Izakaya economics: Japan’s traditional night out fights tooth and ale for survival
Japan's izakaya, those cozy restaurant-bars that serve a variety of small plates and drinks, are facing a challenging time. The once-thriving industry is now struggling to stay afloat, with a record number of closures and an uneven distribution of damage. While some izakaya are flourishing, others are struggling to adapt to changing economic conditions and customer preferences.
One area that has seen a significant impact is Tokyo's trendy Shimokitazawa district. The district, known for its narrow winding streets and quirky stores, has long been a popular destination for young Japanese and overseas visitors. However, the izakaya in Shimokitazawa tend to be traditional, with a focus on serving local customers rather than attracting tourists. As a result, the district's izakaya are struggling to stay open, with some even closing earlier than usual.
The challenges faced by izakaya are not new. In the past, the industry has faced crises such as the dotcom bubble bursting, stricter drink-driving laws, and the aftermath of the 2011 earthquake, tsunami, and nuclear meltdown. However, the current situation is more severe, with a record number of closures and an increase in food, drink, and personnel costs. Younger people are drinking less alcohol, and quasi-compulsory boozy afterwork parties, once a backbone of Japanese corporate culture, are declining.
One izakaya owner, Shotaro Kawada, who manages Kiraku in Shimokitazawa, notes that younger people are drinking much less compared to three or four years ago. This, combined with sharp price rises for draught beer and sake, has made business tough. Kawada also mentions that the serving of horse meat, which is a mainstay at Kiraku, puts off a lot of overseas visitors.
Despite these challenges, some izakaya are finding ways to adapt and survive. Kotaro Nakatsuka, the manager of Erakokyu, a seafood speciality izakaya, has implemented a range of strategies to make the business succeed. These include adjusting the menu according to daily price fluctuations for fresh seafood, speeding up customer turnover while ensuring a friendly atmosphere, and making all prices end in "00" to reduce the need for change at the till.
One of the most significant threats to izakaya is the British pub chain HUB. HUB, which was founded in 1980 by the president of a major supermarket chain, has grown to become a chain of 110 pubs across Japan. The company uses domestic marketing tactics to win fans, including collaborations with anime and manga IP, YouTubers, and VTubers. Big-screen sport, particularly Premier League and J League football, is also a pillar of the HUB experience.
Despite the challenges faced by izakaya, the industry is unlikely to disappear anytime soon. Japan is unlikely to replace raw fish and rice with fish and chips, and the izakaya's unique atmosphere and culture will continue to attract customers. However, the industry will need to adapt and innovate to stay competitive in a changing market.
