Food So Tasty, You Have to Slurp

Japanese food exports have seen record-breaking numbers for eleven consecutive years, with JPY 1.45 trillion in 2023. The number of restaurants outside Japan has also increased dramatically, from 55,000 in 2013 to nearly 200,000 today. How do you account for this continued rise of Japanese food exports and restaurants and the growth of the popularity of Japanese cuisine?

I guess you got the numbers from the Ministry of Agriculture, and in one footnote that I noticed, out of those close to 200,000 restaurants, only 10% or so are actually run or owned by Japanese or Japanese companies. When I reflect on that figure, I have some mixed feelings, but it’s great for us Japanese to have a culture or cuisine that can be copied all over the world, not just by the Japanese themselves. Everybody seems to think that there is some value in Japanese food, whether that’s the taste or the variety or the healthiness, etc., so many people obviously see the value. I’m very glad that so many people around the world show appreciation towards Japanese food. To get deeper into the reasons it has become more and more popular, I would start with the fact that there are more and more people visiting Japan and discovering the culture and food for the first time, and when they go back to their countries, they think they are missing this Japanese food, or that they don’t have Japanese restaurants in their country or city, so why not open up a restaurant. Another reason is that there has been a lot of expansion of Japanese companies abroad, and some of those expats have decided to stay in those countries. One of the obvious ways for them to make a living is to do some cooking.

I think it’s only recently that Japanese restaurant operators have started expanding internationally. For example, we only started our international expansion in 2008, which is pretty late to the game, but when I look at other Japanese restaurant companies trying to do the same thing, it has met with mixed results. Some of them have indeed entered the market, but they exited thereafter. Some of us continue to stay in the market and try to expand our bases.

One thing that is clear is that people seem to love the flavors of Japanese food, and I think that started with sushi, which was especially popularized by the California Roll. I’m actually glad that somebody came up with such a concept to mix what is very traditional food into a more modern, more popular version. I think without the California Roll, sushi would not have gotten so popular. If you asked anybody anywhere in the world fifteen to twenty years ago what Japanese food is, they would have said it’s sushi because it became so popular, but then people started realizing that there is so much more to Japanese food than just sushi. There’s tempura, yakiniku, udon, ramen, tonkatsu, etc.

Ramen is an interesting case because its positioning in Japan is basically like chicken soup for many. It’s a complete meal in a bowl. It’s a noodle dish. It’s a soup dish. As such, it’s not seen as elevated cuisine per se. When you think about haute cuisine or elevated cuisine, it’s like a French multi-course meal, but we Japanese have peculiar ways to elevate anything that we touch and even such a common food as ramen can become elevated cuisine. That’s why authorities like Michelin recognize the level of sophistication of the ramen cuisine and award Michelin stars to some of the ramen restaurants.

So, I think a lot of people helped make Japanese food more and more popular, and perhaps another element is the spread of things like anime and manga and these cultural influences. Everybody knows some famous examples of anime or manga, and in every manga, there’s always something about food, so many people get curious about what the main character is eating and what is so fascinating about the food, and they would like to try it.

All these things helped. Japanese expansion, the increase in inbound tourists to Japan, anime, manga, and probably the Internet itself helped because many people started posting pictures of their food everywhere. The spread of Japanese food has been so strong, and I don’t think it’s going to change its course at all. Washoku, as Japanese cuisine is called here, was recognized as a UNESCO World Heritage in 2013, and recently, the sake manufacturing process itself was also recognized, so I hope we can ride on the wave of that popularization.

We saw that during COVID, 25% to 30% of restaurants struggled, whereas Japanese restaurants continued to grow. We’ve also seen a demand from consumers for faster and better service and better value. How are you responding to those challenges?

It was certainly difficult surviving the pandemic, that’s for sure. We were down almost 50% because all over the world, including Japan, we could not operate as normally. We had to close our stores, put employees on leave, etc., but after the pandemic, it was reassuring to see many people flocking back to the restaurants because they still want good food and good times.

Of course, we as restaurant operators need to improve ourselves and set the standards higher than before because there are so many choices, including non-Japanese cuisine. Therefore, our challenge is how to differentiate ourselves in such a crowded market. The pandemic was, in a way, a process of natural selection. A lot of players who had neither the financial strength nor a sound business model had to exit the market. They could not sustain their business.

We had to do a lot of things to survive, including cutting costs and focusing on our basics, such as store operations. What we always say is that quality is service, cleanliness, and overall ambiance. There’s not much more you could do if you were a restaurant operator during that challenging time, so that’s what we did. Thankfully, there was a strong recovery in the demand for dining out, so last year was pretty good. This year is not so great, but that’s another story.

There will be 37 million tourists coming to Japan this year, a number that’s expected to grow in the coming years. What is your strategy for tapping into that?

