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Group
Integrated Report
2016
For the Year Ended December 31, 2016
SKYLARK CO., LTD
1-25-8 Nishikubo, Musashino-shi, Tokyo
http://www.skylark.co.jp/
Get to
Swiftly Perceive Changes in Living
know It was our founders who popularized the term “Family Restaurant” in Japan.
Skylark
“Responsiveness” After opening the first Skylark restaurant—inspired by a well-established coffee shop in the
United States—Skylark has repeatedly carried out new initiatives adapting to the lifestyles and
needs of customers, who change with the times. This approach has not changed.
In anticipation of the times, Skylark will continue to develop its business to meet customer needs.
Increasing popularity Diversification of
Increasing demand of lower priced Increasing demand Increasing concern for preferences
Increasing
motorization in Japan for casual dining restaurants for home-meal food safety and including preferences for
due to the trend toward due to the collapse
replacement security the authentic, experiential
nuclear families, the of the bubble as more women consumption, and
Global Trends
increase in single-person economy enter the workforce health-consciousness
households, and rising
living standards
1970s 1980s 1990s 2000s 2010s
1992
1970
First affordably priced 1998
First Skylark restaurant Gusto restaurant Gusto introduces
2015
opened roadside Developing specialty brands
opened home delivery service
Inspired by a well-established coffee shop in
the United States, the first Skylark restaurant
In response to a decline in customers With the aging of society, and women’s social tailored to your needs
caused by economic change, Skylark devel- advancement, the need for home meal replacement
opened in Fuchu City, Tokyo. Amid ongoing diversification, evolving consumer preferenc-
oped Gusto, a new low-priced format.
1977 is increasing. As of April 2017, we had developed es and segmentation of consumption, customers’ food
home delivery service at about 900 restaurants to needs are also changing. In response to these changes, we
Established commissaries Installed drink bar and support the eating habits of our customers. are developing a variety of specialty restaurants.
in anticipation of growth waiter call system
Gusto was the first in the industry to introduce
To promote the standardization necessary for drink bars and waiter call systems that are now
Skylark Trends
chain operation, we established the Commis- commonly found in family restaurants. We have
sary System to take charge of processing, prioritized the offering of low priced and
distribution, and inventory management of great-tasting food to customers. Taking the
food ingredients at one location. initiative over our competitors, we have
adopted new service formats and become the
industry leader.
2007
Introduced a low allergen menu and healthy menu,
combined with transparent communication of the latest
allergy information
Introduced point-of-sale (POS) system and We developed a menu to respond to the increase
in people with food allergies and the health-con-
TOPICS first handheld order entry system scious. We have developed our restaurant menus
1981~ The restaurant industry has actively introduced information technology, Skylark was
in such a way that many customers can enjoy
an early adopter and the first in the industry to begin using a handheld order entry
eating out. Moreover, since 2008, we have set up
system. We have improved the efficiency of our operations by utilizing these systems.
a system for disclosing the latest allergy informa-
tion for the menus we offer.
1 Skylark Group integrated report 2016 Skylark Group integrated report 2016 2
Skylark’s distinctive robust
Get to Delivering fresh food ingredients daily to restaurants
know
Skylark
“Foundational Strength” Commissaries
10
Commissaries at 10 locations nationwide are
responsible for managing food ingredients and
primary processing. Consolidating the preliminary
processes and preparation of sauces has helped to
Our progress of more than 45-years as a family restaurant pioneer reduce the burden of cooking at restaurants and
has shaped the foundation that supports Skylark today. provides higher-quality products.
locations
Hokkaido area
In the table service restaurant industry, we have 27
D’s
WORLP!! the largest number of restaurants High retention rate and highly capable Employees
TO
100
in the world
3,079
Skylark is working to retain competent employees with its
improved educational and staff award systems. Due to
the foundational strength of Skylark, our staff effectively
manage menu revisions, format changes, and new store
openings that support Skylark’s growth aspirations.
Tohoku area
restaurants (as of May 31, 2017) 108 thousand people
The Skylark Group is a core business of the table
service restaurant operation that provides a wide Sendai
range of dishes including Western, Chinese, and
Japanese. Our restaurants have spread to every Koshinetsu area
158
prefecture in Japan and is one of the largest Kitakanto area
restaurant chains in the world. Multiple brands
Hokuriku area
176 that meet a wide range of needs
48
Maebashi
More than Starting with our mainstay
20
Fujioka
Higashimatsuyama brand “Gusto,” we have
Taiwan Kinki area Akishima developed a wide range of
48
Shisui
321 Gifu Sagamihara brands that transcend the
Chugoku area boundaries of food. In addition
101
Tokyo metropolitan area
Tokai area to formats where different
1,622
Nishinomiya
kinds of dishes can be enjoyed,
278 we have recently developed
specialty formats including
brands
Kitakyushu •••
Commissaries cafés and Japanese cuisine.
Shikoku area
60
Numbers in black indicate
Kyushu area the number of restaurants
120 ’s
Skylark Co., Ltd. JAPAPN!!
’s T O
JAPAPN!! Zensho Holdings Co., Ltd.
TO
1
Doutor Nichires Holdings Co., Ltd.
Saizeriya Co., Ltd.
Industry No.
2016 Ordinary Income*
Okinawa area Received the Toridoll Holdings Corporation
12 Best Japan Brands 2017 award Saintmarc Holdings Co., Ltd.
Plenus Co., Ltd.
The Skylark Group is ranked second in the industry in total sales
In February 2017, Gusto was ranked 37th in “Japan’s Best Domestic Brands Kura Corporation
and first in ordinary income in Japan. Higher profitability owing to
2017” published by Interbrand Japan, Inc., which evaluates brand value. This McDonald’s Holdings Japan effective cost optimization is one of the Group’s features.
marked the first time that the restaurant industry was selected based on an
Aim Services Co., Ltd. * As Skylark applies international accounting standards, it uses pretax profit.
evaluation of brand value improvement achieved through aggressive restaurant
remodeling and menu enhancements, which we have practiced for several years. Source: Prepared by Skylark based on Nikkei MJ’s “43rd (FY2016) Japan Food Service Industry Survey”
3 Skylark Group integrated report 2016 Skylark Group integrated report 2016 4
Get to
Aiming for another leap forward
to a “New Stage”
know
Skylark
For about nine years since 2008, Skylark has been working on a range of
reforms. Based on the strength developed during this time, Skylark entered
“STAGE 3” in 2017.
