Sushi Chains and Global Diversification: A Strategic Play to Counter Inflationary Pressures in Japan

Japan’s rice market has become a textbook case of how rigid domestic policies and supply shocks can amplify inflationary pressures. In 2025, rice prices in Japan surged to over double their 2023 levels, driven by a combination of extreme weather, panic buying, and a flawed crop index that underestimated supply shortages [1]. The government’s emergency stockpile releases and policy shifts—such as reducing import tariffs—have provided only temporary relief, with structural issues like high tariffs and fragmented futures markets persisting [3]. For businesses like Sushiro, a leader in the conveyor-belt sushi sector, these dynamics pose a direct threat to cost stability.

Yet Sushiro’s response to this crisis is not merely defensive; it is a masterclass in strategic resilience. By accelerating its international expansion, the company has transformed its global footprint into a buffer against domestic cost shocks. In the nine months ending June 2025, overseas operations accounted for nearly half of Sushiro’s operating profit despite contributing only 30% of revenue, signaling significantly higher margins abroad [2]. This margin superiority stems from two key factors: first, the ability to source rice in international markets where prices are far lower—U.S. rice, for instance, costs 145% less than in Japan [1]; and second, the replication of Sushiro’s cloud-based IT infrastructure, which enables rapid market entry and operational efficiency [4].

The company’s global strategy is underpinned by a modular system built on Amazon Web Services (AWS), allowing it to scale operations in new markets while maintaining centralized control over demand forecasting and supply chain logistics [2]. This technological agility has enabled Sushiro to open 50–60 new international locations annually since 2023, outpacing domestic openings by a factor of three [4]. Markets like Hong Kong, Thailand, and Singapore have become profit engines, with overseas sales growing 125.5% in 2022 alone [4]. Crucially, these markets also provide diversification in rice sourcing, reducing exposure to Japan’s volatile domestic market.

The financial implications are clear. While Sushiro’s domestic operating income in Japan fell by 47.1% in 2022, its international operations turned a JPY 697 million loss into a JPY 3.4 billion profit in the same period [2]. Goldman Sachs has highlighted the company’s return on operating assets as a standout metric in Japan’s restaurant sector, noting its superior asset turnover and profitability [5]. This divergence underscores a broader trend: as domestic margins erode under inflationary pressures, global diversification becomes not just a hedge but a growth driver.

Sushiro’s approach also reflects a deeper economic truth. In an era of fragmented global supply chains and persistent inflation, businesses that can decouple from domestic cost shocks through internationalization gain a competitive edge. By leveraging technology to replicate its model across borders, Sushiro has created a scalable solution to a problem that will likely persist in Japan’s rice market. For investors, this represents a compelling case study in how strategic global expansion can turn inflationary headwinds into tailwinds.

Source:
[1] Explainer: What's behind the surge in Japan's rice prices? [https://www.reuters.com/markets/asia/whats-behind-surge-japans-rice-prices-2025-06-16/]
[2] Rice Inflation Spurs Japan Sushi Chain to Rely on Growth Abroad [https://www.bloomberg.com/news/articles/2025-08-31/rice-inflation-spurs-japan-sushi-chain-to-rely-on-growth-abroad]
[3] Japan reaps the consequences of flawed rice policies [https://eastasiaforum.org/2025/05-29-japan-reaps-the-consequences-of-flawed-rice-policies]
[4] AWS Global Utilization Support – Sushiro | Classmethod,inc. [https://classmethod.jp/english/cases/sushiro-global/]
[5] Goldman Sachs: Food & Life, the parent company of Sushiro, has initiated coverage with a "Buy" rating [https://news.futunn.com/en/post/61131587/goldman-sachs-food-life-the-parent-company-of-sushiro-has]