Why is Sushiro Profitable Despite Rising Rice Prices? — The Truth Behind the Diverging Fortunes of "Kura Sushi" and "Kappa Sushi"

Chapter 1: Mechanism of Rice Price Surge

1-1. Supply Side Contraction

• Poor Harvest Due to Climate Change: The summer of 2024 recorded the lowest sunshine hours in 20 years, especially in the Tohoku region, with a nationwide crop index average of "94" (slightly poor).
  
  

• Farmers Leaving and Aging: The proportion of rice farmers aged 70 and above increased from 56% in 2020 to 63% in 2025, leading to a decrease in production and an increase in costs.
  
  

• Persistently High Fertilizer and Fuel Prices: The Russia-Ukraine situation has kept international prices of urea and phosphoric acid high for two consecutive years, pushing up production costs and being passed on to wholesale prices.

1-2. Sudden Increase in Demand Side

• Inbound Recovery: By the end of 2023, the number of visitors to Japan returned to 90% of pre-COVID levels, rapidly expanding the demand for dining out.

• Establishment of Delivery and Takeout: The demand for sushi through Uber Eats and Demae-can continues to rise, increasing the transaction volume of commercial rice.

1-3. Limitations of Government Rice Stockpile Policy

The government released 450,000 tons of stockpiled rice into the market in the fall of 2024, but it could not keep up with the sudden increase in demand, resulting in the wholesale price in March 2025 reaching a record high of 18,900 yen per 60kg (a 32% increase from the previous year).

Chapter 2: Power Dynamics in the Conveyor Belt Sushi Industry

Chart: Created by the author from the public database as of March 2025

The conveyor belt sushi industry is becoming more oligopolistic, but there is a significant difference in profit margins among chains. Notably, Sushiro's operating profit margin is 7.8%, which is 6 to 8 times that of its competitors.

Chapter 3: Dissecting Sushiro's Profit Mechanism

3-1. AI × Logistics

The AI demand forecasting platform "Sushi Meister," introduced by F&LC in 2023, learns from three years of POS data and weather information to generate customer and product-specific sales forecasts every 30 minutes. This has achieved a 26% reduction in rice (sushi rice) loss and an 18% reduction in ingredient (topping) loss compared to the previous year. The amount of rice used was reduced by an average of 15 kg per store per day.

Case Study: Flagship Store in Tokyo / February 2025 Results

• Waste Rate: 1.2% (2.3% in the same period last year)

• Waste Cost Reduction: 1.2 million yen per month

3-2. Menu Strategy: Value-Oriented Premiumization

• Small Rice, Large Topping: By reducing rice by 12% and increasing toppings by 15% in weight ratio, the increase in cost rate is offset while improving customer satisfaction.

• Monthly Fair: Launching seasonal fish fairs and collaborations with local ingredients abroad every month. The proportion of high-priced plates (220 yen to 360 yen) increased from 22% to 32%.

3-3. Labor Reduction through DX

• Mobile Order Ratio 76%: Reducing "waiting" plates on the lane to suppress waste.

• Serving Robot "Sabi Robo-kun": Introduced in 220 stores, reducing serving time by an average of 45 seconds and saving 1.2 billion yen in labor costs annually.

• Self-Checkout: Eliminating waiting time for payment, reducing turnover time from 18 minutes to 15 minutes.

3-4. Overseas Expansion and Exchange Rate Benefits

• Success in ASEAN: In Thailand and Vietnam, targeting wealthy customers with plates priced at 50 to 70 baht (equivalent to 220 to 310 yen), achieving high profitability.

• Yen Depreciation Effect: Overseas sales increased in yen terms, contributing an additional 3.8 billion yen to consolidated operating profit.

Chapter 4: Challenges for "Kura Sushi" and "Kappa Sushi"

4-1. Kura Sushi: Collaboration Fatigue and Cost Increase

• Excessive Anime and Game Tie-ups: The high cost of ingredients for limited-time menus led to a 15% decrease in customer numbers after the fairs ended.

• Structural Issues in North American Business: The increase in the minimum wage in California (20 dollars per hour) has sharply increased fixed costs. Additionally, rising transportation costs have increased the rice cost ratio from 38% to 46%.

4-2. Kappa Sushi: Brand Hollowing

• Trap of Mid-Price Range: Positioned higher than 100-yen sushi but cheaper than premium routes, resulting in an unclear customer segment.

• Dead Space in Aging Stores: With 78% of stores in suburban areas, seat occupancy rates are around 47%, leading to a high fixed cost burden.

• Dispersal of Management Resources: Parent company Colowide prioritizes multi-format investments, delaying investment in Kappa Sushi.

Chapter 5: Changes in Consumer Behavior and Sushi Chains

5-1. Increasing Resilience to Price Hikes

Due to repeated price hikes since 2022, consumers are increasingly prioritizing "experience value over price." In an F&LC survey, the combined share of satisfaction attributed to **"thickness of toppings" and "frequency of new menus"** was 68%, significantly surpassing "price" (14%).

5-2. Behavioral Characteristics of Foreign Customers

• Frequent Group Use: The average number of visitors is 2.3 for Japanese and 3.8 for foreigners, with a 22% higher order rate for high-priced menus.

• SNS Dissemination Power: 56% of visiting foreigners post on Instagram. Sushiro has set up photo spots inside the store to promote UGC (User Generated Content).

Chapter 6: Intersection of Technology and ESG

6-1. Traceability

From 2024, F&LC has introduced a blockchain-based system for certifying the origin of seafood. The proportion of MSC (Marine Stewardship Council) certified toppings is planned to expand from 24% in 2023 to 42% in 2025.

6-2. Energy Efficiency

By converting store lighting to LED, annual electricity consumption per store has been reduced by 38%. Utilizing energy-saving subsidies, the investment is expected to be recouped in four years.

Chapter 7: Future Risks and Growth Opportunities

Opportunity: By developing plant-based seafood, it is possible to enter the vegan market while keeping costs down.

Conclusion

In the conveyor belt sushi industry, companies that have minimized risks through two axes: waste reduction through data utilization and value-oriented menus, have emerged as winners against the external shock of rising raw material costs. The model demonstrated by Sushiro is a balance of "high efficiency + high added value," and in the future, it is expected to evolve into multifaceted competition incorporating ESG and sustainability standards. For Kura Sushi and Kappa Sushi to make a comeback, it is essential to move away from reliance on collaborations and price competition and to rebuild a unique brand experience and integrated digital strategy.

📚List of Reference Articles (External Links, Chronological Order)

• Foodrink "Sushiro, Operating Profit Up 60% in Q2" (2025-05-12)

• F&LC "FY2025 Q2 Financial Results Report PDF" (2025-05-08)

• Kura Sushi "FY2025 Q2 Financial Results Report PDF" (2025-06-12)

• ##HTML