The Journal The Authority on Global Business in Japan

On May 25, Japanese Prime Minister Shinzo Abe lifted the state of emergency that had been declared on April 16 to slow the spread of the coronavirus. The end of curbs to business activity couldn’t have come a moment too soon for countless companies across the country. In the food and beverage (F&B) industry, the state of emergency—which effectively shut down most social and economic activity—has caused a major disruption.

The American Chamber of Commerce in Japan (ACCJ) Tourism Industry Committee has started a project entitled #SafeAndSocial (accj.or.jp/tourism) to provide tips and ideas for enjoying social activities in the new normal.

And The ACCJ Journal asked restaurant and bar owners about their struggles to survive during unprecedented times. We also spoke to US government officials to learn how they are supporting small and medium-sized enterprises (SMEs) preparing to navigate the post-pandemic landscape.

Despite uncertainty about how long the pandemic will last, all participants said they were optimistic about turning over a new chapter and entering a bright future—eventually.

KINDRED SPIRITS
For husband-and-wife team David and LaTonya Whitaker, the crisis had an immediate effect on their business—the fall in revenue, for example, was dramatic. “The end of March was the drop. Right up until then, everything was cool, but a little slow. When it hit the last week of March, it was like [makes hand-dropping gesture],” David said.

He is from Georgia and LaTonya hails from Mississippi. Together, they founded Soul Food House, an American Southern and “soul food” restaurant, in 2015 after more than a decade of offering catering services and cooking lessons under the name Taste the Love. LaTonya has appeared on NHK, Nihon TV, and Fuji TV to introduce Japan to American soul food, and the couple can be seen presenting their delectable hot chicken and waffles in episode 6 of the Netflix series Ugly Delicious.

Located in Azabu-juban, a neighborhood of Tokyo popular with expats, the restaurant relies heavily on patrons in search of traditional American fare. But for eight days after the state of emergency was declared, the restaurant was closed. This was in line with government guidelines, LaTonya noted.

When they reopened, they transitioned to takeout ser­vices—and, in any case, customers largely stayed away due to the government’s social distancing recommendations.

For the Whitaker’s, the drop in customers called for a new strategy.

First, they created a more expansive menu for takeouts by increasing their offering of fish-based meals and sandwiches for lunch and dinner. That was in addition to their traditional dishes rich in meat, seafood, and poultry.

Second—and for the first time in the company’s history—they offered in-person food deliveries by staff and directly to customers’ homes.

Third, customers could order takeouts from the company’s website and pick them up personally in front of the store.

The upshot has been that, while they are still far from their normal capacity, the road to recovery has begun in earnest for the Whitakers.

The Whitakers offer up Southern favorites.

CLUB CHALLENGE
The pandemic has had a significant economic impact on Tokyo American Club, primarily on banqueting and restaurant operations, according to General Manager Anthony Cala; but things are beginning to look up.

“Despite a 25-percent reduction in seating capacity, our restaurant business has pretty much returned to pre-closure numbers since reopening on June 1,” he explained. While we have reopened our banqueting business for private events and meetings, it will take some time to recover due to the need to limit capacity for social distancing.”

Tokyo American Club closed on April 8 and its doors remained shut for 54 days. Members have been pleased to be able to visit again, but some were a bit concerned about safety and health. Cala said a three-phase approach, which closely follows Government of Japan guidance and the Tokyo Metropolitan Government’s Roadmap to Recovery, has been implemented.

“Member and staff health, safety, and wellbeing were the most important drivers in all decisions,” he said. Hygiene- and health-related policies and practices were clearly communicated, effectively implemented, and are being diligently enforced.

Promotion of practices and policies to reduce the risk of coronavirus transmission have been incorporated into operating procedures and include:

  • Use of personal protective equipment
  • Increased sanitization of facilities and equipment
  • Strict social distancing protocols

We are currently in phase two of the three-phase approach, with phase three being fully recovered—within the parameters of the new normal, Cala said. Although we probably will not experience pre-Covid-19 capacities for some time, we will continue to monitor the situation and adjust safety measures as necessary. We are always focused on providing members with a safe, enjoyable environment, which guides our aim to return to some sort of normalcy by spring 2021.”

