Akindo Sushiro: Tasty Sushi for All at $1 per plate

“Tasty sushi for all. Tasty sushi for the heart”
Sushiro changed sushi from high-end meal to more daily meal

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

Ex1

Business model

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

Sushiro Menu

Operating model

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

Ex2a   Ex2b

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)

Ex2                                                                 Ex3

2. Automation

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

Ex7

 

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

Ex5a       Ex5b

 

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

Ex6

 


Note:  Assuming that $1=JPY123.

Sources:

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)

 

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6 thoughts on “Akindo Sushiro: Tasty Sushi for All at $1 per plate

  1. I was really impressed reading how this restaurant uses data to decrease waste and prepare the right foods at the right time. When I worked with Starbucks, I was surprised that our waste rate for food was about 50%! It can be very challenging to prepare/thaw the right foods for the day to decrease waste at the end of the day, and the way Akindo Sushi can better predict consumption is a huge expense saver! I wonder how this translates to their operations more upstream; I’m assuming they use this data to order sushi more just-in-time and in more accurate quantities.

  2. Tak, thank you for such great insights. This reminds me a lot of Benihana, where the unique layout of the restaurant is very conducive to high operational efficiency. Having been to several conveyor belt sushi restaurants, I have to say that I love the experience, and have always been pleasantly surprised by the quality of the sushi and the quality of the service. As I think more about it now and from reading your write-up, it is really interesting how the operational efficiency of the restaurant actually leads to higher quality. For example, due to the shorter cycle time and hence the multiple seatings per night that a restaurant is able to accommodate, the sushi turnover is also higher, which means that the fish is much more fresh here. Because the conveyor belt is essentially what is serving the customers, the labor force can be focused on either making the food or catering to customer questions / requests, rendering higher quality service. I really think this is an example where operating and business models come together so well, and I think it is time for you and I to start a chain of conveyor belt sushi restaurants here in the US!

    1. I will be commenting more below, but I agree with Cynthia and want to be part of the US chain idea, please!

  3. One thing I wonder about is the pricing aspect. The 100JPY/plate price feels like great marketing, much like dollar stores that we studied in other classes. However, over time, many dollar stores start offering multiple price points due to inflation or maybe product variety. I wonder how prices have changed since 1975 and how they might change in the future.

    I also wonder if there’s also an opportunity to use consumer mobile technology to increase operational efficiency. For example, a mobile app that:
    1) Allows users to order using a more familiar technology than proprietary touch screens
    2) Save preferences so their favorite dishes show up more prominently
    3) Pay bills easily with saved payment information that reduces cashier labor costs

    Thanks for this, Tak. I learned a lot!

  4. This is so cool! I’m a big time sushi consumer and very intrigued by this business and operating model. The use of consumption data to optimize their operations is critical to the business model working, but it’s also brilliant. Without it, I’m not sure they would be able to maintain the quality and thus the volume to support the business. By tracking consumer trends in their restaurants, they can utilize the the conveyor belt, maintain fresh selections, and cater to their customers’ need in short order, create a superior operating model. Thanks for the insight, Tak!

  5. Tak, this is great, thank you for the post! I, too, am reminded of Benihana’s operating model here, but think that Sushiro takes it to the next level. I love the data gathering mechanisms they have integrated into the operating/business models, and think they could expand on this capability moving forward. A prior comment suggested that they could build a mobile app that saves user preferences and allows customers to order and pay more easily; I like this idea and also think that they could be implementing parts of this into the restaurant sans any mobile app, as well. For instance, tables could have a screen of some sort where they could log in/save their preferences, and over time the restaurant’s system could gather data on individual customers who opt in, making sure to stock their favorites whenever they make a reservation, or perhaps even send a special sushi plate to them on the conveyor belt for special occasions. As much as I love this model, I wonder if there is a point at which an appreciation for the craft of sushi-making, which may take longer to make and be more costly, trumps the appeal of automation and inexpensiveness. For now it seems like there is a place for both!

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