Royal Holdings - Company History

Royal begins with a young man who reasoned that if he could get himself into a kitchen he would never starve. Egashira Kyoichi trained as a cook in the wreckage of post-war Fukuoka, then within a year switched to supplying the US Army base at Kasugabaru — sundries, bread, photo developing — a trade incorporated in April 1950 as Kilroy Special Trading. In 1955 the tax authorities came for him with an assessment of nearly $277,778 (¥100m). It was while absorbing that blow that he read a biography of the American restaurant-chain founder Howard Johnson, and took from it the ambition that governed the rest of his life: to turn the food trade — in Japan a business of low repute — into an industry.

His way in was the airport. In October 1951, on the day Japan Airlines began domestic service, Royal started loading in-flight meals and running a café at Itazuke (today Fukuoka) airport; Egashira said he had put up two million yen to help the cash-short airline open its Fukuoka branch and taken the catering rights in return. A bakery followed that December, a full French restaurant in Nakasu in 1953 — Marilyn Monroe, honeymooning and touring US bases, walked in three months after it opened — and in 1956 Royal Co., Ltd. was incorporated with ¥1 million of capital. Within a decade the company was running five different formats and had developed cake-freezing technology. Long before he had a word for it, Egashira was simply trying everything food could be made to do.

The word arrived in 1962, when Royal opened in a new building in central Fukuoka and, unable to serve affordable food at downtown rents, moved all preparation off-site into what it called a central kitchen. The revolt was severe: about half the cooks left rather than have cooking treated as a process. Egashira did not give way, and pushed on the other two constraints as well — hiring university graduates from around 1965 while the trade laughed at him, sending staff to study restaurant management in San Francisco, and courting the Industrial Bank of Japan until, after three months of investigators living in Fukuoka, it lent $1.7M (¥600m) to a company with sales of about ¥2 billion. The loan built the Royal Center plant in 1969; the 1969-vintage central kitchen then made the 1970 Osaka Expo contract workable, 600km from home, and Royal took ¥1.15 billion of sales and ¥150 million of profit out of it.

Roadside came next. The first Royal Host opened in Kitakyushu in 1971, aimed at car-owning families; the first highway-service-area restaurant followed in 1973. By 1976 the group turned over ¥15.07 billion and ranked sixth in Japanese food service. But the model was capital-heavy by design — Royal spent about $547,945 (¥160m) per store to make a store feel like a Royal, against roughly $85,616 (¥25m) at Skylark, which was racing it on unit count. The choice to be chosen on quality accumulated on the balance sheet as fixed cost, and it shaped the next twenty years.

Egashira had set up a listing office in 1972, when the idea that a restaurant company could go public was still treated as a fantasy. He argued from the American sequence — bakers listed first, then retailers, then food service — that Japan would follow ten years behind, and he was right: Fukuoka Stock Exchange in August 1978, Osaka in 1979, the Tokyo Stock Exchange second section in August 1981 and the first section in June 1983. The proceeds went into plant and people. A Tokyo head office opened in 1982 with nearly half its floor space given to a training centre, most of it for cooks — a company with a central kitchen still putting cook training first — and a second food factory opened near Tokyo in 1983.

In April 1994 Egashira handed the presidency to Inada, a 26-year veteran, with two instructions: run the company for its shareholders, and do not draw up store-expansion plans. Inada held to it. With 351 restaurants in 1998 he put the ceiling at around 550 while rivals talked of a thousand, on the reasoning that past a certain size head office simply loses control. When the post-bubble market turned to discounting, he refused: to sell a ¥750 hamburg steak for ¥380, he said, you have to drop some quality or cut some service. Royal would compete instead through bulk purchasing and the atmosphere of its restaurants, and in 1995 declared itself a hospitality company rather than a restaurant company. The doctrine did not show up in the numbers — earnings fell four years running to 1998.

The group kept widening around the weak core: contract catering with Sumitomo Corporation from 1990, the Sizzler franchise in 1991, the first Richmond hotel in 1995. Airports, expressways, staff canteens, hotels — more places to trade, none of them enough to offset Royal Host. The hardest case was the oldest. In March 2000 Royal bought a loss-making in-flight caterer from All Nippon Airways rather than exit Kansai airport, where a JAL-affiliated operator held most of the volume and only scale could reach break-even. Nikkei Business reported the industry read plainly: nobody could lower Royal’s flag at Kansai out of deference to the founder, for whom in-flight catering was where it all began. Chairman Enomoto admitted to the same magazine that he knew closing it was the right answer. In the year to December 2001 Royal posted ¥105.9 billion of sales and a net loss of $51.8M (¥6bn) — its fiftieth year, spent at the bottom.

