By Yuki Yamaguchi,
When Yoshihiko Koyama ordered a fried dumplings set meal at a well-known Chinese chain restaurant in Tokyo in September he noticed something different -- the price was a little higher than his previous visit.
Koyama was charged 710 yen ($4.9) instead of the 670 yen he usually paid for the set menu in a Hidakaya restaurant in the capital's Okachimachi district, illustrating how eateries and restaurant chains such as Hiday Hidaka Corp. are passing on soaring material and energy costs to consumers.
"It feels like a small increase but it's happening at other restaurants too," said 74-year-old Koyama who works in the jewelry industry in the area. "The cumulative effect can be huge."
Imported raw materials from cooking oil to flour have become more expensive on the back of the war in Ukraine and the yen's depreciation, which saw it hit a fresh 24-year low against the U.S. dollar in early September, adding to the pressure on consumers in the world's third-largest economy who are already struggling with higher prices for groceries and fuel.
Rising labor costs are also adding to the restaurant sector's woes as it has become more difficult to recruit staff since many eateries cut opening hours or closed temporarily amid the coronavirus pandemic.
According to a survey of 122 Japanese restaurant chains by private credit research firm Tokyo Shoko Research, 71 companies had raised prices or announced plans to do so this year as of early September. Of those, five chains had made such announcements twice, it showed.
Japanese restaurant chain Yayoiken, which operates more than 360 eateries nationwide, has been charging more for set meals and rice bowl dishes since September due to increased prices for imported beef and pork.
It is now offering its popular ginger pork set meal at 670 yen, up 30 yen, while the price of its pork cutlet rice bowl has been raised by 20 yen to 710 yen.
Diner chain Denny's raised the prices of some of its menu items such as pasta and steak by 10 to 80 yen from Sept. 6, saying, "It has become difficult to strike a balance between prices and quality" amid soaring material costs.
The chain said, however, it was not increasing the prices of some of its popular dishes such as hamburger steak and desserts to retain customers.
Conveyor-belt sushi chain Sushiro has said it will raise prices at its restaurants from October to cover higher material, logistics and labor costs.
McDonald's Co. (Japan), curry restaurant operator Ichibanya Co. and Torikizoku Holdings Co., which operates a chain of "izakaya" Japanese-style pubs, have also passed on higher costs to consumers this year.
Wu Haokai, a student from China who is enrolled in an MBA program at J.F. Oberlin University in Japan, said that as he supports himself with a part-time job, he is concerned the recent price increases will add to his financial burden.
"It worries me that those restaurants I often visit are raising prices," the 25-year-old said. "It's hard to cut back on the frequency of eating out as I enjoy doing so with my friends."
With a growing number of restaurants forced to increase prices, many in the sector are anxious about losing customers.
While Skylark Holdings Co., the operator of the Gusto restaurant chain, is feeling the negative impact of price increases implemented in July, it said it may raise prices again if it cannot absorb higher costs.
"Customers are becoming increasingly cautious about their budgets," Skylark President Makoto Tani said. "Our customers are decreasing, especially in rural areas."
The company said in August that it plans to close about 100 of its group restaurants due to rising costs.
Shun Tanaka, a senior analyst at SBI Securities Co., said, "A lot of people became accustomed to buying ready-made food at supermarkets or cooking at home instead of eating out during the coronavirus pandemic."
If restaurants cannot offer added value such as better ingredients, they could lose customers, he said. "Demand has not recovered yet. We might see more restaurant closures in the future."
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