Saizeriya's Secret to Survival

Can saize really matter?

In the past, we discussed Italian Japanese food, and the reigning torchbearer: Saizeriya.

The Italian-American-Japanese (Mario) Effect

To me this only defines one of the two traits that the franchise has: Italian. Today I want to delve into the other: Cheap. Yes, today’s post is entirely focused on the global costs involved in delivering margherita pizzas for 400 Yen (~$3 USD).

Before we jump into it, just like Saizeriya’s great value offers, Hidden Japan is currently running a birthday special for paid subscriptions!

Saizeriya Starts

Was Saizeriya really designed by a lost Italian who got trapped in a Japanese convenience store for days, subsisted on a highly modified Italian diet, then came out the other side with low cost yet tasty Italian food?

Sadly the truth is much more mundane. It was founded by a Japanese man who wasn’t even that interested in Italy. Yasuhiko Shogaki was once a part-time chef whose manager told them “You’re pretty good at this chef business, why not own your own restaurant?” but in Japanese. Shogaki decided off the back of some positive reinforcement, to give it a go and found a nice older fruit shop in Ichikawa, Chiba to open his Yoshoku/Western-style (learn more here), restaurant. He kept the fruit shop name… Saizeriya.

Japanese corner fruit shop Courtesy of Pikbest

This turned out wonderfully, and now he’s a billionaire. Or at least that’s the smoothed over version. This first restaurant was less than successful. By that I mean, it was burnt down after drunken customers fought too ferociously.

This unexpected closure meant he had some time to visit Europe and trial what actual European food was like. After all, he was in a 1970’s mid-sized city in Japan, hardly the central meeting spot for authentic Italian dining. Being won over by Italian food, he once again reopened his Saizeriya. Once again, it failed miserably.

In a last-ditch effort to stay open, Shogaki decided to cut the menu price items by 70%. This brought in customers. Everyone wanted a very low price Italian meal, and quickly a line formed out the door. Even though this sounded like something Kramer from Seinfeld would do, the volume of diners meant this was actually a profitable restaurant. A term that hadn’t applied to any previous iterations of Saizeriya.

Soon the demand was so big that Saizeriya could grow outside of the fruit shop stop. How exactly would they manage to keep the price at 70% across multiple chains?

Jargon time!

After the several bumpy starts, Yasuhiko Shogaki finally figured it out. Saizeriya has now become the master optimiser, integrator, and mega pre-fabricator of restaurant lore.

First off, the optimiser. Once they realised that 70% off permanently was the goal, the idea meant that every cost was analysed. Not necessarily cut, just looked at real close. For any chain resaturant, these main costs are human labour, food costs, and land/capital costs. On the human front, the metric became “hourly labour efficiency”.

I.e., How much a staff member can do in their allocated hour. Now, this sounds brutal and sad for the poor Saizeriya team members, but somehow the company has managed to have good employee satisfaction across Japan and Asia. Anonymous giant companies named after rainforests might be scratching their heads at the term good employee satisfaction.

The onus for optimisation is with the store managers.

They are rewarded for both reducing time taken for tasks, and reducing employee fatigue. A mundane example is that some store manager saw that taking dirty dishes took a long time for the staff. They had the flexibility to decide, “let’s get lighter dishes”. This meant less broken dishes, more plates being carried, and generally lower employee tiredness.

These implementations may sound simply process driven, and in a sense that’s true. In every aspect of their workforce, Saizeriya goes further. They calculate optimal mop times (improved by building custom mop vessels), develop in-house solutions for oily plates, and work with manufacturers to make safer cups. Any new efficiencies found in any stores can be brought across to every store. Store managers and staff aren’t measured on KPI’s but on contributions across the company.

Perhaps the best example was when Saizeriya infamously “priced gouged” over the COVID days. This marked the first increase by the chain in almost 20 years. People were furious to hear that even this bastion of the cheap diner was raising rates. Until the price changes were revealed. While most pricing teams the world over generally insist all prices should be end in the 99 Yen (for the psychology), Saizeriya bravely rounded up. Across the menu, prices rose a solitary 1 Yen. While I’m sure the margins on a 1 Yen increase are not to be trifled with, the idea was to reduce both coin and COVID transmissions.