In 2001 Royal set up a restructuring headquarters and began writing off its past: more than ¥30 billion of special losses across three years, 129 closures over four, the accounting and personnel departments moved out of Fukuoka after fifty years, impairment accounting applied early. What mattered more than the closures was the rule underneath them — any store with an ordinary loss over the past twelve months went onto the agenda, reasons irrelevant — which removed the room to defer. Sales returned to growth in 2004 at ¥100.5 billion with ¥6.1 billion of ordinary profit, though the ¥4.9 billion of net income leaned on one-off gains from dissolving the pension fund. The bad legacy was cleared; the earning power was not yet rebuilt.

On 1 July 2005 the company renamed itself Royal Holdings and split its operations into six subsidiaries. The case for it was empirical: through the restructuring years the consolidated subsidiaries had run at roughly twice the parent’s margin, so authority was pushed out to regions and functions. Acquisitions ran alongside — a hotel operator in 2004 that became a pillar, the Tenya tempura-bowl chain in 2006 — until the financial crisis stopped everything. In the year to December 2008 ordinary profit collapsed to ¥1.1 billion and a ¥5.5 billion net loss followed; 63 company-operated restaurants closed in 2009. Then in February 2011 the group tore at itself: thirteen shareholders including a former vice-president demanded the board be replaced, alleging that a non-executive senior adviser was running the company as private property. The chairman’s post was vacated, a third-party committee convened, and the founding family — around 12% of the stock — backed management.

The recovery, when it came, was a vindication of the road not taken. Royal Host’s same-store sales had fallen year on year for 48 consecutive months to August 2010, losing customers to chains charging around ¥700. Rather than meet them, Royal in 2011 leaned on the one thing it could not be copied at — most dishes still cooked by cooks in the restaurant — under the banner of “a cook’s food you cannot make at home,” and cut main-menu revisions from four a year to one so that cooks could master what they were making. By the year to December 2012 same-store sales rose for the first time since 1996, and spend per customer reached a record $15 (¥1,170), about 1.5× the discount chains. Average price per dish actually fell; customers simply ordered more. The same logic drove the labour-shortage response — shorter hours from 2011, later openings from 2017, New Year’s Day closures from 2018 — and same-store sales still rose 2% in 2019, with ordinary profit up to ¥4.6 billion.

Every one of Royal’s businesses depended on people moving, and in 2020 they stopped. Consolidated sales fell from ¥136.5 billion to ¥80.3 billion, with a ¥19.8 billion ordinary loss and a net loss of $257.5M (¥28bn); restaurants, contract catering, hotels and foods all lost money at once. Around 90 unprofitable outlets were marked for closure and five Richmond hotels were handed over as isolation facilities. In February 2021 the board resolved on a capital and business alliance with Sojitz — roughly ¥10 billion of common shares plus warrants to the trading house, preferred shares to four banks, reserves reduced to absorb the accumulated deficit, and two of seven board seats given to Sojitz. The following month the in-flight catering subsidiary was diluted out of consolidation. Seventy years on, the founding business left the group accounts.

Recovery came in three steps: a loss a quarter the size of the previous year’s in 2021, the first full-year profit since the pandemic in 2022, and ¥5.2 billion of ordinary profit in 2023 helped by consolidating the expressway restaurant business. By the year to December 2025 sales of ¥165.5 billion and ordinary profit of ¥7.9 billion were both records — though the records owed as much to that consolidation and to returning tourism as to self-repair. Royal also went abroad for the first time in earnest, with Sojitz: a Singapore joint venture in 2021, a Vietnamese company in 2024, Royal Host’s first overseas company-operated restaurants in 2025.

The shape of the profit tells the real story. Of that ¥7.9 billion of ordinary profit in 2025, ¥6.8 billion came from hotels — a business that started with one property in 1995 — against ¥2.3 billion from restaurants on far larger sales. President Abe Masataka, who took over in 2022, named the lesson of the pandemic precisely: the weakness was a portfolio that depended on people moving. The remedy has been to build products that sell when they do not — frozen meals for the home, a fried-chicken format — but the earnings that set the record came from tourism. The dependence on human traffic has not been cured so much as relocated, and with 2,383 employees against 2,706 before the pandemic, the founder’s premise — invest in people and plant ahead of demand — faces its hardest test in a labour-short country.