Leveraging cost price and table turnover rate in your advantage
How the Japanese restaurant Ore No group can offer high-quality food at reasonable prices
Ore No (俺の), which literally translates into “mine” or “my”, is a Japanese restaurant group founded in 2009. The company has grown from one single standing restaurant concept in Shimbashi, Tokyo, to a 45 shop operation with an unique business model.
How did they do that? After a short outline of the growth story, we will take a look at their business model and the main take-aways.
The Evolution
The company has originally started off as VALUE CREATE in November 2009 founded by Takahashi Sakemoto (坂本孝).
Before his embark into the food services space he led the second-hand store BOOKOFF as the founder to over 1000 shops in 16 years. In September they opened up their first Ore No Italian in Shimbashi in September 2011 as a 53m2 standing restaurant concept, shortly after in December they open up their second shop Ore No Yakiniku, which stands literally for grilled meat, a form of Japanese BBQ, in the Kamata station (near the Tokyo’s Haneda Airport).
The turning point was when chef Okamoto of the newly created Ore No France Ginza won two stars in the Michelin Guide Tokyo 2013 edition, turning the broad audience towards the young company. In late 2012 they renamed the company Ore No Kabushikigaisha (俺の株式会社), which converts into something like “My Company”. In the following years they opened various concepts mainly in their focus area Ginza/Shimbashi to strengthen their local brand and mitigating risks of going into complete new territory.
In April 2017, 8 years after their insurrection, the first franchise shop was opened up in Matsuyama as Ore No French. All other restaurants before that point were self-run businesses. With expanding both their own restaurant portfolio with opening Ore No Bakery concepts and franchising out the food business they reached 1273 employees out of which 433 are full-time employees (February 2019). As a comparison, in April 2014 their staff count was at 609 including the part-time employees.
After their quick growth from 1 shop in Shimbashi 2011 to 31 outlets in 2015, they have now over 45 shops. Looking at the number of shops by category, their main growth driver is the expansion into a new category. The Ore No Bakery cafe-bakery concept is selling Japanese bread loafs at 12 bakeries across Tokyo. The secondary growth driver is market expansion. They have added in the last five years two outlets of their French-Italian concept in Seoul and Shanghai.
“I made this company for the happiness of my employees. I am aiming for opening 30 shops in the Ginza area as well as expanding to New York.”
At the moment the company runs 15 shops in the Shimbashi/Ginza area, but has yet to expand to American soil. The Japanese food categories like Yakitori (grilled chicken skewers), Yakiniku (BBQ), Unagi (grilled eel) have not seen any growth since then. In the meantime one Ore No French restaurant and another Ore No Kappou (traditional Japanese cuisine) seem to have closed for good.
The Concept
What is behind the business model?
The concept is relatively simple. Good food for low prices by hiring talented chefs and ensuring three table turnovers per night (compared to a normal high-class restaurant of just one turnover) by limiting the dine-in time to 2 hours. The last order call comes just after 90 minutes.
“The business model I have created has two main pillars. To have Michelin-starred chefs at the top of their game delivering food at one-third the price of a high-end restaurant. Realize the profits of a thriving restaurant by getting table turnovers at least three times a day, even if the food cost ratio is over 60%.”
First: high-quality food for less money.
By limiting the dine-in time for customers they are able to increase the table turnover rate per night to over three times allowing their talented chefs to create delicious high-quality food for up to one third of comparable offerings. The high turnover rate to over three tables can offset the high material costs of up to 60% (compared to the average 30% in the industry). In the early days they began with a standing restaurant concept to limit the service time per customer and at the same allowing customers (and staff) to engage in a more closer familiar way. After a couple of years they have shifted to a seating concept where the dine-in time is limited two hours.
“The other thing we do is to build our employees’ growth (career plan). In an industry where it is said that it takes 10 years for a chef to become a full-fledged chef, we can achieve this in just two years through our individualized professional development program.”
Second: attract and retain talented staff.
In a very competitive talent market they try to offer their employees interesting growth options with a defined career plan. With their individualized professional development program they can provide young kitchen staff with a good growth opportunity working as a sous-chef candidate already in the second year after graduation. Also the company is leveraging its restaurant portfolio in order to teach their employees how to start their own businesses and franchises, and to gain overseas experience in Seoul or Shanghai outposts.
The Take-aways
Looking closely at the growth story and concept of Ore No restaurants, the following four points most struck me:
- Do not be afraid to change things: if necessary, i.e. your customer’s needs, tweak your business model accordingly. Ore No shifted from a standing restaurant to a seating concept in the end.
- Focus on a particular area: the Ginza/Shinbashi area itself is a big enough market thinking of the vast size of Tokyo and Ore No selected this area as their beachhead market. After the brand name was established further expansion with franchises, different categories and finally international expansion followed.
- Focus on your employees: Especially in the service industry nothing works without people. Retaining good people is a challenge for restaurant owners and Ore No tried to make their restaurants interesting for talented chefs.
- Know your levers: The table turnover rate and cost price ratio are powerful levers to drive business when in alignment with the whole restaurant concept. Ore No was able to offer high-quality food with a 60% cost price ratio by maximizing the table turnover rate.
