Last orders? Soaring costs and declining demand take toll on Japan’s legendary izakaya

In the bowels of a commercial building in Tokyo’s Shinbashi neighbourhood there is little to suggest that office workers seeing in the year of the snake have lost their appetite for shared plates of Japanese food and jockeys of draught beer. They tuck into plates of charcoal-grilled chicken, bowls of edamame and flasks of hot sake. Calls of

“

irasshaimase!”

welcome each new group of diners.

It was not that long ago that

curfews and alcohol bans

introduced to limit the spread of Covid-19 forced

izakaya

– informal, boozy salons that range in size from cosy joints serving

yakitori

(chicken skewers) to cavernous spaces with seemingly endless menus – to call last orders at what would have normally been the busiest time of the evening.

The pandemic has passed, but Japan’s thousands of

izakaya

are battling new threats on two fronts:

soaring costs

and declining demand.

Often described – a little misleadingly given the quantity of food they offer – as Japanese-style pubs,

izakaya

are going out of business at a faster rate than in 2020, the year the coronavirus became a global pandemic.

Between January and November last year, 203

izakaya

operators declared bankruptcy, exceeding the 189 recorded in the whole of 2020, according to Teikoku Databank, which offers financial and research support services.

While many people celebrated the end of pandemic restrictions by resuming regular nights out with colleagues and friends, a significant proportion continue to socially distance preferring cheaper nights at home.

Economic factors have also dealt a blow to the

izakaya

sector. Cash-strapped consumers are ordering fewer items, while restaurateurs wrestle with higher costs for materials, energy and labour.

After decades of stagnation, Japan’s inflation rate has risen in recent years, reaching its highest for a decade in 2023. Currently hovering about 2%, it is lower than in many comparable economies, but across-the-board price rises are forcing households hit by a decline in real wages to tighten their belts.

About 40% of

izakaya

were losing money in the 12 months to April last year, according to Teikoku, with more attempting to stay afloat by reinventing themselves as cafes and fast-food outlets.

But there is little they can do about consumer behaviour. Put simply, young Japanese – like their peers in other parts of the world – no longer equate a good night out with copious quantities of beer,

sake

and

shochu

.

Japan’s

demographics

are the greatest challenge facing

izakaya

, said Robbie Swinnerton, a veteran

restaurant critic

for the Japan Times.

“The

izakaya

is a holdover from earlier times, when the postwar baby boomer generation ruled the roost,” he said. “These days, there are fewer younger people, and they don’t drink as much. And they don’t want to drink in the same places as their parents and grandparents. It’s the same with food. Unless they’re really good, old-school Japanese dishes aren’t necessarily what young people want to eat.”

The rot has spread to other parts of Japan’s culinary landscape that were once thought impregnable. Shops serving

ramen

– the country’s undisputed comfort food – went out of business in record numbers last year, as soaring costs challenged the dish’s reputation for value for money.

According to Teikoku, almost 34% of 350 ramen businesses it surveyed said they had been operating at a loss throughout 2023.

While a bowl of ramen still costs, on average, less than 700 yen (£3.70 or $4.50), price rises are noticeable enough to make some diners choke on their

tonkotsu

broth. The main ingredients – flour noodles, pork and vegetables – cost an average of 10% more than in 2020.

Takatoyo Sato, the manager of a noodle shop in Shinbashi, was forced to put up his prices last year and saw a drop in custom. His most popular menu item, ramen in a soy-based soup, has risen in price from 780 yen in 2021 to 950 yen, perilously close to the 1,000 yen not even ramen addicts are willing to pay for what began life as hidden-market sustenance during the postwar years of austerity.

“I couldn’t avoid raising prices,” Sato told the Kyodo news agency. “We’d have been in the red otherwise.”

Sato’s dilemma is familiar to Shingo Shimomura, who runs a budget

izakaya

in the Fukushima district of Osaka – a food-obsessed city that encourages visitors to “

eat yourself bankrupt

”.

“Everything we use a lot of – rice, octopus, tuna, eggs, cooking oil – has gone up in price,” said Shimomura, who is reluctant to pass on rising costs to his customers and still offers set lunches for just

500

yen. “If I raise prices, my customers will stop coming,” he added. “We’re busy, but I’m not making any money.”

The 52-year-old, who has been in the

izakaya

business for almost three decades, has noticed a declining appetite for alcohol. “Even salarymen spend less than they used to, and young people barely drink.”

Japan’s drinking culture is traditionally centred on work, with

izakaya

the venue of choice for junior staff to mix with senior colleagues during after-hours nomunication – a portmanteau of the Japanese verb to drink [nomu] and communication.

The pandemic, though, reminded younger people that their social lives need not revolve around work. “I think that the traditional

izakaya’s

days are coming to an end,” said Shimomura. “Young people

don’t want to drink with their bosses

any more.”

The decline began before Covid, as

izakaya

fell victim to population decline, the rise of a “

sober curious

” gen Z, and competition from an array of more “sophisticated” places to eat and drink.

“Times have changed and so has Japan,” said Swinnerton, an

izakaya

fan since he arrived in Japan in the 1980s. “An

izakaya

used to be the place to go to relax, eat and drink, and chat. They were places to decompress from the pressures of work, family and society in general. They still have that role, especially at a time when there is a lot more fragmentation and compartmentalisation in life, but these days there are so many alternative places to eat, drink, and relax with friends and colleagues.”

But Sachiko Inamura, the secretary general of the

Japan Izakaya Association

, said the charms of a traditional Japanese-style pub would endure, despite a tough labour market and rising costs.

“The idea of serving delicious dishes from different regions along with local alcohol might be unique to Japan,” Inamura said. “And with smaller

izakaya

, the menu changes from one place to the next, so diners never get bored.

“Going to an

izakaya

is not just about eating and drinking … people go for the unique atmosphere. They are a wonderful part of Japanese culture, and the good ones really know how to connect with their customers.”