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Food & Beverage

Japan's Ootoya eatery chain branches out to meal kit deliveries

Partnership with Oisix designed to defeat hostile takeover by Colowide

Ootoya's business model of serving made-from-scratch meals at low prices has suffered amid the coronavirus outbreak. (Photo by Ryosuke Eguchi)

TOKYO -- Ootoya Holdings, a Japanese comfort food restaurant operator, will partner with online produce seller Oisix ra daichi to develop a meal kit service targeting the burgeoning demand for stay-at-home meals.

The new subscription service will be announced Friday. Along with the kits, the partners will deliver frozen meals and bento boxes to customers' doors.

Ootoya hopes this venture will build up enterprise value and maintain loyalty among investors in order to fend off a hostile takeover by principal shareholder Colowide. The fellow restaurant operator has launched a tender offer of up to 7.1 billion yen ($66 million) to lift its stake in Ootoya to 51% from 19%.

Ootoya is preparing a detailed growth plan designed to capture support from retail investors, who hold 60% of the company's shares.

If Colowide fails in its tender offer, Ootoya will begin talks with Oisix toward a capital tie-up, an Ootoya insider said.

Oisix delivers farm-fresh organic vegetables through various online portals. The coronavirus pandemic has boosted demand for home delivery, and Ootoya looks to tap Oisix's user base of over 300,000 members.

Oisix will handle manufacturing and delivery of the meal kits and other food, while Ootoya provides the ingredients and recipes. The chain operator also will explore using the foodstuffs supplied by Oisix at its restaurants. The synergies gained from the operational alliance could provide an edge in the boardroom fight with Colowide.

Ootoya's chain serves teishoku set meals, which usually consist of an entree, rice and miso soup. The brand is built on providing affordable meals made from scratch. But Ootoya's existing-store sales sank after Japan's consumption tax hike in October, a problem compounded by voluntary closures in response to the coronavirus outbreak.

Colowide seeks to cut costs by replacing Ootoya's on-site meal preparation with centralized kitchens that supply food to multiple locations. However, voters soundly defeated Colowide's motion to install a slate of executives during the shareholders meeting in June.

Early in the following month, Colowide struck back with an offer to buy shares at a 46% premium. Ootoya aired its opposition to the tender on July 20, officially triggering the hostile takeover bid.

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