Yoshinoya: Japan’s Number One Beef Bowl Since 1899

Japan's food-related exports have increased for 11 consecutive years, reaching 1.45 trillion yen through 2023, fueled by the growth of Japanese restaurants from 55,000 in 2013 to over 200,000 today and their growing popularity overseas. As president of Yoshinoya Holdings, how do you explain this significant increase in Japanese food exports? Why is now the time for Japanese food to shine internationally?

There are multiple reasons why Japanese food is gaining popularity. First, Japanese food was recognized as a UNESCO Intangible Heritage Site in 2013, shining a light on the concept of Japanese food. However, I honestly believe that the most important factor is the explosion of anime culture thanks to Netflix and Amazon, which has made this entertainment more accessible to the world. People who see a scene involving food will want to try that food for themselves. When I was a child, I remember watching the cartoon Doraemon and thinking, "What is a dorayaki?" I remember thinking. It was Doraemon's favorite food, and I wanted to try it. Kinnikuman, another anime, had a scene of "gyudon" (beef bowl). More recently, "Naruto" has a ramen shop where the characters go to eat delicious ramen. All of these shows have triggered an emotional connection with Japanese food, which is a major component of this love affair with Japanese food.

Looking overseas, the number of Japanese restaurants is growing, but the majority of them are not run by Japanese people. Most are run by Chinese or Koreans. In a sense, the company has done a great job in increasing the number of Japanese restaurants and establishing the Japanese food business format.

Hanamura Udon Noodles

The Japanese government is now pursuing its target of JPY 5 trillion in exports by 2030. Sushi and ramen tend to be Westerners' two favorite foods. Do you think this target is achievable by 2030? To reach that target, new foods and dishes will need to be introduced to Western audiences. Which particular dishes do you see as the ones with the most potential to penetrate Western markets? 

I am not in a position to comment on the government's move, but speaking personally, it seems that the government wants to export more high-end foods such as wagyu beef, scallops, and abalone. Our business is more in the area of providing reasonably priced food prepared with less expensive ingredients; Yoshinoya Co. provides beef bowls and Hanamaru Co. provides udon noodles. The ingredients for these dishes are rice and wheat flour, and I feel that Japan is weak in international competitiveness in these two staple foods. This is all I can tell you from my perspective.

As to your question about dishes that are likely to penetrate Western markets, our company operates more than 1,000 stores overseas. However, I think sushi is more likely to penetrate Western markets than hamburgers or beef bowls because sushi looks healthier.

Japan is famous for its mottainai attitude, which refers to waste, not wanting, and not wanting. Food producers can reduce packaging, but as a restauranter, perhaps there are other ways of creating a circular economy, such as upcycling ingredients. Could you tell us about any examples of circular economies within your business in order to ensure food loss is reduced in your operations?

Both Yoshinoya and Hanamaru operate in a style that produces very little food loss compared to other restaurant brands. Yoshinoya cooks and serves raw meat in the restaurant, so inventory expiration date loss is very low. In addition, dishes are washable rather than disposable, and packaging is kept to a minimum. The factory processes vegetables, but the vegetable parts are transported to a nearby zoo to feed the animals. Vegetables that the animals cannot eat, such as onions, are ground into powder using a special machine and transformed into another product.

If you have ever had a beef bowl, you will know that our product is made from a fatty part called "belly," but you may not feel much fat. The reason why you do not feel the fat is because our chefs constantly remove the fat from the surface of the beef bowl many times during the cooking process. This fat is reborn as a raw material for soap. Recycling is not a recent phenomenon. For the past 20 years, companies have been trying to reuse food residues by turning them into feed and fertilizer. However, farmers and livestock producers have not tried to use these recycled residues as feed or fertilizer. This is because the purpose of farmers and livestock producers using feed and fertilizers was to increase production and improve quality, not to recycle. Therefore, before starting a project, Yoshinoya tries to visualize the results with the users in mind.

Yoshinoya’s model is very labor intensive, and as you mentioned, just overseas alone, you are operating over 1,000 stores. In Japan specifically, there is a labor crisis with the aging and declining population, and unfortunately, you are in a field that is going to get hit first by this crisis. On the other hand, we are seeing that this situation has created an interesting ecosystem for companies to try and offer service robots. How are you mitigating the impact of the decreasing demography and shrinking labor? Can you tell us a bit more about how you are utilizing digital technologies to overcome these labor challenges? 

