1930s, has been operating edible oil business in Guangdong, Hong Kong and other places for decades, and has made great achievements in the food industry.
The marriage of strong and powerful has made the Yoshino family's road to China expansion very smooth.
In March 1992, Yoshinoya, the first Chinese mainland, opened in Wangfujing, Beijing, and was greeted with unprecedented popularity due to its opening in a crowded food street and the freshness of Japanese dining at the time, initially reaching a record of 2,000 bowls of beef rice sold on weekends. At that time, the price of beef rice in the Yoshino family was positioned at 6.5 yuan a bowl, which was a high price at the time, but it still managed to attract a large number of passengers.
In the years since, Yoshinoya stores have opened more and more in the northeast and north China markets. At that time, the franchise scope of Jiyejia represented by Xia Yu Group covered Beijing, Tianjin, Hebei, Northeast China and Inner Mongolia, and subsequently, its franchise scope added Shanxi, Shaanxi and Henan.
In 2011, Xia Yu Group was reorganized and merged into Hexing Group, a listed company under the Hung family, and Hong Mingji also became the chief executive officer of Hop Hing. At this time, Hop Hing has more than 200 Yoshinoya stores within its franchise scope, and the stores are mainly concentrated in Beijing.
After the assets of XiaYu Group were restructured, Hop Hing's Yoshinoya business has developed more rapidly – as of 2020, its Yoshinoya stores have reached about 390, nearly double the number of stores outside beijing-Tianjin-Hebei, and the proportion of stores outside Beijing-Tianjin-Hebei has increased significantly. At the same time, its turnover has also increased significantly, from HK$1.46 billion in 2011 to about HK$2.1 billion in 2019.
Later, with the gradual liberalization of China's policy on foreign investment in the retail industry, Yoshinoya in Japan also tried to open stores in China in the form of direct operation, mainly in the southern Chinese mainland market area, through the establishment of Yoshinoya (China) Investment Co., Ltd. in Shanghai to operate and supervise the Yoshinoya store in the mainland market. At present, the mainland stores directly operated by Japan's Yoshinoya are mainly concentrated in shanghai and Shenzhen, some of which are fully directly operated and some of which are operated in the form of chains or joint ventures.
As of July 2021, there are about 560 Yoshinoya stores in the Chinese mainland market. From the perspective of urban distribution, it is mainly distributed in beijing, Shenzhen and Shanghai, which are three first-tier cities; from the perspective of stock, the northeast region is the region with the largest number of stores outside Beijing; from the incremental point of view, the number of stores in Shandong, Hubei, Anhui, Sichuan and Chongqing has also been growing steadily.
2. Yoshinoya's business secrets
Yoshinoya has always been one of the typical representatives of Japanese fast food in the minds of Chinese consumers, whether it is its iconic single-product beef rice, or its standardized operation and service style, which has inspired many local chain restaurant brands in China.
Yoshinoya can be widely loved in the Chinese market for two main reasons: First, compared with Western-style catering, the tastes of Chinese and Japanese diets are relatively close, and Yoshinoya's standardized products also have strong plasticity and are more suitable for the Chinese catering market; second, the three business principles that Yoshinoya has always adhered to - "delicious, cheap and fast" (うまい, 安い, early い), which also fit the background of China's rapid economic development in the past three decades and well meet the needs of Chinese consumers.
The following observation jun will specifically say how the Yoshinoya implements its three major management principles.
(1) Delicious taste of Yoshinoya
In his book, Yoshinoya's former company, Yoshinoya,Yoshinoya would adjust to the dynamics of the market, but for the Yoshinoya, there was nothing worth sacrificing "deliciousness" in the order of the three elements of "deliciousness, cheapness, and speed."
The reason why the element of "delicious" is the most important is not only because delicious is the primary requirement of all food and beverage consumers - price and efficiency are premised on the willingness of consumers to come to buy, but also because of Yoshinoya's unique business strategy of beef rice as the most important item - whether beef rice is delicious directly determines the performance of Yoshinoya.
Yoshinoya's most classic standard beef rice, the "beef bowl", is very simple and consists of only three core elements - beef, soup and rice. Therefore, Yoshinoya strives to achieve these three elements to the extreme. For example, the ratio of beef to rice in the beef rice of the Yoshino family is carefully designed: in order to pursue the effect of the beef when the rice is eaten, the bowl is first filled with a spoonful of rice until it is six or seven points full, and then the second spoonful of rice is put in, not to compact the rice hard, but to keep the rice fluffy, so that the amount of rice will be just right.
