Oct 01, 2017 (Nikkei) - With higher costs weighing on the conveyor-belt sushi restaurant industry, Akindo Sushiro and Genki Sushi aim through their merger to leverage greater scale to negotiate better prices for quality fish.
The two companies on Friday announced a capital partnership toward integrating their businesses. Rice wholesaler Shinmei, the parent of Genki Sushi, will lead the process by obtaining 32.72% of Sushiro's parent Sushiro Global Holdings from British investment fund Permira for 37.9 billion yen ($336 million).
Widening the lead
Akindo Sushiro is the market leader in Japan, and Genki Sushi the fifth-place player. With combined sales of some 180 billion yen, the pair would control around 30% of the market, taking a significant lead over No. 2 Kura Corp.'s 113.6 billion yen and No. 3 Hamazushi's 109 billion yen.
"Increased procurement volume boosts our negotiating power, so this will help counter rising costs," Sushiro Global President Koichi Mizutome told a news conference in Tokyo. Stable procurement is of great importance to the business.
To cut operating costs, the conveyor sushi industry has automated many tasks like making sushi, taking orders and delivering to the table. As a result, ingredient costs are equivalent to 40-50% of menu item prices, around 10 to 20 percentage points higher than at other casual restaurants. Ingredient costs have that much more impact over profit.
Prices of imported salmon and trout have climbed around 20% in two years on the back of rising fish demand in emerging economies. Yet price hikes are not an easy option because lower prices are what draw many customers and make conveyor sushi a rare growing segment within the food service sector.
Source: ANNnewsCH
