Japan's restaurant industry, already grappling with labor shortages and rising materials costs, is facing yet another challenge in keeping existing customers and attracting new ones following the latest consumption tax hike.
Major restaurant operators have taken various measures out of fear that the tax increase from 8 percent to 10 percent for eat-in food would push customers to choose takeouts to which the 8 percent levy will continue to apply under the two-tiered taxation system from Oct. 1.
They will face tougher competition from supermarket and delivery service operators which see the two-rate taxation, aimed at easing regressivity, as a tailwind for their sales of prepared food and meal sets taxed at 8 percent, especially at a time such products have grown in popularity among working parents and seniors living alone.
Ootoya Holdings Co., an operator of a Japanese-style meal restaurant chain, has decided to strengthen the lineup of its takeout lunchboxes and deli food.
"We are taking steps in response to the reduced tax rate (for take-away food). The lifestyles of our customers have also changed and there is growing demand for takeouts," Ootoya President Masaya Yamamoto said.
For in-restaurant menus, Ootoya, which has been seeing its sales decline due to intensifying competition, decided to keep the tax-included price of its popular dishes unchanged even after the tax hike.
"Leaving the price the same is not an easy decision given our business situation, but we see a strong need to tune in with the customers' perspectives," Yamamoto said.
Ootoya booked a loss of 105 million yen ($974,000) for the April to June quarter from a 7 million yen profit the year before, hit by rising labor and materials costs.
Japanese retail giant Aeon Co. has doubled the variety of meal kits that can be easily prepared at homes. A bag of "Frozen Cookit" of white fish and vegetables with sweet and sour jelly sauce, for example, includes all the ingredients needed for a meal for two at 861 yen.
The meal can be prepared in about 10 minutes through heating with a microwave and stir-frying in a pan.
On food delivery site Demae-can, around 20,000 members were registered as of the end of August, up some 16 percent from the year before, reflecting the eateries' expectation for larger demand for takeouts, according to its operator.
New members to the site include major restaurant chain operators such as Ohsho Food Service Corp., Coco's Japan Co. and Kourakuen Holdings Corp.
Kazuaki Osumi, secretary general of the Japan Ready-made Meal Association, said, "Demand for delivery service, such as Uber Eats, is expected to increase" when the reduced tax rate is introduced while restaurants will continue to have their place and attract people wanting something in addition to meals such as ambience of dining facilities and other experiences of eating out.
Major fast food and coffee chain operators are divided in their response to the two-rate system, with some keeping in-house and takeout prices the same by adjusting before-tax prices, while others are presenting two prices depending on the applicable tax rate.
McDonald's Co. (Japan) said it will keep prices the same for around 70 percent of items on its menu regardless of whether they are eaten in the stores or taken away to ensure clarity.
Rival hamburger chains Mos Food Services Inc. and Lotteria Co. will set different prices.
Beef bowl chain operator Yoshinoya Holdings Co. and Starbucks Coffee Japan Ltd. will also set separate prices for takeouts and eat-ins, while at Kentucky Fried Chicken Japan Ltd. and at Yoshinoya rivals Sukiya Co. and Mastsuya Foods Co., the prices will remain the same.
In a bid to strengthen its takeout services, Starbucks Coffee Japan has introduced a new system that will allow customers to pre-order food and drinks and pick them up at a store without lining up at cashiers.
The coffee chain expects the new tax rule to turn more consumers to take-away services, said Hisae Morii, chief marketing officer at Starbucks Coffee Japan.