HERE BE LEGENDS
Despite the state of emergency, Mark Spencer chose to keep both of his businesses open—even if that meant reducing operating hours per government guidelines.

“No, we didn’t close at all—never. We just followed the Japanese government’s guidelines for closing times.”

Originally from England, Spencer is owner of Hobgoblin Roppongi and Legends Sports Bar. Both loca­tions offer trad­itional pub food—from steak and kidney pie to fish and chips. Fare with American and Australian influences is also available.

Spencer noted that there has been a noticeable fall in cus­tomers: in his case, a dramatic decline in Japanese patrons. Expats, meanwhile, have maintained a steady presence through­out the crisis.

Hobgoblin and Legends Sports Bar saw good business from expats.

“It’s Japanese salarymen that are missing. The expat business is still coming in,” he said.

Legends Sports Bar has been particularly hard hit because sporting events—a major attraction—have largely been sus­pended globally during the pandemic.

Looking back at both company’s decades-long histories—Hobgoblin was founded in 2002 and Legends in 2004—Spencer notes that this is “the worst” period that he has endured.

But even then, and despite the steps the company has taken to mitigate risks associated with social gatherings at this time, he is optimistic about the current situation.

“My philosophy is that I want you to come in here and feel relaxed. So, we haven’t put plastic between the staff and customers, and our staff don’t wear plastic face shields—as that may send the wrong signal—although we do conduct temperature checks and offer sanitizer at the entrance.”

LIVE SURVIVES
The Covid-19 crisis—and the lockdown that followed—couldn’t have come at a more inopportune time for Scotsman John Coyle.

After all, the British pub that he established in Ebisu Ward—What the Dickens!—has had a packed live music calendar since its founding in 1995.

“We are not technically a live house—we’re a pub. So, when the government announced that live houses had to close and people should stop going to performances, our business dropped off. We went from normal to zero overnight.”

What the Dickens was closed from April 6, when govern­ment restrictions extended to bars and live houses, until the beginning of June.

The Dickens, as it’s popularly called, offers traditional pub fare, such as steak, tandoori chicken, and pork sausages. A vegetarian quiche and falafel are also available.

Since the state of emergency and stay-at-home recommen­dation, and despite reopening, the company saw its operations reduced to about 20 percent of pre-Covid-19 output.

“This is the worst recession, I suppose. The second worst was caused by the earthquake, back in 2011. And the third worst was that of the Lehman Shock in 2008,” he said. “But in all those recessions or disasters, we were able to stay open and maintained at least 80 percent of business. This has been zero business for two months.”

In late July, The Dickens was set to have its first live music performance in weeks, after the government relaxed social distancing rules.

FRENCH REVOLUTION
Pascal Morineau shared the same concerns as others. He is the proprietor of Cavo Wine Bar, a French bistro in Ebisu Ward.

“I would describe Cavo as ‘A little France in the heart of Tokyo’,” the Frenchman said.

Despite the genuinely French atmosphere that Cavo offers—all staff are French—the bistro shut its doors for weeks during the state of emergency. Since reopening, Cavo has put into place new strategies to consolidate their customer base while opening up new revenue streams.

By creating new menus and establishing new services—including takeouts, deliveries, and online orders—the bistro has found a path to staying solvent.

“This was the first time in Cavo’s history—and we have been going for 10 years—that we’ve had a lunchtime business; it is a takeaway service,” Morineau said.

Alcohol has also been added to the takeout menu, thanks to a govern­ment initiative to offer temporary licenses for six months to Food & Beverage providers during the crisis period.

TO SURVIVE, F&B PROVIDERS HAVE:

  • Cut costs and restructured their business by letting go some part-time staff

  • Applied for central and Tokyo Metropolitan Government emergency funds (About ¥2 million and ¥500,000, respectively)

  • Requested aid to offset a portion of rent

  • Sought for zero-interest, government-backed loans to maintain operations


SAFE GRILLING
Weber Park in Odaiba faced coronavirus at a time when busi­ness usually starts to pick up. “Due to the state of emergency, both the park and our Grill Academy in Aoyama were forced to shut down for most of April and May, which are typically the months when people start to come outdoors to barbecue. After reopening, reservations in June were a little slow to come in, but are now starting to pick up,” said Brian Ashenfelder, corporate sales director at Weber-Stephen Japan G.K., which operates the facilities. “Grill sales at stores were also affected, but with many people stuck at home, we saw a rise in online sales.”

