April 28, 2022#5. For the Richness of the Sea and the Revitalization of Regional Areas and the Restaurant Industry

Mr. Keiichi Sohtome, Representative Director of Gate Inc.

Note: This article was originally published on the website of the INCF (the predecessor of ICF) in June 2020.

We interviewed Keiichi Sohtome, the representative director of Gate Inc. After running izakaya bars (Japanese-style restaurant bars), he entered the fishing industry to preserve and utilize the richness of the sea and is aiming for new innovations even amid the COVID-19 pandemic.

―Could you tell us what motivated you to enter the fishing industry?

Sohtome: While running izakaya bars, I felt that there were various strange things about the practice, such as the pervasive complaints about the signboards and some unorthodox instructions from our health center. In addition, All the advice I received from those around me was that I should buy wholesalers outright or expand my stores to get the upper hand in purchasing negotiations.

In the first place, wholesalers usually buy a large volume of products and sell them on a large scale, so people often do not even know where the products are from. In addition, the Great East Japan Earthquake triggered a sharp rise in purchase prices and a decline in the quality of foodstuffs. These made me feel strongly that I had to review the structure from the ground up. I took this as an opportunity to visit fishery sites, where I was shocked to see marginal villages where the population was rapidly declining and aging and producers who were suffering because their fish could not be priced properly, despite the abundance of nature. So, I decided to create a new business model using izakaya bars as outlets.

Mr. Keiichi Sohtome, Representative Director of Gate Inc.

―What business model have you developed?

Sohtome: We are engaged in set-net fisheries in the Sugari area in Owase City and in Kumano City in Mie Prefecture. In Kumano, a team of three women catches and processes marine products. While some caught fish is often discarded as “unused fish” in normal fisheries, we use and cook all the fish we catch and serve it at izakaya bars in Tokyo. We also transport all of the fish ourselves. These efforts have vertically integrated our business consistently, which differentiates us from conventional businesses that simply catch and wholesale fish to the market.

Recently, we have started underwater monitoring in cooperation with KDDI Research, Inc. Before  now, fisheries have often depended on the intuition of fishers, and the world under the sea has been unknown. Starting in July, however, we plan to use the monitoring to forecast yields in fisheries. This will also lead to more efficient management of marine resources.

Company name:Gate Inc.
Number of employees:40
Main businesses:Izakaya business, fishery business (since 2017), etc.

―What goals do you have and how successful have you been so far?

Sohtome: Ideally, I hope that the sea will get richer day by day while we continue to provide care and attention to the fish population with a visualized balance sheet of the sea (stock status of marine resources). I would also be happy if consumers visit fishing towns. It is often said that we can enjoy the freshest fish in Tsukiji (Toyosu), but fish is freshest when still in the sea. Fishing towns are the best places to enjoy the freshest fish. Speaking of fishing villages, I think it is necessary to revitalize them over a long period of time with the help of other types of companies. Education is also needed to increase the local population’s growth.

Although there are a lot of issues, trying to solve a major problem from the beginning does not work. For example, in the case of underwater monitoring, it is necessary to take time to involve relevant parties in such efforts while promoting value as a place for demonstration experiments.

Demonstration experiment of underwater monitoring

―How are you responding to changes in the situation during the COVID-19 pandemic?

Sohtome: Since we were trying to break away from the existing structure of the restaurant industry, we had been downsizing our bars for five years. Restaurants and bars are voluntarily scaling back their operations due to COVID-19, which makes me feel that the world I anticipated to see in four to eight years has come true earlier.

Demand for izakaya bars for corporate parties has all but disappeared due to the pandemic. The daytime population of Tokyo has decreased drastically, maybe for the first time since the air raids during the Pacific War. If there is a sudden market shift, then we must move with it. The izakaya bars we have used as outlets have had their reputations damaged, so I am thinking about rebuilding our business in the tertiary industry again based on the primary industry. I assume that our new market will be in rural areas instead of Tokyo and in residential areas instead of suburban office districts, so I think that we will need to put extra effort in visiting customers, rather than just waiting for them to come to us. We are also planning an entertainment device that will allow customers to catch fish remotely via smartphone.

Although we use government subsidies, the damage is much greater than we can handle. I guess that the bigger a company is, the greater the damage was. If we are prioritizing survival, it is important to stop the bleeding first and to then manage our remaining funds. So, we have now started making model changes on a trial basis.

Conversation with Mr. Keiichi Sohtome

―Do you have any difficulties such as conflict with conventional values?

Sohtome: We consider the sea our stakeholder. It means that human beings owe their lives to the sea. Even though economy is important, we need to judge our decisions based off the idea that catching too many fish is not good. I think it would be good if awareness developed to the extent that, for example, fisheries cooperatives or the like conducted IR activities as if they reported their balance sheets to the sea. However, such an idea sometimes conflict with conventional ones.

―What are your expectations and aspirations for the future?

Sohtome: This pandemic has been affecting us in many ways, but I think it will give us a chance to rethink and for business to make changes. I would like to change the restaurant industry to one with dreams. We might have stopped here if we had simply been running izakaya bars. We are able to hang in there because we feel the social significance of our efforts that have extended to fisheries.

of our business, does not look promising. To this end, we will actively take on the challenge of cooperating with other companies. Since the COVID-19 pandemic is not a temporary disaster, we should develop a business continuity plan over a 10-year period. In order to do so, it is important to determine what is required inherently and what else remains essential.

Although the state of emergency has been lifted, the COVID-19 pandemic has caused serious damage to the restaurant industry. Mr. Sohtome has been restructuring his business without adhering to the conventional structure. He is looking for innovation in his next market, rather than simply going back to the past. We have great expectations for his challenge.

This article is part of a series of articles introducing venture companies working together as INCF members to resolve societal issues.

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