TOKYO — Japanese restaurant chains are facing headwinds from the coronavirus outbreak, while food delivery businesses scramble to hire more staff as they experience a jump in demand amid the crisis that has paralyzed the economy.
Chikaranomoto Holdings, the owner of ramen restaurant chain Ippudo, on Tuesday revised down its operational profit forecasts for the current fiscal year to 680 million yen ($6 million), from the previously announced 1.15 billion yen, due to the pandemic. The company is also reviewing its plan to expand to 600 restaurants by 2025 amid the coronavirus pandemic.
The ramen chain also decided to cut executive pay from April to June by between 10% and 32%.
Major Japanese cafe chain Doutor Nichires Holdings announced Tuesday that for the full year to February 2020 it saw a 1.5% rise in sales to 131.1 billion yen and an increase of 1.4% in operating profit to 10.2 billion yen. But the company refrained from giving forecasts for the next fiscal year because of “ever-increasing uncertainties” and a “completely unreadable future.” As of Tuesday, Doutor Nichires had closed more than 460 outlets of its two cafe brands and had reduced opening hours at around 380 others.
Yoshinoya Holdings, a restaurant chain known for its beef bowl dishes, did not report forecasts for the 2021 fiscal year either, amid the spread of coronavirus. It said that “weak consumer sentiment due to refraining from going out and the suspension and shortening of business hours are affecting sales.”
Like Doutor Nichires, Yoshinoya had been on an upward trajectory, with consolidated results for the fiscal year ending February showing net profit of 700 million yen, in a recovery from losses of 6 billion yen the previous year. Sales increased by 6.8% to 216.2 billion yen thanks to a marketing campaign and new menus.
Although almost all of Yoshinoya’s 600 outlets in China that closed or reduced their business hours after the Chinese New Year have now resumed operations, people are still refraining from going out there, the company said. At its eateries in the U.S and Southeast Asian countries, only takeaway operations are permitted. In Japan, the company decided to close more than 200 restaurants, including its other chain brands, as of Tuesday.
To make up for the drop in business at eat-in restaurants, Yoshinoya is increasing its stores that offer delivery services. Now, more than 750 Yoshinoya restaurants offer this service, up from about 660 in early February.
Kushikatsu Tanaka Holdings, the operator of a chain of casual bars, has also started this month to roll out lunch box and special set menus for takeaway customers.
The casual bar owner saw growth in both sales and operating profit for the three months ended in February, of 34.3% and 91.5% respectively. But a continuous rise in performance in the March to May quarter is uncertain after the company suspended operations at its 41 bars from Monday. The company is “anticipating an impact of [coronavirus] on business performance,” it said in a statement.
Seven senior executives at Kushikatsu Tanaka will take a pay cut of 20% per month for the April to June period. The returned compensation will be used to purchase items to prevent the spread of coronavirus, such as masks that will be allocated to its bars still open for takeaway and deliveries.
The adjustment in restaurants’ business practices to focus more on meals for takeaway means there is now increased competition for delivery drivers.
“We still have enough delivery people now, but we are not sure how long coronavirus will last and how demand for food delivery will change in the future. We want to be prepared,” said Kumi Fujimoto, spokesperson for online food-delivery site Demae-can.
The company, which is one of Japan’s largest food-delivery websites, has begun a tie-up with Sushi carrier Ride On Express Holdings to increase their number of delivery drivers. With cases of COVID-19 infection rising rapidly in Japan, Demae-can’s delivery orders jumped to 3.03 million in March, up 21% from the previous year.
Demae-can last week started to recruit staff from restaurants affected by the pandemic, who have lost their jobs or been furloughed due to the closure of outlets. The company has declined to comment on the size of the hiring program but it “has received quite a lot of inquiries since the first day of applications [opened].”
When the coronavirus pandemic ends, Demae-can will release its new hires so that they can return to their orginal resturant jobs, on the assumption that they will needed once the lockdowns end. The food delivery site operator will pay the new hires the hourly wage for the site they are assigned to.
“Even when coronavirus is over, we believe delivery and takeaway demand will increase in Japan given the expansion of the service [already seen] in foreign countries such as China and South Korea,” Fujimoto told the Nikkei Asian Review.
Many in Japan are still reluctant to order delivery food, she added, as women tend to cook homemade dishes at home and consider delivery meals as cutting corners. “It is good opportunity to take [this] personnel exchange between us and restaurant to popularize the service.”
Domino’s Pizza Japan will also increase the number of its staff. The pizza group is aiming to take on 5,000 part-time employee including delivery drivers and 200 full-time employees from April to June. The company has more than 600 outlets in Japan, but it plans to expand to 1,000 in the near future.
Protecting the health of customers and delivery staff is a concern for all such businesses. Demae-can recommends cashless payments to its customers to avoid the spread of infection, as well as conducting health checks on delivery operatives before they start work.
Despite seeing a sales increase of 22.7% to 3.8 billion yen for the December-to-February period from the previous year, Demae-can is also struggling, with losses of 900 million yen in the three months ended in February. The Japanese company has not been able to earn enough to offset its operational and marketing costs.