SUSHI REVOLUTIONARY ISN’T FINISHED GROWING
Kunihiko Tanaka was peddling vinegar to sushi restaurants in western Japan when he spotted the opportunity that would change his life.
It was the 1970s, and the sushi industry was set to boom. But Tanaka thought it was seriously flawed in how it operated. Artisan chefs presided over restaurants with poor quality control. They charged different prices to different people for the same meal, and bills weren’t affordable to the average person, except for special occasions.
Tanaka decided to establish his own sushi restaurant. But he would do it differently. And so, with about US$26,000 that he’d borrowed, he opened his first restaurant in 1977, setting out on a path that would eventually lead to the founding of Kura Corporation in 1995.
The company embraced modern technologies, aiming to bring sushi to the masses. Kura is now Japan’s second-largest chain of kaiten sushi restaurants, where the food is delivered on revolving conveyor belts. It has a market value of $1.2 billion and hundreds of outlets nationwide.
“I believed kaiten sushi would keep the sushi legacy going,” Tanaka said in an interview at the company’s headquarters outside Osaka. “And I was right.”
Kura’s restaurants are about as far away as it is possible to get from the notion of sushi-making as a lifelong artisanal craft. The chain uses robots in the kitchen for some tasks instead of expensive and sometimes erratic sushi chefs handling the food
with their bare hands, and an express delivery order lane above the revolving conveyor belt that speeds dishes to customers’ tables.
Kura is also different from other firms in that it refuses to use additives or preservatives. In a typical sushi restaurant, those would be in the vinegar for the sushi rice and the soy sauce and wasabi mustard used to flavour the sushi, but in Kura’s restaurants, they’re all custom-made to avoid this, according to Tanaka.
And the dishes are cheap, mostly ¥108 (95 cents) apiece, a price that has barely changed for three decades, even as many rivals gradually raise prices.
Tanaka says he keeps the prices low through tight cost control, which goes as far as automating the cleanup process. Finished plates are dropped by customers into a slot at their table, from which they’re transported automatically to the dishwasher and counted to calculate a customer’s bill. This means the company doesn’t need to hire as many waiters or waitresses.
Kura owns 31 patents for the inventions that underpin its unique system. The most prized one is called Sendo-kun, or Mr Fresh, a transparent dome-shaped cover placed on top of each plate. It flips open when you slightly lift the plate.
That way, customers or chefs never need to touch the cap, reducing the risk of germ transmission. It also contains an embedded chip that lets a monitoring centre track how long a plate has been doing the rounds on the conveyor.
Kura currently has 420 outlets across Japan, with 19 restaurants in the United States and 15 in Taiwan.
Tanaka said he wanted to “dream big” when he was growing up in western Japan. With the country reeling from postwar damage, his parents sold goods in the market to support the family. Tanaka had no interest in academic goals, so he joined a vinegar company after college.
He remembers nervously borrowing about ¥3 million to start the business after his sales visits to sushi restaurants convinced him that the model had to change. He recalls being served raw squid
in one restaurant and breaking out in a severe rash, finding out later that the squid had been meant for fried dishes, not for serving raw. He couldn’t believe how careless the restaurant had been.
Today, Kura employs 25 people at a monitoring centre who work solely on regulating the flow of sushi across its restaurants, using a points system where customers who have just arrived get the highest points while those who have been there an hour get zero. “If it’s 100 points in total, we’d
offer a certain amount,” Tanaka said. “This is how we control it.”
Kura commands a 20% share of Japan’s kaiten sushi market, according to CLSA Ltd. That puts it second after Sushiro Global Holdings Ltd, which has a share of 26%. But the market is becoming increasingly mature, creating challenges for firms such as Kura.
“You’re reaching a point where it’s not a saturated market but it may get that way in a couple of years,” said Robert Purcell, an analyst at CLSA in Japan. “So, will they acquire someone else? You need other growth opportunities.”
Tanaka has said that Kura isn’t looking at domestic deals but is focusing on overseas growth, betting that Kura’s additive-free
food will take off globally amid an increasing consumer trend toward healthy food. The company hopes to add at least 10 restaurants each in the US and Taiwan every year, and to go public in the US as early as 2020. He anticipates bringing Kura to Europe one day.
Time will tell whether he succeeds, but whatever happens, Tanaka has come a long way since his days as a travelling vinegar salesman. At current prices, his family’s stake in Kura is worth hundreds of millions of dollars. But he isn’t content with his success to date.
“I’m not there yet, far from it,” he said, when he’s asked if he feels like he’s realised his dream. “The real show starts now.”
Bloomberg