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All photos by Euromonitor International
The self-service cafeterias category isn’t generally seen as much of a global growth opportunity, but a new trend of high-quality, low-priced udon noodle chains sweeping across Japan has made it the fastest growing category in the highly mature market. Driven by two major chains, Marugame Seimen and Hanamaru Udon, Japan self-service cafeterias have averaged 5% in annual sales growth from 2007-2012, even in a market that saw a 2% decline in foodservice value as a whole.
Leader Marugame Seimen has grown very quickly, jumping from just over 100 outlets in 2007 to nearly 700 in 2012, and it’s easy to see why. The concept offers fresh, healthy, high-quality food at very low prices and very high speeds, appealing to busy professionals at lunch and price-conscious families for dinner. Udon is a thick Japanese noodle made from wheat flour that is commonly served with or without broth or sauces, and often topped with scallions, tempura, balls of rice or fish cakes. The format also allows for customers to take control of their dining experience from start to finish, choosing their own portion size, ingredients, toppings and seasonings, and paying only for what they really want. This kind of customisation is very appealing to modern urban consumers in mature markets, who have grown increasingly discriminating amidst a highly competitive market.
To gain a better understanding of just how the chain has managed to breathe new life into a relatively stagnant category, Euromonitor International visited a Tokyo outlet to observe the brand at work.
Ultimately, this chain has been successful because it meets all of the demands of modern Japanese consumers while offering an exciting, appealing menu that feels innovative enough to set itself apart. With this positioning, Marugame Seimen has achieved average annual value growth of 51% from 2007-2012, and absolute growth of nearly US$692 mn (¥55 bn) over the same period, growing to claim 30% of the local self-service cafeteria market along the way.
While it’s unlikely this particular trend will reach global or even regional status immediately over the short-term, it serves as yet another example of the changing preferences of sophisticated consumers in urban, developed markets. Consumers worldwide continue to look for more flexible, customizable foodservice options that offer high quality at lower prices and a wide variety of formats. In fact, our recent store visit to a Vapiano self-service cafeteria outlet in the US highlighted a similar strategy despite very different cuisine and outlet design. Consumers are growing increasingly willing to experiment with foodservice formats, especially with those concepts that are willing to hand over control of the dining experience. Adding entertainment value by bringing the customer into the ordering process has also become popular, allowing the format to become a part of the dining experience.
These kinds of formats which trade heavily on customization however, also come with an inherent risk: At some point, too much choice can be overwhelming, especially for new customers. Marugame Seimen deftly maneuvers this challenge by offering a streamlined menu of a single, popular dish, allowing customers only enough options to ensure that no matter their choices, they will still end up with a pleasurable meal. This strategy echoes the menu format of US fast-casual chain Chipotle Mexican Grill, which has almost singlehandedly spawned a global movement of imitators with similarly modular menus. Like Chipotle, Marugame guides customers through the ordering and customization of their dish, offering control while still minimizing failure.
Even beyond formats and branding, however, the rise of self-service udon bars in Japan is significant because it has the potential to spur growth in an entirely new chained foodservice niche. Consumers in many developed markets continue to seek out new Asian dining experiences, and noodle bars have just the right combination of the familiar and the exotic to maximise appeal. In addition, their particular brand of fresh, high-quality, ingredient-focused positioning combined with relatively low prices and a premium dining experience is seeing growth all over the world, based on what are rapidly becoming the universal preferences of upper-income urban consumers. So far, Marugame Seimen has made only tentative forays into overseas markets, opening outlets in Russia and London in late 2013, but grander expansion plans have yet to be discussed. When that time comes, however, current trends in consumer preferences and format innovation suggest they may find many new consumers who are eager to make their first visit.