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.

Trends and outlook

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.

Strengths and weaknesses

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).

Key financial data

Income statement		FY03/13	FY03/14	FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21	FY03/22
(JPYmn)		Parent	Parent	Parent	Parent	Parent	Cons.	Cons.	Cons.	Cons.	Cons. Est.
Revenue		497	553	650	849	1,052	1,377	1,788	2,015	1,189
	YoY	-	11.4%	17.5%	30.7%	23.9%	30.9%	29.8%	12.7%	-41.0%
Gross profit		-	-	-	753	958	1,234	1,582	1,752	963
	YoY	-	-	-	-	27.3%	28.8%	28.2%	10.8%	-45.0%
	Gross profit margin	-	-	-	88.7%	91.0%	89.6%	88.5%	87.0%	81.0%
Operating profit		-	-	-	321	451	595	688	558	-169
	YoY	-	-	-	-	40.5%	32.1%	15.5%	-18.9%	-130.3%
	Operating profit margin	-	-	-	37.8%	42.8%	43.2%	38.5%	27.7%	-14.2%
Recurring profit		79	128	188	323	423	570	687	557	-156
	YoY	-	62.5%	46.9%	71.9%	31.1%	34.7%	20.5%	-18.9%	-128.1%
	Recurring profit margin	15.9%	23.1%	28.9%	38.0%	40.2%	41.4%	38.4%	27.7%	-13.2%
Net income		49	79	124	210	265	364	439	287	-178
	YoY	-	61.7%	57.8%	68.8%	26.1%	37.6%	20.5%	-34.5%	-161.9%
	Net margin	9.8%	14.2%	19.1%	24.7%	25.1%	26.4%	24.5%	14.3%	-
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		2.3	3.6	5.8	9.7	11.1	13.9	16.4	10.8	-6.7
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
Intangible assets		-	-	-	2	0	130	104	37	3
Total assets		230	377	485	776	2,093	2,562	2,836	3,099	2,732
	Accounts payable	-	-	-	8	5	5	5	4	5
	Short-term debt	-	-	-	0	0	2	2	1	0
Total current liabilities		-	-	-	218	295	387	410	364	204
	Long-term debt	-	-	-	0	0	3	1	0	0
Total fixed liabilities		-	-	-	7	7	12	21	23	23
Total liabilities		92	161	144	226	303	399	431	387	227
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
Financial ratios
ROA (RP-based)		41.8%	42.1%	43.6%	51.2%	29.5%	24.5%	25.5%	18.8%	-5.4%
ROE		42.9%	44.4%	44.6%	47.1%	22.6%	18.4%	19.2%	11.2%	-6.8%
Equity ratio		59.9%	57.4%	70.3%	70.9%	85.5%	84.4%	84.8%	87.5%	91.7%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company adopted consolidated accounting from FY03/18, so YoY figures show comparison with FY03/17 results for the parent.

Recent updates

1H FY03/22 flash update

2021-11-15

On November 12, 2021, Synchro Food Co., Ltd. announced earnings results for 1H FY03/22; see the results section for details.

