Ippudo Goes Public: How Did This Japanese Ramen Shop Take Off in New York, Singapore, Hong Kong and Shanghai?

It may be the most globalized ramen brand there is, and it owes its cool image above all to its first stop abroad: New York.

“Waiting behind 400 numbers, three and a half hours in line for a single bowl of noodles.”

By today's standards, the lines Ippudo once drew would easily earn it the title of internet-famous ramen shop. Over the past 31 years it has spread to 12 countries and cities, among them New York, Paris, Singapore, South Korea, Hong Kong, Shanghai, Beijing and Myanmar.

For sheer reach, no ramen brand has yet passed Ippudo.

Today Ippudo's parent company, Chikaranomoto Holdings, listed on the Tokyo Stock Exchange as scheduled. By midday its shares had climbed from 600 yen to 1,080 yen, a jump of as much as 80%. The 30 billion yen it plans to raise (about 1.79 billion yuan) is once again meant for expansion abroad: the goal is to take the overseas store count from 63 today to 200 within three years.

Once you know that Ippudo has opened only 196 stores worldwide in 32 years, you can see how ambitious that plan is.

It doesn't look impossible, though. Figures in Chikaranomoto Holdings' prospectus show that in the fiscal year from April 2015 to March 2016, Ippudo's overseas sales grew 30%, and even in Japan's crowded home market it managed 13% growth.

Two- and three-hour waits at Ippudo's New York store are rare now, but you still usually have to wait. In China, Ippudo was among the first ramen chains to move into high-end shopping malls — Shanghai's iapm Mall and Jing'an Kerry Centre, Beijing's Oriental Plaza on Wangfujing, Wharf's Chengdu IFS. Before it came along, Ajisen Ramen was generally stuck in mid-tier malls.

“I wanted cool young men and women to come eat ramen” — that was the thought Shigemi Kawahara had in mind when he founded Ippudo in October 1985 in the Daimyo neighborhood of Fukuoka.

Japan was then in its bubble years. When the bubble burst in the early 1990s, ramen — an everyman's food — quickly came back into favor, and young women who had been spending on pricey pasta and Western food turned back to it. Even so, they described Kyushu's ramen shops with the “3K”: kusai (smelly), kowai (scary), kitanai (dirty).

That gave the 32-year-old Kawahara his idea: “a clean ramen shop with the feel of a dining bar, where even a woman on her own can eat in peace.” The name Ippudo itself comes from the idea of blowing a new wind through Kyushu's ramen world.

To suit young tastes, Ippudo's shops were designed to look trendy and cool, jazz played inside, and the drinks list and desserts were things you would not normally find at a ramen shop. That difference is what made Ippudo stand out in Japan.

But it only became a national name after the Shin-Yokohama Ramen Museum opened in 1994. Ippudo was one of eight ramen shops chosen to open a stall inside, and from 1995 to 1998 it won three straight titles on TV Tokyo's “TV Champion — Ramen Professional Championship.”

The acclaim set off rapid growth across Japan. Between 1994 and 2001 its stall at the Yokohama ramen museum sold more than 1,000 bowls a day and took in about 240 million yen a year. In 2005 it also won the title of “Ramen King.”

Kawahara never meant to stay inside Japan. He wanted to build Ippudo into “the Starbucks of ramen”: “We should open stores in central cities around the world, to reach an international scale.”

New York was the perfect place to start.

In an interview, Kawahara said he wanted Ippudo to have a clear image, which is why he chose New York for the first store abroad. “Of course, Japanese people do have a bit of a thing for New York.” Takashi Sakamoto, president of Japan's wildly popular “Ore no” restaurant group, has said much the same: “New York is a city that contains every element found in the world. The center of the world is New York.”

Because the target customers were men and women aged 20 to 30 who were open to new values, Ippudo picked Manhattan's East Village, a neighborhood full of young people that stays busy late. Ippudo's leadership picked five experienced regional managers to send over as expatriate staff, and had the uniforms designed by the celebrated Engineered Garments — a measure of how much weight it put on its first store abroad.

Ippudo's New York prices were not low: $15 to $16 for a bowl, and with a side, a drink or a dessert (plus tip) it was easy to spend $30 a head. That is a long way from ramen's image as everyman's food.

