This is an English adaptation of a FoodBud historical article originally published on January 21, 2024.
Over the past three years, independent restaurants in China have weakened while chained brands have accelerated national expansion. The market has produced directly operated chains with several hundred stores, such as Maji Yong Beef Noodles, and franchise chains with more than 1,000 units, such as Tastien.
On the demand side, consumers continue to expect better quality, but their willingness to pay has not risen meaningfully. That gap makes “high value for money” one of the largest opportunities in foodservice.
For the next generation of restaurant chains, the priority is to refine the menu portfolio and operating system until the brand finds the right balance between quality and efficiency. Only then can national scale become a real advantage.
Saizeriya, the Japan-born Italian restaurant chain, is a useful case study. Its ability to deliver extreme value and operate at scale helped it grow over the past 30 years to revenue of roughly RMB 10 billion. The operating logic behind that value positioning is especially relevant for chain operators.
Saizeriya is an Italian restaurant chain founded in Japan. In 2022, revenue was about RMB 8.1 billion. It ranked ninth in Japan’s restaurant industry and was the largest non-local cuisine brand after McDonald’s and Starbucks.
The company operated 1,547 stores: 1,069 in Japan, 449 in China, and 29 in Singapore. All were directly operated.
Saizeriya has built a value image through low prices and broad choice. In Japan, it has long appeared on lists of popular restaurant brands. A customer can have a meal for around RMB 30-40, creating a sense of “ordering freedom.”
The company’s rise was helped by Japan’s restaurant-industry downturn from 1996 to 2011. After 1997, Japan’s restaurant market contracted as household budgets tightened. Average annual household income fell from JPY 6.6 million in 1997 to JPY 5.3 million in 2014. At the same time, labor costs rose as the workforce shrank: the minimum hourly wage for part-time workers increased from JPY 460 in 1985 to JPY 920 in 2020.
By 2022, the number of registered restaurant-sector legal entities in Japan had fallen by more than 30% compared with 1996. Many independent restaurants and restaurant companies exited the market.
In that environment, Saizeriya kept its value strategy and even cut prices. From the 1990s to 2020, its doria fell from about RMB 30 to RMB 18, and its Italian ham fell from about RMB 36 to RMB 18. As other prices rose, Saizeriya’s menu felt increasingly cheap to consumers, reinforcing its price image.
Japanese retail expert Toshikazu Atsumi once said the best price range for chained restaurants is one where consumers can order with their eyes closed. Saizeriya’s menu reflects that logic: the highest-priced dishes are kept as close as possible to no more than twice the lowest-priced items, helping keep average lunch spend around RMB 30.
Low prices create psychological safety. Customers become willing to visit across dayparts, giving Saizeriya a position similar to a neighborhood canteen.
Typical consumer budgets for breakfast, lunch, and dinner follow roughly a 1:2:4 ratio. At dinner, customers tend to order more items. A doria, a hamburg steak, and a salad can combine to an average ticket of about RMB 50.
Some Saizeriya items have very low gross margins, so the company needs customers to voluntarily add more dishes and create a blended margin. The menu is designed around different use cases. For example, a glass of imported Italian red wine costs only about RMB 6. Its gross margin is only 3%, but founder Yasuhiko Shogaki has resisted raising the price because high-value wine can encourage office-area customers to order several small dishes and have a drink before going home.
Cheap does not mean compromised. Shogaki has consistently emphasized the value customers feel from the dining experience.
Menu breadth is one direct expression of that value. Saizeriya’s Japanese menu has 65 SKUs, with staple foods accounting for about 30%. Shogaki has described the desired menu mix as 6:3:1: six parts items that sell naturally, three parts items the store wants to sell, and one part items that the restaurant needs to have. For example, squid-ink pasta and after-dinner sweet wine sell in lower volumes, but they help support Saizeriya’s image as an Italian restaurant.
To protect that brand image, Saizeriya has an unwritten rule against launching the common Japanese “one-person meal” format. Shogaki believes Saizeriya is not fast food; it is a shared dining occasion. In his view, the core of Italian food culture is sharing, and the happiness of eating together is part of the value. This also helps the brand cover multi-person dining occasions.
