100-Yen Conveyer-Belt Sushi Chain Suffers Skyrocketing Material Costs
October 16, 2013
A conveyer-belt sushi chain well known for its all 100-yen sushi business concept is facing quite a challenging situation due to skyrocketing sushi fish prices triggered by the devalued yen. Kappa Create Holdings, one of the leading sushi boat chains that runs Kappa Sushi, significantly revised downward its second quarter forecast (March-Aug 2013). Underperforming 50 restaurants will be closed during the third quarter. The operating profit of the second quarter plunged from JPY 2.1 billion (€15.6 million/$21.4 million) to JPY 200 million (€1.5 million/$2 million). Net loss of JPY 2.9 billion (€21.6 million/$29.5 million) was posted.
Direct Hit of Boiling Sushi Topping Costs
The total number of existing operations was 386 as of late August. Four new chain stores were opened and nine were closed during the second quarter. Sales smoothly grew; however, raw material costs, mainly of tuna and shrimp, exhibited steep rises, resulting in profits much lower than the forecast. Some stakeholders in the sushi industry maintain that “a business strategy that offers two pieces of sushi for JPY 100 is hitting its wall” in the face of relentlessly rising material costs.