There are multiple ways to approach those visitors. One thing that sets us apart from our competition is that we already have restaurants outside Japan, so let’s say you’re from Singapore. We have fourteen restaurants there already. That means some of the inbound tourists have already experienced us in Singapore, New York, Sydney, or Paris, and that’s a sort of trigger to try our product and service in Japan, where they might consider it more authentic or more original. They will try to compare their experience in their respective cities or countries with that of Japan. In that way, our presence internationally reinforces our presence in Japan.

Another thing is that we have stores in key locations where lots of inbound tourists, especially first-time visitors, inevitably visit, like Narita Airport, Roppongi, and Ginza. For connoisseur tourists or regular visitors to Japan, we also have a location in Niseko, for example, which is very famous, so we have a visible presence in key locations where they will typically visit.

Something else, which is perhaps less obvious, is that we have been putting a lot of effort into an online presence. Of course, many people visiting Japan will search for food options, whether they look at TripAdvisor, Yahoo! Travel, or other popular sites, and when they’re actually on the ground here in Japan, they’ll look at a maps app. We have been doing optimization for five or six years for search and maps, etc. For example, we respond to practically every feedback or review from our visitors to build our database so that we will appear at the top of the search results.

It’s interesting that you talked about your international presence. Japan has a population crisis. The current population is 125 million, and we’re expecting that to reduce to 100 million by 2050 and half that number by the end of the century. This presents problems in the form of a diminished domestic base and labor pool. How much of your strategy to combat the population crisis is based on internationalization, and which countries have you earmarked for future international expansion?

A lot of companies tried to go international for the reasons you just mentioned. Our inspiration originally was more of a strong desire and conviction that what we are doing with ramen can be made popular all over the world. From very early on, when I joined the company fourteen years ago, the founder was quite adamant that what we are doing through ramen should be recognized as a good value anywhere in the world.

When you look at Japan’s situation, yes, the population is aging, and yes, it’s shrinking, but if you look at the world, the population is increasing, and the market is expanding. Therefore, we’re not talking about 125 million or fewer people per se. We’re talking about a billion people currently in the market. Granted, not all of them can dine out, especially at a Japanese restaurant, for various reasons, but the market is out there, and we have a strong conviction that what we are doing can be made global. That’s why I consider the world as our market. Having said that, the domestic market probably will shrink if we don’t do anything about it, and it remains to be seen how much of that lost market can be made up by inbound tourism.

Because of the weakened Japanese yen, the country is cheap at the moment for lots of visitors. It’s only JPY 800 or 900 per bowl, whereas, in downtown New York, we charge USD $22 plus tax and tips, but we don’t consider that price disparity to be unfair because we have to change our business model depending on the market. Having said that, Japan is an important market because it is still the biggest business segment that we have. How do we tackle the shrinking market? How do we tackle the increasingly difficult labor situation? Well, that’s what the challenge is. We need to come up with strategies. In terms of the shrinking market, we don’t think that we need to conquer 100% of the market in Japan, whether that’s ramen or udon or other food, but Japan will be basically a crown jewel of what we do. We are a Japanese company, and what we do is Japanese, so we will always remain in the Japanese market.

How do we combat the labor situation? There are a lot of things you can do that we have already been doing. One is digital transformation (DX). We do a lot of digitization. We have customers order on their own, and we automate lots of the processes on the back end so that our people can be at the forefront of our store operations, where the real value is created. You don’t create value through your inventory system. You cut costs with that. You don’t create value through optimization. The real value is created when you serve a hot, delicious meal to customers in a way that they would like to receive it, and that makes them smile. That makes them feel satisfied and want to come back. That’s the real value creation. At that point, we will always need people, but for the rest of it, including all the back-end functions, I think it can be automated, so yes, the labor force will shrink, and we’ll have more and more challenges in getting people and training them so that they can be Chikara no Moto people and they can work in an Ippudo way, but I think it’s not something that we need to despair about. I think it is actually a good opportunity because many of our competitors may not be able to do it, which means there’s more of the market for us.

You mentioned that during COVID, you had to go back to basics, which is providing a unique service to your customers, and you talked about how adding value is done at the front end, not the back end. Japan has ramen shops everywhere, so you have large chain competitors and also small, independent competitors. What’s the Ippudo way? What’s made it unique, and why should our readers eat there?

Well, of course, we run the restaurant, so we focus on ramen quality. We are known for tonkotsu, which is pork broth ramen, but we’re much more than that. Since the beginning, in 1985, we’ve had product lineups that were not just confined to tonkotsu ramen. We were born in Fukuoka, so many people in Japan consider us the epitome of tonkotsu ramen, but in Singapore and other places, we have other ramen types. Of course, when you look around the world, there are many people who do not eat pork or are vegan or vegetarian, and our R&D team can create dishes for these customers. From time to time, even in Japan, we provide chicken-based ramen or vegetarian or vegan products. We work with Fuji Oil to create specific types of dashi or soup so that even vegans can enjoy ramen, similar to tonkotsu. It’s not served at all the locations in Japan, but in some, we do.

