Will Japan’s Culinary Success Shape the Future of China’s Restaurant Industry?

Will the Future of Chinese Dining Mirror Today’s Japanese Dining?

As we look towards 2025, many in the Chinese dining industry are bracing for a challenging year. The peak seasons are not thriving, and the off-seasons seem bleaker, with consumer spending remaining low and foot traffic declining sharply. The notion of “anti-involution” has become a mere slogan, and price wars are intensifying. Feelings of frustration, loss, and confusion are pervasive among industry professionals.

Despite these challenges, there are glimmers of hope. A number of Japanese dining brands, such as Sushi Lang, Hamazushi, and Meat Rice, are experiencing significant growth in China, starkly contrasting the stagnation of many local Chinese brands. What is driving the success of these Japanese dining establishments in a competitive market? What lessons can the evolving Chinese dining sector learn from them?

What Can We Learn from Japanese Dining?

In recent years, a prevailing sentiment in the dining community has been that “yesterday’s Japanese dining is today’s Chinese dining.” This perspective is largely based on the insights from Minoru Miura’s book, The Fourth Consumption Era. Miura, recognized as a leading authority on Japanese consumer society, outlines the significant shifts in Japan’s consumption patterns from 1912 to 2020. He delineates four eras:

• First Consumption Era (1912-1937): Focused on the state, where consumption was closely tied to national interests and the middle class began to emerge.
• Second Consumption Era (1945-1974): Centered around the family, with rapid economic growth leading to consumption patterns that revolved around households.
• Third Consumption Era (1975-1997): Individual-centered, where the focus shifted from quantity to quality, allowing consumption to become an expression of personal identity.
• Fourth Consumption Era (1998-2020): Socially-centered, characterized by a downgrade in consumption preferences towards affordability and emotional value, with keywords like sharing, sustainability, and community responsibility coming to the forefront.

When comparing these eras to China’s current economic trajectory, it appears that we are mirroring Japan’s developmental path. We are facing similar socio-economic challenges, such as declining incomes, depreciating core assets (like real estate), decreasing birth rates, and an aging population. Moreover, consumer attitudes are shifting in parallel: from a focus on upgrading consumption to seeking cost-performance, from brand-name obsession to simplicity and local preferences, and from mere sustenance to a focus on health and emotional value.

Given this context, the experiences of Japanese dining brands indeed hold valuable lessons for us. But what, specifically, should we learn?

1. Extreme Cost-Performance

Brands like Yoshinoya, Shikikyu, and Matsuya, which are known as the big three in Japanese beef bowl fast food, achieved rapid growth during the “Great Depression” by emphasizing extreme cost-performance. Similarly, the “100 Yen Revolution” in conveyor belt sushi led to the rise of numerous affordable sushi chains, with Sushi Lang being dubbed the “national sushi” by Japanese consumers due to its exceptional price-to-value ratio. The strategic adjustments made during Japan’s “lost thirty years” have set a benchmark.

Saliya’s founder, Yasuhiko Seki, highlighted the relationship between extreme cost-performance and brand management, stating, “The essence of a chain is not to create bustling stores, but to generate sufficient profit from stores with modest sales.” Understanding the accurate judgement of consumer trends and maintaining awareness of profit margins is essential. The Japanese dining sector entered a low-margin era thirty years ahead of us, with average gross margins in chain restaurants ranging from 40% to 70%. For instance, Saliya’s net profit margin in the first three quarters of 2025 was merely 4.1%.

2. Extreme Individual Store Focus

Saliya exemplifies excellence in the Japanese dining sector, particularly in its relentless pursuit of operational efficiency at the individual store level. They have refined operations to minimize service times, employing methods that save precious seconds while maintaining quality. For instance, instead of using trays, staff stack dishes on their chests, saving 8.6 seconds per order. All employees are trained to handle tasks ranging from taking orders to cleaning, ensuring efficiency and flexibility.

Saliya’s “15-minute rapid turnover” record is a testament to their operational precision. Furthermore, the staffing model is stringent—most locations employ only four full-time staff, with a 1:4 ratio of full-time to part-time workers, keeping labor costs under 12%. Their site selection strategy follows the “113 strategy,” focusing on first-tier cities and core business districts but avoiding prime locations to minimize rent, which typically accounts for about 13% of costs—significantly lower than industry averages.

3. Extreme Supply Chain Efficiency

The most significant transformation in Japanese dining over the past thirty years has been the restructuring of their supply chain, moving from handcrafted processes to industrialization. This change is rooted in an “efficiency revolution.” Japanese dining entered the “Central Kitchen 2.0” phase early, exemplified by companies like Tamagoya, which utilize fully automated rice cookers with precise water absorption controls and robotic arms for accurate ingredient dispensing.

Japanese dining establishments have closely adopted lean management principles from manufacturing. For example, Nissin has adapted Toyota’s “Just-In-Time” (JIT) manufacturing to create a “Zero Inventory of Ingredients” model, enabling deliveries within four hours of order placement. Efficient logistics and high cold chain coverage have enabled Japan’s dining sector to maintain food quality with minimal waste—reporting labor productivity rates that are 4.2 times higher than China’s and supply chain costs as low as 18%.