Trends and outlook

Quarterly trends and results

Cumulative		FY03/20				FY03/21				FY03/22
(JPYmn)		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1
Revenue		489	984	1,525	2,015	227	503	857	1,189	370
	YoY	14.3%	19.1%	18.6%	12.7%	-53.6%	-48.9%	-43.8%	-41.0%	63.2%
Gross profit		424	842	1,313	1,752	170	393	695	963	315
	YoY	10.0%	16.3%	16.3%	10.8%	-60.0%	-53.3%	-47.1%	-45.0%	85.4%
	Gross profit margin	86.8%	85.5%	86.1%	87.0%	74.9%	78.1%	81.1%	81.0%	85.1%
SG&A expenses		305	596	897	1,195	299	587	869	1,132	290
	YoY	45.4%	39.6%	36.9%	33.6%	-2.0%	-1.5%	-3.1%	-5.2%	-2.8%
	SG&A ratio	62.3%	60.6%	58.8%	59.3%	131.7%	116.8%	101.4%	95.2%	78.4%
Operating profit		120	245	417	558	-129	-195	-174	-169	25
	YoY	-32.1%	-17.3%	-12.2%	-18.9%	-	-	-	-	-
	Operating profit margin	24.5%	24.9%	27.3%	27.7%	-	-	-	-	6.7%
Recurring profit		119	245	416	557	-129	-193	-163	-156	25
	YoY	-32.3%	-17.5%	-12.3%	-18.9%	-	-	-	-	-
	Recurring profit margin	24.4%	24.9%	27.3%	27.7%	-	-	-	-	6.7%
Net income		70	136	240	287	-94	-149	-138	-178	7
	YoY	-37.3%	-27.1%	-19.7%	-34.5%	-	-	-	-	-
	Net margin	14.4%	13.8%	15.7%	14.3%	-	-	-	-	2.0%
Quarterly		FY03/20				FY03/21				FY03/22
(JPYmn)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1
Revenue		489	495	541	490	227	276	354	331	370
	YoY	14.3%	24.1%	17.7%	-2.4%	-53.6%	-44.2%	-34.5%	-32.3%	63.2%
Gross profit		424	417	472	439	170	223	302	268	315
	YoY	10.0%	23.5%	16.4%	-3.1%	-60.0%	-46.6%	-35.9%	-39.0%	85.4%
	Gross profit margin	86.8%	84.2%	87.2%	89.7%	74.9%	80.7%	85.3%	80.8%	85.1%
SG&A expenses		305	292	300	298	299	289	282	263	290
	YoY	45.4%	34.1%	31.8%	24.5%	-2.0%	-1.0%	-6.2%	-11.8%	-2.8%
	SG&A ratio	62.3%	58.9%	55.5%	60.8%	131.7%	104.5%	79.5%	79.3%	78.4%
Operating profit		120	125	171	141	-129	-66	20	5	25
	YoY	-32.1%	4.3%	-3.5%	-33.9%	-	-	-88.1%	-96.4%	-
	Operating profit margin	24.5%	25.3%	31.7%	28.8%	-	-	5.8%	1.5%	6.7%
Recurring profit		119	125	171	141	-129	-64	30	6	25
	YoY	-32.3%	4.1%	-3.7%	-33.7%	-	-	-82.3%	-95.5%	-
	Recurring profit margin	24.4%	25.3%	31.7%	28.8%	-	-	8.6%	1.9%	6.7%
Net income		70	65	104	48	-94	-55	11	-39	7
	YoY	-37.3%	-11.6%	-7.5%	-66.1%	-	-	-89.6%	-	-
	Net margin	14.4%	13.2%	19.2%	9.7%	-	-	3.0%	-	2.0%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company adopted consolidated accounting from Q4 FY03/18, so cumulative results for FY03/18 include three non-consolidated periods. Also, YoY figures show comparison with FY03/17 results for the parent.

Seasonality: Revenue tends to increase in Q4 (January–March)

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

Source: Shared Research based on company data
Note: Consolidated figures shown for FY03/18.

Fee-paying member count

Average spend per fee-paying member

Source: Shared Research based on company data
Note: Cumulative total for period; quarterly data are undisclosed starting in FY03/19.

Quarterly registered member count

Quarterly revenue by service

Source: Shared Research based on company data

Number of registered business operators

Number of registered job seekers (at job.inshokuten.com)

Source: Shared Research based on company data

Number of businesses registered for supplier search services

Number of businesses registered for property search services

Source: Shared Research based on company data

Number of interior design contractors registered

Source: Shared Research based on company data

Q1 FY03/22 results (out August 6, 2021)

Earnings trends

Q1 FY03/22 (April 2021–June 2021) results

Revenue: JPY370mn (+63.2% YoY)
Operating profit: JPY25mn (vs. operating loss of JPY129mn in Q1 FY03/21)
Recurring profit: JPY25mn (vs. recurring loss of JPY129mn)
Net income attributable to owners of the parent*: JPY7mn (vs. net loss of JPY94mn)
*Net income/loss attributable to owners of the parent

Business environment and the company's response

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 (Uniting the world through food and forging the future of food), the company is responding by conducting business under a management strategy focused on two main points: implementing measures premised on further impact from the COVID-19 pandemic and preparing for future growth.

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 quasi-emergency measures issued in response to the COVID-19 pandemic are expected to be lifted. This tendency contributed to the Q1 recovery in revenue, boosting demand in the first half of April 2021 and in June of the same year. The company also remarked that demand for its job posting services, which have a competitive price advantage, is high and indicated that its market share is increasing as customers shift from other companies to the company’s media. In Q1, Operating Services generated JPY250mn in revenue (+79.9% YoY), while Opening/Closing Services produced JPY83mn (+31.7% YoY) and Other Services JPY36mn (+56.5% YoY).

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.

Segment information

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.

Media Platform business

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), as well as services for companies such as real estate agents and food suppliers that render their own services through inshokuten.com.

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.

M&A Intermediary business

The business reported revenue of JPY32mn and segment profit of JPY0.

The business includes M&A intermediary services aimed at facilitating the transfer of restaurant businesses or shareholdings in restaurant businesses, as well as support services for restaurateurs looking to buy/sell restaurants with the furnishings and fixtures in place.

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 property deals still tends to run long, the company has made progress on the potential deals it has amassed thus far, and deal closings began to recover in Q1.

Personnel Recruitment business

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.

