Synchro Food operates an online information-matching platform for restaurant operators in Japan. Services span all phases of restaurant operation, including preparations to open or close a restaurant. The company’s multiple websites provide free member registration for restaurant operators, real estate agents, interior contractors, foodstuff suppliers, and restaurant workers, and then match up these members based on their respective needs. In addition, members can post ads, which generate most of Synchro Food’s revenue in the form of fees. As of FY03/21, the company group comprised Synchro Food (parent), which operates an online media business targeting restaurants, and consolidated subsidiaries including Wit Co., Ltd., which operates an M&A intermediary business specializing in the restaurant industry.
The company had one reporting segment, Online Media, which was divided into two service categories covering different parts of the restaurant life cycle: Operating Services (70–80% of revenue) and Opening/Closing Services (15–20% of revenue). Due to the increase in number of consolidated subsidiaries, however, the company has started to report results based on three reporting segments from Q1 FY03/21. The Media Platform business is centered on the parent company’s above-mentioned Operating Services business and generates revenue by connecting member restaurant operators, suppliers and jobseekers. The bulk of revenue in this business comes from recruiting ads for full- and part-time staff. The M&A Intermediary business is focused primarily on the parent company’s above-mentioned Opening/Closing Services which generates revenue from ads by realtors and interior contractors targeting operators who are planning to open or close a restaurant. It also includes the M&A intermediary business of Wit Co., Ltd. The Recruitment business includes the parent company’s restaurant research, ad placement and e-mail newsletter activities as well as consolidated subsidiary Synchro Career’s recruitment services for food service providers and Nicoshigoto Co., Ltd., a part-time work opportunities service. The breakdown of revenue (JPY1.2bn) for FY03/21 was Media Platform business (87.7%), M&A Intermediary business (8.1%) and Recruitment business (4.2%).
The company has three types of paid services. The first type is ads from restaurant operators and suppliers. The second type breaks down into success fees from suppliers, and commissions from buyers or sellers (depending on the type of transaction) for facilitating the sale of furniture and fixtures or restaurant acquisitions. The third type involves online sales of kitchen equipment. The company decides which fee model to apply based on the registered member’s needs, scale of business, and operating environment.
In FY03/21, the company reported full-year consolidated revenue of JPY1.2bn (-41.0% YoY), operating loss of JPY169mn (vs. operating profit of JPY558mn in FY03/20), recurring loss of JPY159mn (vs. recurring profit of JPY557mn), and net loss of JPY178mn (vs. net income of JPY287mn). There were 206,432 registered members (+15.9% YoY) and 7,979 fee-paying members (-15.6% YoY); revenue per fee-paying member averaged JPY94,673 (-37.8% YoY). By service category, revenue from Operating Services stood at JPY765mn (-49.0% YoY), Opening/Closing Services at JPY286mn (-18.3% YoY), and Other Services at JPY137mn (-16.5% YoY). Performance of the company’s mainstay job posting services (Media Platform business) was lackluster, particularly in 1H, because of the spread of COVID-19. The company posted an operating loss for the full-year, as the drop in revenue resulted in a 45.0% YoY decline in gross profit, while SG&A expenses remained largely flat.
As in the case of FY03/21, the company has refrained from releasing its full-year earnings forecast for FY03/22, citing the uncertainty as to how the pandemic would impact the restaurant industry during the period. The company said it will provide full-year guidance once the outlook for a recovery from the pandemic has become clear and it is able to put together reasonable estimates.
The company announced its medium-term business plan ending in FY03/23 at the time of its full-year FY03/18 results announcement. In the medium-term plan, the company looks to focus on strengthening platform capabilities, geographic expansion and enhancement of services, and development into businesses related to restaurant operation. In the medium-term, the company aims to maintain revenue growth of 20% and an operating profit margin of 35–40%. Its long-term targets for FY03/23 are 200,000 registered members, about 15,000 fee-paying members, and 6,000 registered business operators. On April 15, 2020, when the company revised its FY03/20 earnings forecast, it temporarily withdrew its medium-term plan's numerical targets for FY03/21. Although there will be no major changes to the medium-term plan, the company intends to continue its business activities while keeping risk hedging and post-coronavirus preparations in mind.
Working towards the performance goals set under its medium-term plan, the company acquired Wit Co., Ltd. in 2018, established Synchro Career Co., Ltd. in April 2019. The company's move to consolidated accounting in Q4 FY03/18 was due to this business expansion. Note: As of July 2021, Synchro Career will be merged with the company due to changes in the business environment caused by the COVID-19 pandemic.
