August 12, 2016 10:30 pm JST

Japanese restaurants feed global ambitions with New York branches

ELISABETH ROSEN, Contributing writer

Yakiniku Futago's restaurant in downtown New York City has smooth wood paneling and elaborate acoustics, unlike the chain's more informal branches in Japan. (Photo by Elisabeth Rosen)

NEW YORK -- Even in New York City, it's hard to beat the spectacle of ordering "hamideru kalbi" at Yakiniku Futago.

Heads turn as a massive slab of marbled wagyu beef is carried through the dining room in a fog of dry ice. The server then shouts in Japanese that it's ready to cook. Already briefed on the correct response, the diners who ordered the $45 steak -- a day in advance, as there are only 10 servings each night -- shout out: "Yoisho!" (Let's go!) and the meat lands on the grill with a dramatic sizzle.

Scenes like this could soon be increasingly common. Facing slowing domestic consumption, Japanese restaurants are using New York City as a stepping stone to expand in the U.S.

At least a dozen Japan-based restaurant chains opened U.S. branches in the past year or plan to open by year-end. Eight are in New York, ranging from noodle joints such as Zundo-ya and TsuruTonTan Udon Noodle Brasserie to upscale Sushi Ginza Onodera, where an "omakase," or a chef's selection, can cost as much as $400.

"Fifteen years ago, there were no Japanese chains in New York, only mom-and-pop shops. But now a lot of big brand names are coming to New York," said Satoru Yasumatsu, general manager at Yakiniku Futago, which opened in downtown Manhattan in 2015.

For many companies, the symbolic importance of establishing a presence in the Big Apple outweighs what are often higher investment costs.

"To announce in Japan that you have a branch in New York -- that's a big plus for the Japanese consumer. If you succeed in New York, you can get investors from all over the world," New York-based restaurant consultant Shigeko Fuke said.

Slowing home market

Restaurateurs are also motivated by the prospect of shrinking domestic sales. Consumer foodservice growth in Japan slowed last year, with restaurant output forecast to increase less than 1% between 2013 and 2018. Meanwhile, the American foodservice market is growing by more than 3% and there is surging demand for Asian food in the country.

"Consumption in Japan is not growing anymore, so companies have to look outside Japan for business. They see other restaurants succeed in New York, so they follow," said Ami Nakanishi, vice president at New York Mutual Trading, a restaurant supplies and equipment wholesaler.

If restaurants like Zundo-ya and Yakiniku Futago are succeeding, that is due in part to increasing familiarity with the cuisine. A decade ago, few New Yorkers knew that there was more to Japanese fare than sushi. Now, customers readily toss out words like "tonkotsu"(pork broth) and "gyoza" (fried dumplings).

"New Yorkers are becoming much more aware of regional Japanese cuisine, and are becoming familiar with the depth of real Japanese food," said Steven Hall, founder of restaurant-focused agency Hall PR.

These factors have fueled ambitious expansion plans. Yakiniku Futago, which specializes in tabletop-grilled wagyu beef, aims to open 50 U.S. restaurants within five years -- 15 more than it currently has in Japan -- including a second branch in New York that could open as soon as next year. Similarly, ramen joint TsuruTonTan has just 13 outlets in Japan but aims to establish branches "all over the U.S." after opening one in New York in August, said Joji Uematsu, vice president of Dining Innovation, which owns the chain.

For these companies, New York plays a central role in their strategy. This is the first location outside Japan for many of them, such as TsuruTonTan and Zundo-ya. Even Yakiniku Futago and Sushi Ginza Onodera, which already has branches in Hawaii, view the recent New York openings as more important to their business strategy.

"We have decided that New York is the key to success for expanding the Onodera brand to the world," said Kazuhiro Ueo, executive officer at the New York branch of the sushi restaurant, which is owned by the Japanese catering company LEOC.

Abundant challenges

However, establishing a new restaurant in New York presents a number of daunting obstacles, from finding a location to hiring a contractor and dealing with aging infrastructure. Regulations can be another hurdle, such as obtaining a liquor license, which is crucial in the U.S. but unnecessary in Japan.

The city's infamously high rents also make it difficult to turn a profit. A lease in densely populated Midtown can cost more than $70,000 per month.

Marketing can be an additional struggle, as business owners used to custom by word of mouth in Japan might not understand the power of food critics and social media to determine a restaurant's future -- or be able to create the atmosphere that reviewers consider desirable.

"Atmosphere is far more important in New York than Tokyo. In New York, you need to back up the food with other aspects to give diners a complete experience," Hall said.

For that reason, low-key restaurants in Japan have significantly altered their strategy in New York. While Yakiniku Futago's Japanese branches are small, sparsely decorated, with raised gas grills on each table, the New York restaurant has wood paneling and elaborate acoustics created by a Japanese sound designer: Customers in one of the private rooms might be treated to soothing classical music subtly overlaid with the chirping of birds, while a more energetic soundtrack might be played in the main dining room. The grills are also set into the tables for a smoother, more elegant look.

Ootoya, which arrived in New York in 2012, also tried to recreate its three Manhattan restaurants as fine-dining locations. Home-style dishes like grilled mackerel and simmered pork belly arrive on elegant lacquered trays, and the spacious, warmly lit rooms bear little resemblance to the company's 344 restaurants in Japan.

"Design-wise, Ootoya in Japan is very casual, but we designed the New York restaurants to be modern and Japanese to meet the expectations of the customers here," said America Ootoya CEO Tomonori Takada.

Even ramen restaurants -- the epitome of casual dining in Japan -- have adopted a more sophisticated vibe in New York. At Zundo-ya, garnishes such as pickled ginger and sesame seeds arrive on minimalist ceramic trays presented with a ceremonial flourish.

As a result, diners see the restaurant as a destination -- to the amusement of Japanese staff accustomed to thinking of the noodle soup dishes as something more akin to fast food. General manager Ryota Orita recounted his surprise when a group of customers brought a cake to celebrate a birthday. In Japan, he said, that might happen at a French bistro, but never in a ramen shop.

Customers in New York expect restaurants to deliver memorable experiences, and Japanese businesses are adapting fast to ensure they can survive in the increasingly crowded market.

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