Takuo Sato, president and COO of Japanese major restaurant chain operator Skylark Holdings Co., expressed concern in a recent interview with The Yomiuri Shimbun that chains providing everyday meals would be "significantly affected" by a decline in dine-in demand resulting from the consumption tax cut on food.
The Japanese government plans to reduce the consumption tax rate on food from 8% to 1%, excluding food for dining out, for two years from April next year.
Sato, who assumed the presidency on March 27, also revealed plans to open stores specializing in takeout and delivery, as a strategy to strengthen the ready-made meal sector, where demand is expected to rise.
The following is excerpted from the interview.
The Yomiuri Shimbun: What areas do you plan to focus on as president?
Takuo Sato: In recent years, we've been focusing on investing in our employees. We are boosting productivity in various ways such as by enhancing their skills so they can quickly prepare high-quality meals. In addition, we aim to raise the standard of our store operations through training, which will lead to customers having an improved experience.
In terms of developing our workforce, a comfortable work environment is also crucial, and we need to enable employees to work in a way that fits their lifestyle. There is a need for a system that allows employees to take work leave that accommodates individual lifestyles, and we want to move forward with measures including establishing systems that ensure a smooth handover of duties when employees take time off.
We have also started training sessions specifically for foreign employees. Communication among foreign staff is expanding, and we want to create an environment where they can play an active role.
Yomiuri: The restaurant industry is facing headwinds due to price hikes and other factors. What can be done to prevent customers from leaving?
Sato: We have multiple restaurant chains, and it's important for each one to attract loyal fans who become regular customers. The thought of, "I'm going there because I want to eat this (specific meals)," is a strong motivator for attracting customers. We also need to develop items on the menu that serve as strong runners-up to our flagship products.
Yomiuri: Purchasing prices are rising due to the weak yen and soaring raw material costs. What measures are you taking regarding raw material costs?
Sato: We are working on a "cost reduction project." While we have been reducing food waste and making other efforts, the recent yen depreciation, among other factors, means we need to take cost reduction to the next level. We want to leverage our strength in having our own supply chain to standardize wherever possible.
Yomiuri: Next April, the consumption tax on food will likely be reduced, creating headwinds for the restaurant industry due to the tax rate differential. How do you plan to respond?
Sato: I believe the consumption tax cut on food will have a certain economic impact, but the restaurant industry -- which is not covered by the cut -- will likely be significantly affected, particularly businesses that provide everyday meals. Our strategy involves addressing the demand for ready-made meals, and we have already begun initiatives in that direction.
The Gusto (restaurant chain) is exploring facilities dedicated solely to preparing meals for takeout and delivery in regions where demand for preprepared meals is expected to grow. Developing products unique to delivery and takeout -- items not found on our in-store menus -- is also a key focus.
Yomiuri: How do you plan to increase your business performance through mergers and acquisitions (M&A), an area you've been focusing on in recent years?
Sato: Sukesan Udon and Shinpachi Shokudo, which we acquired through M&A, are strong restaurant chains that attract customers, and we've made a good start toward expanding our store network horizontally. At Skylark's central kitchens nationwide, we're already seeing synergies from these acquisitions in terms of food supply. If we identify other partnerships where similar synergies can be realized, we intend to actively pursue them.
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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.
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