Founded in 1975 with the mission “Tasty sushi for all. Tasty sushi for the heart”, Akindo Sushiro (“Sushiro”) is now the largest sushi chain in Japan, with 400 stores and JPY120bn (=$1.0bn) of revenue (Exhibit 1). Sushiro has driven its rapid growth in the plateau eating-out market in Japan by aligning its business model and operating model.
Exhibit 1: Historical performance
1. Affordable Fixed Price
Targeting mainly the low-mid income family, Sushiro serves 80 kinds of sushi (Exhibit 2) at the fixed price of JPY100 (=$0.83) per plate (most of which have 2 pieces of “Nigiri”), which costs around JPY1,000 per customer for a meal, while sushi typically costs more than JPY3,000. Most of stores are located in suburban area with store area of larger than 300 square meters on average and with sufficient parking area, while a traditional sushi shop has around a dozen of seats.
2. High Quality
Sushiro procures higher-grade fish from the suppliers who Sushiro has built the long-term relationship. Sushiro prioritizes quality over cost and targets 50% of COGS as % of sales to guarantee the good quality of sushi, while restaurant chains typically maintain 30-35% of COGS. Also, Sushiro prepares sushi at each restaurant’s kitchen to keep freshness, while most of Japanese restaurant chains use “central kitchen system”, in which foods are prepared at a big plant and distributed to and cooked at each restaurant.
Exhibit 2: Sushiro’s Menu
1. Conveyor belt system
In a traditional sushi shop, customers sit at a counter organized around a sushi chef, and place orders over the counter. Then, a sushi chef prepares sushi, which takes around 20 seconds for a piece of Nigiri. In total, a customer stays more than an hour on average. On the other hand, Sushiro uses conveyor belt carrying sushi plates (Exhibit 3). Customers sit at a table surrounding a conveyor belt, and pick up any plate they wants at any timing. Sushiro has developed further the system to maximize the number of available seats with limited space (Exhibit 4/5). Conveyor belt system improves the cycle time of a customer to 45 minutes on average by skipping some order processes, which increases sales per store. This system also reduces labor costs of waiters as well as sushi chefs by decreasing their idle time to wait for customer’s order.
Exhibit 3: conveyor belt sushi
Exhibit 4: “O shaped” layout of a typical conveyor belt sushi shop Exhibit 5: “E shaped” layout of Sushiro (200 seats per store on average)
Sushiro has replaced ushers and waiters with touch panel devises. When entering Sushiro, a group of customers is required to input into the devices the number of grow-ups and children of the group and the preference of seat type. Once getting seats, they can take sushi plates from conveyor belt as well as place an order what they want with the devises equipped at each table. The order is shown at the screen in the kitchen, and the ordered sushi is delivered by the conveyor belt.
Sushiro has improved capacity with sushi robots. For example, a sushi rice robot produces 3,300-3,600 pieces of rice part per hour (Exhibit 6), while a sushi chef prepare 300 pieces of Nigiri per hour. Also, with these robots, sushi can be prepared by part-timers instead of skilled sushi chefs.
Exhibit 6: Sushi Rice Robot
3. Big Data
To serve fresh sushi to customers, Sushiro discards sushi after a certain time has passed: for example, tuna sushi is discarded after 70-80 minutes have passed. A higher wastage rate declines profit margin. To tackle this issue, Sushiro has introduced IC chip. Each plate has a small IC chip which records the kind of sushi on the plate, the time to start running on the conveyor belt and to be taken by a customer, and which customer takes it. If a plate is not taken for a certain time, the plate is automatically removed. These data has been accumulated to predict the demand of customer, combined with the data collected at the touch panel devises. For instance, Sushiro’s big data system predict when a child will take what kind of sushi after having a salmon sushi. Then, the screens at the kitchen give sushi chefs the guidance to prepare, for example, two plates of tuna sushi and a plate of shrimp sushi, based on the historical data, how many minutes have passed since customers get a table, and the number of sushi on the conveyor belt at that time (Exhibit 7). As a result, the wastage rate has improved from 10% to 4% on average.
Exhibit 7: Demand Prediction System
In 2015, Sushiro generates the second highest sales per unit among international chains all over the world (Exhibit 8), and is ranked as the leading restaurant chain for customer satisfaction in Japan. Sushiro has changed the landscape of sushi industry with its aligned business model and operating model.
Exhibit 8: 2015 top 25 estimated sales per unit
Note: Assuming that $1=JPY123.
Akindo Sushiro’s company HP: http://www.akindo-sushiro.co.jp/en/
Wikipedia “Conveyor belt sushi”: https://en.wikipedia.org/wiki/Conveyor_belt_sushi
Diamond Weekly (Magazine) “The Innovation in Conveyor Belt Sushi Industry -Big Data-” (5 Sep 2015)
The Economist (Magazine [Japan edition]) “CEO Interview at Akindo Sushiro” (30 Sep 2014)
Nikkei Information Strategy (Magazine) “IT on site: Akindo Sushiro” (Sep 2013)
The Nikkei (newspaper) “Change in Conveyor Belt Sushi Industry” (2-3 Jul 2013)
Toyo Keizai Online (Web) “CEO Interview: Akindo Sushiro chose a private equity firm as a partner” (29 Dec 2012)
Nikkei Business (Magazine) “High efficiency to keep freshness at Akindo Sushiro” (12 Dec 2011)
Nikkei Information Strategy (Magazine) “CEO Interview: Akindo Sushiro” (Feb 2011)
Restaurant Management (Magazine) “CEO Interview at Akindo Sushiro” (Oct 2010)
Gigazine (Web) “Sushi robots”: http://gigazine.net/news/20120404-sushi-machine/
Restaurant News (Web) “2015 International Top 25: Ranking brands by estimated sales per unit2015 International”: http://nrn.com/international-top-25/2015-international-top-25-ranking-brands-estimated-sales-unit
Nikkei MJ (Magazine) “Japanese Customer Satisfaction Index 2015” (6 Jul, 2015)