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Polarisation of profitable and unprofitable shops? What are the factors? The answer is clearly the strength of the product, i.e. the taste! -Survival strategies for udon and soba shops for shopkeepers who want to make more profit: Chapter 3

This report analyses the Japanese market.

Chapter 2: The udon and soba market is actually continuing to expand! Continuation of.
The factor that polarises the profitable and unprofitable shops is, without a doubt, ‘taste’.

What this means is that, as a result of the spread of the internet and gourmet food websites, we now live in an age where we can instantly tell whether a dish tastes good or bad before we eat it.

1. the huge evolution of the internet is changing all businesses from the ground up

This means that the emergence of gourmet websites has clearly separated the strong from the weak in the restaurant business. Scores on gourmet food websites make it easier for the average consumer to distinguish between good and bad restaurants. Specifically…

・If the score is around 3.0, it is difficult to survive
・If the score is 3.5 or above, it is more likely to survive
・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 with subsequent efforts

This is what we mean. 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, this means providing delicious noodles that are second to none and never compromise on taste. In fact, a study of the reasons why consumers choose udon and soba restaurants shows the following results.

Why consumers choose udon noodle 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 it is conveniently located
    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)Data from our data, January 2013
526 responses

A similar point was made a long time ago in a popular television programme called ‘Love’s Great Escape from Poverty’. Some young people may not know about this programme, but those of a certain age may be familiar with it.

The examples of no-good shops featured in this ‘Operation Love’s Poverty Escape’ 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.

2. all past successes have collapsed.

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 rate

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.

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 the smaller the size of the restaurant, the larger the kitchen area as a percentage of the restaurant area, and the less seating space available 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 parking space.

3. only companies that are aware of and can cope with major changes in the environment 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 Dining Hall has launched an AI business forecasting service with a “90% accuracy rate”!
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 reduce the labour cost ratio by utilising digital technology.
So how can you improve taste?

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