That’s on the product front. Also, when you think about mom-and-pop restaurants or even some chain restaurants, you wouldn’t take your first date or possibly even your family there, especially if you have a small child. Our original concept for the ramen restaurant was that even a single female customer could walk in and not feel intimidated by the surroundings or the owner. That’s why our stores are designed to be more female-friendly. It’s primarily made of wood materials to give a sense of comfort. There’s background jazz music. In the past, you wouldn’t have heard a sound in a ramen restaurant, especially not jazz. We also try to keep our restaurants very clean.

Our seating is also not just counter seats, which is common at other ramen restaurants. We have tables. If you think about operational efficiency, counter seating is the best because you can always put people of different group sizes here and there, but we want to have lots of groups or families come together and enjoy not only our food service but also the time that they spend together.

Ippudo is your most renowned restaurant. It’s famous for its iconic offerings, like Shiromaru, Akamaru, and the spicy Karaka. How are you further tailoring their offerings at Ippudo, and are there any new products you can tell us about?

As I mentioned a bit earlier, we probably have a few hundred different recipes for ramen. If you name an ingredient, we have or can come up with a ramen for that.

At the moment, we’re doing a small project on the side that we call regional revitalization through ramen, where we work with, for example, a sake manufacturer in Akita prefecture. As a bit of background, the city of Oga has a population of 25,000, with 48% of the people over 65 years old, and many people are leaving the city because there are no jobs. The economy is declining, and pretty soon, if we do nothing about that, the city will diminish or even cease to exist. This is a typical situation in many places in Japan, with the population aging and shrinking, causing young people to leave their hometowns because there are no more jobs.

There’s a group of people who have built a sake manufacturing facility in Oga, and they’re trying to revitalize the local economy. With sake production alone, the amount of employment and reach is limited. The group approached us, saying in every city or town in Japan, there should be a ramen shop, but they don’t have one in Oga, so they asked us if we could do something about it. From a corporate point of view, the market is too small to open an Ippudo, but if they are willing to own it and run it themselves, we can come up with a product for them, and we can advise them on how to open and operate it, and that’s what we did. We helped them create a ramen shop called Ogaya. They don’t actually serve our signature tonkotsu-style ramen at all. They use chicken-based ramen, use local ingredients, have local workers, and cater to local customers. It’s gotten so famous that a lot of tourists go there just for that.

We have about ten projects running all over Japan at the moment, so what I wanted to mention was that we can do any product. We even significantly revised the recipes for our Shiromaru, Akamaru, and Karaka flavors last year. Common wisdom says you don’t change something that works, but one of our guiding principles is to continue changing to remain unchanged. That comes from a Zen Buddhist teaching that there are things in the world that remain permanent, but the surface of everything is ephemeral. It constantly changes, whether you like it or not, and what doesn’t change for us is no matter what we do or where we are, we will continue to create new value for the customers. In order to continue to do that, we need always to change ourselves. If we’re in New York, we need to adapt to the New York way. If we’re in Singapore, we need to adapt to the Singapore way. Even in Japan, customers’ taste preferences are changing constantly, so we need to reinvent ourselves continuously. Thus, to your point, we will continue to change ourselves and try to improve even our signature products because we’re not afraid at all to change our products as long as we continue to create value for our customers.

It’s interesting you mentioned the regional revitalization project at that ramen restaurant in Oga. Is that something you are considering replicating on an international level?

Our priority as a company is to open more and more company-owned stores, and maybe secondarily, we want to open more stores through our partners in whatever regions, so we want to open more restaurants. That’s our number one priority. Having said that, there could be opportunities where it doesn’t make that much sense for us to open our own restaurant, but somebody else wants to do it, and then we can help.

I was in Arkansas two weeks ago, in the US. We have a presence in New York and a presence in the Bay Area, and Los Angeles, so Arkansas was not the first location on my priority list. There is a ramen owner who has two restaurants in the small town of Bentonville, and his original inspiration was actually Ippudo. This person is from Indonesia, and he visited an Ippudo in Japan, got inspired, and then opened a ramen restaurant in Arkansas. On one hand, it could be seen as competition from a business point of view. On the other hand, we welcome the spread of ramen food culture because we can compete on quality and service differentiation.

On the topic of partnerships, Yo-Kai Express and Japanese frozen food producer TableMark are two key partnerships you made recently to market new ramen and udon options for Yo-Kai’s autonomous restaurant platform. You also acquired Inaba Udon in 2016. Could you tell us about your strategies for future partnerships and what a partner of choice looks like?

