Sector Trend Analysis – Foodservice trends in Japan

Market overview and consumption trends

The current population of Japan is 123,562,121 as of Wednesday, October 16, 2024, based on Worldometer's elaboration of the latest United Nations data. The gross domestic product (GDP) in Japan was worth 4.1 trillion US dollars in 2024, according to official data from the World Bank. The GDP value of Japan represents 4.2% of the world economy.

Consumer foodservice

Consumer foodservice continued to see strong recovery in Japan in 2023, posting double-digit growth in current value sales in line with the recovery of flows of consumers after the downgrading of the status of COVID-19. On 8 May 2023, the Japanese government announced that it would reclassify COVID-19 as a class 5 infectious disease - the same classification as seasonal flu. As a result, decisions regarding infection control were left to individuals and businesses as a general rule. This shift pushed consumers in Japan to return to pre-pandemic behaviours, including dining out (Euromonitor 2024).

Compared with the consumer spending US$157,343.6 million in 2019, consumer spending declined to US$122,945 million in 2020, US$113,579.5 million in 2021 and US$134,188.8 million in 2022. In 2023, it gradually recovered to US$156,111.8 million but not recovered to the 2019 level.

In 2023, the chained consumer spending US$81,753.0 million surpassed the 2019 level: US$77,508.6 million, 2020 level: US$68,475.8 million and 2021 level: US$67,787.4 million and 2022 level: US$74,248.7 million.

However independent consumer spending US$74,358.8 million in 2023 was lower than 2019 level: US$79,835.0 million but higher than that in 2020, 2021 and 2022.

Consumer spending is forecast to increase at a CAGR of 2.6% between 2023 and 2028. Among which chained consumer foodservice will grow 2.5% and independent consumer foodservice will grow 2.7% between 2023 and 2028.

Company shares

Top three companies are Seven & I Holdings Co Ltd, representing 7.5% market share, McDonald's Corp representing 3.3% market share and enjoyed the fastest CAGR growth of 10.7% from 2019 to 2023, Lawson Inc representing 2.8% market share.

Full-service restaurants

After COVID-19 was downgraded to class 5 in May 2023, consumers felt more comfortable eating out. This contributed to a sales rebound for full-service restaurants, but challenges remained. Costs continued to rise, and players continued to find it difficult to control production costs. In particular, the weakening yen impacted the costs of imported products such as meat and wheat. Logistics and energy costs also remained high. Although some companies had already implemented price increases in 2022, it became inevitable that they would increase prices again in 2023, as production costs remained high (Euromonitor 2024).

The frequency of eating out at full-service restaurants has not recovered fully, due to changes in consumers' lifestyles, such as hybrid working or full-time working from home, which led more people to get used to eating at home compared with pre-pandemic. Moreover, inflationary pressure made consumers more selective and careful with their spending. Full-service restaurants are facing the challenge of balancing between price increases and attracting back consumers (Euromonitor 2024).

Compared with pre-pandemic year 2019, US$21,306.2 million, consumer spending on the chained full-service restaurants declined to US$17,473.9 million in 2020, US$17,113.4 million in 2021 and US$19,243.1 million in 2022 respectively, but rebounded to US$21,535.3 million in 2023. Independent full-service restaurants declined to US$35,776.1 million in 2020, US$30,753.1 million in 2021, US$40,055.9 million in 2022 and US$48,663.2 million in 2023 respectively from US$51,583.5 million in 2019. Same situation falls on Asian full-service restaurants (chained and independent), European full-service restaurants (chained and independent).

It is forecast that the foodservice sales will grow at a CAGR of 3.0% between 2023 and 2028 as the Covid-19 dies down and customer choose to enjoy the full service restaurants more often. Chained full-service restaurants will grow at a CAGR of 3.0% and Independent full-service restaurants will grow at CAGR of 3.0% from 2023 to 2028. All the other types of full-service restaurants will be on the same positive trends from 2023 to 2028.

Company shares

Top three companies are Skylark Group, representing 2.8% market share, Zensho Holdings Co Ltd representing 2.2% market share, Food & Life Companies Ltd representing 2.0% market share in 2023. Kura Corp enjoyed the fastest CAGR growth of 12.5% from 2019 to 2023.

