Hamazushi & Kurazushi Doing Well, Kappa & Sushiro Struggling… What is the “One Strategy” that Divides the Conveyor-belt Sushi Industry?

The conveyor-belt sushi chain is said to be the winner of the COVID-19 crisis among restaurant chains. This is due to the fact that they are equipped with contactless service systems such as revolving lanes and touch-panel ordering systems, which have given them an advantage.

However, the performance of each chain varies greatly in terms of how well it does or does not perform. In order to compare which chains have increased their sales due to the COVID-19 crisis, we compared the same-store sales of the four major chains in 2022 with those in 2019, the year before the COVID-19 crisis occurred, and found some interesting results.

The above is the result of multiplying each company’s announced comparable store sales YoY by the previous year’s comparable store sales YoY ratio to calculate the actual comparable store sales vs. 2019.

Kura Sushi and Hama Sushi, which increased same-store sales from before the COVID-19 crisis, can be categorized as winners, while Sushiro and Kappa Sushi, which decreased same-store sales, can be categorized as losers.

Note that only Hama Sushi does not disclose same-store sales data for the chain on a stand-alone basis, but rather data from the fast food category of Zensho Holdings (HD) Co. However, since Hamazushi accounts for the majority of sales, there should not be much difference between the same-store sales of Hamazushi and those of other restaurants.

Following this data, Hamazushi has significantly increased its sales since April 2022, overtaking Sushiro and Kurazushi to become the top winner.

Sushiro’s strategy is to raise the price per customer.

The top three conveyor-belt sushi chains have very different sales strategies. Sushiro has adopted a chain strategy that emphasizes high quality, while Kurazushi focuses on entertainment and Hamazushi on low prices, and these characteristics are strongly evident in the recovery strategy for sales at COVID-19 crisis.

For example, Kurazushi achieved a 126.1% year-on-year increase in same-store sales in October 2020 and a 134.4% year-on-year increase in November 2020. The catalyst for this increase was a collaboration campaign with the hit anime “Oni no Shura” (Blade of the Demon).

Sushiro was trying to recover sales by increasing the price per customer through value-added products, such as the introduction of a 480 yen plate (excluding tax) in October 2020, which uses luxurious sushi items.

In FY09/2021, the company plans to recover existing-store sales to 99% of the pre-COVID-19 crisis level. The breakdown was 88.5% in terms of the number of customers and 114% in terms of sales per customer.

Hamazushi, on the other hand, has not taken the same conspicuous measures to recover sales as Sushiro and Kurazushi. No flashy collaboration campaigns. Although it has held menu fairs offering such high-end items as otoro (fatty tuna) and abalone at special prices of 100 yen excluding tax, these events have been held regularly since before the COVID-19 crisis, and are not new initiatives.

Nevertheless, Hama Sushi was able to achieve a significant increase in sales, and this can be attributed to the fact that the storm of price hikes that blew in 2022 was a tailwind for Hama Sushi.

The Failure of Kappa Sushi

As is the case with Sukiya, Zensho HD’s common business strategy is to hold down the bottom price in the market. Hama Sushi has been defending its position as the “cheapest 100-yen conveyor-belt sushi chain” for many years with its “90 yen per plate (excluding tax) weekday sushi campaign.

Although this campaign ended in June 2022, Sushiro raised the price of its 110-yen plate to 120 yen and Kurarazushi raised the price of its 110-yen plate to 115 yen in October of the same year, further increasing its price advantage.

The major conveyor-belt sushi chains have rapidly expanded their business scale by offering “100 yen flat” prices. The introduction of the 180-yen plate by the top chain Sushiro in 2015 led to a rapid expansion of multiple pricing, but low prices are still strong.

However, the difficult part of the low-price strategy is to maintain a balance between quality and profitability. If the price is too low or too low, it is difficult to attract customers, but if quality is pursued, the cost of goods will rise.

The difficulty of this strategy can be clearly seen in the business performance of Kappa Sushi, which, along with Hama Sushi, has announced a policy of maintaining a 110-yen plate. Kappa Create, the parent company of Kappa Sushi, has posted operating losses for 10 consecutive quarters since the COVID-19 crisis occurred.

All conveyor-belt sushi chains are doing everything they can to maintain low prices, but Zensho HD is a cut above the rest when it comes to low-pricing strategies.

A closer look at the store’s interior reveals ……?

The thoroughness of Zensho HD’s low-pricing strategy can be seen in the change in store formats. Since around 2018, Hamazushi has been opening stores with “no revolving lanes. In this type of restaurant, a two-tiered “straight lane” is installed in place of the spinning lane, and sushi ordered by customers via a touch panel is served in the straight lane.

Sushi that is placed in the rotation lane is discarded if it is not picked up for a certain period of time, which increases losses and increases the cost of the sushi. In addition, in a restaurant without a spinning lane, customers eat only the items they order from the touch panel, eliminating the need for staff to count the number of plates at checkout, which also helps to reduce labor costs.

All chains know this, but the brass factor of the entertainment value of the sushi flowing in the revolving lane and the resulting increase in the price per customer has been significant, and many chains continue to maintain the revolving lanes.

While an increasing number of urban conveyor-belt sushi restaurants are now without revolving lanes in order to improve operational efficiency, Hamazushi was one of the first to adopt such a system in its suburban restaurants. The decision to cut out the positive factor of the revolving lanes was made by Zensho HD, which is highly cost-conscious, and the accumulation of such innovations supports its low price strategy.

If the wave of price hikes continues into 2023, Hamazushi’s relative strength will be enhanced, and further sales growth is expected.