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Essential solutions to manpower shortages – manpower shortages: chapter 2

This report analyses the Japanese market.

Chapter 1: Do you understand the realities of labour shortages? Continued from.

1. the reasons for the inability to recruit personnel are management and human resources

Two major problems are treatment and the work environment

As described above, it is anticipated that a more severe labour shortage era will arrive in the future, and that the relatively low-paid service workers needed in the food service industry will be competing with those in interpersonal service occupations (including care-related occupations), transport and machine driving work, as well as on-site work such as driving and construction.

Therefore, the market for manpower will be an endlessly competitive red ocean market, but in order to break out of this and turn it into a blue ocean where excellent manpower can be secured, it will be important to create a working environment, job descriptions and remuneration systems that do not compete with the rest.

And to achieve this, the financial ability to pay sufficiently high salaries and provide welfare and working conditions is an absolute prerequisite.

To achieve those conditions, the following items are required

1.Increase sales and make the shop profitable.
2.Increase profits and create a system that enables reinvestment
3.Create a system that enables you to increase profits and retain talented people
4.Build a profitable business model to solve the above problems

2. the major evolution of the internet is changing all businesses from the ground up

As a result of the spread of the internet and the proliferation of gourmet websites, we now live in an age where the quality of ‘taste’ can be instantly identified before the food is eaten.

In other words, the emergence of gourmet websites has clearly separated the strong from the weak in the restaurant business, and consumers can now easily distinguish between good and bad restaurants based on scores on gourmet websites. Specifically..,

・If the score is around 3.0, it is difficult to survive
・If the score is above 3.5, then survival is possible
・If the score is above 4.0, there will be queues, no matter how remote and isolated the location is
・If you get a bad score when you open a restaurant, it is very difficult to improve your score in subsequent efforts
So how can you raise this score?

The quickest way to raise your score is to improve your product.
In the case of noodle specialty shops, it is a matter of course to provide delicious noodles that are second to none, and to always offer uncompromisingly delicious noodles and soups, and to keep raising the quality of the product to a level that is incomparable to other shops.
In fact, a survey of the reasons why consumers choose udon and soba restaurants shows the following results.

3. why consumers choose udon noodle and ramen shops

1.Because the noodles are tasty
   36.5%
2.Because the soup stock is tasty
   32.0%
3.Because it is close to home/school/work
   15.7%
4.Because the location is convenient
   7.9%
5.Because of volume
   3.5%
6.Because there is a wide variety and I never get bored
   3.1%
7.Because it is a famous restaurant
   1.3%

(Source: From our data, January 2013)
526 responses

A similar point was made in a popular old television programme called ‘Operation Love Poverty Escape’. Some younger people may not know about this programme, but those of a certain age may know about it.
The examples of no-good shops featured in this ‘Operation Love’s Poverty Escape’ programme were shops with the following characteristics.

1.Products are not tasty (weak product power)
Merchandise strength

2.Too many items on the menu (no strong or signature products)
Merchandise strength

3.Shop is dirty (not cleaned)
Cleanliness (hygiene)

4.Lack of energy (lack of motivation)
Service

5.I don’t know what the shop is (the shop is not distinctive)
Shop strength (concept)

Looking back on it in this way, it is quite interesting and seems to be true. It is clear that above all, product power (i.e. taste) is important.

4. all past success stories have collapsed and the principles for making profits have changed dramatically

As a result of these changes, almost all past successes have been shattered.
There are three main reasons for this

Collapsed Success Story 1: Raw Material Cost Ratio

In the past, it was fundamental not to apply a raw material cost ratio. Specifically, it was commonplace to have a raw material cost ratio of less than 30%.

Nowadays it is different.
Nowadays, the average raw material cost ratio for the entire restaurant industry is 40%.
Ikinari Steak and Ore no French are at 60%.
Sushiro is 50%.
Within the same industry, the more successful restaurants (those that are able to secure customers) spend more on raw materials.
Basically, the more you spend on raw material costs, the easier it is to improve your product.
At the same time, the ability to produce tasty food is obviously essential.

Collapsed success story 2: Number of seats

Smaller shops and those with fewer seats are at a disadvantage. The smaller the size, the lower the productivity tends to be. This is because smaller shops have a larger kitchen area as a proportion of the shop floor area, which means that they cannot take up as many seats to increase sales.
Especially in rural areas, meal times are almost constant, so if you don’t have enough seats, you can’t attract many customers.
Also, the smaller the restaurant, the harder it is to recruit staff, and as a result, the labour ratio tends to be higher.

Collapsed success story 3: Insufficient parking

Most new or existing shop owners are indifferent to the lack of parking spaces. Unsurprisingly, even in large cities, parking is always required in a 500 m radius with a daytime population of no more than 20 000 people.
Countless shops lose sales due to lack of parking. Incidentally, paid parking cannot be a car park.

Only those companies that can recognise and cope with major environmental changes will survive

The integration of IT to increase productivity is also essential. Specifically, the use of IT and AI, such as the introduction of an order entry system using a handy terminal.
One successful example of the use of IT and AI in the food and beverage industry is the Ebiya Dining Hall.

Success stories

“Long-established venture” Yebiya Grand Shokudo offers an AI business forecasting service with a “90% accuracy rate”!

The 100-year-old business, Yebiya Ltd. has been operating commercial facilities such as shops (souvenir shops), Japanese restaurants and food stalls in Ise City, Mie Prefecture, for 100 years.

Based on the belief that “we want to increase business efficiency and profitability so that we can invest in the future, increase wages and grant holidays”, the traditional company has developed a business forecasting solution based on the cloud platform Azure, with an astounding customer forecasting and marketing effectiveness measurement rate of “over 90%” based on in-house research. The company has developed a business forecasting solution based on its own research, with a “forecasting accuracy rate of more than 90%”.

The company has achieved a fourfold increase in sales, a tenfold increase in profitability and an average salary increase of 50,000 before and after the introduction of the solution.

“Long-established venture” Yebiya Grand Shokudo offers an AI business forecasting service with a “90% accuracy rate”!
 The reason” for the decision to enter the IT business.
 https://japan.cnet.com/extra/ms_ebiya_201710/35112861/

What we can learn from this success story is that it is not the size of the business, but the seriousness with which IT and AI are approached that determines the success or failure of a business.
The customer forecasting solution of Ebiya Dining Hall, which is also sold externally to other restaurants in the same industry, is something that deserves a lot of attention.

In any case, the important thing is to increase the raw material cost ratio, improve the taste, raise the score and increase the number of customers.
The key is to provide seating and parking to accommodate the increased number of customers, and to continue to use digital technology to reduce the labour cost ratio.

Continued in Chapter 3: Tottentious Measures to Hire Good People.

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