The decline in the workforce due to a shrinking population is the biggest problem facing the food service industry. In Asia, Japan is ahead of other Asian countries in terms of declining birthrate and aging population, and the same will happen in China and European countries in the near future. This is a series of small measures with no absolute solution. We are trying to develop various labor-saving technologies, but we do not intend to mechanize everything. One of our key philosophies is to let humans do the work that only humans can do. Right now, many companies are still having humans do the work that machines cannot do, but in my opinion, this is the opposite of what should be done; we believe that humans should do the work that can provide value. Where humans cannot create value, robots should do it. The majority of restaurant chains use a central kitchen system, where food is prepared in a factory, and each ingredient is assembled and heated in the store. Yoshinoya excels in that it prepares food in its kitchens at all of its 2,200 stores, including those overseas, and it does so from raw meat and onions, an extremely complex and burdensome operation. Compared to other global restaurant chains, we are the only one that bears this burden.

We insist on in-store cooking because we strongly believe that there is high added value in the cooking part and that this added value is created by people. We believe that it is very important for both ourselves and our customers to have people cooking in the restaurant. For this reason, we train every day to improve our cooking and service skills. Every year, Yoshinoya holds a beef bowl technique competition, and the winner receives an unprecedented prize of 5 million Japanese yen. This is a testament to how much Yoshinoya values its people. All of us, including employees and part-time workers, who hone our skills every day, believe that the beef bowls we make are the best in the world.

At first glance, it may seem labor intensive, but our value is in the cooking procedures that can only be done by humans. Furthermore, we feel that it is important that the service that greets and deals with customers is also human. This is not to say that we are in any way rejecting robots, but there are areas that can be replaced by robots. For example, there is the free green tea that we always offer to customers in our restaurants. The customer may be grateful to the employee who served the green tea but may not think about the person who washed the glass or wiped the table before serving the tea. We believe that this kind of role supports the store behind the scenes, where robots can play an active role. We have an in-house R&D team that develops unique solutions to replace human labor with robots when necessary.

Inside a Yoshinoya restaurant

You mentioned cooking in the kitchen, and this is clearly part of Yoshinoya's new strategy to convert existing stores into what it calls C&C stores which is short for Cooking and Comfort How exactly do you define C&C, and why is it important to convert them into stores that offer a C&C experience? How exactly do you define C&C and why is it important to retrofit stores to provide a C&C experience?

When I took over the management of Yoshinoya, the biggest challenge was to grow the company. 2003 saw the outbreak of Bovine Spongiform Encephalopathy (BSE). We made the difficult decision to stop selling beef bowls because we could not offer the Yoshinoya taste without U.S. beef. As a result, our growth potential slowed. In order to grow the company, we decided to analyze our customers first and conducted a survey, which revealed that 90% of our customers are male, making us a male-dominated brand. Thanks to this, the company has often been featured in the media on various occasions, but at the time, the images were all of male office workers eating beef bowls. With an unstoppably aging population, our first strategy was to expand our client portfolio.

However, the road to actually achieving this was not easy. For female customers and family customers who had not yet visited Yoshinoya, simply changing the menu was not enough; they needed to be noticed and encouraged to visit the restaurant. The entry barrier to visiting a restaurant they had never been to before was quite high, so a step-by-step approach was necessary. Since I became president, all of our TV commercials have shown us serving customers at tables rather than at the counter. Also, instead of showing only the beef bowl, we try to show other menu items along with spoons, forks, and chopsticks; C&C is the final result of our efforts from the past.

Traditionally, lunch for middle-aged and older men has been seen as a meal to fill one's stomach. Therefore, we were able to meet their needs by offering easy and tasty beef bowls at reasonable prices. In order to increase the number of women and family customers, it is important to create an environment that encourages them to stay longer while chatting. Yoshinoya has been a full-service restaurant, which is unusual for a fast food restaurant. Full service means that customers do not have to move once they are seated, and employees move to handle all aspects of the service, such as serving products and accounting. In Japan, newspapers and other media conduct customer satisfaction surveys, and Mos Burger and Starbucks were ranked number one. Interestingly, in those restaurants and cafes, the staff is not running around to serve the customers, but the customers are moving to place their orders and bring the items to their seats by themselves. Therefore, we decided to offer a space design that would suit the customers' preferences instead of abandoning the full service. Basically, instead of a counter, C&C added more table space so that customers could enjoy their own time.

Aging staff is an issue these days; a staff in their 20s can run around, but a staff in their 50s can't make the same moves. Another reason we moved to C&C is also to secure the aforementioned staff. Thirty years ago, when I worked at a Yoshinoya restaurant, a beef bowl was served to customers in 30 seconds during the peak lunch hour. Therefore, if the serving time took one or two minutes, customers were irritated. Thus, customers used to have high expectations for the speed of Yoshinoya's service. Nowadays, customers have smartphones so that they can wait painlessly for about five minutes. If they can afford the serving time, they can use that time to make more delicious food in the restaurant, develop valuable products, and realize the C&C concept. Ten years ago, the ratio was 90% male and 10% female, but after the C&C concept was introduced, it became 70% male and 30% female. It took 10 years to get to this point. Since I became president, C&C has been the final result. Another achievement was the development of fried food products, which were so well received by customers that we expanded beyond the C&C concept and now offer them at more than 900 restaurants, including non-C&C restaurants. The company is now the number one restaurant chain in terms of karaage sales. When one thinks of karaage, one might think of KFC, but KFC's fried chicken is prepared in a rather Western style, while karaage is prepared in a Japanese style. In the broad sense of the word, Yoshinoya’s fried chicken is inferior to KFC's at the moment, but I hope to overtake KFC's sales in the field of fried chicken someday.

