Number of Japanese Restaurants Overseas Declines for First Time Since Survey Began: 181,000 Restaurants, Down 6,000

The “Approximate Number of Japanese Restaurants Overseas” survey, compiled biennially since 2013 by the Ministry of Agriculture, Forestry and Fisheries with cooperation from overseas diplomatic missions worldwide, was announced on the evening of November 28th, one month later than originally scheduled.

The delay in announcement was likely due to the fact that this was the first decrease. Even during the COVID-19 pandemic in 2021, the number had maintained a 1.9% increase, but now, in normal times, there has been a decrease of 6,000 restaurants.

Where exactly did this decrease of 6,000 restaurants, representing a 3.2% drop, occur?

For the first time this year, the Ministry of Agriculture, Forestry and Fisheries (MAFF) released the number of Japanese restaurants by country worldwide, along with their increases or decreases. Looking at this country-by-country data reveals the cause of the ▲6,000 decrease.

The largest decrease was, unsurprisingly, in China. It saw a ▲15,260 decrease to 63,500 restaurants, a 19.4% drop.

France also saw a staggering decline. ▲1,290 restaurants, down to 3,390, a 27.6% decrease.

Other countries experiencing declines:

Russia: ▲670 restaurants, 21.1% decrease

Taiwan: ▲340 restaurants, 4.6% decrease

Italy: ▲300 restaurants, 12.2% decrease

Sweden: -220 stores (-41.6%)

Colombia: -100 stores (-19.3%)

Singapore: -70 stores (-5.8%)

Armenia: -50 stores (-50%)

Incidentally, this figure of 181,000 stores is by no means a count of Japanese restaurants with Japanese involvement in management.

According to the Ministry of Agriculture, Forestry and Fisheries, a “Japanese restaurant” is counted if it meets any of the following criteria: ① Listed as a “Japanese restaurant” on local websites, phone books, or guidebooks; ② Participates in local organizations like the “Japanese Restaurant Association”; ③ Is treated as a “Japanese restaurant” by local Japanese associations or Japanese Chambers of Commerce and Industry; ④ Is recognized as a “Japanese restaurant” by overseas diplomatic missions beyond the above.

Therefore, “Japanese cuisine” restaurants operated by local residents or Asian foreigners are naturally included in the count. In fact, some theories suggest that over 90% of such restaurants have no Japanese involvement whatsoever. Actually, it’s not just a theory; it’s probably accurate.

There was a time when it was said that displaying “Japanese cuisine” on the signboard was key to success when operating a restaurant overseas. Many cases existed globally where Asian operators, particularly Chinese and Korean individuals, used “Japanese cuisine” signage.

This phenomenon itself is perfectly natural in the restaurant business: offering cuisine that pleases customers is fundamental. If customers come because the sign says “Japanese food,” that’s only logical.

In Japan itself, there are countless Chinese restaurants run by Japanese people. Similarly, during the Italian cuisine boom years ago, many restaurants offering Italian food proliferated, yet only a minority had undergone formal training in Italy or held recognition from the Italian government.

The issue, I believe, isn’t whether Japanese people are involved or not, but having a correct understanding of why the absolute number has decreased.

The Tide Turned: The Inbound Boom

While Japanese food was popular, many Japanese restaurants overseas served what was essentially “fake Japanese food,” largely unrelated to Japan or Japanese people. They were hugely successful for a time. However, the Japanese government’s inbound tourism policy dealt a major blow to this “fake” food.

Previously, people enjoyed ramen and tempura in their home countries, believing them to be delicious. But when they actually traveled to Japan and tasted the authentic versions, they realized what they thought was ramen or tempura was quite different. They discovered that real Japanese food is incredibly delicious. This made it increasingly difficult for imitation restaurants to continue operating under the Japanese food banner.

This impact is likely particularly strong in countries sending large numbers of inbound tourists.

Incidentally, “eating Japanese food” has been the number one reason cited by inbound tourists for visiting Japan for over a decade.

While this is wonderful, the more people eat authentic Japanese food in Japan, the more the position of “imitation Japanese food” is being squeezed.

(Reference: Inbound Consumption Exceeds 5 Trillion Yen: Analysis of Visitor Spending Trends https://www.assentia-hd.com/news_and_pressrelease/20240117/)

The Arrival of Authentic Japanese Food Deals a Major Blow

Furthermore, the expansion of Japanese food and beverage companies overseas is also having an impact.

Toridoll Holdings, owner of Marugame Seimen, is a prime example. As you know, Marugame Seimen’s arrival led to its recognition worldwide as a place where tempura could be easily enjoyed.

Post-COVID, the overseas expansion of Japanese food and beverage companies has accelerated.

Sushiro now generates more profit from its overseas stores than from its total domestic stores.

When authentic Japanese food—offering consistent quality and reasonable prices—arrives, imitation Japanese food can no longer survive.

Now is the era of opportunity for authentic Japanese cuisine.

“Imitation Japanese food” expanded awareness of Japanese cuisine. And now, a shift is occurring from imitation to the real thing.

It could be said that opportunities to provide authentic Japanese cuisine are arriving worldwide.

What we must consider is how to expand Japanese cuisine into foreign countries. It’s a matter of the management structure for overseas expansion.

A useful reference point is the various food businesses that entered Japan from the US starting in the 1970s.

McDonald’s, KFC, Dunkin’ Donuts (now defunct), Mister Donut, Domino’s Pizza, and later Starbucks Coffee… all entered the Japanese market through franchising. Japanese franchisees who understood and loved these brands significantly grew each business.

This was never about imposing American success factors. Instead, Japanese franchisees, deeply familiar with each brand’s strengths, implemented the best strategies to conquer the Japanese market, leading to today’s success.

As the saying goes, “When in Rome, do as the Romans do.” Entrusting each country’s operations to capable local franchisees is the common sense approach to expanding food businesses overseas.

(Reference: Overseas Expansion: Franchising is the Global Norm https://www.assentia-hd.com/news_and_pressrelease/20200507/)

The definition of authenticity. No one questions that McDonald’s, KFC, or Starbucks are American.

This means that even as franchises, Japanese food is recognized as authentic Japanese cuisine.

While Japan faces population decline and labor shortages, looking globally reveals challenges like population explosions and, in some countries, a lack of job opportunities for young people.

This makes it the perfect timing to challenge overseas markets using the franchise strategy.

Conclusion

While the number of Japanese restaurants overseas appears to have plateaued statistically, certain countries and regions are actually entering a transition phase from “imitation” to “authentic.”

This can be seen as a “plateau” phase poised for further growth.

By shifting the strategic focus from direct operations or exporting ingredients from Japan to exporting the intellectual property of Japanese cuisine through franchising, I believe more companies can seize this opportunity.