Chains all the way down

Boo! Globalisation. Yes, funnily in an article about the mixing of distinct global cultures, the role of globalisation is the one of the key drivers of the bus. Beyond giving Saizeriya its distinct “cuisine”, globalisation is central to the Saizeriya success story.

In any inauthentically Italian restaurant, the first thing to consider is decor. Luckily, Saizeriya sources from the best. From the literal Renaissance Masters themselves, the shops are replete with a classic degree. Almost every store features some of the finest paintings of the Italian Golden Age, which is likely where much of the cost of running the business lies.

World famous art next to the toilet sign

The purpose of this sheen is not only to make the diners know that the food is in fact Italian, which doesn’t always come through in the menu. It also serves to remove the sense that the business model is a hyper-efficient, dine-in fast food chain with non-mandatory but highly encouraged group dining seats. This is quite a departure from other competition in Japan, where solo dining is encouraged if not the norm. This concept is drawn from Italy and European dinners, where solo dining is seen as cause for concern.

The group dining drives up the volume, making up for a low profit margin across products. Even on wine, traditionally a trattoria’s most profitable product, the total margin is 3%, making Saizeriya a favourite place for students to start their evenings out. Instead, the drive is to have friends, families and couples to order many more items across their vast menu selection. With over 60 items on the Japanese menu, not including specials, no one is starved for choice.

So far we’ve been focused on the actual store where customers eat and drink. Saizeriya’s secret power is the down the supply chain. Behind the dining tables, we have the kitchen. Well, in normal restaurants, that’s the case. For Saizeriya, they use centralised kitchens, where all the food is prepared. Everything is pre-processed into near-ready-to-eat items and distributed to stores. It cuts down on kitchen area required in the malls, and simplifies the process for store employees to simply heat, arrange, and serve. Reportedly, it takes 8 minutes to cook the most difficult dish in store.

What about the food before arriving in the central kitchen? Chains down. Saizeriya pre-fabricates the raw ingredients, creating uniform and identical items to send to all their central kitchens. Food arrives and is processed in their own custom machinery, from Saizeriya branded dough makers, unique tomato cutters that save time, to even a special salad dressing that doesn’t stick to the bottle, the engineers have worked it out for efficiency.

Speaking of raw ingredients, who do you think owns that? Yes, Saizeriya. They control their own farms, with 6 in Japan, 1 ranch in Australia and a vineyard direct from the distant motherland of Italy. The tomatoes are genetically modified to have firmer flesh than supermarket tomatoes (easier to fit into the cutters), lettuce is branded as Saizeriya 18 (smaller core for bigger salad), and milk is milked in Australia because it’s cheap!

Too Cheap to Date?

All of this is incredibly innovative in how the restaurant group is able to cut cost without hurting the customer experience. Except for one group of customers. Among the young and online Japanese, Saizeriya has taken on another meaning. Should you look online, the term Saize guy has become a hotly debated topic.

It all started when someone boldly proclaimed Saizeriya as the perfect spot for a first date for the following points:

1. No tatami floor, so you don’t look at your dates feet

2. Somewhere expensive looks desperate, Saizeriya is nothing if not casual.

3. Teppanyaki and izakayas leave a lingering aroma of meat.

4. Saizeriya has all the core drink options, from soft drinks to incredibly cheap wine and beer

5. There are choices for even the pickiest eater.

At first, the Japanese online world seemed to agree. Now, it’s become an ongoing debate. Women calling Saize men cheap, men reiterating with claims of elitism and shallowness, and on and on. Now even the mere mention of dinner at Saize in certain circles can cause long-simmering tensions to boil over. This has spread to other countries where culture wars erupt as Singaporean TikTok-ers share how they won’t attend a date at Saizeriya, and simple illustrations of a happy couple enjoying their meal on Twitter can cause actual confrontations as regular diners continue to ignore the commotion.

My advice … try Saizeriya. Maybe not on a first date. Maybe not even on your first visit to Japan, considering all the actual Japanese food options. But one day you, too, will find yourself craving a 400 Yen margherita pizza, and you too will be able to enjoy the fruits of Saizeriya’s carefully choreographed labour.