Fortunately, Weber already had a strong online presence and were able to put more efforts into that part of the business to help weather the storm. “We spent a lot of time reassessing our marketing efforts and put a lot more into digital marketing to get the word out about Weber Park and our grills in time for reopening,” Ashenfelder said. “During the closure, we provided virtual tours of our store in Aoyama to make sure customers could get their questions answered.”

With customers return­ing, safety measures are being put in place at Weber Park and Weber Grill Academies. “All staff disinfect and clean the space, grills, and accessories daily, and staff wear masks and gloves during work hours—particularly when handling food items or serving guests,” he explained. “We ask customers to wear masks, use alcohol disinfectant and hand sanitizer, and maintain recommended social distance whenever possible. Since Weber Park is a completely open-air outdoor barbecue park, I believe this gives us an advantage with respect to safety.”

INNOVATE OR BUST
Morineau is not alone on this front. At Hobgoblin and Legends, Spencer, who also has an alcohol import business which brings craft beers from the UK and distributes them to bars around Japan, has increased delivery and online food and drink services. In his case, there was about a 10-fold uptick in sales via delivery services such as UberEats and through online purchases.

While orders of draft beer by bars went down, individuals purchasing bottled drinks such as beer and cider—via Amazon, for instance—for consumption at home went up.

With the exception of Coyle from What the Dickens, who did not offer takeout, deliveries, and online sales, owners saw greater business than before by expanding services or launching new ones.

NECESSITY OF DIGITAL
The disruption that the pandemic has caused has also been at the forefront of concerns for the US Agricultural Trade Office (ATO) at the Embassy of the United States, Tokyo.

Morgan Perkins, director of the ATO, noted that the pan­demic has been a major disruption to the three pillars of the office’s work in Japan:

  • Educating US exporters on opportunities and dynamics in the Japanese marketplace, and Japanese importers on how they can find US products
  • Facilitating business-to-business connections between companies that would like to export here and potential buyers for their products
  • Organizing platform activities, such as cooking seminars, demonstrations, and tastings, to promote US products in Japan

Perkins said that, during the crisis, there has been an increase in retail sales, even while there has been a sharp drop in hotel, restaurant, and institutional services—and that has different implications for different products.

For example, about 70 percent of US wines sold in Japan are sold at restaurants and bars. And yet “the nosedive in sales for the restaurant industry has really impacted volumes of US wines.

The US Agricultural Trade Office teamed up with Japan’s Hero Barbecue to promote US beef, pork, and craft beers.

“On the other hand, Japan is the top market for US wheat and wheat products,” he noted. Because a lot of people have been staying at home and baking, wheat has enjoyed an uptick in sales.

However, with in-person events canceled or postponed in Japan, and international travel restricted, much of the ATO’s remit has been curtailed.

To mitigate this, the office is ramping up online initiatives and partnering with domestic F&B providers, as well as social media influencers, on platforms such as YouTube and Instagram.

In a recent 90-minute promotion, the ATO teamed up with Hero Barbecue, a Japanese provider of barbecue services, such as sets for rooftop cookouts.

Some 3,000 participants joined the live online event and ordered—in collaboration with convenience stores—pre-made baskets of produce. “The baskets included US beef and pork, and we worked with them to showcase US craft beers,” Perkins said.

Does the dive into digital represent a new normal for the ATO—and the F&B industry at large? For Perkins, as for others who spoke to The ACCJ Journal, it does.

“This switch over [from live to virtual promotions] has been coming for a little while. It allows us to really broaden our impact—if we can figure out a way to really do it so that people assimilate the message,” he said. “That whole process has been drastically accelerated by the coronavirus pandemic.”

SAFETY MEASURES INCLUDE:

  • Providing hand sanitation stations

  • Checking patrons’ temperatures as they arrive

  • Keeping enough spaces between seats and patrons

  • Reducing overall capacity at any given time

  • Offering contactless payment options

  • Providing protective masks for staff to wear

John Amari is a writer and editor from the UK who specializes in articles on startups, entrepreneurs, science, tech, and business.
By creating new menus and establishing new services—including takeouts, deliveries, and online orders—the bistro has found a path to staying solvent.