For many years, beef rice accounted for the vast majority of Yoshinoya's sales. However, in recent years, as more customers have pursued a variety of choices and to reduce their dependence on a single product, Yoshinoya's menu has begun to become more and more abundant, adding dishes such as curry rice, pork rice ("tochiko"), fried chicken rice ("tang 揚げ丼") and even eel rice. At the same time, it also enriches the taste selection, adding the flavor of grilled meat ("stewed meat"), and also adding a choice of side dishes such as kimchi and natto.
△ Yoshino's "Tang 揚げ丼". Image source: Yoshinoya official website
After entering the Chinese market, in order to adapt to the tastes of Chinese consumers, Yoshinoya also made some attempts at product localization. From 2020 to the present, Yoshinoya has added a series of localized dishes in the Chinese market, such as yam beef rice, double mushroom roast beef rice, sauerkraut pork belly rice, etc., trying to integrate more Chinese daily dietary elements into the research and development of dishes, and the products are no longer completely beef as the absolute core.
(2) The cheapness of the Yoshino family
For many years, the Yoshinoya family has used beef rice as an absolute selling point. But in fact, in Japan, beef has never been cheap. Until the 1970s, the main choice for Japanese families to make barbecue or sukiyaki was still pork or chicken, and beef was a more luxurious choice. Therefore, when Yoshinoya insists on selling beef rice at affordable prices, it has a great attraction for consumers in itself – it can be said that the cost performance has always been the most significant and high-selling feature of Yoshinoya in Japan.
Yoshinoya's product positioning is mainly the lunch of office workers or students, so it must take the route of high quality and low price, small profit and high sales. Yoshinoya's pricing of beef rice requires careful consideration before a decision can be made – and for price increases, it is even more necessary to be extra cautious.
For example, the original standard beef rice on the Yoshinoya menu, "Beef Bowl and Serving", sold for 300 to 350 yen in the 1980s and 400 yen in the 1990s. By 2021, the after-tax price of beef bowls will be around 387 yen. It can also be seen that the price of the Yoshinoya has not changed much over the years and has always insisted on taking the low-price route.
To control the selling price at a low level, controlling the cost is the key to the source. Like other restaurant chains, Yoshinoya's stores employ a large number of part-time employees to try to control labor costs. At the same time, the store is also open for as long as possible – in the early stages of local operation, Yoshinoya's slogan has always been "open 24 hours a day, 7 days a week".
Of course, these measures are all aimed at maximizing the use of fixed inputs such as labor and rent, reducing the average cost of store operations, and creating favorable conditions for the low pricing of dishes.
(3) The swiftness of the Yoshino family
High efficiency and high turnover have always been the secret weapon for Yoshinoya to achieve revenue growth. After entering the 1970s, Yoshinoya's operating system was transformed and upgraded, officially becoming a modern fast food chain enterprise, with higher requirements for the logistics supply chain. While ensuring the speed of operation, we cannot sacrifice the quality of the ingredients, which requires good planning and scheduling in all aspects from procurement to stores.
Purchasing and purchasing is the first step, and of course, it is also the most basic part of the logistics system. In Japan, the Yoshinoya family has insisted on using grain-fed beef imported from the United States for many years. In order to ensure the quality and stability of the beef supply, Yoshinoya often sends senior cadres of the procurement department to stay in the United States for a long time, on the one hand, in order to find contract farmers who provide supplies in the local area, on the other hand, to supervise the local procurement process and ensure the quality of procurement.
In China, Yoshinoya mainly uses ingredients native to China. When Yoshinoya entered China, it already had a fairly mature logistics system. As one of the early foreign chain catering brands that entered the Chinese mainland market, Yoshinoya can be said to be an early example of the use of central kitchens, logistics systems and retail information systems in the mainland, providing an important example and reference for later catering enterprises.
In the front-end stores, there are also many places that reveal the characteristics of Yoshinoya's ultimate pursuit of operational efficiency. For example, Yoshino's requirement for the clerk is that the time from the customer's order to the delivery of the food to the customer should not exceed 30 seconds, and when the meal is delivered, it is necessary to take care of the empty tableware next to it. In order to improve the efficiency of preparing dishes in the back kitchen, but also to ensure that the taste of the stores is consistent, Yoshinoya's soup is also uniformly made and concentrated in the central kitchen, and then mixed with water after distribution to the store.
Over the years, Yoshinoya has been adhering to the "customer number doctrine" and "store frequency doctrine", taking the number of customers entering the store as the core indicator, preferring to increase revenue by increasing customer flow rather than unit price. Therefore, as long as there is still room for the market, Yoshinoya will try to improve the process and increase efficiency. Between 2007 and 2008, Yoshinoya's average store traffic reached a peak to date – at that time, its more than 1,000 stores in the country reached a total of about 600,000 passengers per day.
