Marukai Corp., a Japanese-owned company with 12 U.S. stores, is testing a pair of new formats as it prepares to launch a major expansion program in California.
The company, which once operated as a membership chain, has abandoned that approach at all but two locations — at the same time it has changed the name on two stores to Tokyo Central and two smaller stores to the name Tokyo Central and Main.
Marukai operates nine stores in California, all but one of which are in Southern California, plus three in Hawaii. The stores were acquired in 2013 by Tokyo-based Don Quijote, which operates nearly 300 supermarkets and nonfood stores in Japan.
The new owners kept the Daiei name on the Hawaii stores and the Marukai name on the stores in California.
This is one of Marukai's new formats, Tokyo Center.
This is one of Marukai's new formats, Tokyo Center.
Hideki Okada, the company’s SVP, told SN the parent company wants to grow its nine-unit base in California to approximately 50 stores by 2020, including at least 10 additional stores in 2016.
The California stores range in size from 10,000 to 35,000 square feet, with one store of 60,000 square feet. The larger units have full kitchens for prepared fresh foods made on site, including sushi, yakitori (barbecue chicken), traditional Japanese snacks, Japanese ribs, tempura and okonomiyaki (unsweetened pan cake), while the smaller ones do not have kitchens.
According to the company’s website, 45% of sales at the larger stores come from groceries, 15% from prepared foods and 40% from nonfoods. Okada declined to discuss U.S. volume.
Stores in West Covina and Costa Mesa were converted earlier this year to the Tokyo Central banner — a process that involved the company taking over and operating departments that were formerly leased to outside vendors, Okada said. 
The company has also converted a 10-000-square-foot San Diego store and a 20,000-square-foot Cupertino store in Northern California to the Tokyo Central and Main banner, he noted. Those stores will focus on nonfoods, and while they will carry some processed foods, they will have few perishables, he said. 
“We’ll probably keep the remaining stores under the Marukai banner to see how the new formats do before deciding how to move forward,” Okada explained – a decision he said the company expects to make next year.
As it seeks to grow, Marukai is scouting potential sites in Northern California “because there is a large Asian population there, especially in the San Francisco Bay Area, and we see a huge need for Japanese supermarkets,” Okada explained.
He said 80% of the stores’ current customer base is Asian — encompassing Japanese, Chinese, Koreans and other ethnicities — “but as we grow, we realize we have to cater to a broader range of customers, and we think we can accomplish that by altering the product mix somewhat.
“But we are a Japanese company, and while we want to adapt our stores to appeal more to American tastes, we want to maintain a Japanese edge.”

Of the products carried, about 10% are imported from Japan and the rest come from U.S. suppliers, including Japanese grocery vendors based in the U.S. Of the products from U.S. suppliers, about 70% originate in Japan and 30% from the U.S., Okada said.
Marukai operates membership stores at two California locations where customers pay a $10 annual fee. Customers at the Tokyo Central stores are asked to pay a one-time fee of $1 to get special prices on certain items, he noted.
As the company expands throughout California — by leasing properties or acquiring new store sites — it hopes to determine what size will work best, he added.
“RKF [the New York-based real-estate company it hired to help it expand] is dealing with various shopping center operators, and they’ve found a number of traditional supermarket locations that could be converted,” he said.