Reference | FYI

CORNER-STORE CONVENIENCES

Eat-in areas on the rise in Japan’s convenience stores and supermarkets

by Tomohiro Osaki

Staff Writer

In the quest for next-level service, convenience stores and supermarkets are increasingly keen to experiment with “eat-in” lounge areas.

Some are even setting up adjacent cafes where the same clerks who handle convenience store customers also serve coffee and cake. Eat-in areas allow customers to consume their purchases without leaving the premises.

Here is a look into the recent boom of eat-in areas and how convenience stores and supermarkets are tapping into their potential:

Is the number of eat-in areas on the rise?

Yes. Most major convenience store operators — Seven Eleven, Lawson, FamilyMart and Circle K Sunkus — said they have increased their number of eat-in spaces over the years.

FamilyMart, for example, said it has “strategically” increased eat-in areas, boosting their number more than fivefold from 580 in February 2013 to the current 3,200, in response to their popularity among customers, spokeswoman Akiko Tsuse said.

Circle K said that of the current 300 outlets with eat-in spaces, 100 were established over the past year, according to spokesman Naoto Shinozaki.

Seven Eleven and Lawson said they don’t keep a tally, but that they are in line with the current upward trend.

Ministop has eat-in space in almost all its outlets, unless local regulations and other conditions preclude their presence.

What’s driving the increase?

Most convenience stores said the increase reflects a diversification of consumer demand.

Circle K spokesman Shinozaki, for one, cited a gradual change in his firm’s customer base. They now see more female and elderly customers, as opposed to middle-aged businessmen, who previously accounted for an overwhelming majority of their patrons.

Shinozaki said female customers, for example, would rather sit and eat an onigiri rice ball, as opposed to eating while walking. The eat-in spaces, he said, come in handy for such people.

Elderly customers appreciate in-house eating areas because it affords them a place to rest before returning home, he said.

What can customers do at eat-in areas?

Convenience stores and supermarkets are exploring their potential.

The Circle K group, for example, runs 13 K’s Cafe establishments, many of which are located next to their stores nationwide, Shinozaki said. They aim to accommodate customers in a manner fundamentally different from eat-in areas, which cater primarily to customers in need of space for a quick meal. K’s Cafe, he said, offers a more leisurely break.

The cafes sport elaborate interior designs featuring “Japanese-style modernity” in a bid to carve out a following among women in their 30s and 40s, he said.

Similarly, Ministop customers can use eat-in areas not only to consume what they purchased but to socialize, spokesman Kimikazu Sugawara said.

Midsize supermarket chain Inageya Co. said it also wants to stand out from its rivals by creating “a hub of communication” in areas around their shops, according to spokesman Takuya Okuda.

Inageya has introduced high-quality sofas, tables and chairs in many of its lounges to make customers feel more at home, while in some FamilyMart outlets customers can recharge their smartphones.

Going a step further, FamilyMart announced last month that the eat-in space at its new outlet in the Osaka city of Suita will be open to performances by professional stand-up comedians.

The firm said this is part of its collaboration with a local merchants’ association to lure more people to the area and reinvigorate local businesses.

Are convenience stores planning to increase eat-in space?

FamilyMart said it plans to further increase such spaces from the current 3,200 to 6,000 nationwide by the end of February 2018. Although Circle K has no set target, it too may introduce them into more of its outlets.

Seven Eleven, meanwhile, is more cautious, saying it will weigh customer demand and floor space in each outlet before deciding, spokesman Katsuhiko Shimizu said. Lawson has no plans as of yet.

Will the consumption tax rise in April 2017 affect eat-in areas?

The ruling Liberal Democratic Party and its junior partner Komeito agreed in the tax reform outline released earlier this month for the next fiscal year to keep “foods in general” levied at the current 8 percent rate, to mitigate the financial blow to households of the overall sales tax hike to 10 percent in 2017.

The ruling coalition, however, made an exception: the 8 percent tax rate will not apply to “foods served in eating establishments.”

The tax rate for food consumed in eat-in areas will vary depending on packaging, possibly creating confusion among both consumers and retailers.

Bento boxed lunches and other packaged foods that can be brought home will continue to be subject to the 8 percent rate. These disposable products will be considered as being merely “sold” by convenience stores, and therefore categorized as “foods in general.”

If meals are served on plates that must be returned, they will be levied at 10 percent, based on the premise that they are “provided” by stores and thus regarded as “foods served in eating establishments,” according to the outline.