Market Overview

The domestic food service market for FY2023 (including takeaway bentos, delis, and ready-to-eat food) grew by 6.5% from the preceding fiscal year to 31,241,100 million yen (based on the store sales). As pandemic restrictions eased, socioeconomic activity began to recover in 2023. The demand recovery throughout the year pushed the market size to exceed pre-pandemic levels.

By business category, fast food restaurants, which performed well even during the pandemic, continued to thrive, thanks to strong demand for takeout and delivery services. Family restaurants have improved operational efficiency by closing underperforming locations, implementing self-ordering and payment systems (via in-store tablets or smartphones), and introducing robotic servers as part of their digital transformation efforts. Other business categories, such as sushi restaurants, udon & soba shops, Chinese restaurants, ramen shops, and cafes, have also seen a rebound. However, the total number of izakaya (Japanese-style pubs), pubs, and beer restaurants declined during the pandemic, and while there has been an increase in demand for banquets and events, sales have not yet to return to pre-pandemic levels.

Noteworthy Topics

Companies Raise Prices as Cost Reductions Prove Insufficient to Offset Rising Expenses

Over the past few years, companies have faced significant challenges in managing the rising costs of raw materials, employee wages, and distribution. Despite efforts such as changing ingredients and optimizing logistics, it became increasingly difficult for companies to maintain existing prices. As a result, many of them were forced to adjust their pricing.
Several restaurant chains began raising prices in the second half of 2021. Unable to absorb these increased costs, some have implemented regular price hikes, adjusting prices once or twice a year. To mitigate customer turnover from these price increases, businesses are working to strike a balance between maintaining quality and managing price expectations to gain consumer acceptance.
Other strategies include implementing regional pricing, where product prices vary by location based on differences in rent and labor costs, and introducing late-night surcharges to cover the higher wages paid for late-night shifts compared to daytime hours.

Future Outlook

The restaurant market in FY2024 is expected to see an increase in customers traffic compared to FY2023, as socioeconomic activities continue to recover from the pandemic’s impact. In addition, the average spending per customer is expected to increase due to price adjustments. Given the circumstances, we project the overall domestic food service market (including takeaway bentos, delis, and ready-to-eat food) to grow by 2.9%, reaching 32,142,300 million yen in FY2024.

Research Outline