ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintSite TitleTitle ChevronIcon Twitter
Food & Beverage

Fans of eatery Ootoya block top shareholder's cost-saving ax

Freshly grilled fish cannot be replaced by factory-made dishes, they say

Ootoya is known for its teishoku -- a set meal usually consisting of an entree, rice and miso soup -- prepared from scratch at each of its locations. (Photo from Ootoya Holdings' Facebook page)

TOKYO -- Ootoya Holdings has prevailed in its battle to preserve its founding philosophy -- serving Japanese comfort food made fresh at each restaurant -- with overwhelming support from retail shareholders who love the food served at the company's eateries.

At issue during Thursday's annual shareholders meeting was whether to abandon the company's current approach to cooking and set up central kitchens that churn out meals for multiple locations.

The idea had come from Ootoya's top shareholder, compatriot Colowide, which nominated a set of executives who would back its proposal. Colowide argued it would cut costs, speaking from its own experience of having extensive supply chains for its own eateries, like Japanese-barbecue chain Gyu-Kaku.

"I'm a huge fan because I can get traditional food, with five-grain rice and miso soup, for a reasonable price," said a shareholder who sided with Ootoya at the meeting. "I had the steak bento box just the other day. I'm extremely happy that I get that much food for about 1,000 yen ($9.30)."

More than 80% of voting shareholders ultimately backed Ootoya's management, according to the company. Some of the strongest support came from retail investors, who hold roughly 60% of its shares.

"I like the current menu," another shareholder said. "I don't know what this Colowide company is all about."

Colowide's nominees included Tomohito Mitsumori, the eldest son of Ootoya's de facto founder, Hisami Mitsumori. The younger Mitsumori had clashed with corporate leadership following his father's sudden death in 2015. He later left Ootoya's board and transferred almost all of his and his family's stake in Ootoya to Colowide in October 2019.

Colowide positioned Tomohito Mitsumori as a true champion of his father's goal -- turning Ootoya into Japan's No. 1 restaurant for teishoku set meals, which commonly consist of an entree, rice and miso soup.

But Ootoya President Kenichi Kubota insisted that he and the current leadership were more aligned with the founder's ideals. The company publicly framed its feud with Colowide as the battle between locally based eateries and factory kitchens.

Ootoya Holdings President Kenichi Kubota speaks to reporters after the shareholders meeting on June 25. He remains committed to making all meals on-site. (Photo by Yo Inoue)

Preparing all its food at each restaurant has been the company's selling point. When Hisami Mitsumori was alive, Kubota would visit locations where the founder was working to learn how the food was made, down to how each piece of scallion was chopped.

"In order to protect Ootoya's future, we will never not make our meals on-site," Kubota stressed at the shareholders meeting.

But the current approach comes with heavy costs, especially as Japan's restaurant industry grapples with a labor shortage. Price hikes have driven some customers away, and existing-store sales fell a fifth straight year for the 12 months ended March. The company also logged its first annual net loss since going public, bleeding 1.1 billion yen ($10.3 million) in red ink.

The coronavirus outbreak has only made matters worse. The restaurant industry could shrink as much as 16% to 28.6 trillion yen in 2020 because of the pandemic, according to research company Fuji Keizai.

"The figure could keep falling with more people staying home," said Seiichiro Samejima of the Ichiyoshi Research Institute.

Ootoya expects eat-in sales to fall 20% to 30% from pre-coronavirus levels, owing to reduced seating and other infection prevention measures. To offset this, it wants to sell more bento boxes and frozen foods. But "there's a lot of competition, and Ootoya doesn't have a unique edge in the field," an analyst at a Japanese brokerage said.

Colowide declined to comment on the shareholders meeting but could attempt a takeover of Ootoya.

Not all Ootoya shareholders are completely sold on the current management, either.

"I voted with the company this time, but I'm not that happy with the executives," one shareholder said. "I'd be open to selling my shares if Colowide gives me an attractive tender offer."

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media