Skylark: Is 'Having Everything' a Losing Strategy? The Survival Strategy of Pivoting to 'Specialized Formats' Even at the Cost of Gusto

[Series] Redefining True Value: 'Next-Generation Winning Strategies' to Break Through Commoditization [Part 2]

■ Introduction

If you walk through the city, you should notice changes in the landscape. The red 'Gusto' signs that were once everywhere are being replaced by the calm, wood-grained 'Musashino Mori Coffee,' the tropical-feeling 'La Ohana,' or 'Syabu-Yo,' which draws lines every day.
What Skylark Holdings, Japan's largest family restaurant chain, is currently undertaking is not merely a store renovation. It is a farewell to the business model of 'comprehensive strength' that symbolized the Showa and Heisei eras, and a major shift toward 'specialization' that pierces deep into specific needs.

Why are they carrying out a strategy that seems painful at first glance—cutting back on 'Gusto,' which boasts overwhelming name recognition? Hidden within this is a cold and rational 'redefinition of true value' to survive the rough waves of commoditization.

■ The Proper Use of 'Cash Cows' as Taught by PPM Principles

To decipher this strategy, we must first return to the classic management framework of PPM (Product Portfolio Management).
Many business people misunderstand PPM as a 'tool to classify current positioning.' However, the essence of PPM lies in the 'recirculation of cash.' At Skylark, 'Gusto' has long been a 'cash cow' that boasts overwhelming market share and earns large amounts of cash.

However, with the maturation of the market, the growth rate of the comprehensive family restaurant format itself is slowing down. The trap many companies fall into here is continuing to reinvest the earned cash into maintaining or making minor adjustments to the 'cash cow' itself. If they do that, the brand will collapse along with the decline of the market.

Skylark's wisdom lies in the fact that while 'Gusto' still had the capacity to earn, they poured that cash one after another into 'problem children' (new specialized formats).
Specialized formats like 'Syabu-Yo' and 'Musashino Mori Coffee' were 'problem children' that incurred high costs when first introduced. However, thanks to the capital poured in from Gusto and the accumulated know-how of their central kitchens, these were quickly nurtured into 'stars' capable of aiming for high growth and high market share.

The 'replacement of Gusto signs' we are seeing now is a declaration of strategic victory, signaling that the nurtured 'stars' have finally entered a phase of full-scale profit growth.

■ People Will Pay 1,500 Yen for the Spatial Value of 'Comfort'

So, why was it necessary to go to such lengths to nurture specialized formats? It is because the value consumers seek in restaurants has completely shifted from 'function' (filling the stomach) to 'emotion' (experience and space).

For example, let's analyze 'Musashino Mori Coffee.' The set of fluffy pancakes and high-quality coffee offered here is in the 1,500 to nearly 2,000 yen price range. Considering that Gusto's average customer spend is around 1,000 yen, there is nearly a twofold difference.

Even so, the reason customers keep coming is not just because 'the pancakes are delicious.' What is there is 'spatial value (emotional value)': comfortable sofas, interior design that feels the warmth of wood, and a sense of comfort that makes you want to stay for hours.

What Gusto has pursued is 'efficiency.' The introduction of serving robots and self-service via digital menus contributed to maximizing functional value, but on the other hand, it stripped away the emotional aspect of the 'joy of staying.'
In contrast, specialized formats like Musashino Mori Coffee invest thoroughly in spatial design tailored to the brand's personality. Customers are not paying for the 'thing' called a pancake; they are paying for 'rich time' separated from the hustle and bustle of daily life. This redefinition of value is one of the few 'opportunities for victory' in the food service industry, which is commoditized and mired in price competition.

■ The Essence of 'Selection and Concentration' Lies in the Courage to Discard

What I want to emphasize most in this article is the true definition of 'selection and concentration' demonstrated by Skylark.

In the modern business scene, the term 'selection and concentration' is used too easily. Looking at the reality, most companies are enthusiastic about 'what to choose,' but cannot decide 'what to discard.' Even if they know it is unprofitable, they continue to maintain brands out of consideration for past glory or existing customers, and as a result, resources are dispersed and all brands weaken.

However, Skylark was different. They carried out the most difficult 'subtraction' of 'discarding (shrinking) Gusto.'
The network of Gusto stores spread across the country was a powerful weapon for them, but at the same time, it was a weight that hindered change. They saw through the fact that their core competence (true strength) did not lie in the 'Gusto sign,' but in the 'advanced logistics network and central kitchen' behind it.

As long as the foundation is solid, the 'signboard' on top can be replaced to match the times. This cold, calculated decisiveness became the driving force behind closing Gusto locations one after another and transforming them into specialized stores.

'Choice' is not simply about selecting something. It is about 'discarding' what you did not choose. By courageously abandoning the success story of the general family restaurant, Skylark has seized hegemony in a new market: specialized business formats.

■ Abstraction: Has your career become a 'Gusto'?

This strategy offers terrifyingly relevant implications for individual career strategies as well.
If you are valued by your boss as a 'handyman who can do anything,' it might be a sign of the risk of 'Gusto-ization.' While convenient, you are easily caught in price competition (wage suppression) and risk having your market share taken by 'specialty stores (specialists)' with more focused skills.

Just as Skylark used Gusto's cash flow to nurture 'Musashi no Mori Coffee,' we must use the resources we gain in our current roles to cultivate a star business format within ourselves: 'specialized expertise.'

・Of the skills you currently possess, which ones should you 'discard'?
・Into which 'expertise' should you invest all your cash (time and effort)?

Redefining true value is a painful process that involves denying your past self and reconstructing value in a new context. However, that is the only path to breaking through the dead end known as commoditization.

■ In Conclusion: A Question to the Readers

What Skylark sought, even at the cost of the peace of mind that comes with 'having everything,' was customer 'enthusiasm'.
In your business, or in your own skill set, have you achieved results by 'daring to discard' something? Or, what are the things you 'want to discard but cannot' and are stuck with?
I would love to hear your thoughts in the comments regarding the 'courage to discard' hidden behind the phrase 'selection and concentration'.

I will also touch upon PPM and 'selection and concentration' during the training sessions.

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【Reference Information】

・PR TIMES: Skylark Holdings Co., Ltd. Press Release (2023/10/17)
'Marronnier Gate Ginza 2 Power-Up Opening: Strengthening the opening of specialized formats such as "Musashi no Mori Coffee"'
https://prtimes.jp/main/html/rd/p/000000418.000017486.html

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