In Los Angeles last December, Morio Sase had a bout of nerves. What had made him think he could persuade Americans to cast off their culinary prejudices and warm to something with as great an “ick factor” as octopus?

“I worried whether Americans could eat octopus, but ‘takoyaki’ sales at a special event proved they love it,” said Sase, founder and president of HotLand Corp., which operates about 300 Tsukiji Gindaco takoyaki outlets across Japan and 11 in other parts of Asia. “I was relieved and I felt I could make it.”

He said customers at the weeklong event stood in line for up to two hours to try his company’s product. They sold some 500 packages a day and had to close the event two days early after running out of ingredients to make the takoyaki octopus dumplings.

The octopus, diced and mixed with pickled ginger and green onion into battered balls, is fried in a special pan, then finished off with a drizzling of mayonnaise and a sprinkling of shaved dried bonito and green laver.

“Gindaco grew to become the No. 1 brand here and it’s time for us to open the first one in the U.S.,” Sase said of the company’s planned entry there later this year. The firm aims to have 20 stores in California by 2010. It already has outlets in Hong Kong, Taiwan, South Korea and Thailand.

The 44-year-old president’s confidence is backed by the recent trend in the U.S. toward healthy Japanese food, including sushi, sashimi and tofu.

The company has been in the black since opening for business in 1997. Sales have grown steadily from 84 million yen in the initial year, when the company had only two stores, to 15 billion yen in the business year to December 2006.

Sase’s interest in food, and takoyaki in particular, began when he was in his 20s. After graduating from Tokyo YMCA College of Hotel Management in 1983, he landed a job at a small restaurant in the hope of learning how to run a business. But he ended up drifting from one job to another.

Then, when he was 25, America — in the form of McDonald’s and Mister Donut — came to his hometown in Gunma Prefecture, and suddenly it seemed everyone was standing around with hamburgers and colas in their hands.

“It was an unimaginable scene at that time,” Sase recalled. “These stores were a window on America. Food represented American culture. Since then, I’ve started to dream about opening a Japanese food chain in the U.S., hoping to become a window on Japan.”

Two years later, he sold his car and opened the first store in Gunma to sell fried noodles and “onigiri” rice balls. But sales were slow.

In 1991, with 10 million yen in capital, he set up HotLand Corp. The company sold ice cream in Yokohama’s Chinatown, “okonomiyaki” Japanese-style pancakes at shopping malls and other food items at highway rest stops.

To boost sales, Sase tried expanding the product line, but few items stayed popular, except for takoyaki, which sold regardless of time or season. The process of making takoyaki is also fun to watch, he said.

Determined to make the best takoyaki product, he researched and studied for two years, trying various takoyaki in Osaka, home to more than 1,000 takoyaki eateries. He also made a pilgrimage to Tokyo’s Tsukiji fish market to learn all he could about octopus.

In 1997, Sase finally opened the first Gindaco store in Gunma Prefecture. No competitor, Sase claims, can imitate his takoyaki, which are crispy on the outside and thick and soft on the inside.

Word of mouth drove sales, and the takoyaki’s popularity spread, especially in the Kanto region. When a Gindaco opened in Nakano Ward in 1998, just the second in Tokyo’s 23 wards, the line of customers stretched 100 meters long.

However, as with many other entrepreneurs, times were not always good.

When the number of Gindaco outlets topped 200 in Japan in 2000, Sase opened a chain of “izakaya” Japanese-style pubs in an effort to expand his business portfolio and boost the company’s sales. But after years of sluggish sales, the company was forced to close its eight outlets in the Tokyo metropolitan area in 2005.

Sase learned from failure.

“I was just arrogant. I failed these businesses,” he said. “Employees thought that I was just doing new businesses as a hobby. They didn’t take it seriously.”

He re-shifted focus on the core business to further develop its own characteristics, he said.

“When I went to the U.S. for the special event, I realized that Gindaco is a company with its own characteristic takoyaki,” Sase said. “Why couldn’t I value and keep it? Small stores, takeout services, a Japanese atmosphere, and having a presence at shopping centers where many young families eat takoyaki with toothpicks — these are all our strong suits.

“I realized after I did the special event in Los Angeles how important it is for a company to focus on its main business and develop its own style.”

Now, Sase is confident takoyaki can have international appeal.

“After I opened stores outside Japan, I realized that takoyaki is something that makes people feel warm inside. People who live in foreign countries told me they felt relieved to find takoyaki,” he said.

In this occasional series, we interview entrepreneurs whose spirit perhaps holds the key to a more competitive Japan.

Key events in Morio Sase’s life

1962 — Born in Kiryu, Gunma Prefecture, to a family of iron workers.

1983 — Graduated from Tokyo YMCA College of Hotel Management.

1989 — Opened a store selling fried noodles and rice balls in Gunma.

1991 — Established HotLand Corp.

1997 — Opened first Gindaco store in Gunma.

2000 — Opened a chain of “izakaya” (Japanese-style pubs) in the Tokyo metropolitan area.

2004 — Opened Gindaco’s first overseas store in Hong Kong.

2005 — Withdrew from the izakaya business.

2007 — Preparing to open first Gindaco in the United States.

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