TOKYO -- Pepper Food Service, the Japanese company behind Ikinari Steak, reported its first annual net loss in eight years on Thursday as the steakhouse chain popular among domestic patrons struggled to find its footing in the U.S.
Pepper Food logged a net loss of 121 million yen ($1.09 million) for the year ended in December, compared with a 1.3 billion yen profit in 2017. In the U.S., store closings and associated costs forced the company to book about 1.2 billion yen in impairment losses and 1.3 billion yen in loss provisions. A strong showing in Japan and 300 million yen in proceeds from store sales failed to make up the difference.
The success of Ikinari Steak in Japan spurred Pepper Food to bring the chain to the U.S. in 2017. Its American presence expanded to 11 locations, concentrated in New York. The company even listed on Nasdaq in September via American depositary receipts. But the concept failed to catch on with consumers who prefer fast and cheap lunch options like sandwiches.
Sales jumped 75% to 63.5 billion yen, and operating profit rose 68% to 3.8 billion yen. While same-store sales at Pepper Food's Japanese steakhouses declined, the addition of about 200 locations boosted profit.
Tokyo-based Pepper Food expects to return to the black in 2019, forecasting net profit of 3.4 billion yen. Sales are projected to rise 47% to 93.5 billion yen.