In Japan, you’ll come across a couple of different sub-classifications of restaurants. There are senmonten, “specialized shops” that focus on variations of a single dish, like beef bowls or ramen. There are teishokuya, which serve a variety of set meals with a main dish accompanied by rice, vegetables, and miso soup. And then there are izakaya, pubs that offer a wide array of alcoholic beverages and sides such as skewers of grilled chicken, plates of sashimi, and bowls of edamame.
Because of the extensive variety of their offerings and how easily sharable their food is, izakaya are a popular choice for a couple of cold ones and a bite to eat…but the results of a recent study by Japan’s Teikoku Databank research firm shows that izakaya are in a shaky spot these days, with 2024 on pace for the largest number of izakaya bankruptcies in more than a decade.
According to Teikoku Databank’s findings, through November of this year 203 izakaya have declared bankruptcy (defined in the study as declarable with debts of over 10 million yen). That’s higher than any January-November period in the past 15 years, and up 7 percent compared to 2023. What’s more, no year between 2010 and 2023 had more than 204 izakaya bankruptcies for the entire year, so once this December’s numbers are added in to the 2024 total, it’s almost certain to set a new record.
▼ The study’s figures, showing izakaya bankruptcies between 2010 and 2024 for the first 11 months of the year in blue, and for the entire year in gray.
Obviously, there was a spike in izakaya bankruptcies during the pandemic, with 189 in 2020. But while bankruptcies dipped in the latter half of the health crisis, a massive jump occurred in 2023 with 204, more than in any single year of the pandemic, and things are going to be bleaker still in 2024.
So what’s going on here? Teikoku Databank cites changes in consumer spending habits, as well as rising costs for alcoholic beverages, food, and labor, and those factors are likely feeding into one another in a vicious cycle.
Starting with the first part, izakaya have long benefited from having large groups of customers come in for company drinking parties, as well as smaller groups of coworkers stopping in for an informal round or two on their way home from the office. That practice got put on hold during the pandemic as work-from-home and social distancing became the norm, and it hasn’t made a 100-percent comeback, with a lot of Japanese workers now more acutely aware that they’d rather spend their time doing something other than drinking with coworkers after clocking out as a result of being freed from such obligations for a few years.
Meanwhile, a weakened yen is resulting in all sorts of rising prices in Japan. With the country experiencing its worst inflation in a generation, restaurants have been steadily increasing their prices in order to protect their profit margins. However, it’s not just izakaya that are paying more for cooking ingredients, electricity, and delivery costs. Necessary living expenses like groceries, utilities, train fares, and gasoline are all rising for consumers too, and outpacing increases to workers’ wages.
In other words, izakaya are charging higher prices while potential customers have less money to spend, which is coinciding with an increased number of people having recently confirmed that they’d be OK with making fewer izakaya visits anyway. That’s not a very reliable recipe for financial success, and until some of the contributing factors change, the izakaya bankruptcy situation might get worse before it gets better.
Sources: PR Times, Teikoku Databank via Ryutsu News
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© SoraNews24
38 Comments
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HopeSpringsEternal
Health concerns, restaurant food is risky, especially izakawa types. Fewer and fewer people who are older and older on average = risk averse. Imagine most buy their cheap produce from Fukushima for example.
factchecker
So many places will throw out people who are happily drinking and eating (ie making the store money) after two hours. For them I have zero sympathy.
Also anywhere that makes QR code ordering mandatory will not be getting ¥1 from me.
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robert maes
in complete agreement with fact-checker here.
Adding that less Japanese means less drinking and eating customers so all retail will suffer
fallaffel
Izakaya food is risky? The only risk is you'll gain weight.
HopeSpringsEternal
Have two store/shop rules, no convenience stores and no izakayas, why? Too risky, apparently many others concur!
Ricky Kaminski13
Oh come on guys, be the happy gaijin jorensan and keep our beloved izakaya Bunka alive! Be that change!
