Shares in fast-food restaurant operator Zensho Holdings have jumped on its plans to raise prices at beef-bowl meal restaurant chain Sukiya. A target price increase by Morgan Stanley MUFG Securities also helped boost the stock.
Zensho surged as much as 7.7% in Tokyo, to its highest since November 2023. Prices will increase for about 60% of Sukiya menu items starting Nov. 22 due to a recent rise in the price of Japanese rice, the Tokyo-based company said in a statement Monday. The hike comes seven months after it raised prices on higher materials, labor and energy costs.
"With the restaurant industry, the number of customers doesn’t drop much even when prices are raised,” said Seiichiro Samejima, an analyst at Ichiyoshi Research Institute. "Profits will likely increase while cost of materials is absorbed, leading to expectations its gross profit will improve.”
Zensho joins other companies, including packaged food suppliers Morinaga & Co. and NH Foods, in raising their prices this year on higher costs. The pace of gains in Japan’s corporate goods prices accelerated to the fastest clip in 14 months, led by agricultural products such as rice, according to a report by the Bank of Japan last week.
Zensho shares also gained after Morgan Stanley MUFG boosted its earnings forecast, and its price target to ¥9,700 from ¥8,700. Earnings at U.S.-focused takeout sushi operations are growing, while its Hamazushi conveyor-belt sushi chain is expanding with a focus on China, analyst Katsumi Arai wrote in a note.
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