Shared Research thinks the company’s strengths are: convenient end-to-end platform offering comprehensive information related to restaurant operation; competitive pricing for help-wanted ads; and high registration rates of restaurant operators in its service areas. Its weaknesses are: low barriers to entry for individual services; jobseeker registry ill-suited to restaurants aiming to keep costs low; and earnings structure skewed toward job posting revenue (see Strengths and weaknesses section for details).
|Gross profit margin||-||-||-||88.7%||91.0%||89.6%||88.5%||87.0%||81.0%|
|Operating profit margin||-||-||-||37.8%||42.8%||43.2%||38.5%||27.7%||-14.2%|
|Recurring profit margin||15.9%||23.1%||28.9%||38.0%||40.2%||41.4%||38.4%||27.7%||-13.2%|
|Per-share data (JPY)|
|Shares issued (year-end; '000)||0.2||0.2||0.2||240||2,905||8,867||26,861||26,894||26,894|
|EPS (fully diluted)||-||-||-||-||10.8||13.5||16.3||10.8||-|
|Dividend per share||0.0||0.0||0.0||0.0||0.0||0.0||0.0||0.0||0.0|
|Book value per share||6.4||30.1||47.4||76.5||205.5||81.3||90.5||101.8||94.4|
|Balance sheet (JPYmn)|
|Cash and cash equivalents||-||-||-||650||1,949||2,224||2,371||2,709||2,338|
|Total current assets||-||-||-||720||2,022||2,321||2,487||2,790||2,556|
|Tangible fixed assets||-||-||-||14||11||21||36||55||48|
|Investments and other assets||-||-||-||41||60||89||209||216||125|
|Total current liabilities||-||-||-||218||295||387||410||364||204|
|Total fixed liabilities||-||-||-||7||7||12||21||23||23|
|Total net assets||138||217||341||551||1,791||2,163||2,406||2,712||2,505|
|Total liabilities and net assets||230||377||485||776||2,093||2,562||2,836||3,099||2,732|
|Total interest-bearing debt||-||-||-||0||0||5||3||1||0|
|Cash flow statement (JPYmn)|
|Cash flows from operating activities||-||-||119||261||370||444||450||398||-406|
|Cash flows from investing activities||-||-||-13||-5||8||-153||-103||-67||-28|
|Cash flows from financing activities||-||-||-||-||949||-17||-199||7||-51|
On November 12, 2021, Synchro Food Co., Ltd. announced earnings results for 1H FY03/22; see the results section for details.
|Gross profit margin||86.8%||85.5%||86.1%||87.0%||74.9%||78.1%||81.1%||81.0%||85.1%|
|Operating profit margin||24.5%||24.9%||27.3%||27.7%||-||-||-||-||6.7%|
|Recurring profit margin||24.4%||24.9%||27.3%||27.7%||-||-||-||-||6.7%|
|Gross profit margin||86.8%||84.2%||87.2%||89.7%||74.9%||80.7%||85.3%||80.8%||85.1%|
|Operating profit margin||24.5%||25.3%||31.7%||28.8%||-||-||5.8%||1.5%||6.7%|
|Recurring profit margin||24.4%||25.3%||31.7%||28.8%||-||-||8.6%||1.9%||6.7%|
The company’s businesses are seasonal, and Q4 revenue tends to be several percentage points higher than in other quarters, as more restaurants open in March and April and post more help-wanted ads in February and March in preparation. For example, in FY03/19 (prior to the COVID-19 pandemic), revenue in each of the first three quarters was around 24% of the annual total, but Q4 revenue was about 4pp higher at 28.0% of the total. Similarly, quarterly operating profit for the first three quarters averaged about 23% of the annual total, while Q4 was about 8pp higher at 31.1% of the total.
In addition to job postings, the company’s websites list information on properties and interior contracting aimed at operators planning to open restaurants, so the timing of booking revenue and operating profit is affected by when restaurants are opened. Q1–Q3 earnings tend to be at about the same level.
Revenue by quarter
Operating profit by quarter
Fee-paying member count
Average spend per fee-paying member
Quarterly registered member count
Quarterly revenue by service
Number of registered business operators
Number of registered job seekers (at job.inshokuten.com)
Number of businesses registered for supplier search services
Number of businesses registered for property search services
Number of interior design contractors registered
Source: Shared Research based on company data
Q1 FY03/22 (April 2021–June 2021) results
Faced with a resurgence in COVID-19 cases, the Japanese government on April 25, 2021 issued its third declaration of a state of emergency, focused mainly on the Tokyo metropolitan area. The government around the same time also announced priority measures for preventing the further spread of the virus. Both actions contributed to the sustained curbing of social activity in the country.
