The COVID-19 pandemic has been hell on restaurants worldwide. Many have had to shutter their doors permanently.
Japan is no exception to this trend. The country’s ramen shops, in particular. appear to be closing at an accelerated rate. However, one expert argues that, at least when it comes to ramen, fewer shops might be a good thing. Or, if not good, at least a cruel necessity.
Rapidly Vanishing Ramen
The ramen industry had been facing difficulties even before the pandemic. As Alyssa Fusek wrote last year, many smaller, non-chain stores have had a tough time surviving due to the lack of successors. Japan’s dwindling population means fewer people left to pass the family business down to.
The pandemic added an extra layer of challenge – not just for small shops, but for large ramen chains as well. Research firm Teikoku Databank recently announced that 34 ramen shop brands had shut their doors already this year. That’s the first time closures have exceeded 30 at this point of the year since 2000.
Writing for Toyo Keizai, ramen expert Ite Taicho argues that ramen shops were particularly ill-equipped to survive the pandemic. Other restaurants were able to switch to takeout with little issue. But ramen, Ite says, is different. Since noodles tend to get soggy and lose their shape, it’s not an ideal food for take-out. Ite says he knows a few stores that have managed it. By and large, however, most haven’t made the transition.
The 1,000 Yen Wall
In other words, ramen shops' continued existence depends on a business model that the pandemic has made impossible. Share on XIte also brings up something else about the ramen business that I saw covered recently on Japanese TV. Ramen is, by nature, a low profit, quick return business. This is due in part to ramen’s “1000 yen wall”. Most ramen shops have shirked from exceeding a price point of 1,000 yen (around USD $9). Anything more than that, convention holds, is considered “too expensive” in Japan, where ramen reigns as one of the country’s cheap eats.
In reality, ramen goes for far cheaper than that. According to data collected by Japan’s Ministry of Internal Affairs, the average price of a bowl of ramen in 2020 was 523 yen. That’s actually 27 yen less than what it cost 20 years ago!
In other words, no one gets into the ramen business for the ridiculous profit margins. It’s all about packing as many people into the store and turning them out as quickly as possible.
To put it another way, many ramen shops’ continued existence depends on a business model that the pandemic has made impossible.
Higher Prices Mean Better Wages, Quality
According to data collected by Japan's Ministry of Internal Affairs, the average price of a bowl of ramen in 2020 was 523 yen. That's actually 27 yen less than what it cost 20 years ago! Share on XHowever, says Ite, there’s some hope. A few of Japan’s most popular ramen shops (as determined by the Japanese restaurant review site Tablelog) have managed to exceed the 1000 yen price point without driving away customers. Tsuta, the first ramen shop to earn a Michelin star, retails its product for around 1300 yen.
This, says Ite, is a good thing. Shops that manage to retain their prices, he argues, have more money to retain employees and pay them decent salaries. Plus, it means shops can use higher quality ingredients – thus producing an even better product.
The shuttering of ramen shops, Ite concludes, is a clear sign that some shops must find a way to raise their prices to survive:
ๆฅๆฌใใฐใฎๆฅญ็ใซ้ซ็ดใใฐๅบใใ็ซใก้ฃใใใฐๅบใพใงใฌใใซใฎๅทฎใใใใใใซใใฉใผใกใณใฎไธ็ใ1000ๅ่ถ ใใฎใฉใผใกใณๅบใจไฝไพกๆ ผใฎใฉใผใกใณๅบใๅ ฑๅญใงใใใใใชๅฝขใไฝใไธใใใใใใใใใพใงใฏ้ซ็ด้ฃๆใไฝฟ็จใใฆใใใๅบใ ใใไพกๆ ผใฎไธไนใใงๅ ่กใงใใใใใฉใผใกใณๅบใจใใฆใฏโ่ทไบบใฎๆ่กโใซๅฏพไพกใใฉใๆใฃใฆใใใใใฎไปๆใใ่ใใฆใๅฎ่กใใฆใใใชใใใฐใชใใชใใๅ็ดใชไฝไพกๆ ผ็ซถไบใซๅทปใ่พผใพใใฆใใฆใฏใใธใช่ฒงใ ใ
In the same way that you have different levels of soba shops – from high-end soba to eat-and-run shops – I wonder if we’ll see shops that cross 1000 yen existing alongside low-cost shops. Until now, it’s been the shops that use high-end ingredients that have led the charge on raising prices. But ramen shops need to think about what value they can attach to their artisan skills. Getting caught in a simple race to the lowest price point will only make things worse.