Operating income Revenue
(Billions of yen) Second consecutive (Billions of yen)
year of record-
35 breaking profit 400
Revenue
30
STAGE 3 350
Relisted on the
First Section of the Growth through restaurant expansion
Tokyo Stock Exchange
With our ability to increase store openings having
300
significantly expanded due to brand development in
25 STAGE 2, we accelerated store openings in response to
Operating income diversifying needs.
Bain Capital acquired a
* At Skylark, we define a location where it can be determined that an investment can generate
strong returns, leveraging our portfolio of brands, by analyzing data including national and 250
98.7% equity interest in economic census of night-time and daytime populations, the number of passengers at train
20 Delisted from the
Skylark Co., Ltd. stations, and T-Card usage by neighborhood and district.
First Section of the
Tokyo Stock Exchange STAGE 2 Expansion of the number of restaurant openings
· Open about 450 restaurants over the next three years 200
STAGE 1 Establish foundation · Open more roadside locations, especially new brands
15 for growth
Structural
reforms Developed many specialty formats Enhance existing restaurants 150
to meet diverse customer needs.
Abolished the brand-spe-
Strengthened procurement capabili-
· Offer menus tailored to customer needs
cific company system.
ties by taking advantage of scale, · Implement cross-brand promotions
10 Curbed excessive
improved processing and delivery
restaurant openings and · Expand delivery and takeout service
established a manage-
efficiency at our commissaries, and
100
ment system that enables
formed a solid foundation that is · Improve restaurant operation continuously
unique to Skylark.
prompt decision-making.
5
Makoto Tani
50
becomes
President
0 0
-5 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
5 Skylark Group integrated report 2016 Skylark Group integrated report 2016 6
Our Corporate Philosophy
Creating Richness with Value to Society
Offering great-tasting food
at affordable prices with good service in our clean restaurants
to as many people as possible
Brand
Portfolio
→P19
“Brand Portfolio”
Vertically
Management Integrated
Style Supply Chain
→P11 →P23
“Message “Foundation to
from the CEO” Support Growth”
Skylark’s
5 Advantages
Marketing/
Data Analysis
Business Scale
Capability
→P1 →P21 “Special Feature:
“Get to Know Skylark” Market Analysis
Capability”
→P29 “Marketing”
CONTENTS
1 Get to Know Skylark 19 Brand Portfolio 33 Interview with Indepen-
dent Outside Directors
9 Financial and Non-Financial 21 Market Analysis Capability
Highlights
23 Foundation to Support Growth 37 Corporate Governance
11 Message from the CEO
24 1. Human Resources 42 Risk Management System
16 Special Feature: 43 Board Members and
27 2. Procurement
Skylark Takes on the Executive Officers
Challenge of “Expanding the 28 3. Production/Distribution
45 Financial Section
Number of New Restaurant 29 4. Marketing
Openings” 52 Company Information/
31 Sustainability Initiatives Shareholder Data
Regarding the Publication of Integrated Report 2016
This report has been published to communicate financial and non-financial information to shareholders, investors and stakeholders, as well as initiatives to
raise corporate value over the medium to long term with the aim of inviting further dialogue.
The editing of this report was performed by referencing the International Integrated Reporting Framework published by the International Integrated
Reporting Council (IIRC). The Skylark Group has adopted International Financial Reporting Standards (hereafter, “IFRS”) and the content of this report is
based on IFRS, unless otherwise noted.
Based on its corporate philosophy of Creating Richness with Value to Society, the Company will continue to engage in dialogue with stakeholders
through the enhancement and proactive use of its integrated report, and create business value.
7 Skylark Group integrated report 2016 Skylark Group integrated report 2016 8
Financial1 and Non-Financial Highlights
Consolidated Revenue2 Ratio of Sales by Brand Dividend per Share4, Payout Ratio Number of New Employees
(Number of ■ New employees
(Billions of yen) Other restaurant Others 2.6% (Yen) ■ Dividend Payout Ratio (%) Employees) Female employment Internal recruitment (%)
500 businesses (9 billion yen) 40 38 50 200 100
21.7% 193 81.5%
40.6%
400 (76.8 billion yen) 40 80
354.5 30 150
Steak Gusto Revenue
4.9% Gusto 42.9%
300 354.5 (152 billion yen) 30 60
(17.3 billion yen) billion yen
20 100
Yumean 6.0%
200 20 32.7% 40
(21.4 billion yen)
Bamiyan 10.4% Jonathan’s 11.5% 10 50
100 10 20
(36.9 billion yen) (40.9 billion yen)
0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 2014 2015 2016 0 0 2013 2014 2015 2016 2017 2018 target 0
The year ended December 31, 2016 had a major impact on changes in the external environment and consumption trends, but major revisions adapted to Based on favorable performance, the dividend per share for the year To expand the number of restaurant openings from the year ending
market needs that were made to the menus of our mainstay brands proved successful and sales steadily increased from the second half. In addition to our ended December 31, 2016 increased by ¥5 over last year’s dividend of December 31, 2017, we are aggressively hiring manager candidates and
existing store strategy, consolidated revenue increased 1% year on year due to brand conversion to newly developed specialty restaurants and aggressive ¥33. The dividend payout ratio remained stable, surpassing our target of internally recruiting highly capable human resources with staff experience.
opening of new restaurants in front of train stations and shopping centers. 40%. Furthermore, year after year we have increased the employment ratio of
women by promoting workstyle reforms, such as in the personnel system,
which accommodates diverse workstyles, and reduced late-night service.
