Japan restaurant group Zensho to buy U.S., U.K. sushi chains

TOKYO — Japan’s leading restaurant operator Zensho Holdings announced Tuesday that it will buy the parent of sushi chains that operate in North America and the U.K. for 87.4 billion yen ($625 million).

Zensho will acquire all shares of  SnowFox Topco from the current owners after gaining the necessary approvals from U.S. and other authorities.

Snowfox controls roughly 3,000 sushi kiosks and restaurants, mainly in North America and in the U.K., and also supplies sushi to supermarkets and other clients through group units.

For the fiscal year ended November 2022, Snowfox reported an operating loss despite a roughly 50% increase in consolidated revenue. The company had debt exceeding its net worth by 34.9 billion yen as of the end of that fiscal year

Zensho said in Tuesday’s release that Snowfox’s existing debt will be paid off upon the share purchase.

This marks the largest purchase for Zensho. The price far exceeds the previous record of roughly 28.8 billion yen it paid in 2018 for Advanced Fresh Concepts, an operator of takeout sushi shops in North America.

Snowfox specializes in delivery and takeout. In the U.S., the rise of Uber Eats and other food delivery apps after the pandemic has boosted demand for takeout.

By purchasing Snowfox, Zensho hopes to generate synergies with Advanced Fresh Concepts in the areas of logistics and ingredient procurement.

Zensho, best known for its chain of Sukiya gyudon beef bowl restaurants, became Japan’s largest operator of restaurants in just over 30 years after its founding in 1982.

In addition to expanding the number of Sukiya locations, Zensho has also incorporated other chains under its umbrella, including the Coco’s and Jolly Pasta family restaurants, as well as the Nakau udon eateries.

Zensho has been on an acquisition spree of late, buying the Lotteria hamburger chain in April and Sushi Circle Gastronomie, which operates sushi kiosks in Germany, the following month.

In the fiscal year ended in March, Zensho generated a record 21.7 billion yen in consolidated operating profit, up 140% from the previous year.

But despite the current strong performance of the restaurant business, Japan’s shrinking labor pool amid a declining population poses a challenge.

At the same time, demand for Japanese food is growing overseas. There were roughly 159,000 Japanese restaurants offshore in 2021, according to an estimate by Japan’s Ministry of Agriculture, Forestry and Fisheries, roughly tripling in eight years.

Against this backdrop, Zensho plans to step up overseas expansion to diversify revenue sources. At the end of March, the group ran 5,759 locations outside of Japan, surpassing the 4,524 domestic sites. Current plans call for opening 599 restaurants overseas and 127 in Japan this fiscal year.