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Food & Beverage

Japan's Saizeriya bets on downsized restaurants amid pandemic

The chain known for finding profits with low prices struggles with distancing

Saizeriya, a restaurant operator known for low-cost Italian meals, will start opening new outlets that are 60% the size of its existing eateries.

TOKYO -- Saizeriya, the operator of a chain of affordable Italian eateries in Japan known for its ability to thrive in a deflation-hit economy, will open new restaurants with smaller footprints in Tokyo as the food services industry pivots to lower-cost and delivery options amid the pandemic.

By April, the chain operator will have compact outlets about 60% of the size of its current restaurants. The diners will be almost the same size as an average Japanese convenience store. The costs for refrigerators and other equipment as well as for rent and labor will be reduced.

In fact, the cost of opening one of the new outlets will be about half that of a full-size restaurant.

The small-footprint restaurants will have seats for solo, dine-in customers. Each dining space will be partitioned on both sides.

Saizeriya has already reduced the number of seats in its restaurants by about 20%, per social distancing measures, so the new eateries will be able to seat about the same number of patrons as existing shops currently do, according to Saizeriya.

Menus and prices will not change, but delivery and takeout orders will be emphasized to meet the increasing demand for restaurant-prepared meals that can be eaten at home.

Saizeriya expects each of the smaller outlets to make about 10 million yen ($94,500) in monthly sales, the same as existing restaurants.

Plans are for 10 of these diners to be open by next August, mainly in Tokyo.

Restaurants across Japan have been struggling amid the coronavirus as social distancing takes hold, local governments request reduced operating hours and restaurant-goers shy away from dining out, fearing the virus.

According to the Japan Food Service Association, the industry's sales in the five months through July were down 20% to 40% compared to the year-earlier period.

Saizeriya was once dubbed a deflation conqueror because of its ability to turn profits with a low-priced menu.

But existing store sales have been below year-earlier levels for six consecutive months now, since March, and the industry as a whole does not expect to find its way back to pre-COVID revenue levels.

In Japan, 100 major pub and restaurant operators, including Colowide, Watami and Yoshinoya Holdings, had to close more than 1,000 restaurants as of late July due to the new normal. According to Teikoku Databank, 538 restaurants went bankrupt from January to June, a record number.

Reducing operating costs and securing new sources of income are priorities. Mos Food Services has started experimenting with robots. Seven & i Food Systems, operator of the Denny's chain of family restaurants, has set up a kitchen in Tokyo dedicated to home deliveries.

Although the number of people infected with the coronavirus is trending down in Japan, there are fears that winter could bring a new wave of infections.

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