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Friday, Oct. 3, 2008

It's a cakewalk for Tokyo's newest doughnut maker

Yamada tries to set his shop apart by offering a 'sophisticated taste for Japanese customers'

Staff writer

Yoshihisa Yamada, at 44 a holder of an MBA from Harvard, quit his job as president of Rakuten Travel Inc. and established Neyn, a handmade doughnut shop in Tokyo's Akasaka district last month.

News photo
Value added: Owner Yoshihisa Yamada shows off a variety of handmade treats at the Neyn doughnut shop in Tokyo's Akasaka district on Sept. 20. YOSHIAKI MIURA PHOTO

After graduating from the University of Tokyo, he landed a job at the prestigious Industrial Bank of Japan, which later merged with other banks to become today's Mizuho Bank. He moved on to Goldman Sachs Japan Holdings and then to online shopping operator Rakuten Inc. to work in its M&A section before taking the helm of Rakuten Travel.

People may wonder why he abandoned his lucrative career just to open a small doughnut shop. But to Yamada, it was a perfectly rational decision.

Reflecting on the chaos being generated by the global credit crisis, Yamada believes working in the financial industry isn't all that lucrative. He says the doughnut business, which transforms flour into a deep-fried treat, results in more value added than his previous jobs.

"I'm doing nothing strange," he said in a recent interview. "I wanted to get involved in a business where I can produce my own products and offer services to customers."

Using only his own money, Yamada opened the shop Sept. 1 near the new Akasaka Sacas commercial complex. He chose the business district to target working women, who are notably sensitive to trends.

The shop has 15 seats, no smoking allowed. He hired two Japanese pastry chefs, one of whom learned cooking in France, and 17 part-time workers as kitchen and shop staff.

Yamada decided on doughnuts because their popularity in Japan is a constant, and because there aren't all that many competitors. He said he could have tried the fashion business or a patisserie, but Tokyo already has a ton of those and he wasn't sure if he could set his company apart.

All of Japan's major doughnut shops are U.S. imports. The introduction of Mister Donut dates back to 1970, while a more recent entry, Doughnut Plant Inc., entered in 2004. Then when Krispy Kreme Doughnut Japan Inc. began operations in 2006, it set off something of a new doughnut craze here.

Yamada said his doughnuts are tailored more to the tastes of Japanese customers.

"Neyn offers a sophisticated taste for Japanese customers, which is different from American-style doughnut shops," he said.

The doughnuts are less sweet than their heavily glazed American counterparts, have that strong flavor of flour found in French pastries, and use fresh fruit for decoration.

"Our doughnuts and Krispy Kreme are totally different things," he said.

He also pursues a natural flavor and texture.

"No artificial flavor or coloring is used. I wouldn't want to eat a doughnut with artificial additives myself."

Even though his doughnuts go for ¥230 to ¥300, while Krispy Kreme charges around ¥170, Neyn has already built up some regular customers.

He said some are buying doughnuts to bring back to the office to share with their colleagues.

"I don't think a manager would want to bring back doughnuts from a Mister Donut," he grins, referring to the chain popular with young customers. "Cakes are a little troublesome as they have to be kept in a fridge. Our doughnuts are easier to eat than cakes and look nicer."

The shop, designed by a British art director who came up with the French-sounding name, has a stylish European decor reminiscent of a modern Paris cake shop or cafe.

Yamada said the designer added elements of a European garden, putting a wooden bench outside the shop. "We painted wild birds inside the eaves so customers can see them while sitting outside."

Having lived in Canada as a child, in the U.S. while attending Harvard Business School and in London while working for the Industrial Bank of Japan, his next goal is to open a shop overseas, preferably in London.

"Perhaps my background of living overseas influenced me," he said. "Creating value-added products and bringing them overseas — that's what I'm interested in doing."

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