In accordance with its management philosophy (
Revenue in Q1 amounted to JPY370mn (+63.2% YoY). Demand for help-wanted ads (the company’s core business) tends to rise sharply at points in time when states of emergency and
Gross profit came to JPY315mn (+85.4% YoY). The company pushed forward with efforts aimed at improving its business structure, strengthening its administration of personnel expenses primarily through the use of distributors and enhancing its management of advertising expenses. The company generated JPY25mn in operating profit following an operating loss of JPY129mn in Q1 FY03/21. This rebound was primarily due to the recovery of revenue to pre-COVID-19 levels.
Starting in Q1 FY03/21, Synchro Food moved from a single reporting segment to three reporting segments. The company does not retroactively adjust figures to reflect the change.
The business reported Q1 FY03/22 revenue of JPY336mn (revenue from external customers) and segment profit of JPY27mn.
The Media Platform business primarily comprises inshokuten.com and other services for restaurants (such as job advertisements),
The number of registered inshokuten.com users grew steadily, reaching 213,477 as of end-June 2021 (+15.7% YoY). Despite the current trend of cutting advertising costs amid the COVID-19 pandemic, performance in terms of registrations was strong as the company observed recovery in property acquisition conducted in anticipation of the post-COVID-19 era. Meanwhile, the number of real estate agents, interior design contractors, and other companies providing services through inshokuten.com steadily grew to 4,520 (+3.7% YoY).
The decline in job postings, a key source of business for the company, following the government’s third declaration of a state of emergency was milder than it was after the first and second state of emergencies were declared, with the number of new inquiries and orders from existing customers remaining steady.
The business reported revenue of JPY32mn and segment profit of JPY0.
In M&A Intermediary, the marketing of new properties with existing furniture and fixtures to restaurateurs has been difficult, in part because these potential buyers remain cautious about acquiring these properties and in part because subsidy systems established to provide relief to restaurants remain in effect. Although the length of time leading up to the conclusion of
The business reported full-year revenue of JPY2mn and a segment loss of JPY2mn.
The Personnel Recruitment business primarily consists of recruitment services that introduce jobseekers to eateries, meal supply service providers, and other businesses in restaurant and food service-related industries. Due to the COVID-19 pandemic, recruitment demand from the core customers of these services (medium-sized and large restaurant operators) was sluggish. Meanwhile, on July 1, 2021, the company absorbed Synchro Career Co., Ltd., a major subsidiary that was responsible for operations associated with the Personnel Recruitment business.
|(JPYmn)||1H Act.||2H Act.||FY Act.||1H Act.||2H Act.||FY Act.||1H Act.||2H Act.||FY Act.|
|Cost of revenue||103||103||206||143||120||262||110||116||226|
|Gross profit margin||87.6%||89.3%||88.5%||85.5%||88.4%||87.0%||33.8%||115.7%||81.0%|
|Operating profit margin||35.9%||40.7%||38.5%||24.9%||30.3%||27.7%||-||3.7%||-14.2%|
|Recurring profit margin||35.9%||40.6%||38.4%||24.9%||30.3%||27.7%||-||5.4%||-13.2%|
As in FY03/21, the company refrained from releasing its full-year earnings forecast for FY03/22, citing the uncertainty as to how the pandemic would impact the restaurant industry during the period (It also refrained from releasing a FY03/22 forecast when announcing its results for Q1.). The company intends to maintain its group-wide cost control efforts while further strengthening its sales structure through the use of distributors.
|Results vs. Initial Est.||FY03/13||FY03/14||FY03/15||FY03/16||FY03/17||FY03/18||FY03/19||FY03/20||FY03/21|
|Revenue (Initial Est.)||1,013||1,270||1,846||2,250||Undisclosed|
|Results vs. Initial Est.||-||-||-||-||3.9%||8.4%||-3.2%||-10.5%||-|
|Operating profit (Initial Est.)||366||483||661||690||Undisclosed|
|Operating profit (Results)||-||-||-||321||451||595||688||558||-169|
|Results vs. Initial Est.||-||-||-||-||23.1%||23.3%||4.1%||-19.2%||-|
|Recurring profit (Initial Est.)||341||459||661||690||Undisclosed|
|Recurring profit (Results)||79||128||188||323||423||570||687||557||-156|
|Results vs. Initial Est.||-||-||-||-||24.2%||24.3%||4.0%||-19.2%||-|
|Net income (Initial Est.)||221||289||444||439||Undisclosed|
|Net income (Results)||49||79||124||210||265||364||439||287||-178|
|Results vs. Initial Est.||-||-||-||-||19.7%||26.0%||-1.2%||-34.6%||-|
Synchro Food started disclosing profit forecast in FY03/16. Based on the last two years’ results, the company appears to have set ambitious revenue targets. The company’s strategy emphasizes continually launching new services, and it includes anticipated earnings in forecast. Shared Research believes this is why the company’s revenue has fallen short of forecast.