Can you tell us a little about your international strategy? Which countries or regions do you see as having the most potential moving forward?

In the history of the Japanese restaurant industry, we were the first to expand overseas, In fact, we did not even have a plan to open stores in the United States. At first, we set up a trading company to import U.S. beef to Japan. At the time, the Japanese government had not liberalized the import of U.S. beef. Although the company was established in the U.S., it was unable to fulfill its trading function and opened stores to consume the beef it procured, which was the first overseas store in the U.S. Currently, the company has 100 stores in California and the country with the largest number of stores overseas is China. Most of the stores in China are franchised, but the development in China began when the current Chinese franchise owner while studying at UCLA, fell in love with Yoshinoya's beef bowl when he visited one of the LA stores.

Regarding overseas management policy, since I became president 10 years ago, my approach has been to basically not make all decisions in Tokyo but to decide local matters locally. For franchisees, as long as the Yoshinoya brand and the beef bowl recipe are maintained, they are allowed to decide everything else freely. This is why each country develops products tailored to the local people.

When looking at international store openings we saw a recent emphasis on ramen. In 2007, you expanded into ramen with the purchase of Bikkuri Ramen, which had over 100 stores at the time, but then exited the business a couple of years later due to difficulties. You tried again in 2016 with Withlink, a key part of your international expansion. Firstly, why bet on ramen for overseas expansion? Secondly, what do you think has changed since 2007, when you were unsuccessful with Bikkuri Ramen? What makes you think you will be successful now?

Although the acquisition of Bikkuri Ramen was not a success as a result, we view it as a positive experience of failure. We decided to give ramen another shot because we believe that after sushi, ramen will become the next most popular Japanese food. Sushi still sees local adaptations today, and ramen is heading in exactly the same direction. This global partnership represents a great business opportunity.

Our group tried to enter the sushi restaurant business 20 years ago, but we were not successful due to various factors. One of those factors was the huge investment per restaurant. In the past, we also entered the steak restaurant business, which unfortunately also failed. Hanamaru Udon, on the other hand, has been very successful. What we have learned from this is that there is a correlation between the amount of investment required per store and the success of the model. We believe that the more investment per store and the price point of the product, the more successful the model will be. The average Hanamaru Udon restaurant is 150 meters square, with an average investment of 60-70 million yen. Thanks to our experience and know-how, we know which areas are best and which areas are most adaptable to boost sales. For future M&A strategies, we would like to find based on the metric of size vs. store investment. As a beef bowl and udon brand, we would like to promote the delicious taste of beef bowls and udon overseas, but with the growing popularity of ramen, we intend to strengthen ramen in our overseas expansion.

Regarding the M&A of WithLink, while its technological intervention is not as high as that of Yoshinoya, it excels in reproducing the taste. The fact that it is able to provide the same quality as in Japan, even overseas, where training time is limited, and attention to detail is difficult, will be an advantage in overseas expansion. WithLink plans to expand into Scotland this year, and we intend to expand the number of overseas restaurants in the future aggressively.

What ambitions or objectives do you want to achieve as the President of the Yoshinoya Group? What do you want your legacy to be by the time you hand the baton onto the next generation of Yoshinoya executives?

The history of Yoshinoya is a culmination of innovations, and the founder is the creator of the beef bowl in Japanese food culture. Although he was not the first person in history to create the first beef bowl, he is certainly the one who invented the modern recipe incorporating onions, beef, and the characteristic sauce. Yoshinoya's success over the decades was also due to his development of cooking utensils and kitchen layouts. The founder was a man of eccentric ideas, even for his time. He was the first to introduce the concept of "24-hour operation," which is not uncommon today. Other concepts, such as the drive-through and in-store children's play areas, were also conceived by the founder and are now commonplace throughout the world. Yoshinoya has traditionally been a pioneering company. We have inherited a history of innovation and important business lessons from our predecessors. It is important for me, the current generation, to carry on this spirit and push forward innovation with the group. I believe that by doing so, we can change the world. My own legacy is not my top priority. Rather, I want Yoshinoya's history and experience to be remembered as a history of continuous innovation.

For more information, visit their website at:  https://www.yoshinoya-holdings.com/