Adjusted EBITDA3 Consolidated Operating Profit Staff Aged 50 or Older and their Percentage CO2 Emissions per Restaurant in Manufacturing
(Number and Distribution
(Billions of yen) (Billions of yen) of Staff) ■ Staff Aged 50 or Older As a Percentage of Total Employees (%)
50 47.8 12,000 12.5% 14.0 (t-CO2)
25
40
10,000 12.0
40 31.2 9,872 20
10.0 17.3
30 8,000
30
8.0 15
6,000
20 6.0
20 10
4,000
4.0
10 10
2,000 5
2.0
0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 0 2013 2014 2015 2016 2017 0 0 2012 2013 2014 2015 2016
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Staff members aged 50 or older currently account for about 10,000 of our The Skylark Group has a vertically integrated supply chain and manages
In the year ended December 31, 2016, continuous cost reductions and cost optimization to counteract inflationary effects such as personnel expenses, and total staff of 100,000. As Japan’s demographics change, we are working energy at its restaurants, as well as in production and distribution at its
selling, general and administrative expenses, in addition to sales growth, resulted in a ¥3.0 billion (6.8%) year-on-year increase in adjusted EBITDA. to create an environment for the participation of many active seniors. commissaries. With the number of restaurants increasing, total CO2
Consolidated operating income climbed ¥3.4 billion (12.4%). emissions in production and distribution have been reduced by about
20% per restaurant over the last five years.
Net Income Gross Profit Ratio and Exchange Rate Fluctuations Electricity and Water Usage per Restaurant5
(Billions of yen) (%) ■ Gross Profit Ratio Exchange Rate Fluctuations (kW/h) ■ Electricity ■ Water (m3)
18.2 75
20 (Yen)
600 8.5
15 130
580 8.0
10 70
5 120
560 7.5
0 65
-5 540
6.8 7.0
110
-10 60
520 6.5
100
-25
500
489 6.0
-30
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 2015 2015 2015 2015 2016 2016 2016 2016 2017 0 0 2010 2011 2012 2013 2014 2015 2016 0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
Due to higher revenue and cost optimization, net income increased ¥2.1 Amid a drastically changing external environment that included foreign In addition to the introduction of LEDs at restaurants and energy manage-
billion (13.5%) year on year, setting a record for the second year in a row. exchange fluctuations and sharply rising ingredient prices, we maintained ment backed by employee-wide efforts, the maintenance of equipment
the gross profit ratio at around 70% throughout the year by controlling the and installation of the latest energy-saving equipment has been per-
menu mix, sales promotions, and optimizing the supply chain. formed by Group companies . As a result, during the seven-year period
from 2007, both electricity and water usage per restaurant have been
reduced by about 15%.
Notes: 1.Up to 2011, prepared based on Japanese generally accepted accounting principles (J-GAAP). From 2012, prepared based on International Financial Reporting Standards (IFRS). 4.The Company carried out a 100-for-1 share split of its common stock on August 4, 2014. Equity per share attributable to owners of the Company and basic earnings per share are
2.Sales do not include consumption tax. 3.Adjusted EBITDA = EBITDA + Loss on disposal of fixed assets + Impairment loss of non-financial assets + Advisory fees in accordance with the calculated using the number of issued and outstanding shares after the share split assuming the share split came into effect at the beginning of 2012. 5.Figures are per restaurant
BCPL management agreement (including periodic payments) + IPO and public offering-related expenses (including special bonus for initial public offering) + Amount associated with the excluding the Group company restaurants of NILAX Inc., FLO JAPON, and Tomato and Associates Co., Ltd.
change in accounting estimates due to qualified listing. (Supplementary) EBITDA based on J-GAAP = Operating profit + Depreciation + Amortization of goodwill + Amortization of
long-term prepaid expense + Amortization of long-term prepaid expense (deposit) + interest on asset retirement obligations
9 Skylark Group integrated report 2016 Skylark Group integrated report 2016 10
Message from the CEO
Leveraging our diverse brand portfolio,
we will pursue new growth with a focus on
store expansion
Achieved record-breaking profit and Closed unprofitable restaurants, con-
ventured into a further growth stage verted formats, and implemented dras-
In the 2000s, Skylark overcame the greatest crisis it tic business reforms
had ever experienced since its founding and was During the three-year period from 2017 through
thereby transformed into a restaurant business 2019, Skylark plans to open about 450 new restau-
Makoto Tani group with a stronger business foundation. With rants, which is three times more than it opened
Skylark the restaurant market remaining sluggish due to over the last three years. I’m convinced that the
President and continuing deflation and stagnant personal biggest reason that we shifted to an aggressive
Chief Executive Officer consumption, Skylark has developed a structure strategy to increase the number of restaurants was
that is capable of achieving consistent and stable to build a business foundation to swiftly and
profit. precisely respond to changes in customer lifestyles
Results in 2016, on a consolidated basis, were and in markets through the business structural
revenue increased 1% to ¥354.5 billion and operat- reforms we have taken so far.
ing income climbed 12.4% to ¥31.2 billion, achiev- In “STAGE 1” of reforms started in the
ing double-digit growth, breaking the previous second half of 2008, we closed about 400 unprofit-
Company record. able restaurants in about a year and a half while
Having assumed the position of CEO in implementing brand conversion tailored to market
August 2008, to solve the problems that had piled changes at 400 restaurants. At that time, personal
up, I worked on structural reforms to stop the consumption cooled down due to the global
outflow of cash by closing unprofitable stores, financial crisis in September 2008, but fortunately
brand conversion, and other measures as “STAGE we had two brands with growth potential, Gusto,
1.” From 2012 and after, I focused on laying the which has had increasing customer support due to
foundation for future growth by strengthening its reasonable prices, and the newly developed
existing stores, developing new formats, and other Steak Gusto. In addition to converting unprofitable
measures as “STAGE 2.” and poorly performing restaurants to these brands,
Company performance followed a steady
course to recovery and the setting of record profits
in 2016 was no doubt the result of all Group
employees working together to implement these
Consider employees
drastic business structural reforms. Based on these
achievements and reform results, we positioned and push through
2017 as “STAGE 3” in which we will promote a new
growth strategy centered on expanding the reforms
number of restaurants.