They are the Japanese version of a mini town square. We can get stuck in those same-job type bubbles easily, but your local J pub counter can be the best touchstone to the culture you will find. No PHD necessary for this type of research! As real as it gets. Kick it with the locals and feel part of a community.
Laughs and good sentiment guaranteed. Would do a good izakaya over a silver plate joint any day.
Pukey2
With the amount of tobacco smell inside these establishments, I'm not surprised fewer people want to venture inside. Personally, I'm also not keen on the type of food they serve.
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Stewart Gale
It’s a shame for the owners but with all the greedy price gouging evident in supermarkets and stores, the increase in utility charges combined with stagnant salaries, it’s not surprising.
grc
I went to an izakaya once. It was lovely
fallaffel
Many (most?) are non-smoking for the last few years now.
The main complaint I have is that it's often only 1 or 2 beers on tap.
iron man
I think that there is a major change of culture, smoky environments, concentration on how many covers (bums on seats) are needed for social beers v eating plus a few sips. Stagnant salaries of customers? Come-on the whole world complains about stagnant salaries for generations, is it not balanced thru out the supply chain?
Huge difference is the commercial sell of the new lifestyle to the power 10. Izakaya cannot compete with that social media pressure. unfortunately, same all around local bars were the social club. now I-phones rule??
WoodyLee
""In other words, izakaya are charging higher prices while potential customers have less money to spend, which is coinciding with an increased number of people having recently confirmed that they’d be OK with making fewer izakaya visits anyway.""
This is what happened when the government forces inflation on the public and shoves it down their throats like it or not, the BOJ kept pushing of 2 % inflation and got more than that but salaries in most sectors remained unchanged.
Unless the very same people who pushed for inflation do something to help increase salaries things will just continue to get worse, more businesses will close, people out of work, and many will become homeless.
DanteKH
Because of high inflation, very weak Yen, and especially real salaries getting lower each year, it only means less spending. Logical.
Mr Kipling
Where were these izakayas?
Tohoku and the rest of the countryside are being depopulated.
nero
Yet curry restaurants stay alive without patrons even manage to bring in the entire village as staff. Really makes you think.
DurraSell
A piece of information missing here is the age of these izakayas. If new to the business people tried to reopen places that closed in 2020, then the jump could be do to inexperience of those new owners. Without that age data, it would be interesting to see if the same drop off occurs over the next couple of years followed by another spike.
CaptDingleheimer
Sorry for the izakayas, but I'm glad to see that the nomikai culture has collapsed a bit. Those who still want to do it still can, but if office workers who'd rather be at home with their families don't feel as pressured to go out after work, that's a good thing.
Here in the US, the kids who turned 21 (legal drinking age) during Covid when all the bars were closed developed habits of drinking at home, if they drink at all. Apparently lots of them, compared to previous generations simply don't drink.
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Antiquesaving
In well over 3 decades in Japan, I have never once gotten sick from food in an Izakaya.
However I have gotten sick from food in a few chain restaurants and once in a very well known high end restaurant I was invited to as did our entire group.
I like to eat in Izakayas I don't drink other than a non alcoholic beverage and most have great food and good service.
NipponIchiGo
Have to think this was a desired outcome from the government somehow - they caused this with their unnecessary lockdowns. Kill off the public domain and drive people home - weakens democracy and makes it easier to take over that much more. Japanese restaurant scene was the envy of the world before this - so sad to see this article.
Antiquesaving
I live near popular tourists places in Tokyo but my area itself is not a tourist zone.
But there are now plenty of low cost small hotels and hostels.
Several Izakayas in our neighbourhood now have signs advertising English, Chinese, Hangool, etc...menus stipulating "no set charge" and "lunch/dinner only OK"
The owner of the one closest to my place said he is extremely grateful for the tourist business as their social media posts is free advertising and more and more people are going to his place because of it.
