NEW YORK – A handful of U.S. casual dining chains are planning to move into the Japanese market, counting on not just the domestic base of customers but also a rising number of foreign visitors in the run-up to the 2020 Tokyo Olympics.
Menus offered by these “fine casual” restaurants are pricier than conventional fast food chains. But teaming up with local partners, the prospective entrants reckon they can capture a slice of the Japanese market at a time when the economy appears to be emerging from the shackles of deflation and consumers are developing a taste for more authentic culinary experiences.
The food service market is one of the solid growth areas of the economy, weathering the impact of the consumption tax hike in April last year. Per-diner spending in Japan increased 2.9 percent in 2014 from a year earlier, excluding the tax increase, according to the Japan Food Service Association.
Operating mainly in California, 800 Degrees Neapolitan Pizzeria plans to open its first overseas restaurant in Japan next spring.
It will be located within Lumine Co.’s new shopping complex opening at the New South Exit area of Shinjuku Station, which Lumine says handles roughly 3.6 million arriving and departing passengers every day.
In the United States, 800 Degrees Neapolitan Pizzeria offers customers add-ons of their choice from among some 40 varieties of hams, tomatoes and other ingredients for their pizzas before they are baked.
Lumine, a unit of East Japan Railway Co. that operates shopping centers at major stations in the greater Tokyo area, spotted the pizzeria’s increasing presence in the United States and signed an exclusive contract to develop a franchise in Japan.
No specifics have been worked out yet for its menu in Japan, according to a Lumine official. At a downtown Los Angeles shop, a classic Margherita pizza with Italian sausage, peppadews and caramelized onions goes for $9.85, which comes to ¥1,180 at the exchange rate of ¥120 per dollar.
The Lumine official said the first shop will just be the start and that several are planned.
Shake Shack Inc., a chain that grew out of a roadside burger stand in New York, is also setting up a shop in Tokyo in 2016. Known for “all natural” beef and fresh vegetables, its Manhattan outlets draw long lines of customers. In Tokyo, it is planning to offer its signature ShackBurger and Shack-cago Dog as well as shakes, beer and wine.
Menu items at Shake Shack are priced slightly higher than those of major competitors in the market. A regular-size ShackBurger goes for $5.19 in Manhattan and a Shack-cago Dog sells for $4.
“Shake Shack already feels iconic New York, even though it’s barely a decade old. I think their approach is one of a high quality, less rushed fast food,” said Rachel Graves, a 29-year-old diner from New York. “The price difference of $2 to $4 is completely worth it for fresher food and an environment that feels less cookie cutter than mass fast food chains.”
The eatery chain went public on the New York Stock Exchange in January. Including its entry into Japan, the company is planning to expand globally as it grows from 63 outlets at the end of last year.
These U.S. companies announced their plans to land in Japan at a time when McDonald’s Holdings Co. (Japan), the biggest restaurant chain in the country, is struggling with food scandals — expired chicken sourced from China and plastic fragments found in products — that have dented customer confidence.
Its same-store sales in March dropped 29.3 percent from a year earlier, falling for the 14th consecutive month.
In Japan, Shake Shack has partnered with Sazaby League Ltd., which runs restaurant and fashion outlets. “We are truly excited about being able to introduce Shake Shake to the Japanese market,” Sazaby League director Ryota Tsunoda said.
Shake Shack said the company is planning to open a total of 10 shops by 2020, the year Japan will host the Tokyo Olympics.
Making a re-entry into Japan is Taco Bell Corp., a U.S. chain offering Mexican food such as tacos and burritos.
The first restaurant is opening in Tokyo’s Shibuya Ward on April 21, which will be followed by a string of others, according to the company. In New York, a typical taco dish costs $2.29, while a shredded chicken burrito retails for $3.39.
Taco Bell had set up shop in Japan in the 1980s but later pulled out except for U.S. military base locations, against the backdrop of comparatively little consumer interest in Mexican food.
Asra Port Dining Co., a Japanese food-servicing company that has teamed up with Taco Bell, will serve Japan-only menu items such as a Shrimp & Avocado Burrito and Taco Rice. A company official expressed confidence about the prospect of reviving the brand in Japan, noting renewed consumer interest in new foreign foods.
U.S. coffee chain Starbucks Corp., meanwhile, is considering starting its tea specialty shop Teavana in Japan following its launch in the United States.
The entries of these new players may revamp the landscape of the foreign food service market in Japan, which has so far been marked by the dominance of major eatery chains such as McDonald’s and Kentucky Fried Chicken.