Limited-service restaurants

Limited-service restaurants continued to see a positive current value performance in 2023, mainly driven by unit price increases. Although some companies had already implemented price increases in 2022, it became inevitable that they would raise prices again in 2023, as production costs remained high. With consumers tightening their budget and becoming more selective, pricing strategy was key to retain consumers (Euromonitor 2024).

Japanese consumers have seemed to accept price increases in limited-service restaurants, as the unit prices in such outlets are still lower than other options, such as full-service restaurants. However, pricing will remain one of the key strategies to continue attracting price-sensitive consumers (Euromonitor 2024).

Consumer spending on the limited-service restaurants continued to increase from 2019 to 2023, at a CAGR of 2.5%, reaching US$56,429.9 million in 2023, surpassing 2019 level: US$51,112.0 million. Same is true with the chained limited-service restaurants and independent limited-service restaurants at a CAGR of 2.8% and 1.1% respectively, reaching US$47,376.2 million and US$9,053.6 million respectively in 2023 surpassing their respective 2019 level.

Independent chicken limited-service restaurants recorded the biggest growth at a CAGR of 15.0% from 2019 to 2023, reaching US$13.3 million in 2023, followed by Chained Burger Limited-Service restaurants at a CAGR of 8.9%, reaching US$6,260.8 million.

Over the forecast period, limited-service restaurants are projected to increase at a CAGR of 1.9% from 2023 to 2028, reaching US$62,063.0 million in 2028. All the subcategories grow between a CAGR of 0.3% (Independent Pizza Limited-Service Restaurants) and 2.8% (Chained Convenience Stores Limited-Service Restaurants and Chained Latin American Limited-Service Restaurants) from 2023 to 2028.

Company shares

Top three companies are Seven & I Holdings Co Ltd representing 20.1% market share, McDonald's Corp, representing 8.6% market share and enjoyed the fastest CAGR growth of 6.8% from 2019 to 2023, Lawson Inc representing 7.8% market share.

Cafés and bars

Consumers returned to going out, and enjoyed dining out. In particular, bars/pubs, which suffered the most within cafés/bars during the pandemic, showed a significant rebound, with strong double-digit current value growth from 2022 to 2023. Companies have gradually increased the proportion of their employees coming into the workplace, contributing to more drinking opportunities after work. Also, the decline in the number of outlets hindered the recovery of bars/pubs, which lost 30% of its outlets between 2019 and 2023. The lack of outlets during a period of recovery of demand led to lost opportunities. Another trend was the increase of online reservations. With the lower number of outlets, reservations have become more important to secure a place to eat and drink out (Euromonitor 2024).

It will be difficult for bars/pubs to recover to the pre-pandemic level of value sales, and this is not expected by the end of the forecast period. As noted earlier, the pandemic has changed the lifestyles of many people, including their drinking habits. Also underpinned by younger generations refraining from alcohol, as they see drinking as a low "time-performance" exercise, the demand for alcohol is forecast to continue decreasing (Euromonitor 2024).

Sales of café/bars plummeted in 2020 at US$18,224.5 million, 2021 at US$13,454.9 million, 2022 at US$19,831.8 million and 2023 at US$27,346.1 million compared with US$31,429.3 million in 2019. The CAGR growth for cafés/bars was −3.4% between 2019 and 2023, in which chained cafes/bars was −2.2% and independent cafes/bars was −4.3%. Only Chained specialist coffee and tea shops has a positive CAGR of 5.1% from 2019 to 2023.

Over the forecast period, cafés/bars are projected to increase at a 2.7%, reaching US$31.3 billion in 2028. Although the recovery of cafés/bars is expected to be slower than other consumer foodservice channels, sales of the most categories and subcategories are expected to return to pre-COVID levels in 2024. All the categories and subcategories will have positive CAGR from 2023 to 2028.