11 Skylark Group integrated report 2016 Skylark Group integrated report 2016 12
Message from the CEO
we reallocated the personnel of restaurants that Centered on segments such as women, Leveraging an efficient supply chain and
closed by increasing sales at existing restaurants senior citizens, and families, the need for intangible economies of scale, all brands provide
and achieved profitability without having to reduce and experiential consumption*, which emphasizes greater value than their price
staff. Customer needs are not only good food, but having an enjoyable time To facilitate the new multi-brand store openings,
In “STAGE 1,” we pushed through drastic
internal organizational reforms. At the time, the
found in the restaurant in a restaurant and a cozy comfortable space, is
growing. For example, in the past, family restau-
the supply chain, including the commissaries and
distribution system, has been rebuilt into a system
Company imposed a brand-based business rants were mainly where customers enjoyed eating that addresses the move to multiple brands.
structure including Skylark, Gusto, and Bamiyan. At with their families, but recently they have become Therefore, in line with its shift to a function-based
a time when the restaurant market had been venues for girls-only gatherings and places for organization implemented in the “STAGE 1,”
steadily expanding, we increased sales with an formats because social conditions and people’s senior citizens to gather and socialize to talk with Skylark has pursued reforms at ten commissaries
aggressive restaurant opening strategy. However, lifestyles have drastically changed. Given that, we friends about their hobbies, and more and more nationwide. Traditionally, under a financially
in today’s low-growth era, cannibalization of thought that quickly responding to customer customers are going there to enjoy themselves in a independent business structure, each commissary
internal brands over limited markets is a major needs was of the utmost importance. In fact, I went variety of ways. Additionally, the number of was essentially a mechanism for producing ingredi-
adverse effect. Therefore, we transformed our to each of the Group’s restaurants by myself, and customers who spend their private time eating out ents for a specific brand only, but this was changed
internal organization into a functional organization while talking to managers and staff and studying in restaurants is increasing. to a system that produces ingredients for multiple
and tried to avoid cannibalization by developing an the restaurants’ interiors, I experienced for myself To meet these intangible and experiential brands while flexibly rearranging the production
optimal Companywide and regional restaurant the greater-than-expected changes in the food consumption needs, we developed MUSASHI NO line in a single commissary. Likewise, we changed
opening strategy and with sales promotion that needs of customers and understood how they MORI COFFEE to provide a relaxing and comfort- distribution from the traditional brand-specific
transcends the brand framework. We also pursued spend their time in restaurants. able space surrounded by greenery. The delivery system, to an area-specific delivery system
cost reductions and optimization of human For example, in the restaurant market, while above-mentioned Syabuyo, which places a premi- that transcends the brand framework. As a result, it
resources by integrating the development, sales, preference for low-price is well established, the um on fresh vegetables and safe and secure meat, was possible for one delivery truck to efficiently
human resources and general affairs divisions, number of people who will pay a little more for a is another example of a format developed from the visit multiple restaurant brands near each other
which until now had been dispersed, into one. menu with one’s favorite dishes or a menu with standpoint of intangible and experiential and major distribution cost reduction benefits were
unique and popular items is increasing. To meticu- consumption. obtained.
lously meet customer needs that are becoming With the development of these new formats, At Skylark, we provide “menus worth more
Build diversified brand portfolio that increasingly customized and personalized , the Skylark’s brand portfolio offers a rich lineup that than their prices” across all brands by utilizing our
responds to the need for personaliza- all-purpose format, which has been Skylark’s can meet diverse customer needs, and based on efficient supply chain and low-cost procurement
tion and segmentation mainstay, by itself has limitations. It is necessary to our research and analysis, the room for store capability that leverages our nearly 3,000 restau-
Next, in “STAGE 2,” we set out to enhance existing develop an even greater variety of formats that are openings has expanded to reach 2,300 locations. rants nationwide. This supply chain and our econo-
stores first. In this, we were especially committed more unique and highly specialized. As “STAGE 3,” we will open new restaurants that mies of scale should be a major advantage, not
to the effective utilization of data. Combining the The format that we enhanced from that point are the optimal brand tailored to the market only to our family restaurants, but in developing
T-Card and POS (point-of-sale information man- of view was the specialized format, which includes characteristics of each region and customer needs, more specialty brands in the future.
agement) data, we could accurately understand the shabu shabu restaurant Syabuyo, the yakiniku taking full advantage of this multi-brand structure.
what kind of customers are coming to our restau- restaurant Jyu-Jyu Karubi, and the Japanese food As for the location of these new restaurants, we
rants, their frequency, what they are ordering and and café fusion restaurant Chawan. Targeting plan to focus on opening new brands along
what the average spend is per customer. Based on customers who want to eat inexpensively, but have roadsides as well as in front of train stations and in
this detailed analysis of consumer trends, we have a limited time, such as company employees and shopping centers.
redesigned our restaurants including menu devel- drivers, we developed Yumean Shokudo and Making our business
opment and interior remodeling, offered sales Tonkaratei, a new format of specialty restaurants
with a low average ticket price. In the United
*Intangible and experiential consumption refers to
consumer pursuit of intangible factors such as a
foundation a driving
promotions, and subsequently increased sales at
existing restaurants and enhanced profitability. States, such restaurants are called “fast casual” better quality of life and interesting experiences as force for growth
At the same time, we started to develop new and are currently the fastest-growing category. opposed to the pursuit of material possessions.
