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Saturday, Dec. 29, 2007
CHANGED WAY PUBS ARE VIEWED
Watami empire built on concept of family 'izakaya'
Until Miki Watanabe opened his first Watami "izakaya" pub in April 1992 in Tokyo's Shibuya Ward, such eateries were considered places for business workers and college kids to have a cheap drink and a few side dishes.
But Watanabe, founder and president of the Watami Co. izakaya chain, wanted to change this concept and instead target families.
"My idea was to offer a warm family dinner table outside the home that did not take the form of a 'family restaurant,' " said Watanabe, who first started out in business in 1984 by franchising Tsubohachi izakaya outlets. "Because izakaya dishes are meant to be shared, I thought it would be great for families."
Izakaya customers order several dishes and share them in a similar way to eating at home, but the so-called family restaurants, or casual diners, offer set meals not intended for sharing.
But targeting families at izakaya meant he had to change the menu to attract health-conscious mothers.
So Watanabe started to offer dishes freshly cooked in the pubs' kitchens using organic vegetables instead of serving reheated frozen food, which was the norm at izakaya to keep prices low.
"That's why we succeeded," Watanabe said.
After 15 years, the Watami chain has grown to about 625 outlets under nine izakaya and restaurant brands in and out of Japan.
Meanwhile, Watanabe has also expanded his business to farming, nursing-care for the elderly and environment-related businesses, including developing a recycling system, which, at first glance, has nothing to do with the core restaurant business.
"In my mind, it's all connected to one another," he said.
Although serving dishes using organic vegetables appealed to mothers, the costly vegetables were a financial headache. So Watanabe set up a subsidiary in 2002, Watami Farm, to supply organic vegetables to the izakaya chain at low cost.
Watami now has 100 hectares at six farms nationwide and a 200-hectare ranch in Hokkaido.
Producing organic vegetables made Watanabe think about protecting the environment, while his knowhow of personnel training and experience of choosing the right locations for businesses led him to expand into nursing-care facilities.
Watami's nursing-care business drew attention when it made a bid in August to take over the business of Comsn Inc., the scandal-tainted nursing-care arm of manpower agency Goodwill Group Inc. Eventually, Nichii Gakkan Co. signed an agreement with Comsn to take over the operation.
For Watanabe, the most important point for an entrepreneur is to have a clear vision of the company's goal.
Then comes the ability to create a road map and follow it, he said, adding that there must be a date for when the goal is to be achieved.
"The moment you put a date on your goal, it determines the action you need to take today," Watanabe said.
When he founded Watami Shoji, the predecessor of Watami Co., in 1984, he pledged to turn it into a listed company in 10 years and later vowed to be listed on the first section of the Tokyo Stock Exchange in 2000. In fact, Watami was listed as an over-the-counter stock in 1996 and was listed on the TSE's first section in 2000.
Watanabe harbored dreams of becoming a company president from age 10. It was shortly after his mother died and his father's TV commercial production company went bankrupt.
Shocked at the sad expression on his father's face when his firm folded, the young Watanabe vowed to take revenge for him by becoming a president himself.
After he graduated from college, he traveled the Northern Hemisphere and was struck by how much people seemed to enjoy dining out with family and friends. It did not take long for him to decide that he would run a restaurant business upon his return to Japan.
He started off by franchising three Tsubohachi izakaya outlets. The first two years were a big success, with sales of his outlets soon topping those of other Tsubohachi pubs.
But soon afterward, he fell to earth with a bump when the fourth outlet he franchised, under the Shirofudaya restaurant brand, in the Kamioka district in Kanagawa Prefecture was a complete failure. The high-class restaurant didn't suit customers there.
Shirofudaya was such a cash-drain on his business that it nearly forced his company to go bankrupt.
"I was conceited. . . . I thought I could do anything. Failure was not in my mind," he said. "The most important thing I learned from that was to realize that I could fail." Watami eventually shut down the Shirofudaya outlet.
He learned well from his mistake.
He opened the Watami chain with a completely different approach from conventional izakaya businesses, and decades later, Watami has grown to become a huge enterprise, with 16 subsidiaries and more than 3,000 employees.
In business 2006, which ended in March, Watami raked in a group net profit of ¥1.6 billion, up 49.3 percent from the previous year, on sales of ¥98.4 billion.
Watanabe's goals have since grown more vague, but in a good way, he said.
"It's things like wanting to have more people eat organic vegetables or making the lives of elderly people happy or funding more schools for children in developing countries," he said.
"For me, running a company as a president is a process of helping to make the world a better place."
In this occasional series, we interview entrepreneurs whose spirit may hold a key to a more competitive Japan.
Key events in Miki Watanabe's life
1984 — Establishes Watami Shoji and opens his first Tsubohachi franchise outlet in Tokyo's Suginami Ward.
1992 — Opens the first "izakaya" pub outlet under the Watami brand in Shibuya Ward.
2000 — Lists the company on the first section of the Tokyo Stock Exchange.
2002 — Establishes Watami Farm Ltd. and enters the farming business.
2004 — Establishes Watami Medical Service Co. and enters the nursing-care business.