Saizeriya localizes flavors, but it deliberately keeps Italian elements in product names. Stores display Italian Renaissance paintings such as Botticelli’s Primavera and The Birth of Venus, and Raphael’s The School of Athens, reinforcing an Italian atmosphere.
The result is a combination of chain-restaurant affordability, a broad menu, and a cultural claim to Italian dining. The foundation underneath is efficient store operation and a vertically integrated supply chain.
Foodservice is labor-intensive, and labor cost has a direct effect on performance. In a rising-cost environment, hourly labor productivity becomes increasingly important.
Saizeriya’s Japanese stores can reach hourly labor productivity of RMB 400-500. A 300-square-meter store averages daily sales of RMB 15,000 and requires 30-35 labor hours to operate, equivalent to about four employees. Only one, the store manager, is full-time. The store uses flexible staffing around lunch and dinner to improve labor efficiency and reduce excess labor.
That productivity comes from continuous operational improvement. In store cleaning, Saizeriya shortened opening cleaning work from 60 minutes to 30 minutes by improving mop design and cleaning routes. Across more than 1,000 stores, saving 30 minutes per store creates meaningful efficiency gains.
In the kitchen, Saizeriya repeatedly increased the use of prepared components. Stores have no chefs and no kitchen knives. Staff plate or heat items according to specified packaging and procedures; even a first-year high-school part-timer can complete the work. This allows cooking staff to take on multiple roles and help in the dining room during busy periods.
Saizeriya also treats employee fatigue as a system-design problem. Shogaki has argued that if store operations produce errors, the problem is not that employees are insufficiently hardworking, but that headquarters has not thought carefully enough. The company tests practical solutions: lighter plates that are easier to carry, safer cups that are harder to break, plates that are easier to clean, and sauce packs that are easier to squeeze during service.
A former Saizeriya product-development director said that whenever the company launches a new product, it evaluates whether the item adds burden to store operations and tries to avoid operational complexity caused by new menu launches.
One expert interviewed for the original research noted that good store operation mainly reduces customer loss and may lift revenue by at most 2-3%. Poor performance is usually driven by headquarters decisions on site selection and product.
That means Saizeriya store managers are not only responsible for daily operations. They are expected to spend energy forming and testing hypotheses for operational improvement.
Promotion is not based entirely on store performance. Saizeriya does not impose mandatory KPIs on store managers; headquarters values their contribution to companywide operations. Managers who are promoted often have trained deputies who can stabilize store revenue and free the manager to think about operational iteration. This system pushes the idea of scientific efficiency improvement down into frontline operations.
Saizeriya’s efficiency comes from two-way improvement between stores and supply chain. Higher standardization and preparation in the back-end supply chain reduce operating difficulty in stores.
Pasta is a clear example. Saizeriya originally used dried pasta, requiring stores to operate dedicated boiling equipment and manage timed cooking. This was time-consuming and created inconsistent output. In 2000, Saizeriya switched to frozen pasta, allowing kitchens to remove boiling equipment, lower the capital needed for new stores, and free up more space. Around 2005, frozen pasta was replaced by chilled pasta, which required only brief heating in stores and further simplified operations.
Saizeriya operates as a foodservice version of SPA, a vertically integrated model from retail to production. The company invests actively in its supply chain to create scale effects. It has seven self-built central factories: six in Japan and one in Australia.
The Japanese factories mainly handle ingredient processing, prepared-food processing, and logistics. The Australian factory uses origin-side cost advantages to produce prepared beef, cheese sauce, and other prepared ingredients.
Saizeriya also extends into upstream agriculture. To improve farm efficiency, it participates in crop variety development. It developed a tomato variety only half the height of ordinary tomatoes, reducing the need for repeated bending and standing during harvest and improving farmer efficiency. For lettuce used in salads, ordinary lettuce has a large core and yields only two to three salad portions. Saizeriya developed “Saizeriya No. 18,” a variety with a smaller core that can yield five to seven salad portions per head.
As the supply chain improves and releases margin, Saizeriya returns part of that margin to consumers. Several current menu items are priced at only 50-70% of their levels from several years earlier.