13 Skylark Group integrated report 2016 Skylark Group integrated report 2016 14
Message from the CEO
Special
Feature
In this way, growth through an increase in promoting more opportunities for education and
restaurant openings, positioned as “STAGE 3,” is a
strategy that is backed by a brand portfolio
self-development by introducing more flexible
workstyles and e-learning. The promotion of Skylark Takes on the Challenge of
“Expanding the Number of
capable of meeting diverse customer needs as well diversity is another important theme. Not only are
as a powerful and flexible business foundation that we focusing on appointing female managers, we
New Restaurant Openings”
supports multi-brand restaurant development. I are also employing senior citizens by extending the
am confident that it will be the driving force for retirement age to 65 and introducing a reemploy-
new growth at Skylark. ment system that allows applicants to continue
working until the age of 70. We are also devoted to Based on its foundational strength that is reinforced in stages 1 and 2, Skylark will take on the
improving employee health and have been certi-
challenge of dramatically expanding the number of new restaurant openings from 2017 to 2019.
Proactively pursuing “workstyle fied by the Health and Productivity Management
From the outline of the plan and the foundational strength that supports it,
reforms,” we support both a work-life Organization (White 500) and have received the
balance and growth strategy Kurumin mark as an excellent company that the two forces that will drive restaurant openings are introduced.
The securing of human resources is an important supports child rearing. We will create an environ-
issue for actualizing this new growth strategy. At ment where it is easier for employees to work, Expand the number of restaurant
→P.17
Skylark, which has developed businesses based on promote a work-life balance, and achieve our openings three times faster
table service for many years, there are many growth strategy.
actively working management-level personnel with
extensive table service skills and knowhow. Howev-
er, to aggressively expand new restaurant open- Continue “Creating Richness with Value
Support optimal
ings, we must secure a greater number of compe- to Society” in the restaurant industry Expand the room for
restaurant openings
restaurant openings
tent employees who will be future manager Since opening Japan’s first family restaurant (first
Brand Portfolio Market Analysis
candidates, as well as staff who are service Skylark) in 1970, we have been striving to “Create
Capability
minded. Therefore, we have taken steps to Richness with Value to Society,” which is also our →P.19 →P.21
enhance employee and staff recruitment while corporate philosophy, with the mission of “Offer-
improving employee satisfaction and retention rate ing great-tasting food at affordable prices with
through “workstyle reforms.” good service in our clean restaurants to as many
As one way to address this, we have signifi- people as possible.” After nearly half a century,
cantly reduced late-night work hours at restaurants restaurants including family restaurants have
to alleviate the burden on employees. We are also become indispensable for people to have a good
time with their families and friends and to lead a
rich life. Since the Great East Japan Earthquake,
the social function of the restaurant industry has
grown in importance as we rediscover the value of
Achieve increase in the bond between people.
As a pioneer in the restaurant industry,
store openings through Skylark will strive to develop new brands with value
workstyle reforms and aggressively open attractive new restaurants
that bring a smile to every customer’s face. Thank
you for your continued support and cooperation.
15 Skylark Group integrated report 2016 Skylark Group integrated report 2016 16
Special Feature Skylark Takes on the Challenge of “Expanding the Number of New Restaurant Openings”
Three-times Faster than the Last Three Years
Restaurant Location
Expand the Number of Point 2
Returning our focus to
roadside restaurants
New Restaurant Openings Roadsides, which can effectively uti-
lize our distribution network centered
Existing brand New brand on 10 nationwide commissaries, have
Shopping long been considered excellent res-
centers taurant locations by Skylark. With
each brand’s earnings base
Point 1 reinforced by the benefits of
Existing brand New brand scale, we have decided to
Expand the Number of 2017-2019 refocus. In addition to restau-
rants in front of train stations,
450
Roadside
New Restaurant Openings which had been expanding
2014-2016 In front of until last year, we plan to
144
train stations accelerate restaurant open-
Shopping Open 450 new restaurants leveraging Roadside
centers multiple brands ings at shopping centers,
especially our chawan brand.
Restaurants
We will accelerate the pace of restaurant open-
ings, which totaled 144 over the last three years.
Restaurants
Our plan is to open around 450 new restaurants
nationwide, 100 in 2017, 150 in 2018, and 200 in Point 3
2019, which is three times more than the past
In front of
three years. Leveraging its multiple brands, a
train stations
Skylark strength, we will open a variety of Restaurant Brands
restaurants of multiple brands with different
formats in the same region in marketable areas.
to be Opened
Newly developed specialty brand
to be opened according to location
Thus far, the Group has increased its profit margins and achieved record-breaking profits amid
Skylark has various new brands besides family
flat sales thanks to business structural reforms and rigorous cost optimization. Now that the restaurants. Leveraging numerous specialty
business foundation has been laid, it is essential that we expand the volume of sales by opening brands developed up to Stage 2, such as
new restaurants for additional growth. In a favorable environment marked by a rising Engel’s Syabuyo, where you can enjoy all-you-can-eat
coefficient and increased spending on dining out by young people, we will increase business shabu-shabu with family and friends, and
profitability by aggressively opening new restaurants tailored to each area’s needs. MUSASHI NO MORI COFFEE, where you feel
like you’re in a resort, we will expand open-
ings according to location.
DATA Domestic restaurant market conditions support expansion of the number of restaurants
Customers seeking Percentage of food and beverage expenses Japan is the country with the highest individual Domestic restaurant market has been declining since its peak, Market size expected to expand
food quality and to household consumption expenditures (%) daily food expenditure but has moderately expanded recently
26 (%)
a better dining Size of restaurant market Dining out expenditure Restaurant market (trillion yen) ■Dining out ■Home meal ■Eating
25 80
experience have (trillion yen) per citizen (10,000 yen) 30 replacement at home
24
increased and the 53 17 Moderately
percentage of spending 23 51 16
22 expanding
on food has grown
21 25 60
~ 26.0
~ 3rd 23.5 25.3
1985 1990 1995 2000 2005 2010 2016 in the
Source: Nihon Keizai Shimbun Inc. (February 17, 2017)
world
20
The young generation Dining Out Expenses (%) * 40 5.7 6.4 6.8
25
spends more on 30
restaurant dining and 30s in 2015 7
15
therefore expenses for 20 40s in 2015
15
50s in 2015
dining out are expected 4 20 36.9 36.2 38.1
to increase overall 10 60s in 2015
10
* Calculated as follows:
General dining out for a working 0
household of two or more
people ÷ food expenses 20s 30s 40s 50s 60s 0 2010 2015 2020(Estimate)
China US Japan Brazil Japan US Brazil China 0 1990
Source: Prepared by Skylark based on the Family Income 1995 2000 2010 2015
and Expenditure Survey (Statistics Bureau, Ministry of Source: Prepared by Skylark based on Euromonitor etc. Source: Prepared by Skylark based on materials from
Source: Japan Food Service Association the Mizuho Bank Ltd. Industry Research Department
Internal Affairs and Communications)
17 Skylark Group integrated report 2016 Skylark Group integrated report 2016 18Special Feature Skylark Takes on the Challenge of “Expanding the Number of New Restaurant Openings”
Brand Portfolio
Restaurant
opening support A brand portfolio that fulfills a variety of needs
capability
1
Average unit price:
around ¥1,500
Expands Room for Restaurant Openings
Diverse brands that hold the key to expanding
new restaurant openings.
