TOKYO -- Yoshinoya Holdings posted a 500 million yen ($4.61 million) operating loss for the nine months ended in November, largely from wage hikes aimed at attracting and retaining staff in labor-short Japan.
The restaurant operator's first operating loss for the period in nine years, announced Thursday, was also blamed on increased store openings pushing up personnel costs. The Tokyo-based company reported a 2.5 billion yen operating profit a year earlier.
Sales rose 2% year on year to 150 billion yen. Robust demand for seasonal offerings, which carry higher prices, drove a 2.7% gain in same-store sales at the namesake Yoshinoya beef bowl chain. New stores also buoyed overall sales at the Hanamaru line of udon noodle outlets.
Yet growth is slowing. Same-store sales at the Yoshinoya chain dipped 0.7% on the year in October, the first decrease in a year, followed by a 3% decline in November. Competition in Japan's fast-food industry is only growing as consumers seek out cheaper meals.
The beef bowl chain scaled down its seasonal menu in an effort to lighten the workload of kitchen staff, but this apparently backfired on earnings.
The high cost of beef and other ingredients has not helped, either. But the biggest blow was payroll. Hourly wages for part-timers are rising amid Japan's labor crunch, and selling, general and administrative expenses rose by about 4.1 billion yen year on year to 96.8 billion yen for March-November -- the biggest jump in five years.
This meant that selling and administrative costs were equivalent to about 65% of revenue, up more than 1 percentage point. Higher costs pushed the company into the red for the nine-month term, even after eking out a 55 million yen operating profit in the March-August half.
The net loss for the nine months came to 1.5 billion yen.
Yoshinoya still expects sales to climb 3% to 205 billion yen for the full year, with operating profit dropping 73% to 1.1 billion yen. The company said it was waiting to see how it does in the fourth quarter, typically a busy season. But whether it will be able to meet the full-year estimates remains unclear, given that results so far this fiscal year have missed company projections.