In summary, it can be seen that Yoshinoya has high standards of operation in operation. It is thanks to years of adherence to the three principles of "delicious, cheap and fast" that Yoshinoya has been able to maintain a leading position in the highly competitive chain fast food market.
<h1 class="pgc-h-arrow-right" data-track="91" >3 Yoshino's dilemma</h1>
After the listing in 2000, the development of Yoshinoya has not been smooth. Over the years, the Yoshinoya has encountered many difficult challenges, and the long-term problems in its business model have caused considerable trouble in recent years.
1. The flow of years is unfavorable and has been hit by the epidemic
In 2003, the Mad Cow Disease crisis occurred in the United States, and the Japanese government urgently banned the import of American beef into the Japanese market, which directly led to the loss of raw material supply to the Yoshinoya. After weighing the quality of the products, Yoshinoya decided to abandon the alternative meat source. Since the beginning of 2004, Yoshinoya has stopped selling beef rice. The suspension was suspended for 950 days. It wasn't until September 2006, with the end of the import ban, that beef rice reappeared on Yoshino's table.
As a Yoshinoya who started with beef rice, the suspension of beef rice has had a significant impact on Yoshinoya's business.
Since 2010, Yoshinoya's operating conditions have also been less stable. In fiscal 2018 (March 2018 to February 2019), Yoshinoya recorded a huge loss of 6 billion yen. After a year, with the arrival of the new crown epidemic in 2020, Japan's Yoshinoya was hit hard again, and its revenue in fiscal 2020 fell sharply by 21 percentage points year-on-year, and the net loss for the whole fiscal year reached 7.5 billion yen.
In July last year, just as the global epidemic was raging, there was sudden news that Yoshinoya would close 150 stores around the world, and for a time the business status of Yoshinoya attracted much attention from the outside world. Later, Yoshinoya's official statement said that the 150 stores planned to close were the planned closures of stores along with all brands under the Yoshinoya Group, rather than closing so many Yoshinoya stores. But there is no doubt that the COVID-19 pandemic has indeed caused considerable damage to the operation of the Yoshinoya.
As the most important franchisee of Yoshinoya in China, Hexing is not optimistic. In the past few years, Yoshinoya's store revenue has accounted for about 85% of Hop Hing Group's revenue, which is an important part of the Group's revenue. Under the influence of the epidemic in 2020, the customer flow of a large number of Yoshinoya stores under Hexing has decreased sharply. In 2020, Hop Hing's revenue fell 24% year-on-year, recording a loss of more than HK$81 million.
It can be seen that under the epidemic, the entire operation of Yoshinoya has been affected to varying degrees.
2. The Yoshino family's predicament has a long history
But in fact, the difficulties encountered by Yoshinoya and its business model did not only begin with the COVID-19 epidemic in 2020. For a long time, both in China and In Japan, the Yoshinoya were faced with a lack of expansion. It should be said that the challenges faced by the Yoshinoya family today are long-term, and it will take long-term patience and wisdom to break through these difficulties.
(1) Homogenization competition is fierce, and profits are meager
Yoshinoya's positioning has always been to provide ordinary wage earners with convenient fast food that can be full, and its entry threshold is not high, and there are countless catering companies and stores with the same positioning on the market. At the same time, the SOP standardized route relied on by the rapid rise of Yoshinoya in the early days, and as the catering supply chain system becomes more and more perfect and mature, the industry barriers it has built are being eliminated. The consequent consequence is that there are more and more competitors in the same industry and positioning, and the advantages of the Yoshinoya are being lost.
For example, in the "Oxbosan 3", zensho group's food stores in Japan ("すき家") have been occupying the first place in the number of stores in Japan since entering the 21st century – in 2020, Food Qiyi has more than 1,900 stores in Japan, almost twice the number of Yoshinoya stores in Japan. Matsuya, led by the Waulif family, has been stable at more than 950 stores in Japan in recent years, closely following the Yoshinoya.
Due to years of fierce competition, both ZENSHO and Yoshinoya's profit margins have been compressed to an extremely low level. According to its annual report, ZENSHO Group's operating margin in recent years has been 2%-3.5% for a long time, while the operating margin of Yoshinoya in Japan has hovered around 1%-2%. In the past decade, Yoshinoya has lost money in three financial years.
It is precisely because the profit margin is low for a long time and the flow of funds of enterprises is extremely tight, so in the face of the impact of the epidemic, chain fast food companies such as Yoshinoya are facing particular pressure.
(2) Success is also Xiao He defeat is also Xiao He: invariance is the original sin
Looking back at the development history of Yoshinoya, it can be found that the core of Yoshinoya's business format seems to have not changed substantially since its birth.