In FY03/20, earnings results fell short of the initial forecast due to upfront spending to secure personnel and establish a more robust business structure, including at consolidated subsidiaries, and it took time to monetize operations at those subsidiaries. In FY03/21, the company did not release an initial forecast, explaining that user activity was unclear due to the impact of COVID-19 and the ongoing issuance and lifting of state of emergency declarations.
Synchro Food announced a medium-term plan through FY03/23 along with its FY03/18 results. Note that on April 15, 2020, when the company revised its earnings forecast, it temporarily withdrew its numerical targets that had been included in the initial medium-term plan announcement. Nevertheless, Shared Research believes the direction of the company’s business strategy remains in line with the medium-term plan. The following detail regarding the medium-term plan is as of the time it was first announced. The company has indicated that it will restructure its medium- to long-term management strategy to take into account the protracted pandemic and the post-pandemic environment.
The company redefined its mission as “Connecting the world of food, creating the food of the future,” and its vision as “Becoming an innovative food platform.” Under its mission, the first step in connecting the world of food is to put in place suitable infrastructure that will carry the company through to the stage where the future of the world of food is created. The vision entails strengthening its existing platform to the point where it becomes indispensable to the world of food.
Synchro Food said that it would like to maintain revenue growth of 20% and an OPM of around 40% in the medium term. Its long-term targets are 200,000 registered members, 15,000 fee-paying members, and 6,000 registered business operators by FY03/23. When it first announced the medium-term plan, Synchro Food forecast an OPM of 30.7% in FY03/20, a YoY decline, and explained that this assumed temporary costs such as those involved in relocating the headquarters. However, the actual FY03/20 OPM was 27.7%.
The company has initiatives in the following three focus areas.
Strengthening platform capabilities: Aims to strengthen the platform’s range of capabilities through developing new services targeting all aspects of the restaurant operations business; expanding the number of members and operators served; and providing marketing data and analysis to users and operators, to become the foremost supplier of restaurant-related services to the industry.
Geographic expansion and deepening: Aims to strengthen its revenue structure at the Tokyo head office, and Osaka and Nagoya branch offices to expand its market shares in each of these regions. In addition, it aims to develop inshokuten.com’s range of services, conducting market research on opportunities for overseas expansion with a view of localization.
Development into peripheral businesses related to restaurant operations: Looks to expand into restaurant-related industries, such as catering and food supply area and recruitment/outplacement services to provide support for chef/dietician/managerial dietician, leveraging the inshokuten.com platform with its newly consolidated subsidiary, Wit playing the center role.
Strengthening platform capabilities entails the development of new services, growing the numbers of members and registered business operators, and data accumulation, analysis, and sales.
The development of new services covers all business functional areas. For example, up to now it has been involved in job ad placement, orders, and procurement. Synchro Food plans to expand its services to include recruitment, training, and attracting customers—priority areas for restaurant management. In order to expand its service offerings, the company is open to collaborations with other companies and acquisitions as well as in-house development.
One benchmark that indicates the capabilities of a platform is its ability to gather in numbers. To maximize the network effect, the company is working to grow not just the number of members, but business operators and other registered members. As its service areas expand, the company has also more target users and target businesses. It is thus establishing a business-oriented marketing structure to actively grow the number of registered businesses. Further, its ongoing efforts to promote the influx of new users include investing in advertising and enhancing content such as owned media.
By commercializing the accumulation, analysis, and sale of registered member data, the number of registered members on the company’s platform now exceeds 150,000 members (as of end-FY03/19). These comprise restaurateurs as well as the next wave of restaurant operators, and results of surveys covering these users are valuable market data. Synchro Food plans to strengthen its business that provides marketing data and analysis output to clients such as food manufacturers and research companies.
Synchro Food has begun creating structures suitable to specific regions in Japan and overseas as part of its geographic expansion and deepening efforts.
