U.S. suppliers serving Japan's family restaurants - 1

Export opportunities for U.S. suppliers of food products to Japanese family restaurants are extremely promising. To succeed in this important food service sector, U.S. exporters should be flexible and willing to invest the time to learn the unique needs of potential Japanese customers.

High-quality products that are convenient to serve and attractively priced stand a good chance of ending up on the menu of a family restaurant in Japan.

The family restaurant market is one of the most important sectors of Japan's food service industry, whose sales reached $255 billion in 1993, according to the latest data available. Family restaurants use large amounts of imported food products and offer exciting prospects for U.S. food and beverage exporters.

Sales in this sector alone surpassed $17 billion in 1993 and accounted for 7 percent of the food service industry's total sales.

Family restaurants in Japan cover a variety of dining styles - Western, Japanese and Chinese. By definition, these restaurants seat a minimum of 80 persons where clients spend $5-$15 per meal per person and the service is quick, taking between three and ten minutes. The number of outlets in Japan exceeds 17,000 and includes a number of large national chains, each with hundreds of outlets, as well as smaller regional or local restaurants.

'Western' Restaurants Lead the Way

Western-style outlets comprise the largest portion of this sector, with well-known chains such as Skylark, Royal Host and Denny's (owned and operated locally) leading the market. Together these three Western-style chains operate over 1,500 outlets with sales of $3.2 billion, or 17 percent of family restaurant sales.

The range of products varies depending on the restaurant, but in popular Western-style family restaurants beef hamburger steaks are featured on both lunch and dinner menus.

For example, "Western" chains like the Asakuma Steak House feature steaks; Red Lobster features seafood; and Bikkuri Donkey serves a standard beef/pork patty, topped with a choice of cheese, pineapple, eggs or a special sauce.

Major Japanese-style chains, like Sato, Kisoji and Aiya, generally operate on a slightly smaller scale. The top three have 427 outlets, with sales reaching $1 billion in 1993.

In Japanese-style restaurants, menus generally center around fresh and processed seafood products, with vegetable-based side dishes. Other familiar menu dishes include pork cutlets and grilled chicken. Usually all of these menu items come with rice and soup. Kisoji features a traditional domestic dish - shabu shabu, a lightly boiled, thinly sliced beef dish.

According to a recent survey, annual food procurement costs for the family restaurant sector are approximately $5.5 billion, or roughly one-third of total sales. The survey also revealed an interesting mix of foods used by family restaurants.

Fresh meats - primarily beef and, to a lesser extent, pork and chicken - account for 25 percent of the sector's food costs. Rice and processed rice products, fresh and processed vegetables and processed meat products account for 13, 12 and 11 percent of food costs, respectively. The remaining 39 percent includes seafood, beverages, pasta, sauces and seasonings.

Another food industry survey estimated that imported foods account for roughly one-third, or almost $1.8 billion, of the annual total food costs of the family restaurant sector.

Looking Overseas for Supplies

Because of high domestic labor and capital costs, intense competition to lower menu prices and the strong yen, practically all family restaurant chains and their suppliers are increasingly looking overseas for food products. These chains are well-suited to use imported food products, given the usual price advantage of imported foods over comparable domestic products.

Looking at the food products behind the menu of an average family restaurant, the significance of imports becomes even more apparent.

Western-style restaurants almost exclusively use imported beef. A procurement manager of a major chain said that 80-90 percent of the beef served in their restaurants is imported from the United States or Australia. U.S. beef has a very positive image and sells very well in restaurants.

Some family restaurants purchase beef patties from overseas manufacturers who tailor the product to individual needs, while others work through domestic ham-and-sausage manufacturers who import the raw materials and produce the final product in Japan.

Seafood products, such as salmon, tuna, squid, prawns, shrimp, lobsters and crabs, also are imported in large quantities. Some seafood products are imported already breaded and fried, needing only to be warmed up in the restaurant before serving.

Assorted vegetables, like baked potatoes, french fries, peas, carrots and corn, are usually imported frozen.

Procurement division managers for the large chains make key food import decisions with help from other managers. These same groups also generally make the major decisions regarding menu planning and sales strategies.

While these large firms use importers/wholesalers to purchase much of their imported food needs, actual handling and distribution of product is conducted internally by the chain itself.

Conversely, independent family restaurants normally depend on specialty food service wholesalers for a much broader range of services, including the procurement, distribution and delivery of the majority of their imported food needs, as well as the introduction of new uses and product ideas from abroad.

The product, whether sourced domestically or overseas, actually will be procured by either trading companies, food manufacturers, food service wholesalers or a combination of these key players.

Which one has the most significant role depends on the particular food item.

Some Chains Make Contact Directly

In the case of such imported foods as meat and seafood, some major chains have established direct contact with overseas suppliers who provide for a part of their needs.

Family restaurants are trying to streamline and simplify their procurement and distribution systems. For example, the Skylark Group formed a common procurement company (S.G.M.) to purchase food inputs for the dozen food service companies that comprise the group.

The Skylark Group operates 1,184 outlets and spends an average of $500 million a year for food and other materials. The new procurement company has been given authority to select suppliers, food manufacturers and wholesalers to supply all the food companies of the group.

Previously, each company handled food procurement independently. This food procurement consolidation trend also is taking place within other large food service groups in Japan.

Many family restaurant chains have their own central kitchen and distribution centers where foodstuffs are processed and delivered ready-to-serve with minimal preparation in each restaurant. Other chains depend completely on food manufacturers and wholesalers to deliver ready-to-serve food products to the restaurant.

Specialty food service wholesalers depend quite heavily on trading companies to procure food products for them. Even companies with a central kitchen use a combination of both systems, depending on the food item.

Given the higher costs of domestic processing, it is now very common for family restaurants to ask overseas suppliers and manufacturers to do a greater amount of processing than in the past. Convenience is the key.

Japanese family restaurants want to spend a minimal amount of time in food preparation at the restaurant. Most food products are served only after being baked, warmed or boiled, thus eliminating costly food preparation steps at the restaurant.

Jeff Jones is with the FAS Agricultural Trade Office, Tokyo. For more information on the Japanese market, contact the regional market cooperator group that covers your state. They are: EUSAFEC (717-731-6017), MIATCO (312-944-3030), SUSTA (504-568-5986) or WUSATA (206-574-2627).

COPYRIGHT 1995 U.S. Department of Agriculture
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