Having brands that meet various needs leads to expansion
of locations where restaurants can be opened.
The Skylark Group has developed diverse brands that cover the low- and mid-price
range in multiple categories including Japanese, Western, Chinese, and Italian
cuisines, supporting a wide range of customers that make up the majority of ALL- Specialty
domestic consumers. With this diversity of brands, we can now appropriately PURPOSE* restaurant
allocate brands to match the distinctive characteristics of the locations where new
stores are opened.
Because the external environment and consumer needs are constantly
changing, detecting and understanding those changes and quickly developing
brands to match the market is essential. From 2015 to 2016, we developed brands
that are highly specialized and expanded our brand portfolio to include MUSASHI
NO MORI COFFEE, Yumean Shokudo, and Tonkaratei.
Haruyoshi Sakita To further enhance format development, we established a specialty format
Managing Director development team in the Marketing Division in 2016. Today, consumer values are
of Marketing Division shifting from “material consumption,” which emphasizes the value of material
ownership, to “intangible consumption,” which values special times and experi-
ences. We will accurately monitor this new demand and meet customer needs that Around ¥500
are diversifying and segmenting.
* A generic term for a business category that offers a comprehensive menu of Japanese, Western, and Chinese cuisines in response to a variety of motives
including period of time and purpose.
!!
NEW New Brands that Meet Customer Needs
A specialty restaurant TOPICS
Create together with your family
that is a cut above
A buffet-style restaurant specializing in shabu-
shabu that offers exceptional value where you can A specialty restaurant where you can enjoy a Community café that is popular with the whole community
freely choose your favorite meat, vegetables, varied and high-quality menu including pork,
broth, and dipping sauce. beef, and prawn cutlet in a comfortable and
stylish setting.
Since opening its first shop in Yokohama City’s Minami-ku in March
2015, MUSASHI NO MORI COFFEE has been popular with customers
Grab a quick bite on the way home or and has greatly exceeded expectations. In June 2016, the Toyama
An exceptional resort-like experience on the way out Kyodo restaurant was opened in Toyama Prefecture, the first restau-
A café designed in the image of a high mountain Developed to meet the need for restaurants in rant outside the Tokyo metropolitan area, giving us roughly 10 shops
resort that provides a space where you can relax front of train stations and in urban areas under centered in the Kanto area. The brand concept is “All day living – in a
amid different designs and atmospheres in each the concept of everyday Japanese food that can
area, and have coffee, specially made pancakes, be enjoyed in a casual atmosphere. Enjoy Japa-
comfortable leisurely space –“. In a spacious shop interior that makes
and other items. nese noodles (udon), lunch specials, and a drink you feel that you are in a coffee shop in a high mountain resort
menu. furnished with comfortable sofas, chairs and magazine racks. Here
you can enjoy a menu rich in variety such as hand-drip brewed
Expansion of restaurants mainly in Experience high-quality specialty coffee and special pancakes that can only be had at
shopping centers Hawaiian resort dining in Japan MUSASHI NO MORI COFFEE cafés. As a community café where you
A restaurant with a casual atmosphere and a “La” is Hawaiian for “sun,” and “ohana” is can leisurely spend your time as you like, in the morning, afternoon or
nutritionally balanced menu to meet the needs of Hawaiian for “family” or “bond.” The restau-
women who want to eat tasty and healthy food at rant offers community dining where customers night, by yourself, or with your family or a group, it aims for wide MUSASHI NO MORI COFFEE
a leisurely pace. can enjoy Hawaiian food and drink. popular community support.
19 Skylark Group integrated report 2016 Skylark Group integrated report 2016 20Special Feature Skylark Takes on the Challenge of “Expanding the Number of New Restaurant Openings”
COLUMN
Market Analysis Capability
Restaurant
opening support
capability
Utilizing Data from Market Analysis,
2 that Supports Optimal Restaurant Openings we Seek to Expand Area Revenue
In the growth of existing restaurants as well
Detailed market analysis is essential when opening as new restaurants, we are executing policies
a restaurant. Selecting the most appropriate brand and and measures that leverage market data.
building the restaurant based on data leads to
Verify the status of all restaurants in the area and consider
a successful opening. measures to improve the entire area’s profitability
The Restaurant Development Division is responsible for restaurant remodeling, Brand conversion that seeks optimal placement in
brand conversion, as well as securing land and buildings, brand selection, and Brand the Group’s restaurant areas tailored to local needs
restaurant design. We have significantly reinforced staff in preparation for the rapid Conversion The brands developed by the Skylark Group have a basic restaurant structure that is
expansion of the number of restaurants. About 50 staff are continuing to search
nationwide, from Hokkaido to Okinawa, for candidate locations and properties for common within the Group, so it is possible to convert restaurants to other brands accord-
new restaurants. ing to local needs and other factors. Because Skylark owns diverse brands, it can strategi-
When opening a new restaurant, it is important to decide comprehensively cally select the appropriate brand at each location according to market changes, and the
based on a variety of factors such as location, floor space, market conditions of the range of those selections is also expanding due to recent new brand development.