From the perspective of the functional positioning of the product, the positioning of the main beef rice and the fast food of the wage earners has limited the price increase space of the Yoshinoya. In recent years, with the increasing maturity of packaging preservation technology and cold chain logistics system, fresh-keeping bento has become the choice of more and more consumers, and some of Yoshinoya's customers have also been eroded.
From the perspective of product sales model, the rapid turnover of Yoshinoya stores is an indispensable prerequisite to support its small profit and high sales model. However, in the face of the rise of takeaway sales channels, the high turnover advantage of Yoshinoya stores is gradually "out of focus".
Hop Hing Group, which understands the Chinese market better, also has a sensitive understanding of the general trend of the rise of takeaway, and its response is more agile. Since 2015, Hexing's catering business has begun to carry out O2O transformation, launching a takeaway mini program "Ji Food Delivery" and a new retail platform "Ji Shi Hui", and even launched a buffet breakfast service in recent years.
By 2020, the proportion of Yoshinoya's delivery sales operated by Hop Hing has reached 49.1%, up 9 percentage points year-on-year, which can be said to be a good reconciliation of the impact of the ban on dine-in during the epidemic. In contrast, the development of delivery services in Japan's Yoshinoya is relatively slow, and according to relevant data, its delivery sales in 2020 account for only 3% of total sales.
(3) The source of customers is too single, and the product update is backward
In Japan, the Yoshinoya family positions its main source of customers as men between the ages of 40 and 50 ("40-dai-00-50-yō-yō"). In the information disclosed, it can be seen that its male customers account for 80% of the total passenger flow. This led to a high degree of homogenization of the Yoshinoya's source of visitors.
A long-term consequence of the high homogenization of customer sources is that product positioning and design are also solidified, which will appear monotonous or even boring for consumer groups of other ages or other identities. This puts Yoshinoya – especially in Japan – at a significant disadvantage in attracting female consumers and younger consumers.
Another of the more obvious flaws of the Yoshinoya is that the format is too single. Due to its high dependence on stores and store staff in its operating model, Yoshinoya's ground rent expenses and sales costs have remained high for many years, seriously eroding profit margins. In 2019, Yoshinoya's sales, management and comprehensive expenses (SG&A Expenses) accounted for nearly 63% of revenue, of which ground rent-related expenses accounted for 13.2% of revenue and labor costs accounted for 28.6% of revenue.
In terms of increasing product categories and expanding the brand matrix, Yoshinoya has also made a lot of efforts. In 2001, Hanamura, an incubated chain of Udon noodle shops owned by Yoshinoya, officially opened for business; around the 2000s, Yoshinoya also acquired Nippon sushi brand Keizuru and yakiniku hot pot chain Arcmeal. But in addition to the slightly better revenue of Hanamaru, the performance of the other two brands is not satisfactory. Under the impact of the epidemic, Yoshinoya had to sell Keizun and Arcumeal one after another.
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It can be seen that in addition to the impact of the new crown epidemic, the difficulties faced by the Yoshinoya family are actually long-term and structural. Whether on the demand side or on the supply side, the situation is not optimistic.
On the demand side, as people's consumption habits and aesthetics change, the hard demand for products such as Yoshinoya is gradually decreasing. Many younger generation consumers prefer casual, more experiential restaurants and are willing to pay for them at a premium. The positioning of restaurants such as Yoshinoya is inevitably based on a certain old-fashioned and boring impression in the eyes of young people, and Yoshinoya itself is also somewhat inadequate in catering to the consumption needs of young people.
On the supply side, with the significant slowdown in global economic growth in recent years, many people have pointed out that the business model of small profits and high sales is actually very fragile in the face of low revenue growth and high labor costs. The traditional business model, which still wants to maintain the era of high growth, is gradually no longer applicable.
With the rise of many potential rice fast food brands in the catering industry, they understand the needs of young consumer groups, can play and play, and Yoshinoya, which has a history of hundreds of years, looks quite "old-fashioned dragon clock". If Yoshinoya can't change its business thinking, perhaps the road ahead will only become more and more difficult.
Written by | fillet
Design | Huang Lihui
Resources
1. Making customers repeat customers – Yoshinoya's way of doing business | Written by Shuhito Abe
2. The deficit of 1.5 billion yen in Yoshinoya is a headwind for both "Sukiya" and "Matsuya", the limits of "Gyudon Average 360 yen" business | Shinchosha
3. Introducing more than 700 stores in Yoshinoya and DQ, how Hong Mingji integrated the | of "Chinese taste" Red Meal Net
4. Yoshinoya HD | Research Coverage Report by Shared Research Inc.
5. Analysis and Prospect of China's Grain Consumption - Agricultural Consumption, No. 5, 2017 | Fu Zhaoxiang
6. Annual reports, website information, etc. publicly disclosed by Yoshinoya, Hop Hing Group, ZENSHO, etc