Restructuring: 129 closures and over ¥30bn of special losses (2001)

On folding up a negative legacy

To read these four years as nothing more than a shrink-to-fit exercise of closing loss-making restaurants is to see only one side of the facts. Heavier than the 129 closures was the exit rule Royal fixed and then kept operating: any store with an ordinary loss over the past twelve months went onto the agenda, whatever the explanation. The scope to defer a decision on the grounds of individual circumstances was destroyed from the system side. That vice-president Imai could state flatly that the company had been working scrap-first is likely because the rule came first.

That said, the 2004 recovery cannot be read as the achievement of the reform alone. Net income of ¥4.896 billion was supported by a ¥3.387 billion extraordinary gain on the dissolution of the employees’ pension fund. Sales of ¥100.5 billion did not reach the ¥105.9 billion of 2001, and growth on a parent basis stayed at 90–95% of the prior year. The processing of the negative legacy was finished, but the recovery of earning power itself remained as the task from there on. Finishing a clean-up and building a shape that grows can be seen as two different jobs.