area, and the effect on existing Group restaurants in the neighboring area, and then The distinctive feature of the Skylark Group’s brand conversion lies in “optimal area
select the most suitable brand. What most differentiates Skylark from its competi- placement” that reduces competition within the Group and maximizes the market’s
tors is its ability to select the most suitable brand that can be expected to reliably potential by reviewing the placement of Group restaurants within an area, and not one
Shigeto Kadowaki generate revenue from among its many brands within the location parameters, such restaurant alone. In 2016, 84 restaurants were converted. This generated a high investment
Managing Director as a Japanese brand in areas where there is an over concentration of Western-style effect because conversions were based on detailed analysis. For example, MUSASHI NO
of Store Development Division restaurants. MORI COFFEE, which was converted and opened in Toyama Prefecture in 2016, saw a
Underpinning this is Skylark’s ability to analyze markets and customers. sales increase effect of about 340% compared to before the conversion, and surrounding
Immediately after developing a new brand, we verify it with a trial restaurant that area sales increased 7.6%.
has undergone brand conversion from an existing restaurant, leading to the
development of an optimal brand through the collection of “living data.”
Meanwhile, we are researching customer segment assumptions based market Increase Customer Traffic through Remodeling (renovating restaurant
data from surrounding areas and on big data collected from existing restaurants. By interiors and exteriors) 316 restaurants remodeled in 2016
Remodeling
combining this data with each brand’s data, we consider the most suitable brand. In
In accordance with market changes, such as the increase in the senior citizen and women
addition, by analyzing such factors as the average number of people who come to
customer segments, Skylark is aggressively remodeling (renovating restaurant interiors
use the restaurant at one time (for example, do individuals or groups of two or three
and exteriors) so that it can provide customers with a comfortable space. We have remod-
people most frequently enter the restaurant at one time) and what are its peak
eled at a pace of about 300 restaurants annually since 2013, focusing on revamping
hours, we decide the restaurant’s design, such as the proportion of individual
seating versus booth seating, and the amount of space to devote to the smoking designs tailored to concept by, for example, constructing separate smoking and
section. This helps us create restaurants that rank high in customer satisfaction. non-smoking sections to accommodate increasing demand and improving the table ratio
to accommodate changes in customer segments. In 2016, 316 restaurants were remod-
Data Collection Analysis Restaurant Opening eled and Gusto achieved an almost 4% sales increase than before remodeling. In recent
years, we began working on layouts that ensure private spaces to meet various needs,
Market data is collected about A specialized division analyzes the market data and Restaurant brands that match
the conditions of surrounding considers the most suitable brand the analysis results are opened such as for rising banquet and larger party demand.
restaurant usage
After remodeling
Changed to a seating
arrangement that
assumes customers will
visit in small groups in a
café-like atmosphere.
Synergistic
effects with our Before remodeling
other brands in the Family seating is most common
surrounding area
are also analyzed
21 Skylark Group integrated report 2016 Skylark Group integrated report 2016 22Foundational
strength
1 Human Resources
“People” Hold the Key to the Success of
our Restaurant Opening Strategy
Over the next three years, Skylark plans to open about 450 restaurants
nationwide, approximately three times that of the last three years. Secur-
ing human resources is therefore an urgent task. To achieve this restaurant
opening plan, we need to hire about 100 more people than we now do
Foundation to Support Growth each year. Naturally, the “quality” of human resources is important, and
because we are committed to our hiring standards that require
“hospitality-minded people,” we will actively promote full-time
employees from our staff.
Skylark’s strength is its vertically integrated supply chain that it operates consistently from
To retain personnel who can provide high-quality service, we
procurement to delivery. Our human resource and marketing capability also supports this. significantly reduced night time work in 2017. Although sales may
decline, we expect profit margins can be secured by increasing the
turnover rate during peak hours and improving service quality by transfer- Minoru Kanaya
ring veteran staff, who had worked night shifts, to work lunch and dinner Managing Director of
time. The acquisition and retaining of high-quality human resources will Human Capital Management
Human resources Marketing lead to the success of our plan to expand the number of restaurants.
Division
→P.24 →P.29
Initiatives to Procure Human Resources
Skylark’s Vertically Integrated Supply Chain
Creating Strengthening Staff Recruitment and of 4, 6, 8, 10, and 12 hours, enables free workstyles to
Procurement Inspection Production Distribution Preparation Service Richness Employee Promotion accommodate busy- and off-periods of work. Mean-
with Value To secure competent human resources, Skylark is while, we have taken steps to curb transfers and moves,
to Society actively promoting staff to full-time employee status. To which are a heavy burden on employees, and reduced
communicate the appeal of working at Skylark with the employee moves by 30% year on year in 2017.
aim of having them become full-time employees, we
have held staff-only dinner parties and seminars for job
seekers, and expanded the number of restaurants where
→P.27 →P.31 →P.28 interviews are set by the call center (instead of by
managers) to all restaurants to reduce the burden on
TOPICS
managers in hiring of staff.
We are also considering the introduction of a Holding Job Search Startup Seminars
staff support system to assist with work at multiple
At Skylark, we held Job Search Startup Seminars in
restaurants, a registered staff system to promote flexible
January and February of this year to assist approxi-
workstyles, and a new system that involves headquar-
mately 5,000 part-time staff, who work at Group
ters’ support in the hiring of foreign nationals and in
companies and commissaries, in their job searching
initial training. activities. At this seminar, we held lectures on how to
effectively sell yourself at job interviews, provided free
Promoting Various Workstyles to aptitude tests to determine eligibility for admission to
Accommodate Lifestyle exams, and feedback. We also held information
To secure diverse human resources, we have upgraded exchange dinner parties where attendees can freely
our system that permits workstyles that accommodate talk with staff associates of nearby restaurants, senior
individual lifestyle. For example, our “modified working employees, and personnel managers.