The Asahi Shimbun once devoted a whole article to the question of why a ramen or teishoku (set-meal) shop so ordinary in Japan would become popular in New York. When a reporter asked whether the prices were too high, one line in Kawahara's answer was telling: “If it were cheap, New York's media and intellectuals wouldn't recognize it. I wanted to change the assumption that a ramen shop means cheap, everyday food.” Tomonori Takada, head of overseas business at Ootoya, another company in the piece, made the same point: “When New Yorkers eat Japanese food, they want more added value.”

That is also why Ippudo set out to build a ramen dining culture — casual dining — in New York, rather than simply run a ramen shop.

A long line soon formed outside the door. To take the edge off the wait, the New York store built an indoor waiting area where guests could have a drink and go over the menu together. The menu ran well past ramen: a wide range of small dishes and drinks, with a sake and shochu list to rival a specialty bar. The izakaya habit of drinking alongside food like Japanese fried chicken and sake-steamed clams won New Yorkers over too.

Unlike Japanese ramen shops of the past, Ippudo in New York also offered four or five desserts. For a while it even served the mille crêpe cake from Lady M, a brand positioned as a boutique patisserie.

None of this went smoothly at first. “In the beginning we gave them the same flavor of noodles as in Japan, but the feedback was mostly criticism — too oily, too salty, too strong,” Kawahara said.

So it took the slower route: first sell ramen in a form local diners would accept, then work toward “more authentic” ramen. Not every customer could handle chopsticks, so Ippudo laid out spoons in several sizes. Customers disliked the slurping, so Ippudo made the noodles shorter. After a transition period, the noodles it sells now are the same length as in Japan.

Ippudo also carried Japan's limited-edition menu habit to New York, developing more than 400 special dishes since opening in 2008. Some flavors are very “Western” — a ramen in a creamy clam chowder broth, and a fully vegan ramen. Given that Japanese chashu pork and pork-bone broth are all but inseparable from ramen, a vegan bowl was a thoroughly when-in-Rome move (a vegan option is close to mandatory for a restaurant in the US).

Ippudo got the customers it wanted. “Our customers in Japan tend to earn more and be settled,” Kawahara said. “The age range centers on 20 to 30, about 65% men and 35% women. Our customers in New York are the same.” On the review site Yelp, Ippudo holds a high 4.1 stars, still among the best-rated ramen shops in New York.

A year after the Manhattan East Village store opened, Ippudo moved into Singapore, its second stop abroad. From then on its expansion followed one pattern: copy New York.

As a trend center with worldwide pull, New York gave Ippudo a solid base. When new stores opened in Paris, Sydney and London, plenty of Google Maps reviewers compared them with the New York branch.

And when Ippudo, 7-Eleven and Nissin jointly launched a creamy clam chowder instant noodle on December 6, 2016 — under 7-Eleven's own Seven Premium label — the product was said to faithfully reproduce a ramen sold only at the New York store. In their taste-test write-ups, Japanese reviewers mostly called it “ramen that went abroad and came back home,” which says something about how far the New York store's influence reached.

Going into Hong Kong, Kawahara said he “hoped to open up the Hong Kong market through the pull of Ippudo ramen and the Japanese fusion cuisine that had succeeded in New York and Singapore.” The company also said it meant to use the Hong Kong store to “raise interest in ramen, and knowledge of it, in the Chinese market.”

In 2011 Chikaranomoto reached an agreement with the Hong Kong restaurant company Maxim's: Ippudo would supply the brand and product development, Maxim's would run the business across Greater China, marketing and logistics included. That same year Ippudo opened at Silvercord in Tsim Sha Tsui. The first Hong Kong store all but reproduced New York's queuing frenzy; at the time, a Hong Kong food blogger invited to skip the line for a tasting treated it as a high honor.

Thanks to the pull of the brand, Maxim's operating muscle and its existing ties to Hong Kong property developers, Ippudo opened mostly in upscale malls in top-tier and first-tier retail districts on the mainland. Early press releases for the Shanghai store almost always mentioned that this “global chain” had branches in “New York, Hong Kong and Singapore,” and used phrases like “packed to capacity.”

