The culinary scene in Japan is truly remarkable, drawing people from around the globe willing to travel just for the exceptional dining experience. Tokyo stands out as a bustling and legendary city that boasts the highest number of Michelin-starred restaurants globally while Kyoto's rich cultural heritage and its array of Michelin-starred Kaiseki restaurants make it a culinary haven.

While Japanese cuisine naturally takes the spotlight in most eateries, the country also offers outstanding options in French, Italian, and Chinese cuisines. Despite the lucrative appeal of the restaurant business in Japan especially Tokyo, it's important to note that the competition is fierce in this lively foodie paradise. For hospitality operators contemplating the launch of a new restaurant, this mini guide provides a valuable starting point to navigate the intricacies of the market and the establishment process.

Start by solidifying a clear culinary concept

The choice of culinary direction involves several factors, with available restaurant capital being a crucial determinant. Will it be a lively fast-food spot dedicated to lip-smacking fried chicken that the Japanese so love or an upscale French restaurant led by an award-winning chef? Once the business owners define their restaurant concept, they can proceed with the following steps:

• Strategic location selection: Choosing a vibrant location ensures a steady stream of food enthusiasts. 

• Know thy neighborhood: Restaurant business owners should decode the demographics and identify their potential customer base. Understanding whether it is a residential area or populated by college students is crucial for business success.

• Visibility is key: It's highly recommendable to opt for a front-facing restaurant for maximum street visibility, rather than opening a restaurant on higher floors. While rooftop spots offer a great ambiance, there might be other challenges like strict regulations and weather dependency.

• Adequate size is crucial: Restaurateurs should ensure that there is ample dining and kitchen equipment space to avoid a cramped setting that could compromise the dining experience.

• Identify competition: Hospitality operators should evaluate their competition carefully to help them strengthen their value proposition.

• Study the Michelin gems of Japan: Restaurateurs should examine the achievements of Japan's Michelin-starred restaurants and dissect the factors contributing to their success. Additionally, investigating customer preferences, understanding Michelin's criteria, and strategically applying insights can assist new restaurants in refining their operations.

Mamta Reid saw an opportunity to become one of the first vegan restaurants in Tokyo. She opened Tudore Tranquilty, a vegan restaurant in Shibuya to cater to a new market.

"I saw that gap. And that coupled with clients asking me where they can come for this kind of food sparked my creativity. I felt it was time to open Tudore Tranquility." – Mamta Reid

Learn more: Mamta Reid of Tudore Tranquility: Plant-based cuisine is the future | 9 things to do before opening a new restaurant

Navigating administrative waters in Japan

Crafting the menu, selecting the location, and establishing the restaurant concept and theme are undoubtedly creative aspects, but the paperwork journey begins well before the restaurant's opening and persists afterward. Here's a checklist for foreign entrepreneurs who would like to open a restaurant in Japan:

1. Apply for the Business Manager Visa 

Starting a restaurant in Japan requires a visa/status of residence also known as zairyu shikaku. According to Nikkei, Japan's government intends to ease residency requirements for foreign business owners by April 2024.

To obtain it, one needs a Certificate of Eligibility (COE) or zairyu shikaku nintei shomei. The business owner should compile the necessary documents, apply at the Immigration Office, and after 3 to 8 months, receive the COE. If the owner cannot be present in Japan, they need to find a local business partner to act as a representative director, facilitating the COE application on their behalf. Collaborating with a Japanese partner simplifies tasks like office rental and capital contribution. This strategic approach allows for a smoother process, even if the foreign investor/owner is not physically in Japan.

2. Apply for a business permit

To operate a restaurant, an owner should apply for a business permit (Inshokuten Eigyou Kyoka or 飲食店営業許可) from the local public health center (Hoken-Jo) overseeing the restaurant's location. There are prerequisites for opening a food business in Japan such as appointing a food sanitation manager (食品衛生責任者).

Things to remember:

• When a food sanitation supervisor is designated, an appointment needs to be filed with a local health care center for a one-day mandatory certification training.

• A chef, an owner, or a full-time employee can be appointed as a food sanitation supervisor.

License application documents should be submitted approximately 10 days before completing the facility. It usually takes a two-week processing time for the business permit, incurring an estimated cost of around 18,000 yen.

 3. Secure a fire license

A fire prevention license is required to operate a restaurant in Japan based on the restaurant's capacity and floor area. This can be obtained via the local fire department where the restaurant is located. The Japanese Government also requires restaurants to hire a fire protection manager and undergo the following:

• Complete a two-day Fire and Disaster Protection Manager's Course or possess expertise in fire prevention.

• Report the manager's designation to the local fire station chief.

• Develop a fire protection plan and submit it to the local fire station chief.

Note: Restaurants accommodating at most 30 people are exempt from this requirement.

4. Obtain labor insurance 

In Japan, restaurant owners need to obtain labor insurance coverage for their employees. This covers both unemployment insurance and accident insurance for staff in case of a work-related injury or sickness incurred during their work shift. Labor insurance coverage should be initiated within 10 days of their hiring.

Raising funds to open a restaurant in Japan

Every new business requires solid business planning, and also funds to bring the business concept to reality. While it's important to have enough funds to start a new venture, sometimes restaurant proprietors still need some extra budget to cover unforeseen expenses. This additional support is key for the long-term success of the business.

Bank loans for foreigners

Borrowing loans (personal loans or credit card loans) from traditional banks in Japan is an option, however, foreigners need to meet some eligibility criteria such as having a residency visa or being married to a Japanese citizen.

In Japan, the Japan Finance Corporation is the institution that supports new business companies and provides loans via their start-up funding.