In the domestic market, the company had developed a framework with almost complete countrywide coverage in the provision of recruitment services by FY03/18. The next step is to put in place a nationwide marketing structure run out of three locations: Tokyo head office (in charge of Kanto, Hokkaido, Tohoku, Hokuriku, and Shinetsu); the Osaka branch (Kansai, Chugoku, Shikoku, and Kyushu); and the Nagoya branch (Tokai region). The company plans to boost its shares in both user numbers and business operators.
In overseas markets, Synchro Food first aims to conduct careful market analysis and restaurant business research and roll out some localized inshokuten.com services in parts of Asia and North America. An example is business support services for domestic customers expanding outside Japan and Japanese restaurants overseas. Because the overseas business environment is different from that in Japan, when localizing, the company aims to collaborate with partners such as foodstuff trading companies and local companies. According to the company, as of May 2018, it had already launched trial runs of localized versions of its existing PlaceOrders procurement system for restaurants serving Japanese food.
Synchro Food plans to leverage its inshokuten.com platform to move into businesses peripheral to restaurants. The company streamlines its businesses by making use of consolidated subsidiaries Wit Co., Ltd., and Synchro Career Co., Ltd. (established after Synchro Food released its medium-term plan). As of FY03/20, the company has given the subsidiaries distinct roles, with Wit responsible for an M&A intermediary business specializing in the restaurant industry and Synchro Career responsible for a personnel recruitment business focused on the restaurant and meal supply industries. Note: Synchro Career will be merged with the company in July 2021 due to changes in the market environment caused by the COVID-19 pandemic.
On its websites, Synchro Food registers restaurant operators, jobseekers, suppliers, and others involved in the restaurant business. As of end-FY03/21, 206,432 restaurant operators, 189,676 jobseekers, 2,829 realtors, 537 interior contractors, and 1,109 foodstuff suppliers had registered as members. As membership increases, the websites are able to extend their coverage by accumulating more information pertaining to restaurant management. As a result, the websites grow more convenient for all parties involved in the restaurant business, thereby driving further increases in the number of registrants.
That said, more members do not translate directly into higher earnings for Synchro Food. Rather, the company generates revenue through three paid services via its websites.
- Ad placements (job postings by restaurant operators and ads by suppliers targeting restaurant operators)
- Introductions (of suppliers to restaurant operators, of properties available for furnishing-and-fixture sale, and of restaurant M&A), which generate success fees
- Online sales of kitchen supplies
Synchro Food also provides some matching services for free.
Promoting the use of paid services by members leads to higher earnings for Synchro Food. To increase usage frequency, the company’s core strategies are to improve the appeal of its websites, drawing even more members and raising the penetration rate. At the same time, Synchro Food looks for new services it can monetize.
|No. of registered members||FY03/18||FY03/19||FY03/20||FY03/21||YoY|
|Real estate agents||2,129||2,332||2,534||2,829||11.6%|
The company attracts members for registration on inshokuten.com by making all of its websites easy to find. This involves search engine optimization (SEO), and starts with analysis of typical search engine software algorithms, followed by constant tweaking of the websites accordingly. The company also uses online ads and social media to attract members. It is not increasing the number of salespeople to boost registrations.
The company’s business depends on connecting restaurant operators with other registered members, which include real estate agents and jobseekers. When restaurant operators want to open a new restaurant, they can look for a property among the ads placed by member real estate agents. They can recruit staff by placing a job posting on one of the company’s websites and receiving applications from member jobseekers. Synchro Food earns revenue from ad placements by restaurant operators or suppliers. The company does not charge success fees, such as when a lease or employee contract is signed.
The number of member restaurant operators is rising, and was over 200,000 as of end-FY03/21. According to the 2019 Economic Census by the Ministry of Internal Affairs and Communications, there are 520,000 restaurants in Japan (excluding bars, cabarets, and nightclubs). A simple calculation shows that approximately 40% of restaurant operators is registered with Synchro Food. The company’s service territory primarily encompasses the Kanto and Kansai regions, and in 2018 it began offering its services in the Kyushu area and Hokkaido as well. Shared Research thinks the number of registered users will continue growing.
The company offers services on the following five websites.
Restaurant property information, kitchenware e-commerce, foodstuff supplier selection, and recruitment management
Specialist restaurant staff recruitment site
Matching site connecting operators thinking of opening or renovating restaurants with interior contractors
Recruitment information for interior design industry covering interior contractors, product designers, and CAD operators
Site for operators planning to close restaurants to search for restaurant assessment services and buyers (via inshokuten.com)
Source: Shared Research based on company websites
The following table shows the various services provided via the five sites and the subsidiaries, with indications of which are free and which are paid. In consideration of the number of registered users and usage status, some of the services currently offered for free may later be changed over to paid services.