I asked if his regular local customers are OK with all the foreigners and he said the locals enjoy chatting and practicing their English.
Many local Izakayas like those in my shitamachi area are more informal and conversation often end up crossing the entire place with staff and patrons from different groups all getting involved.
This type of local non-chain Izakaya are a blast and a lot if fun.
Chabbawanga
Its 100% price. In our area a bunch of izakaya have shut diwn. Each of them become very unpopular after their recent price hikes. The other shops that have maintained cheaper prices absorbed the business and are doing well. The Japanese customer is very sensitive to price, and dont let anyone tell you otherwise.
WA4TKG
Definitely the best thing about Japan next to Onsen, go to Izakaya .
@Japan Glimpsed
While it is true that izakaya bankruptcies are higher than they've been, the same is true throughout the food service industry. The article fails to mention that sales at izakaya have risen steadily since the pandemic.
https://news.yahoo.co.jp/articles/b530ea49816c01ff4347e886ba54fe97f6a41552
@Japan Glimpsed
Evidently you weren't even here. Or suffer from amnesia. Or something else. There were no lockdowns, as such.
@Japan Glimpsed
You seem confused about what causes price increases. Low unemployment, weak yen and cost increases, Ukraine war... The BoJ did not manage this on its own.
TokyoLiving
Just part of the cycle of economy..
No drama here, ladies..
socrateos
This is actually a good news.
Sven Asai
Once like a second home I simply can't afford it to go and enjoy there recently under this extreme hyperinflation. I guess they intentionally strangle all economic and business activities in the whole West for their idiotic pseudo green agenda. Inflation, bureaucracy for small and any other size businesses, restrictions on alcohol or tobacco consumption and whatever else, it finally catches everyone , shop owners and consumers or guests. So be it, game over for all of us, but soon also for them. We'll meet again in hell, bringing it to end there.
Peter Neil
neroDec. 7 08:42 pm JST
because they all live and sleep in one room, eat at the shop and do nothing other than work for a year, then return home with enough money to last about 5 years.
Peter Neil
izakaya time is therapeutic. loved it.
well, except for once. a friend and i (who has a professional license for drinking) were eating all those unhealthy foods and drinking up a storm for a couple of hours.
two guys sat next to me and kept blowing smoke in my face. not fun for a recently quit smoker. asked him to stop, but he didn’t. we had enough anyway and as i got up to leave, i grabbed our bill hanging on the back of my chair, switched it with their bill, and headed to the register.
theirs was only about 1,000 yen because they just got there. ours (now theirs) was probably at least 30,000 yen.
and they just started. :)
proxy
There is opportunity in the millions of tourists visiting Japan for izakaya if they dare to seek it.
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Bret T
@Peter Niel
That's the same method I've seen numerous ethnicity immigrants use in the US for startup of a new restaurant. Within 5-10 years, they have either opened more locations or significantly upscaled their facility. They don't leave, but they do become successful with hard work and sacrifice. Gotta admire them for it.
Peter Neil
@bret t
indeed. that work stuff is passé now.
Stewart Gale
Peter,
All that would have happened is they would have refused to pay your ¥30,000 bill and the izakaya would be the ones to lose out.
So, you stole from the izakaya.
Hawk
Peter Neil,
And the staff didn't notice that the bill of two people who had been "eating all those unhealthy foods and drinking up a storm for a couple of hours" only came to 1000 yen?
stickman1760
Every time I go into an izakaya or bar in central Tokyo now it’s packed. Not sure about the rest of Japan
Patricia Yarrow
The wonderful izakaya downstairs from my apartment briefly switched to nonsmoking. I went often. Suddenly, they returned to smokers allowed, so I had to abandon them, and explained why. Yeah sure, the smokers were in a "back room", but that cancer cloud spreads out to cover everything. I was so disappointed. The owner still gives me dirty looks. His choice, and mine. I only patronize nonsmoking environments.
Keepitreal
@peter keep it real bud….