Steak, a chain of meat restaurants, is struggling to stay afloat.
Pepper Food Service, which operates the chain, posted an operating loss of 1,412 million yen on sales of 18.95 billion yen in the fiscal year ended December 31, 2021, down 39% from the previous year.
“Ikinari! Steak” opened its first restaurant in Ginza, Tokyo, in December 2013. It became very popular, especially among men in their prime, and by 2019 it had grown to about 500 stores nationwide. Why did it fall in such a short period of time? Economic journalist Takashi Matsuzaki explains.
The rapid expansion of the company’s business has become an obstacle. The limited number of stores meant that there was scarcity, and customers flocked to the stores because of the rarity of their products. However, as the number of stores has drastically increased, the novelty has worn off. Moreover, the distance between each store has become closer, and stores are competing with each other for customers.
The rapid increase in the number of stores has also led to a decline in service. The quality of customer service has deteriorated due to a shortage of staff, and complaints have increased dramatically. The new coronavirus has added to the problem.
The president’s complaint in the company newsletter
As of April 2022, the number of stores had dropped to about 220, less than half of what it was at its peak, due to a string of store closures resulting from deteriorating business performance. The quality of employees has also declined seriously, with President Kunio Ichise making the following complaint in an internal newsletter issued in January of this year.
We cannot possibly forgive the negative employees who have caused discomfort to customers who visit our stores.
The situation surrounding “Ikinari! Steak” has only gotten worse. Mr. Matsuzaki continues.
The price of steaks has had to be raised due to soaring raw material costs. When we first opened, you could eat a 300 g steak for less than 1,000 yen. Now, however, many items are priced at 1,500 yen or more. The price of “My Rib Steak” (300g) is about 2,700 yen. Users may have the impression that it is expensive.
In March 2008, “Pepper Lunch” disclosed a “Going Concern Note” in its annual securities report. The company said that it would be difficult to develop the business sustainably. The company has put forward a drastic reform plan, including the liquidation of its stores, but it has yet to reach a drastic solution. I must say that restructuring the business on our own is quite difficult.”
If it is difficult to revive the company on their own, they will have no choice but to seek help from other companies. “Ikinari! Steak” will find a savior? Mr. Matsuzaki points to an unexpected company as a possible savior: “Nitori,” a major retailer.
Nitori, a major retailer. In March 2021, the company opened “Nitori Dining｜Minna no Grill,” a family restaurant focusing on steaks. Originally, many of the “Nitori Dining” restaurants were franchises of “Ikinari! Steak” and are expanding the number of stores.
I have heard that there are exchanges between the two to improve service. In other words, there is a high affinity. Nitori is doing very well, boosted by the demand for nest eggs in Corona and other factors. Nitori Dining is also benefiting from the growth of “Nitori Dining,” and is also in the process of bailing out “Ikinari! Steak.”
Will “Ikinari! Steak,” which continues to face difficulties will be able to revive its “overpriced” service that satisfies customers’ palates?
Photo by： Takashi Yamazaki