Japan's ramen shops struggle to stay open due to COVID hammers small firms
26 November, 2020
Sixty-year-old Yashiro Haga is folding his Tokyo ramen shop following 15 years in December, struggling to overcome the prospect of a enduring customer slump due to the coronavirus crisis.
"The flow of men and women has changed as a result of coronavirus," Haga stated, standing up behind the counter of his ground-floor store, Shirohachi. "Customers aren't coming in and queuing up outside shops any more."
The pandemic is damaging Japan's "mom-and-pop" restaurants - including noodle shops like Haga's - at an evergrowing rate, despite evidence the government's massive effort to push away bankruptcies is employed in other sectors of the economy.
Harm by deflationary pressures and developing competition found in the run-up to the now-delayed Tokyo Olympics, ramen eating places are particularly susceptible to the financial malaise the pandemic triggered found in the service sector.
Small and mid-sized businesses like Haga's employ about 70% of Japan's personnel and take into account 99.7% of the total number of enterprises, relating to government data, top rated some to worry a COVID-19 resurgence could trigger a growing number of layoffs among small firms.
While overall bankruptcies among organizations with at least 10 million yen in liabilities in the half a year to October fell 5.2% from a year before, those among restaurants rose 4.5%, data from private credit provider Teikoku Databank showed.
Bankruptcies among restaurants with significantly less than 10 million yen in liabilities were up by 137% for the same period, Tokyo Shoko Study, a company that monitors similar info, said, as the total for the service-sector, including eating places, rose 64.4%.
But sector insiders expect that is merely the tip of the iceberg, as local shops often close up without official filing.
"Many ramen retailers won't come in any figures when they're closing down because they're small, privately owned businesses," said Haga, who has truly gone without earnings since April.
Hiroaki Nakazawa, a 42-year-older pharmacist who has frequented Shirohachi for approximately ten years, said he felt sad about its closure. "There's only one place like this."
At least seven additional ramen stalls in the central Tokyo area popular with vacationers where Haga has his table-less shop, which seats nine persons at the counter, have previously closed since March this season.
Nationwide, 34 ramen businesses with at least 10 million yen found in liabilities went bankrupt through the first nine weeks of 2020, also a record high for the time, Teikoku Databank said.
LACK OF FUNDS
Another reason why authorities say statistics underestimate the real impact of the pandemic found on ramen shops is definitely that winding down is certainly expensive because of requirements from landlords to leave the retailers stripped down following a six-month notice period.
"There are many businesses with a lack of cashflow," said Manabu Shintani, CEO of Actpro Co, a house intermediation services provider.
Among ramen shops, the first ever to fold this season were those whose businesses were currently on knife-edge before COVID-19, often run by elderly owners, said Takeshi Yamamoto, an unbiased ramen critic who tracks shop closures.
Those were accompanied by a wave of chains closing outlets, and today some spots with younger owners are shutting straight down, said Yamamoto, who has eaten at a lot more than 10,000 ramen eating places.
He estimated that the real number of ramen retailers shutting straight down nationwide was about 290 in October and November alone.
The spate of closures has helped some. Actpro's program for matching businesses seeking to shut down with organizations hoping to move in to the location being vacated has been a hit.
Once a meet is made, a cafe owner and the incoming owner negotiate with the landlord, cutting costs.
The business has seen the matchings quadruple to about 70 to 80 per month following the crisis started taking its toll, Shintani said.
Shirohachi's Haga used about 3 million yen found in government subsidies to complete until his closure.
He tried giving his ramen through takeout but was struggling to make up for the income he lost after office workers' appointments fell due to work-from-home restrictions.
"Even being among the most popular places, revenue from takeout aren't exceeding" the revenue drop from the crisis, ramen critic Yamamoto said.
Source: japantoday.com
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