Ikinari Steak's breakneck expansion ended in 114 store closures and a fire sale

In 2017 Pepper Food Service celebrated listing on the TSE's first section with a party where founder Kunihiko Ichinose was, in one attendee's words, treated 'like a big star'. Barely two years later, at the group's 50th-anniversary gala attended by more than 700 franchisees and partners, Ichinose was showering guests with top-grade hospitality while being fiercely criticised by franchisees — he later wrote in the in-house magazine that guests were 'very satisfied'. 'You deceived us' was the mood, recalled Yokohama Foods chairman Tadashi Aoyagi.

Aoyagi's verdict on the fall was simple: no one could stop Ichinose. Ikinari Steak had started brilliantly — Aoyagi opened the first franchised location as a new format in 2016 and was grossing around ¥20 million a month. But from around 2017 the franchisor rode the hype into rapid expansion. Aoyagi begged HQ to avoid openings in locations where success would be difficult; the expansion line did not stop.

By July 2020 the company was fighting for survival: on 3 July it announced the closure of 114 directly operated Ikinari Steak stores and about 200 voluntary redundancies, and at the end of July it announced a business alliance with an investment fund, selling off the Pepper Lunch brand by the end of August. Nikkei Business traced the collapse to four structural problems, the biggest being governance: a restaurant-industry executive called the listed company 'Ichinose's personal business in reality'.

Governance failure had already flared publicly at the end of 2019, when an Ikinari Steak notice-board controversy blew up — the same pattern: a listed company where no one could say no to the founder.

Expansion ran on brand hype, not site economics — franchisees warned HQ about doomed locations and were ignored.

The founder was unchallengeable: an outside executive described the listed company as one man's personal business.

The 2019 notice-board backlash showed the governance vacuum publicly, and nothing changed.

When COVID hit a chain already hollowed out by overexpansion, closure and a fire sale were the only moves left.

A charismatic founder with no counterweight can outrun the unit economics: if franchisees are begging HQ to slow openings, the expansion curve is already lying.

The fund alliance gave the company a restructuring lifeline — Aoyagi: 'the fund came and I felt relieved; now there is a chance of rebuilding' — but Pepper Lunch was gone and the rapid-growth story was over.