hour system,” which allows the combining of work shifts
23 Skylark Group integrated report 2016 Skylark Group integrated report 2016 24Foundational
strength
1 Human Resources
Promoting Work-Life Balance to
Encourage Employee Retention
We seek the Group’s further growth through the Prohibit Smoking Campaign we are offering a two-month online support program to introduced into all restaurant brands and used during
promotion of workstyle reforms and a workplace Since 2014, we have been conducting a campaign to help them quit, and long-term four-month email work and training.
environment where employees are physically and prohibit smoking with the goal of reducing the smoking support thereafter free of charge. Not only did the iPads make it easy to search the
mentally healthy and can work energetically. rate throughout the Company. In addition to providing formerly paper-based manual, we can now browse the
support tools such as nicotine patches and nicotine BMI Improvement latest version of the manual online. Since the complicat-
Reducing Late-Night Work gum to those who wish to use them, beginning in 2017, Skylark is promoting public awareness about BMI, which ed work of updating the
In December 2016, we decided to shorten late-night is said to have a significant causal relationship with manual is no longer
working hours with the goal of enhancing the work-life TOPICS lifestyle diseases, and efforts to improve BMI figures. In required, work has
balance of employees by reducing those hours where addition to offering courses by nationally registered become more efficient.
Obtaining External Certification dieticians for those who require improved BMI figures,
the burden to labor management is high. Targeting 70%
in Labor Environment we are making a video digest of the course available for
of our restaurants that are open late at night between
Health and Productivity Management Organization online view. Introduction of the iPad has made
the hours of 2:00 am and 5:00 am, in sequential order,
Recognition Program (White 500) consistency in training possible
from January to April 2017, we reduced their hours by
Believing that employee health is our number one Introducing Health Management App
having them close at 2:00 am and open at 7:00 am.
priority, Skylark is committed to promoting good health
The market environment has also changed, and In July 2016, we introduced KenCoM, a health manage- TOPICS
under executive management’s leadership, to the mental
the number of late-night customers has been declining ment app. The app is an information management tool
and physical health management of employees, and to Streamlining Restaurant Operations with IT
for the last few years. In 2012, we re-examined restau- that can provide individual information based on health
creating a comfortable workplace environment. In
rants with very long operating hours, and in 2013, recognition of this effort, in February 2017 we were
check-up results and can help raise awareness about In addition to procuring and retaining human resources,
conducted routine reviews, which led to reducing the disease after health check-up. we have focused on reducing restaurant workload
certified by the Health and Productivity Management
through the introduction of IT including restaurant work
operating hours of about 600 restaurants by an average Organization Recognition Program (White 500) as an
Continuation of Welcome Program terminals, POS registers, and order entry systems, and we
of two hours. Although sales decreased in 2017 due to a excellent company that practices health and productivity
are providing higher quality service to customers.
major reduction in hours, we have improved service by management in cooperation with insurers. As the Skylark Group grows, the active participation of
So far, we have reduced the burden of inspection
transferring employees on late-night shifts to work The Health and Productivity Management Organi- staff familiar with restaurant operations is essential. It is
of automatic change machines, worked on restaurants’
zation Recognition Program was established by the important to enhance education after joining the
during other hours such as morning, lunch, tea and output of work schedules by improving the restaurant
Ministry of Economy, Trade and Industry together with company so that staff will become regular employees in
dinner time, and increased the number of customers. operation system, and established automatic setting of
Nippon Kenko Kaigi (comprised of leaders of the the future. We have established a unique training legal holidays for staff.
business community, medical-related organizations, and
system where managers and trainers provide adequate In 2015, we initiated a project to move to a new
local governments) in 2016. “White 500” is a name that
training so that staff who have just joined the restaurant system infrastructure, comprised of a restaurant system
refers to major certified companies in the corporate
can quickly get accustomed to their work, feel job supporting core restaurant tasks, such as order entry and
sector. A total 235 companies were selected in the first
certification.
satisfaction, and continue working without leaving. attendance management, and a system linking to that,
Instituted in 2012, the Welcome Program introduced an constructed at the new data center (DC), and to revamp
Improved service in orientation to help eliminate employees’ sense of restaurant databases. In June 2016, we integrated our
other time slots by isolation that is felt after first joining a company. We system, which bad been dispersed in four locations
reducing late-night throughout Japan, into one location and started full-scale
operation created a training manual that covers the basics of work
operation. Shifting to a new system infrastructure that
to avoid an education and training deficiency, and
utilizes the latest databases, machines, and servers,
established a three-day training period after joining the
increased the restaurant system’s processing perfor-
Promoting the Health and company. Today, 5 years after its introduction, training is
mance by 300% to 400%. Operational efficiency also
Productivity Management Project Kurumin Mark conducted to impart a proper understanding so that the increased, for example, the time required to transmit
Promoting the acquisition of instruction provided by managers and trainers is
In 2016, Skylark established the health and productivity massive amounts of master data to restaurants was
consecutive holidays, childcare uniform.
management project with the goal of promoting reduced from 11 hours to 1.5 hours.
leave for men, reduced working
employee health and improving the workplace environ- hours for childcare, the Skylark
ment, and we conduct a wide range of initiatives on an Introduction of iPads
Group received the Kurumin
ongoing basis. Beginning from 2014, we introduced tablet PCs at
mark from the Ministry of Health,
Labour and Welfare of Japan in Jonathans with the goal of promoting staff training and
We plan to migrate
Promoting Health Check-Ups February 2016 in recognition of its support for child streamlining restaurant operations, and conducted trials all internal business
Skylark urges staff and supervisors to ensure that they rearing based on the Act on Advancement of Measures to on incorporating digital terminals. After verifying their systems to the new
data center at the
receive health check-ups that are essential for the Support Raising Next-Generation Children. effectiveness, we introduced iPads at all Gusto restau- end of 2019.
prevention and early detection of disease. rants in March 2016. In March 2017, iPads were
25 Skylark Group integrated report 2016 Skylark Group integrated report 2016 26You can also read
