Joyful's record ¥9.3B loss forced it to close some 200 family restaurants

On 25 September 2020 Joyful, the Kyushu-based family restaurant operator, finally reported its delayed results for the fiscal year ended June 2020: a net loss of ¥9.3 billion, the largest in its history, as the pandemic swelled its losses. Sales fell 15 percent to ¥62.3 billion.

The year's damage came from every direction: the company and its subsidiary Friendly closed 80 restaurants, emergency-declaration rules suspended 324 stores and shortened hours at 553 more. Closure-related loss provisions pushed the special loss to ¥6.2 billion.

The structural reform went beyond crisis response. In June the company had announced it would close about 200 directly operated stores with no prospect of profit improvement, starting in July — about 30 by end of September — and was considering roughly 70 more closures in the fiscal year to June 2021. The share of 24-hour stores was cut below half from October.

Managing director Yasunobu Kuniyoshi said the pace of withdrawals would be judged against same-store sales recovery, insisting restructuring proceed on the premise of protecting employees through transfers to nearby stores. Fellow managing director Tetsuya Ono called the pandemic a trigger to rebuild the company leaner, and Friendly was refocused on udon restaurants while headquarters costs were to be cut by around ¥1 billion.

About 200 direct stores were already unable to earn their keep before the pandemic, but were kept open.

Around-the-clock operations carry staffing costs that only pay off during overnight demand that vanished first.

Emergency-declaration suspensions at 324 stores and shortened hours at 553 compounded the fixed-cost burden.

Delivery expansion to about 60 stores could not offset dining-room losses, forcing structural closures instead.

A 24-hour footprint is a fixed-cost trap: restaurants that only pay off at full capacity need a planned exit for their weakest stores before the demand shock arrives.

For the fiscal year to June 2021 Joyful targeted a compressed net loss of ¥746 million on sales of ¥548 billion, with the closures, 24-hour reductions and headquarters cost cuts accelerating.