FY03/22 company forecast

Company forecast

		FY03/19			FY03/20			FY03/21
(JPYmn)		1H Act.	2H Act.	FY Act.	1H Act.	2H Act.	FY Act.	1H Act.	2H Act.	FY Act.
Revenue		827	961	1,788	984	1,030	2,015	503	686	1,189
	YoY	24.9%	34.3%	29.8%	19.1%	7.2%	12.7%	-48.9%	-33.5%	-41.0%
Cost of revenue		103	103	206	143	120	262	110	116	226
Gross profit		724	858	1,582	842	911	1,752	170	793	963
	Gross profit margin	87.6%	89.3%	88.5%	85.5%	88.4%	87.0%	33.8%	115.7%	81.0%
SG&A expenses		427	467	894	596	598	1,195	587	544	1,132
	SG&A ratio	51.7%	48.6%	50.0%	60.6%	58.1%	59.3%	116.8%	79.4%	95.2%
Operating profit		297	391	688	245	313	558	-195	25	-169
	YoY	1.7%	28.7%	15.5%	-17.3%	-20.1%	-18.9%	-	-91.8%	-130.3%
	Operating profit margin	35.9%	40.7%	38.5%	24.9%	30.3%	27.7%	-	3.7%	-14.2%
Recurring profit		297	391	687	245	312	557	-193	37	-156
	YoY	11.2%	28.7%	20.5%	-17.5%	-20.0%	-18.9%	-	-88.2%	-128.1%
	Recurring profit margin	35.9%	40.6%	38.4%	24.9%	30.3%	27.7%	-	5.4%	-13.2%
Net income		186	253	439	136	152	287	-149	-29	-178
	YoY	10.6%	28.9%	20.5%	-27.1%	-40.0%	-34.5%	-	-118.9%	-161.9%
	Net margin	22.5%	26.3%	24.5%	13.8%	14.7%	14.3%	-	-4.2%	-15.0%

Source: Shared Research based on company data
Notes: Figures may differ from company materials due to differences in rounding methods.

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.

Since FY03/21, demand for job offers at restaurants (users) has tended to fluctuate sharply depending on the situation of the COVID-19 pandemic. Shared Research believes that when the end of the pandemic comes in sight, potential demand for services such as job advertisements will promptly manifest itself. In addition, the company plans to strengthen new businesses from FY03/22, such as the kitchen car sharing and matching business (developed under the "Mobimaru" brand), which will be developed mainly in the Kanto and Kansai regions with partners such as local governments and railway companies.

Historical performance versus company forecasts

Results vs. Initial Est.		FY03/13	FY03/14	FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21
(JPYmn)		Parent	Parent	Parent	Parent	Parent	Cons.	Cons.	Cons.	Cons.
	Revenue (Initial Est.)					1,013	1,270	1,846	2,250	Undisclosed
	Revenue (Results)	497	553	650	849	1,052	1,377	1,788	2,015	1,189
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%	-

Source: Shared Research based on company materials

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.

Medium-term outlook (as of FY03/18 results announcement)

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.

Mission and vision redefined

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.

Targeting OPM of around 40%

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%.

Medium-term plan: numerical targets at time plan was announced

Source: Shared Research based on company data
Note: FY03/21 earnings targets are figures from when they were initially announced. As of April 15, 2020, the company has withdrawn its medium-term plan targets for FY03/21.

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

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.

Growth in the number of registered members and data analysis

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.

Geographic expansion and deepening

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.

Domestic structure

Source: Shared Research based on company data

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.

Overseas structure

Source: Shared Research based on company data

Development into peripheral businesses related to restaurant operations

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.

Domestic meal supply market

Source: Shared Research based on company data

Business

Business model

Offering comprehensive food industry information

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.

Registered members, by category

No. of registered members	FY03/18	FY03/19	FY03/20	FY03/21	YoY
Restaurant operators	129,069	152,321	178,078	206,432	15.9%
Real estate agents	2,129	2,332	2,534	2,829	11.6%
Interior contractors	530	543	525	537	2.3%
Foodstuff suppliers	1,073	1,095	1,102	1,109	0.6%
Jobseekers	93,774	117,492	147,586	189,676	28.5%

Source: Shared Research based on company data

Low cost encourages registration

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.

Combination of free and paid services for members

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.

Paid and free services concept map

Source: Shared Research based on company data

Restaurants constantly opening and closing; one-fourth of Japan’s restaurant operators are already members

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.

inshokuten.com
Restaurant property information, kitchenware e-commerce, foodstuff supplier selection, and recruitment management

job.inshokuten.com
Specialist restaurant staff recruitment site

tenpodesign.com
Matching site connecting operators thinking of opening or renovating restaurants with interior contractors

job.tenpodesign.com
Recruitment information for interior design industry covering interior contractors, product designers, and CAD operators

inuki-info.com
Site for operators planning to close restaurants to search for restaurant assessment services and buyers (via inshokuten.com)

Landing pages for company websites

inshokuten.com

job.inshokuten.com

tenpodesign.com

job.tenpodesign.com

inuki-info.com

Source: Shared Research based on company websites

Free and paid services for users

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.

Services provided to registered members (FY03/20)