Company shares

Top three companies are Starbucks Corp, representing 6.2% market share, Doutor Nichires Holdings Co Ltd, representing 2.9% market share, Monteroza Co Ltd, representing 2.7% market share. McDonald's Corp enjoyed the fastest CAGR growth of 28.8% from 2019 to 2023 followed by Starbucks Corp at a CAGR of 11.6% and Komeda Co Ltd at a CAGR of 11.3%.

Self-service cafeteria

Despite rising menu prices, self-service cafeterias benefited from attracting price-sensitive consumers, who were increasingly watching their budgets due to inflationary pressures. As many other types of consumer foodservice options also showed price increases, Hanamaru and Marugame Seimen continued to be cheaper options. Sales therefore showed relatively fast recovery, returning to the pre-pandemic level in value terms in 2023 (Euromonitor 2024).

Within self-service cafeterias, Ikea Restaurant leads in terms of sustainability. Ikea Restaurant globally aims to decrease the actual amount of greenhouse gas emissions by 15% compared with fiscal year 2016. In FY2022, while production volumes increased by 10% worldwide compared with FY2016, greenhouse gas emissions were decreased by 5% YoY, or 12% compared with FY2016. To achieve this, it carries out various measures. One of the new initiatives seen in 2023 was the launch of plant-based ice cream. After two years of development, the product was generated in Japan, and started to be sold at JPY50, the same price as its standard ice cream made with cow's milk (Euromonitor 2024).

Sales of self-cafeteria rebounded and surpassed in 2023 at US$1,832.3 million, compared with US$1,661.0 million in 2019 after decreasing in 2020, 2021 and 2022. The CAGR growth for self-service cafeterias was 2.5% between 2019 and 2023, in which chained self-service cafeterias was 2.7% and independent self-service cafeterias was 1.8%.

Over the forecast period, self-service cafeterias are projected to increase at a 2.5%, reaching US$2.1 billion in 2028. Although the recovery of self-service cafeterias is expected to be slower than other consumer foodservice channels, sales of the most categories and subcategories returned to pre-COVID levels in 2023 and are expected to increase from 2024 to 2028.

Company shares

Top three companies are Toridoll Corp representing 43.1% market share, Fujio Food System Co Ltd representing 10.5% market share, Yoshinoya Holdings Co Ltd representing 6.7% market share. Sagami Chain Co Ltd enjoyed the fastest CAGR growth of 4.7% from 2019 to 2023 followed by Inter IKEA Systems BV at a CAGR of 3.4% and Toridoll Corp at a CAGR of 2.1%.

Street stalls/kiosks

Street stalls/kiosks continued to see an increase in current value sales in 2023, thanks to the rising popularity of food trucks. Even during the pandemic, food trucks were less negatively impacted thanks to their mobility, which allowed them to quickly adapt to home seclusion and move from business areas to residential areas. On the contrary, as the flow of people returned to business areas, food trucks could easily relocate back to these areas. In 2023, demand from employees looking for lunch in business areas recovered further (Euromonitor 2024).

Japan lost a significant number of its total outlets in consumer foodservice from 2019 to 2023 due to the pandemic. Food trucks are a way to maintain a foodservice presence in areas where static outlets have not yet recovered (Euromonitor 2024).

The channel remained highly fragmented being dominated by independent street stalls/kiosks, which increased to US$260.3 million in 2023 compared with US$215.0 million in 2019. Chained street stalls/kiosks represented US$44.7 million in 2023 increased from US$36.4 million in 2019. CAGR growth for chained street stalls was 5.3% and CAGR growth for independent street stalls was 4.9 %.

Over the forecast period, street stalls/kiosks are projected to see a steady CAGR increase of 2.6% from 2023 to 2028, reaching US$477.8 million in 2028.

Online vs offline ordering

The online consumer service became very popular after the pandemic started. It increased from US$2.2 billion in 2019 to US$11.1 billion in 2023 with the CAGR growth of 50.4% from 2019 to 2023. The takeaway online ordering increased from US$69.6 million in 2019 to US$2.5 billion in 2023 with the CAGR growth of 144.8% from 2019 to 2023. Delivery online ordering increased from US$2.1 billion in 2019 to US$8.6 million in 2023 with the CAGR growth of 42.3% from 2019 to 2023.