But Ippudo's international push has not been all smooth. In South Korea it met its Waterloo, and it has since pulled out. Chikaranomoto's official explanation is that the licensing agreement with the AK Group ran out and the Korean economy slumped. In fact the licensing fee was high, which left AK Group less to spend on store design and staff training, so the Seoul store barely felt like an Ippudo. Prices were too high and the flavors did not suit local tastes either. In the end the venture failed.

France has yet to be won over. The French have never been keen on foreign food — Burger King pulled out in 1997 after failing to adapt, while McDonald's survived by rolling out one localized product after another (a baguette burger, a Camembert burger). To win local diners, Ippudo says its Paris store uses fairly high-grade ingredients in the broth, but judging by Yelp and Google Maps reviews the Paris store is nowhere near as popular as New York's — one diner even noted that “the restaurant is really empty.”

Ippudo has not opened a new store in China in a long time, either. Nearly all its current stores date from 2014 or earlier; the only two added last year were one in Disneytown and one at Hangzhou's Kerry Centre.

Ippudo has lost much of its drive.

Sales are still growing, but profits are thin: net profit for fiscal 2016 was 125 million yen. In fiscal 2015 it even posted a 230 million yen loss, which Chikaranomoto blamed on speeding up its overseas push and spending more on marketing abroad.

Toyo Keizai's reading of the prospectus was that Ippudo is running into trouble growing. New openings at home have slowed, and demographic change in Japan means the room for ramen in the domestic market will only shrink.

Japan's aging problem keeps getting worse. In 2013 the share of Japanese aged 65 or over passed 25% for the first time. Last year there were more Japanese aged 80 to 84 than aged 0 to 4. It is not only the young population shrinking — the total population is falling too, which means fewer people eating ramen.

Ramen shops will take the hit along with private universities and household spending power. Yuki Kitazumi, a columnist for Nikkei, reckons that of Japan's more than 100,000 ramen shops, only 20% will be left by 2022, and only 3% will survive to 2032.

Uncertainty abroad is weighing on Ippudo too — geopolitics in Europe, a slowing Chinese economy. In China, more Japanese ramen specialists have followed Ippudo in, among them Hakata Ikkousha, Menya Musashi and Nagi Ramen. That gives mall landlords more to choose from, and on distinctiveness these newer brands may feel fresher to diners than a chain like Ippudo.

Ippudo's parent company is already responding. In Japan it is expanding through something like an internal franchise system, encouraging staff to open their own stores; as of December 31, 2016, there were 24 such stores in Japan, run by 15 owners. Chikaranomoto Holdings has also pushed hard into making and selling instant noodles at home, and into catering for corporate clients. Those two businesses brought in 1.96 billion yen, up 16.6% year on year, with a net profit of 4 million yen (the year before there was none).

Still, markets abroad hold more growth than Japan does. And Ippudo went out with the Japanese government behind it. In 2013 the Ministry of Agriculture, Forestry and Fisheries got washoku onto UNESCO's Intangible Cultural Heritage list and began promoting Japanese food culture abroad. That probably helps explain why the Cool Japan Fund, a public-private fund set up to raise Japan's soft power, chose Ippudo to invest in. In 2014 it put another 700 million yen into the company.

Some press analysis held that among Cool Japan's picks, Ippudo was one of the restaurant businesses with a better chance of succeeding; and because its stores sell sake and shochu, they also serve, in their way, as advertising for Japanese drinking culture.

Ramen is also relatively easy to make, and easy to standardize into a chain operation. Other Japanese cuisines — sashimi, for one — depend far more on where and when the ingredients are caught, and finding overseas suppliers that meet Japanese standards at a stable, reasonable price is hard. That is why Japanese food is difficult to spread abroad in general.

For people who shuttle between New York, Singapore, Shanghai, Sydney and other big international cities, Ippudo stands, in a sense, for Japanese ramen you can recognize at a glance — standardized, reliable. But in size and in profit, it is still a long way from Kawahara's ideal, the Starbucks of ramen.

Cover image from Wikimedia, Flickr, complex.com and others.