Sushi Takes On the Burger
Americans can pop into a franchised restaurant for almost every kind of cuisine, from Mexican and Italian to Chinese and, of course, American. Soon, there will be something new for their food-court trays: sushi rolls and teriyaki. Japanese-food chains are spreading to shopping malls and strip-store centers across the U.S.
The rise reflects a change in American appetites. More people are trying to eat healthier foods, say restaurant executives and consultants, and Japanese food can be low-fat and fresh. Think sushi vs. deep-fried calamari. For today's twentysomethings, Japanese food is both familiar—many have been eating it for years—while also unconventional.
These trends—combined with low prices, despite the common conception that sushi is pricey—are helping make Asian food one of today's hottest restaurant categories. At limited-service restaurants—places without wait personnel—Asian-food sales jumped 15% to 20% in 2006 following an 18% pop in 2005, tabulates Technomic, a restaurant consultancy in Chicago. That's roughly three times the 6% growth rate of limited-service chains overall.
Yoshinoya probably is the most aggressive in its plans. The Tokyo-based fast-food company, which operates 1,010 outlets in its home country, counts more than 85 locations in and around its U.S. headquarters in Los Angeles, plus one each in Las Vegas and New York. And its recent move into franchising, says management, should lead to a doubling of its U.S. sites by 2010, mostly in the West. Entrees include bowls of grilled beef or chicken served over steamed rice for $3.07.
Another up-and-comer is Hibachi-San Japanese Grill. A subsidiary of Panda Restaurant Group of Rosemead, Calif., which also owns Chinese-food chains Panda Express and Panda Inn, Hibachi-San has 27 restaurants in 13 states. Among other quick-serve Japanese outfits are Maki of Japan, a 20-unit chain that is part of Food Systems Unlimited of Longwood, Fla., and Kyoto Bowl of Tempe, Ariz., with 17 stores.
Not just fast food
Japanese chains aren't all confined to quick-serve, however. Benihana (BNHN), which operates 59 hibachi-style restaurants, recently expanded its Ra Sushi subsidiary to 14 sites in six states. Ra Sushi features table service and full bars, with dinner entrees such as chicken teriyaki for $14.50 or a sashimi assortment for $19.25.
Maki of Japan is one of five fast-food restaurants sharing the food court in an outlet mall in Aurora, Ill., 35 miles west of Chicago. Its menu includes beef sukiyaki for $5.29, with steamed rice or maki noodles, and an eight-piece sushi combo lunch for $5.99. Hot food is served on foam plates, while sushi comes in premade trays. There are plastic utensils at the cash register and, tellingly, no chopsticks.
On a recent weekday, John Riley sat across from his wife, Theresa, at this Maki of Japan. Both had a three-item chicken teriyaki lunch special on their trays and shopping bags at their feet. They had never eaten at Maki before. John, a real estate agent, said, "I hate fast-food places, to tell you the truth." Theresa, also a real estate agent, added, "If we're going to eat fast food, we'd rather eat something like this." But they said they liked the food and thought the prices were about right.
Compared with McDonald's (MCD) or even Panda Express, which boasts more than 900 restaurants in 35 states and Puerto Rico, these Japanese-food chains are still small. And worries about eating raw fish will always be a turnoff for diners and restaurant operators alike. But Darren Tristano, an executive vice-president at Technomic, foresees continued double-digit increases in Asian-food sales. "There's absolutely more potential for growth," he says. "You're starting to see the introduction of sushi into the mainstream."
One reason is that restaurant companies are pushing Japanese food as an alternative to sandwiches and mass-marketed ethnic foods that no longer seem new. There's demand-side pull, too. Beyond wanting food that's better for them, Americans increasingly like bolder, more exotic foods. This is particularly true of Gen-Xers and their younger siblings who grew up eating sushi at independent eateries, or bowls of freeze-dried ramen noodles in their first apartments. "For younger people, sushi is what the burrito was 20 years ago," notes Glenn Lunde, Panda Group's chief marketing officer.
The shift is paying off for Benihana. Ra Sushi is the Miami-based company's fastest-growing brand, with six-month sales through Oct. 8 up 57% from a year earlier. Its stock price, meantime, is up 40% over the past 12 months and has more than doubled in the last two years, outperforming the restaurant industry overall.
Now, even mainstream fast-food chains are flirting with Japanese flavors. Wendy's (WEN) and Panera Bread (PNRA) offer Asian chicken salads, while California Pizza Kitchen (CPKI) has spring rolls and an appetizer of wok-seared chicken and shiitake mushrooms.
Indeed, if McDonald's can sell Asian salads with edamame, a fast-food chain with udon noodles or tempura may be just what Middle America wants next.