Government backing: Subsidies for start-ups

With more support now from Japan's government, the country is beginning to become a lucrative place to establish new businesses. There are several grants available for start-ups and other small and mid-size companies for example in Tokyo, which other Japanese Prefectures might also have.

Here's an example on how to get government subsidies in Tokyo:

• Apply for government subsidies through the "Start-up support project."

• Eligible recipients: Individuals planning a business in Tokyo or small/medium-sized businesses under five years old

• Subsidies cover: Rent fees, advertising costs, equipment and equipment purchase costs, industrial property rights application/introduction costs, expert guidance costs, employee labor costs

Grant limit: 3 million yen

Necessary equipment to operate a restaurant business in Japan

In addition to having a successful restaurant concept and raising enough funding, having the right set of tools is also important. Here are the top-of-the-line kitchen equipment that restaurant owners need to incorporate into their kitchen list:

• Gas table

• Sinks

• Cooking tables

• Commercial refrigerators

• Ice machines

• Cooking utensils (knives, chopping boards, pots, etc.)

• Electrical appliances (ovens, microwave ovens, etc.)

• Storage items (e.g. plastic wrap, Tupperware)

• Sanitary items (detergent, rubbish bags, etc.)

While major kitchen tools were outlined earlier, dining area equipment should be an extension of the restaurant theme and concept. It would also depend on the type of guests the restaurants want to cater to. Tableware as well as cutlery and decorations should be consistent with the restaurant brand.

Working with local suppliers

Starting a successful restaurant business in Japan requires more than having a great restaurant or a menu. When it comes to day-to-day operations, working with food suppliers (local or international, depending on the type of restaurant) should equally be on top of a restaurant owner's list. If a restaurant supplier fails to deliver, it can have a severe impact on the longevity of the business and can lead to disruption in the restaurant operations, quality and consistency issues with menu dishes, and ultimately financial loss. To avoid these, restaurant owners need to follow some of these tips to establish successful collaborations with potential food suppliers:

• Research local suppliers: Depending on the type of restaurant they would run, hospitality operators need to identify potential suppliers in Japan via local fairs, their own network, and visiting local markets to find relevant suppliers for their business.

• Discover suppliers using online directories: In this day and age, even food suppliers have their business information accessible online. This is an efficient way to connect with local suppliers and finding how they operate their business before even committing to any agreements.

• Explore seasonal offerings: Even a restaurant that serves international cuisine may need local ingredients. Finding out the seasonality of ingredients and collaborating with suppliers to create seasonal menus can help the restaurant's offerings be more unique and in tune with the local culture.

Forging strategic alliances with hotels

When venturing to establish a restaurant in Tokyo, foreign investors should prioritize hotel partnerships for strategic advantages. Opting for hotels with international staff provides a distinct competitive edge. By leveraging the built-in customer base, diverse clientele, high-end operational support, and collaborative marketing opportunities, this partnership becomes instrumental in navigating the unique challenges of the vibrant Japanese dining scene. Here’s a quick look at the advantages of such a collaboration:

• Work with hotels that have international staff: It enhances guest experiences by promoting inclusivity and comfort through multi-language communication while also creating a cosmopolitan ambiance.

• Partner with renowned hotels. Linking with top hotels can enhance the restaurant's brand image and reputation in a new market. 

• Consider leasing space within well-established hotels: This helps restaurant owners reduce significant cost liabilities but also elevates the overall dining experience for patrons.

• Collaborate with recognized hotel brands: This presents an ideal opportunity for cost-effective marketing and increased visibility in the Japanese market. Restaurants situated within hotels can tap into a built-in customer base, especially during peak seasons or events, ensuring a consistent flow of customers.

• Leverage hotel-hosted events: Conferences, weddings, and social gatherings can broaden catering opportunities and attract more foot traffic to the restaurant.

• Explore the possibility of offering room service through the hotel: This expands the restaurant's reach beyond its premises. 

Establishing a symbiotic relationship with hotels not only provides financial advantages but also grants access to a diverse range of customers, ultimately contributing to the restaurant's long-term success and sustainability.

Learn more: 7 ways to optimize Hotel Restaurant Management in this tech-empowered era | Hospitality trends 2024: What’s next for restaurants and hotels

Choosing the right restaurant management system

Starting a new restaurant business in Japan requires time, creativity, and resourcefulness. Before the new restaurant opens, hospitality owners must optimize every aspect of its operations. On top of that, restaurants also need to plan out future restaurant marketing initiatives to attract potential diners to their establishment, and also incorporate a seamless booking system to ensure that these diners can make reservations to the restaurant with ease.

One of the main challenges for Japanese restaurants is the language barrier. With the influx of tourists to Japan, a powerful reservation system like TableCheck has multi-language capabilities to ensure that restaurants can cater to a diverse clientele while boosting sales.

Learn more: A restaurant owner's guide to finding the right booking platform | The ultimate restaurant marketing calendar 2024 by TableCheck

Japan: A culinary paradise

Opening a restaurant in Japan as a foreign investor can be a challenging yet rewarding endeavor. Japan's culinary delights are renowned worldwide, with a high number of Michelin-starred restaurants gracing the city.  However, the competition is fierce, and careful planning is necessary from defining a clear culinary concept to studying successful Michelin-starred restaurants. Navigating administrative processes, such as obtaining the necessary visas and permits, or a business license in Japan is crucial. Additionally, forging strategic alliances with hotels can provide advantages such as a built-in customer base and collaborative marketing opportunities. With proper preparation and strategic decision-making, opening a restaurant in Japan can lead to gastronomic success.

TablecCheck is the number 1 restaurant reservation platform in Japan. TableCheck is used by top hospitality operators in the country to manage online reservations, automate marketing campaigns, and offer seamless experiences to diners.