Chinese noodle chain Kourakuen was going to close over 50 stores due to profit deterioration

Recently the NHK News On-line reported the following:

ラーメンチェーン幸楽苑 採算悪化で５０店舗余 閉鎖へ

11月10日 21時50分

低価格のラーメンチェーン、「幸楽苑」を運営する会社は、人手不足で人件費が上昇し採算が悪化しているとして、全体のおよそ１割に当たる５０店舗余りを今年度中に閉鎖することになりました。

発表によりますと、「幸楽苑ホールディングス」は、５６０のラーメン店のうち、およそ１割に当たる５１店舗を来年３月までに閉鎖することを決めました。

これにより、北海道、福井県、滋賀県、京都府、岡山県からは撤退することになります。

幸楽苑は、デフレの中、低価格なラーメンの販売で店舗数を急速に拡大しましたが、人手不足を背景とした人件費の上昇や原材料価格の値上がりを受けて、一部の店舗で採算が悪化していることから、今回の閉鎖を決めたということです。

また、店舗の閉鎖に伴っておよそ５億円の特別損失を計上するため、今年度の最終損益が当初の黒字の予想から一転して６億７４００万円の赤字になると発表しました。

幸楽苑は、ステーキ店の「いきなり！ステーキ」を展開するペッパーフードサービスと先日フランチャイズ契約を結んだばかりで、今後は首都圏や東北地方を中心に、単価が高く利益が見込めるステーキ店の出店を進めるなどして業績の改善を目指すことにしています。

My translation

The firm that managed "Kourakuen” which was a low-price chain of Chinese noodle would close about 50 shops in this fiscal year which was about one-tenths of all stores due to wage expenses increase arising from a shortage of labor, and it was assumed that their profit was aggravated.

According to an announcement, "Kourakuen Holdings" had decided to close 51 Chinese noodles shops by March next year out of the total 560, representing approximately 10 percent of all shops.

By that it would retreat from Hokkaido, Fukui-ken, Shiga-ken, Kyoto-fu and Okayama-ken.

Kourakuen expanded rapidly its number of stores with the sales of low-price Chinese noodles during a deflation, but due to a rise of personnel expenses against the background of labor shortage and a rise in price of raw material, the profit at certain shops was aggravated, it was said that for these reasons they decided the closing.

Together with the closing of shops, it appropriated an extraordinary loss of about 500 million yen; the expectation to stay in black as announced at the beginning of this fiscal year was reversed to become 674 million yen in red.

Kourakuen had just made a franchise contract the other day with the pepper food service which developed the steak house "Suddenly! Steak"; from now on, centering on the metropolitan area and Tohoku-district it would advance the branches of steak stores where high profit could be expected from the unit price while aiming at the improvement of business performance.

       It is normal for the company management to down size their business in face of adverse situations. I think some customers will miss the Chinese noodle of Kourakuen.