Our first choice partner would be one that can help spread Ippudo around the world in the restaurant format. We currently have local operators or partners in countries like Thailand, Vietnam, the Philippines, Australia, and others. Those are our priority partners. Having said that, just as the demographics are changing rapidly in Japan, the world is seeing such a fast pace of technological innovation, and people’s eating habits are changing. I think we need to keep up with that pace. Things like Yo-Kai Express are good in key locations, like transit terminal locations, airports, or highway rest areas. They can be useful even in offices where people don’t have the time or the luxury to go outside to have a meal.

So, to answer your question, there could be a few different types of partners. First and foremost, we need partners who can help us spread Ippudo and ramen throughout the world. Second, there are some partners who are on the cutting edge of technology, who may be a few steps ahead of the rest of the market in trying to catch food and beverage trends. Yo-Kai is one of those. The third category, whether it’s through mergers and acquisitions or through pure partnerships, is about other types of food since Japanese cuisine is not only about ramen.

Whatever type of partner, if we see potential value in them joining us or in us partnering with them to spread Japanese food and if we can make a sound business case, we will consider it.

Ippudo has 100 restaurants across the world. Where can we expect to see new restaurants?

Everywhere. We have a good presence in Southeast Asia, except in countries like Brunei, Laos, and Cambodia. I’m waiting for those markets to grow steadily. There are some areas in the world where either the economic or geopolitical situations are hampering our growth, at least temporarily. In the US, as I mentioned, we’re only present on the East Coast and West Coast, so there’s still a huge market opportunity there. In Europe, we are present in the UK and France, and we are preparing for openings in Barcelona and Germany. Africa and India are further down the road, perhaps.

When opening all these shops, do you try to ensure the same flavor of authentic Japanese ramen?

Absolutely. We wouldn’t do it if we didn’t have the confidence to do it right. The New York Times actually had a headline when we opened in Manhattan. It was “a trip to Japan at $13.” That was the price of Shiromaru back then, though it’s a bit more now. Thankfully, they characterized a visit to Ippudo in Manhattan as being like a trip to Japan, so that’s a testament to authenticity, not just for the product but also for the ambiance and service. So, yes, if we weren’t confident that we could provide 100% authenticity, we wouldn’t do it.

Your first shop in New York opened in 2008. How has that developed since then?

Manhattan is a fiercely competitive market, but we’ve been there for 16 years, so that says something. There were many ramen and Japanese restaurant players before we entered the market, and since then, there have been even more. In a way, we sort of paved the way for other players to come in because they felt a bit more confident since we priced it at $13 in the beginning, whereas in Japan, it was half that price, so a lot of other players felt confident charging about the same price as we did. We also provide a strong supply chain there because we normally buy a lot of things locally. There is very little that we have to import from Japan, so we created the infrastructure for ramen restaurants in New York and, thereafter, in places like Singapore, Paris, and Sydney.

In sixteen years, a lot of things have happened. Customers are whimsical or capricious. They like to try whatever new concept is entering the market, so we try to reinvent ourselves continuously. In that way, customers don’t tire of us.

What can we expect for the future? What is your midterm strategy to continue your corporate growth?

The big policy hasn’t changed. We will continue with our international expansion. We will try to accelerate it because if we expand at the same pace as in previous years or before the pandemic, then we are not doing our jobs correctly. And what we need to accelerate our growth is people. As I mentioned, our value creation is through interaction with our customers. That’s the only point in time and place that the value is really created, so we need to get more people on board and join our philosophy, our love of Japanese food, and our enjoyment in delivering that value to our customers.

Of course, we need to train and retain those people, and we’re doing a lot of things to accomplish that. The wages in Japan have been steadily decreasing relative to the rest of the world, but we have increased our base salary plus bonuses for the employees in Japan by 14% the previous year compared to 3% or 4% for other companies. Our turnover rate is less than half the industry average at 11%, as opposed to 26% to 27%. We will also have a few dozen new graduates joining in April of next year. So, whatever we want to do on the business front, it’s always backed up and made possible by our people. That’s why we need to put more and more effort into getting more of what we call nakama, which is like a colleague, friend, or fellow group member; people who share a connection.

You are celebrating your 39th anniversary this year, so let’s imagine that we will come back next year  to interview you again for your 40th anniversary. What dreams and goals do you have for Ippudo , and how would you like to be seen through the eyes of the consumer worldwide?

Enjoy the limitless possibilities of ramen and Japanese cuisine with us. We are an authentic Japanese company, and we are continuously trying to find new possibilities. It’s not just the food. It’s also about the atmosphere and the service, and if you have a chance, whether you’re in Manhattan, Sydney, Paris, Shanghai, or Singapore, come to taste Japan with us.

For more information, please visit their website at: https://www.chikaranomoto.com/