Mitaka No. 3 Office, where the headquarters of Skylark Holdings is located.
Skylark, a major restaurant operator that operates restaurants such as Jonathan and Gust, continues to struggle.
During the financial results for the first half of the fiscal year ending December 2022 on August 12, Skylark Holdings Chairman and President Makoto Tanima said indifferently that the company is in an extremely difficult situation.
The seriousness of the situation is clearly shown in the large downward revision of the earnings forecast for FY2022.
The previous forecast was for operating income of 10 billion yen and net income of 4 billion yen, but after the revision, operating income is 1/20th of the forecast, to 500 million yen, and net income is -2 billion yen. I was driven.
Taking this situation seriously, SkylarkClosure of 100 stores, including unprofitable storesdecided.
The decision to close the store was made at the end of June, and the actual closure will take about six months, at the beginning of 2023. The group, which had 3,088 stores nationwide as of the end of June, will drop below 3,000 stores in early 2023.
What is going on in Skylark right now?
“Inflation impact” is too big
Chairman and President Tanima of Skylark Holdings presents a summary of business results at a financial results conference.
There are multiple factors behind the deterioration in performance, but what I feel is more than expected in the financial results briefing materials is not only the impact of the 7th wave of the corona virus, but also the considerable impact of inflation.
Skylark has announced that the negative impact is expected to weigh 4.1 billion yen in the first half alone and 12.3 billion yen for the full year.
Executives have also said that higher inflation-related costs are “becoming more than expected.”
A document showing the pressure on income and expenditure due to cost-push-type cost increases, such as soaring food prices due to the weak yen, rising utility costs, and rising minimum wages.
Changes in daily sales of eat-in (in-store dining). In the past, the number of cases decreased sharply during the period when a state of emergency was declared and measures to prevent the spread of the virus were applied. Recently, the number of infected people in the 7th wave of 250,000 people is around 250,000, and it is said that the situation is similar to the austere situation even without movement restrictions.
In addition to these, there is also a sudden drop in customer traffic due to the influence of Omicron stock and the 7th wave.
Chairman Tani has previously mentioned the possibility that the number of dinner customers will not return as it is, but he once again acknowledged that “lifestyles have completely changed” in the current financial results.
Especially in provincial cities, the decrease in the number of customers due to the heightened awareness of protecting their lives due to the impact of inflation is remarkable, and in the city center, the performance of Jonathan’s and other urban stores is in a difficult situation due to factors such as the drop in the rate of people coming to work.
At the moment, no state of emergency has been declared, but it is in the same “austere state” as when it was issued (Mr. Tani).Say.
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How far will the menu price increase go?
Various factors after the downward revision of the full-year earnings forecast. The inflation factor increased by about 4.5 billion yen from the initial forecast to 12.3 billion yen. It weighs on your bottom line.
On the other hand, it’s not all bad.
For example, stores located in front of stations are “never worse than last year” (Mr. Tani), and while closing roadside stores whose profitability is deteriorating, they also indicated a policy to consider new exhibitions in good locations.
Nonetheless, there is no doubt that a fundamental transformation of the business format and business model is under pressure.
At Skylark, we are trying to overcome this predicament through the two axes of “increase in average spend per customer” and “improvement in productivity.”
However, an increase in average spending per customer is a double-edged sword.
In the first place, Skylark set a menu system in preparation for future price increases, with the goal of “developing an affordable menu” in the 2021 full-year financial results half a year ago. After that, in the price revision in July, the average price was raised by 2.4%.
However, the current upward pressure on costs (cost push) is only increasing. In the future, Mr. Tani said, “It seems likely that some products will have to be raised by 100 yen.”
Careful judgment is required while watching the number of customers as to how much price increase is acceptable.
Skylark is also promoting the introduction of large-scale catering robots to improve operational efficiency.
“Bellabot” is a catering robot introduced by the Skylark Group. Manufactured by Pudu Robotics, a robot company in Shenzhen, China. The picture is of Skylark’s chain “Shabuha”.
In response to a question from Business Insider Japan, Executive Officer Hirano (Managing Director of IT Headquarters) said,
“We’re seeing an increase in customer turnover during peak times[at restaurants where it’s installed, such as Gusto and Bamiyan].”
“A 5-7% (rpm) improvement (in Gust, Bamiyan, etc.)”
explains that there is Specifically, we have achieved results such as a 30% reduction in dwell time from cooking to serving, and a 2 minute reduction in the time taken to put down dishes after a meal.
In addition, we will change the menu, shorten business hours, strengthen cooperation with home delivery services, and reorganize the production line.
The issue of securing a labor force that will emerge in the future
In this difficult business situation, in July, the Skylark Group was also reported to have a power harassment problem in which Jonathan’s former store manager assaulted a male employee (the store manager was disciplined, and the employee was charged with injury). policy of prosecution).
Mr. Tani responded to Business Insider Japan’s question about the power harassment issue.
“Since this is an individual store incident, we do not expect that it will have a significant impact on the 3,000 Skylark Group stores. want to go”
replied.
At the end of the financial results conference, Mr. Tani said,
“As a table service restaurant, cost, utility costs, and labor costs have risen, and we are in a situation where we can’t do anything other than raise prices.”
“With the 31 yen increase in the minimum wage, the 1,030,000 yen problem and the 1,300,000 yen problem will become a major problem (in the future). The situation will continue to be very difficult, including the need to secure workers.
The industry as a whole is in trouble. In an era when hiring is difficult, I would like to increase the average customer spend and grow the business.”
and
The steering of a huge restaurant group with 5,995 full-time employees and 88,849 crew members (as of June 30) is attracting attention.
(Text by Yu Ito)
Source: BusinessInsider
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