July 31, 2007


Beyond the Restaurant Industry: Integrating Food, Agriculture, and the Environment -- Aleph Inc.

Keywords: Newsletter 

JFS Newsletter No.59 (July 2007)
Toward a Sustainable Japan--Corporations at Work Article Series No.60 Japanese)

Aleph Inc. started in 1968 as a small restaurant serving hamburgers and salads in Morioka, Iwate Prefecture in the northern part of Japan's main island. The company has been expanding ever since. It opened the "Bikkuri Donkey" chain of Hokkaido-based hamburger restaurants and now manages nearly 300 restaurants nationwide and has more than 720 employees. It enjoyed sales of 38.4 billion yen (U.S. $ 312.1 million) in the fiscal year that ended in March 2007.

"In Japanese, the Kanji character representing 'food' is a combination of two other characters that by themselves mean 'human' and 'good.' We can interpret this as 'making people better'," says Aleph president Akio Shoji. He feels that the food industry should be all about improving our quality of life. In Japan, however, with only 1.4 percent of the world's arable land, accounts for a 47 percent of the world's agrichemical consumption, calculated in terms of money spent. Shoji believes that companies are members of society and that companies exist is to serve the needs of society and help solve its problems, and as such, his company has been committed as a restaurant business to ensuring food safety and security, starting with the raw ingredients.

When he was starting out, he found that organic farms were a rare breed in Japan, and that policy measures to ensure safety, and technologies to protect the environment, were still insufficient. In order to learn how to put his business concepts into practice, he started an experimental farm and livestock operation to serve his company in Eniwa, near Chitose Airport, which serves Sapporo, capital of Hokkaido prefecture.

For Shoji, providing safe and high-quality food is the minimum responsibility that everyone engaged in the food industry should fulfill. To make good on his commitment, he established the farm to deepen the company's understanding of how meat is produced, and to build up its relevant knowledge and experience by promoting the creation of healthy soil and pastures while selecting and improving breeds. "Agricultural products in Japan are drenched in agrichemicals. We needed to seek a way to secure safe food on our own initiative, so we could confidently offer menus that are good for the health," says Shoji of his motivation. He also explained his management philosophy - "Decisions based on right or wrong, rather than on gain or loss," and "Human logic leading the bottom-line logic."

For example, the natural New Zealand beef Aleph uses for its hamburger steak and other dishes is raised in accordance with the company's own specifications, established through discussions with local producers. Calves certified in the first nine months of life are raised on feed without antibiotics. The company has also formed a research group to help promote environment-friendly controlled grazing in Hokkaido.

Aleph uses original low-pesticide rice grown by Aleph's contract farmers - a mild herbicide is applied only once during the whole process from planting to harvest, decreasing pesticide use by as much as 95 percent compared to conventional agriculture. The company succeeded in providing this low-pesticide rice to all restaurant branches by April 2006, ten years after the project started. Now the company is working to reduce the amount of pesticides used in growing fruits and vegetables. It also produces original beer and dairy products.

Aleph has established a vertical integration system that covers all activities, from researching new cooking ingredients to their production, processing, distribution, service and consumption. The company's aim is to take responsibility for the quality of their products by encompassing an extensive "total food industry" vision that encompasses both agriculture and the restaurant chain industry.

Aleph also focuses on environmental protection. It started a project aiming for a 100 percent recycling rate at its restaurants and factories in 1997. Since then, it has installed garbage disposal systems at 99 Bikkuri Donkey restaurants and composting systems at 20 restaurant branches. These systems produce composting material using a grinding/drying machine that takes advantage of the power of beneficial microbe clusters. The company says that the garbage recycling rate at directly-owned restaurants is about 90 percent.

This system provides more efficient cooling and heating than normal air conditioning by using geothermal energy that maintains a constant temperature of 10 to 15 degrees Celsius throughout the year. Adapted for use in six restaurants and one factory so far, the system can reduce energy consumption to less than half the amount consumed by an ordinary air conditioning system. The result is a decrease of 25 to 30 percent in the total energy consumed by these facilities. Aleph has established a separate company, Orient Geo Service, to share its original geothermal technology and experience with society.

It also operates a biogas plant in an effort to use small-scale local energy production units. The plant recovers methane gas from livestock manure and beer residues produced by the company's farms and beer plants. Both electric power and heat generated from the biogas plant are used.

The company's Hokkaido Plant uses a pellet boiler that employs biogas and locally-produced wood pellets. The company is also promoting a comprehensive local biomass energy project, which involves local people in planting and harvesting rapeseed to produce oil. Bio-diesel is produced with used rapeseed (canola) cooking oil or other oils discarded by their restaurants and used by company delivery vehicles. As a result of these efforts, the plant generates energy equal to 1,000 liters of kerosene, reducing the equivalent fossil fuel use and carbon dioxide emissions.

The company's goal for 2020 is to cut in half its CO2 emissions (per unit of revenue, in yen) related to energy consumption, compared to levels in the year 2000. Many companies hesitate to take environmental measures because they fear potential costs, but Aleph says such measures can reduce running costs without increasing initial investment costs. For example, although making insulation boards thicker costs more, it ends up in saving money because it lowers the burden on the air conditioning system, reducing wear and tear on the equipment as well as lowering energy costs. Retrofitting rain tanks costs in the vicinity of 1 million yen (about U.S. $ 8,130), but if they are incorporated into the initially planned system, they only cost about 300,000 yen (about U.S. $2,440), a level of cost that can be recovered by reduced water bills.

In June 2006, Aleph opened a garden theme park named "Ecorin Village" in Eniwa. Its themes are agriculture, the environment and culture, and the park has gardening, farming, and ecosystem zones as well as a restaurant zone. The park also includes winter-flooded rice-paddies, which function as an agricultural wetland with a diverse ecosystem. Aleph's new experimental fields aim to revitalize the local farm community and teach children about the connections between life and food.

As Aleph developed its business, its focus shifted away from being merely another restaurant chain towards including agriculture and the environment as core concerns. "We are transforming ourselves from a traditional food chain to an unprecedented one. Our efforts will be more interesting," the company says. We are looking forward to watching the future efforts of the company, and possible social spillover effects.

(Written by Junko Edahiro)