Saizeriya’s pursuit of efficiency has also created serious operating problems. The issue was not efficiency itself, but allowing efficiency to become the objective rather than the tool.
From 1998 to 2003, Saizeriya entered a rapid expansion phase. Under its directly operated model, it opened about 100 stores per year on average. But sales per store fell sharply, from JPY 130 million to JPY 90 million. The reason was insufficient talent reserves. A former store manager recalled that some employees had been with the company for only three months and had not yet understood Saizeriya’s restaurant model before being asked to manage new stores.
With weak understanding of the model, managers fell into the trap of overemphasizing efficiency. During rapid expansion, store managers were required to tightly control hourly labor productivity. The fastest way to meet the target was to reduce staffing or shorten working hours. Store operations then failed to keep up with customer demand, and headquarters received large numbers of complaints every day.
To correct the staffing shortage, Saizeriya slowed expansion from 2003 to 2008, reducing openings to around 20 stores per year.
Just as store operations stabilized, Saizeriya faced a major food-safety incident. In 2008, trace amounts of melamine were detected in imported frozen pizza dough. The amount was very small and would not harm adult health, but it still generated major public concern. Saizeriya urgently removed all pizza products and held a national press conference.
According to an internal employee, the purchasing lead at the time had overfocused on low product cost and paid insufficient attention to investigating the production factory.
These problems came from excessive pursuit of efficiency and an incomplete management system. After painful lessons, Saizeriya tried to bring the entire organization closer to consumers’ lives and needs.
To correct business problems caused by excessive efficiency focus, Shogaki re-emphasized a consumer-first culture. Internally, he refers to consumers as “supporters” and repeatedly stresses that Saizeriya’s growth comes from consumer support.
This emphasis appears in Saizeriya’s corporate philosophy: sharing, integrity, and working in the same boat. It also appears in daily operations.
Product development and pricing show the culture most clearly. Saizeriya holds a new-product committee meeting every week. In those meetings, Shogaki asks the team directly: “How much would you be willing to price this new dish at?” If the product team quickly calculates cost structure and gross margin, he becomes angry, because consumers do not care what the product costs. What matters is whether it creates enough perceived value.
From that perspective, new products should be developed from the customer’s point of view. The real questions are: why would someone come to Saizeriya, who is this product meant to make happy, and would the customer bring friends next time?
Integrity also shaped the company’s response to the melamine incident. At the national press conference, an executive said consumers could bring receipts to stores for refunds. Before the sentence was finished, Shogaki took the microphone and said the company would refund everyone who had eaten the product, whether or not they had a receipt. The response clarified internally what integrity meant in practice.
Corporate culture takes time to build, but once embedded, it creates a foundation for long-term development. After the problems of the rapid expansion period, Shogaki’s philosophy gradually penetrated the frontline. Experts recalled that at store-manager meetings, teams would reflect on and discuss the problem of overpursuing efficiency. Hourly labor productivity may improve performance, but it does not necessarily serve consumers.
For restaurant chains, efficiency and service are often in tension. Saizeriya’s consumer-centered culture is what helps it maintain balance between the two.
Restaurants differ from retail. It is hard to use promotions to raise average ticket, and heavy traffic generation can damage the dining experience. The operating core for restaurant chains is therefore to increase repeat-visit frequency as much as possible. High-value products and broad, high-quality choices become central management questions.
Saizeriya can be understood as a neighborhood canteen serving all dayparts and broad consumer groups. Its extreme value comes from very high operating efficiency. That efficiency comes from continuous two-way optimization between store operations and supply chain capability. The optimization is supported by a culture of testing, verification, and correction.
But restaurants are still service businesses facing consumers. Efficiency without service is insufficient. Saizeriya made that mistake during its expansion period. Its ability to correct course came from Shogaki’s consistent consumer-centered culture.
For chain operators, Saizeriya’s standardized operations and vertical supply-chain capability remain important reference points. In more complex competitive markets, restaurant chains also need to iterate faster and continue exploring business models and menu portfolios that can support national scale.
Note: Revenue, store-count, price, and expansion figures are historical as reported in the January 21, 2024 source article.