"'All-You-Can-Drink Near the Station' Has Lost Its Charm... Japan's After-Work Hotspots Are Disappearing"

Izakaya Bankruptcies at Record High... Could Top 200 This Year
Small Establishments Hit by Rising Costs and Labor Expenses
Consumption Tax Cut Also a Setback... "Drinking at Home" on the Rise

Japan's iconic izakaya bars are closing one after another. Rising food costs and labor expenses, combined with intensifying price competition from large chains, are dealing a direct blow to small businesses.

Tokyo, Japan. AFP-Yonhap News

Japan's Izakaya Bankruptcies Up 32.5% in a Year...On Track to Top 200 This Year

According to Tokyo Shoko Research, a Japanese market research firm, 167 izakaya businesses in Japan went bankrupt from January to September this year, up 32.5% from the same period a year earlier. This is the highest figure since the company began compiling related statistics in 1989.

Tokyo Shoko Research counts only business bankruptcies involving liabilities of at least 10 million yen (approximately 86 million won) that caused actual losses to financial institutions or business partners, excluding simple voluntary closures and similar cases.

If this trend continues, the annual total is expected to exceed the previous record of 185 cases, set in 2024, and surpass 200 for the first time.

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Rising Costs and Price Competition...Consumption Tax Cut Also a Blow

Declining sales accounted for 150 closures, or 89.8% of the total. The analysis attributes this to a drop in customers as competition intensified and businesses raised prices to cover higher costs. Small businesses with fewer than five employees accounted for 90.4% (151 cases) of the bankruptcies.

Industry officials expect difficulties to continue for the time being. Large chains are stepping up marketing efforts, including cutting beer prices, in response to the liquor tax revision that took effect this month, but small businesses lack the capacity to respond.

The planned reduction in the consumption tax on food products in April 2027 is also seen as a setback. The 10% consumption tax will remain in place for food consumed at restaurants, while the rate on supermarket purchases and takeout will be cut from 8% to 1%.

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More People Drinking at Home?...Strategies for Survival

There are concerns that small izakaya bars will lose even more ground if more people opt to buy prepared food at supermarkets and drink at home instead of going to izakaya bars. This trend is known as "home drinking."

For the izakaya industry, standing out through a bar's distinct character and unique experiences, rather than competing on price, is emerging as a survival strategy. In the past, proximity to a train station, low prices and all-you-can-drink deals were competitive advantages. Recently, however, more consumers have been seeking signature dishes, local sake, distinctive atmospheres and attentive service.

This content was produced with the assistance of AI translation services.