Why does Saizeriya’s lunch cost 500 yen and still make a profit?

When it comes to inexpensive and delicious Italian food, Saizeriya is the place to go. The lunch menu, which includes a main dish, salad, and soup for 500 yen, is particularly astonishing. I’m sure I’m not the only one who wonders what the cost is and whether they are really making a profit.

A peek at Saizeriya’s financial data (49th fiscal year, September 1, 2020 to August 31, 2021) shows that the cost of sales is 46.36 billion yen on sales of 126.51 billion yen, or a cost ratio of 36.6%. Looking at the whole picture, it means that the 500 yen lunch is made at a cost of 183 yen (although of course, it goes without saying that the cost differs for each menu item). It’s not just that it’s cheap. There is an extraordinary amount of corporate effort that goes into it. Let’s take a look at some of the secrets of their efforts based on my experience in Saizerias.

Let’s start with the pricing. According to a survey of 5,710 employed people conducted by the Hot Pepper Gourmet Food Service Research Institute from March 1 to 9, 2021, the average budget for lunch was 1,171 yen for “food delivered” and 1,103 yen for “eating out at a restaurant.

Considering that a lunch at Saizeriya costs 500 yen, this means that it is served at half the price of the average budget of business people. In a similar survey by the Hot Pepper Gourmet Gaiseki Soken (November 22-30, 2018, 9,607 employed people), the average dinner budget was 1,491 yen for “regular dinner at a restaurant” and 3,826 yen for “special dinner at a restaurant.

Two strengths

In the author’s opinion, Saizeriya has two strengths. One is its product development capability, and the other is its cost reduction capability.

Saizeriya does almost no cooking at its stores. The food is prepared at the food factory to the level where it can be served to customers with just one more step. And the level of this factory is extremely high.

The difference can be seen in the salad.

In general, salads are considered to be a difficult item to handle in restaurants. Even though it is a menu item that most of the customers like, it is difficult to control the quality, it does not last long, the purchase price fluctuates daily, and it is difficult to raise the menu price even if the purchase price becomes high.

By building an overwhelming cold chain, Saizeriya has created a system that allows them to serve delicious food at low prices all year round. In the lunch menu above, the main dish is the main attraction, but it actually comes with soup and a mini salad. This is a marvel.

A different way of thinking

Next, I would like to talk about the ability to cut costs.

While other restaurant chains are looking for high-tech ways to order using pads, Saizeriya has unexpectedly implemented “handwritten orders,” and I am often overwhelmed by their ideas.

The origin of Saizeriya’s idea is to clarify the purpose and make bold changes to the process, as befits a company where science majors gather. As for the handwritten orders, the company probably explored the most inexpensive way for customers to communicate their orders to the restaurant. The high-tech ordering methods used by other chains will certainly reduce labor costs, but the initial investment in high-tech machines and maintenance costs will be high.

This is not the only way Saizeriya cuts costs. Although it has become the norm for chain restaurants, Saizeriya was a pioneer in “no vacuum cleaner” stores. Needless to say, this does not mean that they do not clean. The company clearly defined the purpose of “cleaning” as “taking trash out of the store from the floor,” and searched for the shortest route to achieve that purpose. As a result, they came to the conclusion that they could achieve their goal with the least cost by not using vacuum cleaners for cleaning.

When the author interviewed him before, he told me this. Using a vacuum cleaner to clean the store takes a lot of time, so I use a mop to quickly sweep up the trash. In order to go around the store as quickly as possible, he had figured out a route that would allow him to make a single stroke with the mop, and had made it into a manual. Through this kind of saving, he was able to make the one-hour preparation before the opening of the store in just 30 minutes. Saizeriya currently has about 1,500 stores nationwide. Assuming an hourly wage of 1,000 yen, this method of not using a vacuum cleaner would cost

500 (yen, 30 minutes’ salary of 1000 yen per hour) x 1500 (stores) x 365 days = 273.75 million yen

This means that the company will succeed in reducing costs by 273.75 million yen per year. The author heard this story 10 years ago, so the system may be a little outdated, but what I want to convey here is that Saizeriya is essentially focusing on “building a better system. There is no doubt that they are currently developing even greater cost savings.

Keisuke Hamane, deputy chief researcher of the Research and Consulting Division of the NRI, specializing in management strategy, said, “Saizeriya’s performance is showing signs of bottoming out, as same-store sales in December last year increased 15.8% year-on-year for the second consecutive month, and its Asian business posted the highest profit. However, it is still too early to say that the company has regained its earning power. However, it is still too early to say that the company has regained its earning power, as the explosion of the Covid-19 outbreak has once again heightened uncertainty about the future performance of food service companies. Saizeriya will continue its efforts to save manpower in anticipation of With Covid-19, such as starting a demonstration test of a food delivery robot,” he said.

I wonder if Saizeriya will be able to overcome the difficulties of the Covid-19 disaster with wisdom and effort, and provide even “better” products to its customers. I have high expectations for Saizeriya’s future.