For consumer foodservice offline ordering, takeaway offline ordering increased from US$44.4 billion in 2019 to US$57.9 billion in 2023, drive-through offline ordering increased from US$1.7 billion in 2019 to US$2.2 billion in 2023 with a CAGR growth of 6.0% from 2019 to 2023. Delivery offline ordering and eat-in offline all declined at the CAGR of −15.4% and −5.3% respectively from 2019 to 2023.

It is predicted that all consumer foodservice by ordering platform will grow at a CAGR of 2.7% from 2023 to 2028. The biggest growth among all types is eat-in online ordering at a CAGR of 4.0% from 2023 to 2028.

Consumer foodservice by location

All CAGR growths were negative from 2019 to 2023 except consumer foodservice through standalone. Consumer foodservice through standalone increased to US$113,694.4 million in 2023, with a CAGR of 0.8% from 2019 to 2023. Consumer Foodservice through leisure decreased to US$4,598.8 million in 2023, with a CAGR of −5.0% from 2019 to 2023. Consumer service through retail decreased to US$22,064.7 million in 2023, with a CAGR of −0.7% from 2019 to 2023. Consumer foodservice through lodging decreased to US$7,089.4 million in 2023, with a CAGR of −5.4% from 2019 to 2023. Consumer food service through travel decreased to US$8,664.5 million in 2023, with a CAGR of −3.6% from 2019 to 2023.

All categories' CAGR growths are positive varying from 1.9% (through standalone) to 5.7% (through leisure and lodging) from 2019 to 2023.

Consumer foodservice through leisure and lodging is expected to see dynamic growth for the rest of the forecast period and their CAGRs will be same 5.7% from 2023 to 2028.

Opportunities for Canada

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a free trade agreement (FTA) between Canada and 10 other countries in the Asia-Pacific region: Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The CPTPP entered into force on December 30, 2018, in the first six countries to have ratified the agreement: Canada, Australia, Japan, Mexico, New Zealand, and Singapore (Global Affairs Canada; About the Comprehensive and Progressive Agreement for Trans-Pacific Partnership [CPTPP]).

One of the benefits of the CPTPP agreement is a comprehensive tariff elimination across all sectors. Once fully implemented, 99% (94% of Canada's exports of agriculture and agri-food products) of tariff lines among CPTPP parties will be duty free. Further, tariffs on other goods will be eliminated gradually over "phase-out" periods, which vary by country and are detailed in each country's respective tariff elimination schedules (please seeAnnex 2-D of the Agreement for the tariff elimination schedules of each CPTPP country) (Global Affairs Canada; About tariff elimination under the CPTPP). For additional tariff information, please consult the Canada Tariff Finder to explore tariff information for the CPTPP market, and other countries with which Canada has a free trade agreement (Global Affairs Canada; About tariff elimination under the CPTPP).

The CPTPP commits to helping small and medium-sized enterprises (SMEs) take advantage of the agreement's commercial opportunities. SMEs represent over 99% of Canadian businesses and almost 90% of all private sector jobs in Canada. For further information, please consult CPTPP benefits for small and medium-sized enterprises.

For more information

The Canadian Trade Commissioner Service:

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

Find a Trade Commissioner

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For additional information on FoodEx Japan 2025, please contact:

Michelle Jardine, Deputy Director
Indo-Pacific Market Development and Promotion
Agriculture and agri-food Canada
michelle.jardine@agr.gc.ca

Resources

• Euromonitor, 2024
• Euromonitor:
  • Consumer Foodservice in Japan, Country Report | February 2024
  • Full-Service Restaurants in Japan, Country Report | February 2024
  • Limited-Service Restaurants in Japan, Country Report | February 2024
  • Self-Service Cafeterias in Japan, Country Report | February 2024
  • Cafés/Bars in Japan, Country Report | February 2024
  • Street Stalls/Kiosks in Japan, Country Report | February 2024
• Worldometer 2024
• World Bank 2024

Sector Trend Analysis – Foodservice trends in Japan
Global Analysis Report

Prepared by: Hongli Wang, Senior Market Analyst

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