The centralized supply of ingredients, along with collaboration with suppliers, has led to a significant reduction in procurement costs. By 2021, Japan’s restaurant chain ratio reached 50.8%, while China’s was only 24%, indicating that there is still much ground to cover.

In Summary

Over the last thirty years, Japanese dining brands have recognized the shift in consumer habits during economic downturns, adjusting their operational structures and embracing industrialization. This approach has enabled them to thrive, cultivating a number of globally influential brands.

Potential Pitfalls

In April of this year, Miura outlined seven consumption trends for the next two decades in his new book, The Fifth Consumption Era:

1. Slow: Emphasizing slow living
2. Small: Valuing simplicity
3. Social: Prioritizing human connections
4. Soft: Focusing on humanization
5. Sustainable: Committing to sustainability
6. Sensuous: Seeking multi-layered pleasure
7. Solutions to social problems: Emphasizing social responsibility

These trends coalesce around the concept of Well-Being, where consumers prioritize personal happiness in their purchasing decisions. The “Fifth Consumption Era” raises critical questions for the dining industry: Should we focus on essential needs or emotional value? Should we prioritize cost-performance or quality-value ratios? Should we invest heavily in supply chains and industrialization, or emphasize the warmth and atmosphere of dining experiences?

Within this context, it is essential to adapt lessons from Japanese dining to China’s unique circumstances. Japan’s small land area and homogeneous culture allow for a relatively simple and replicable dining model, while China’s vast size and diverse consumer behaviors present a complex landscape. The uneven development of China’s economy means that consumers in major cities are already shifting towards the Fifth Consumption Era, while those in smaller cities may still be experiencing the Third Consumption Era.

Moreover, the rapid changes and high levels of digitalization in China’s dining market are unparalleled. Many small business owners have just begun to adapt to mobile ordering, while trends like live streaming and social media marketing evolve at unprecedented speeds. The traditional Japanese model may not translate directly to China’s dynamic environment.

Pathways for China’s Dining Evolution

In the Fifth Consumption Era, the Chinese dining sector can explore several strategies:

1. High-Quality Affordability

In recent years, the Chinese dining industry has mistakenly equated “extreme cost-performance” with “extreme low pricing,” as seen in the “9 yuan coffee wars.” This approach has led to a state of “no-profit prosperity.” While low prices attract highly price-sensitive customers, businesses chasing low prices often sacrifice quality, resulting in losses for themselves and limited benefits for consumers.

Only large players can afford to pursue extreme cost-performance. Brands like Mixue and Luckin Coffee benefit from massive procurement scales, making low pricing sustainable. For most dining brands, a focus on “high-quality affordability” is the most pragmatic path forward.

2. Automation and Intelligence

In July, JD launched the “Seven Fresh Kitchen,” promising fresh, made-to-order meals within five minutes, immediately achieving high demand with over 1000 daily orders. Concurrently, a race toward robotization in kitchens is unfolding, with numerous brands investing heavily in cooking robots to enhance operational efficiency.

These robots can prepare meals in just 3-5 minutes, significantly improving service capacity during peak hours and maintaining consistency in taste and quality. This shift signifies a broader transformation in the Chinese dining industry, moving from scale expansion to deepening efficiency.

3. Counter-Supply Chain Models

The recent debates over pre-prepared meals serve as a reminder that traditional Chinese dining culture is deeply rooted in fresh, hot, and health-conscious meals. Unlike Japan, where pre-prepared meals are widely accepted due to cultural norms around convenience, Chinese consumers prioritize freshly made dishes.

Brands are increasingly recognizing this preference, with many shutting down central kitchens in favor of freshly cooked meals. This shift reflects a growing consumer desire for quality over convenience.

4. Niche Market Domination

As demographics shift, dining preferences are diversifying. The rising number of singles and elderly consumers is reshaping dining trends, with a focus on variety and personalization. Restaurants are increasingly catering to specific demographics, such as offering non-spicy options for older patrons or creating family-friendly environments.

In an age where broad appeal no longer guarantees success, the restaurant industry is moving towards a “niche market is king” strategy, where brands that cater to specific needs thrive.

5. Emotional Value

Many young people are drawn to venues that provide not just food but a social experience. For instance, the brand “Jump Sea” has leveraged emotional connections by allowing patrons to participate in activities and events. This focus on emotional value is proving to be a significant revenue driver, with many consumers willing to pay more for enriched experiences.

Miura’s “7S” theory suggests that as basic needs are met, “spiritual needs” become increasingly prominent. Successful dining experiences now hinge on creating memorable environments and connections.

In conclusion, the Chinese dining scene is undergoing profound changes in response to evolving consumer behaviors and economic pressures. Dining professionals must recognize that while lessons from Japanese dining are valuable, they must be contextualized within China’s unique landscape. The path to success will require a balance between action and belief, navigating through cycles of change with a clear understanding of the market’s dynamics.