Komeda HD (3543) is a restaurant chain where retaining repeat customers is difficult; could it become the "eye of the storm"?
Komeda HD (3543) is a company that franchises “Komeda Coffee Shop.” Originating in Nagoya, it primarily operates stores on roadsides and is characterized by the ability to relax at your own pace without worrying about time.You can relax slowly without worrying about time.
A business model specializing in long stays
There are stores near my home (Chiba) and my parents’ home (Kagoshima), so I often use them for meals and work.Perfect for staying long.
Looking around the store, what you see most often isgroups of housewives. They also chat for a long time without worrying about time. Perhaps to make it worth the price, coffee and meals are set at somewhat higher prices.
From using multiple stores, I noticethe interiors are almost all the same. It’s not that they feel cheap; they are built like log houses with red sofas lined up. The sofas are also very comfortable.
From this,the direction of being a cafe where you can stay long is consistent. It’s a different strategy from Starbucks and Doutor. Rather, I think the main competitors are family restaurants.
Steady management expanding beyond the Chukyo region
It was originally a non-listed company, but after founder’s departure and passing into the hands of funds, it was listed on the First Section of the Tokyo Stock Exchange in 2016. Therefore,the president is a “professional manager” who has worked at Sega, Nike, and McDonald’s Japan.
Speaking of professional managers, some engage in flashy activities like M&A, but when looking at Komeda’s current management,it is very prudent. It gives the impression of doing what should be done in one direction.
Performance is solid, with rising revenue and profit since going public.
This is mainly due to the expansion of store numbers. As a franchise chain,increasing the number of stores is the key to growth.
Being Nagoya-originated, the number of stores in the Chukyo region is the largest. In June, they opened in Aomori Prefecture, achieving a store presence in all prefectures.In the future, they are expected to strengthen store openings outside the Chukyo area.
Could it become a “typhoon eye” in the difficult-to-retain-repeat-restaurants?
Restaurant chains grow while expanding, butcontinuing to grow in the long term is not easy. In many cases, growth stalls somewhere and then declines thereafter.
For example, Pepper Food Service’s “Ikinari Steak” rapidly expanded stores, butit fell out of favor too quickly.
The difficulty, when you think about it, is ultimatelyto maintain the quality of each store. Employee training is essential, and as stores age and deteriorate, customers gradually drift away.
Moreover, even at first customers come because of novelty, but once the buzz fades, they gradually leave. Not just for chains,retaining repeat customers is essential for long-term management.
In that regard, Komeda is locally connected, andif they capture the demand of housewives rooted in the local area, they could operate solidly. The store openings don’t seem overly rapid, giving an impression of stable management.
On the other hand,steady management does not lead to rapid growth. Growth rate remains in the single digits annually. There is a lot of goodwill and debt, suggesting limits to expansion speed.
Recently, stock prices have been declining, butPER is 17x, not particularly cheap. I think it’s a relatively stable company for a restaurant, so I would consider it when prices drop.
