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Business trends

Japan's restaurants tap IT companies for deliveries

Labor shortage prompts McDonald's to partner with Uber

Osaka Osho operator Eat & Co. is expanding home delivery service.

TOKYO -- Restaurant operators in Japan are turning to IT companies like Uber Technologies to improve delivery services, as demand from busy parents and the elderly increases but workers become more difficult to attract and retain.

The moves are part of a larger trend to break down the border between traditional brick-and-mortar businesses and digital services. A growing number of companies are crossing over into each others' realms.

A rush of tie-ups

McDonald's Holdings (Japan) announced on Monday that it will introduce Uber's food-delivery service, UberEats, to 33 Tokyo locations starting Thursday. The fast-food chain's own McDelivery service is currently available at a cost of 300 yen ($2.69) for orders totaling 1,500 yen or more. UberEats costs 380 yen, but has no such minimum, making it easier for a single household to use.

Customers can place an order through UberEats' smartphone app or website. A registered Uber driver then picks up the food and delivers it. McDonald's Japan will be able to reduce costs because it won't have to pay for delivery staff or their transportation. With the tie-up, the fast-food chain hopes to expand its delivery business. Some McDonald's Japan locations haven't been able to keep up with delivery orders due to a labor shortage.

Eat & Co., which operates Chinese restaurant chain Osaka Ohsho, recently began using internet company Yume No Machi Souzou Iinkai's home-delivery website at a location in Kanagawa Prefecture. The restaurant operator says it has difficulty securing delivery personnel, and is considering turning to virtual mall operator Rakuten's delivery service as well.

Beef bowl purveyor Yoshinoya Holdings also started using Yume no Machi's service for deliveries at some of its locations this month. Meanwhile, Sushiro Global Holdings, operator of sushi chain Sushiro, has teamed up with Uber and Rakuten to begin delivery service.

Demand for food delivery is growing in Japan among groups such as senior citizens, parents with children, and office workers who need to finish lunch quickly. Such services are "convenient when I don't want to go out to eat," said an office worker in her 20s.

Japan's severe labor crunch is forcing some restaurant chains to shrink their operations. Royal Holdings' mainstay Royal Host restaurants ended 24-hour operations in January, while Skylark has reduced operating hours at its locations. Eateries are finding it increasingly difficult to maintain long hours of operation as they struggle with diminishing sales even as hourly wages in the food industry reached a record high in May for Japan's three largest metropolitan areas.

Blurred lines

While more retailers and restaurants are teaming up with internet companies to bring products directly to consumers, more online businesses are buying up brick-and-mortar stores, further blurring the line between traditional and digital enterprises.

The most prominent example was Amazon.com's recent announcement that it will acquire U.S. supermarket chain Whole Foods Market for $13.7 billion. The American e-commerce giant is also field-testing stores that allow customers to shop and pay without stopping at a register through artificial intelligence technology and virtual payment systems. In Japan, retailer FamilyMart UNY Holdings and Line, operator of the country's most popular messaging app, have joined forces to develop next-generation convenience stores.

(Nikkei)

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