Japan’s well-known small-business crisis has been exacerbated by an alarming increase in bankruptcies. This crisis is unfolding as the country is moving from decades of deflation to inflation. Local taverns, restaurants and other small businesses have been devastated by this change. Restaurants deeply embedded in their communities that act as neighborhood staples have been hit hardest. As Japan’s tough economic reality shifts by the day, business owners and consumers across the country are growing increasingly uneasy.
And those challenges could not be more pronounced than for small businesses, whose deep pandemic-era scars remain fresh. From our partners, Lisa Kim, Sayumi Take, and Jada Nagumo wrote an excellent, detailed report. Most alarmingly, it exposes how surging costs are pushing countless small businesses to the edge of failure. The piece was released on December 22, 2025, at 06:04 JST.
One particularly poignant example included in the write-up is a south Asian curry house recently opened in Takasaki, Gunma. This unique place is located only an hour’s bullet train ride northwest of Tokyo. Locals and visitors alike have long made it a favorite destination. Like so many other small businesses, it came under threat. With increasing operational costs and changing consumer trends, the landscape has become increasingly difficult to navigate.
Photographer Suzu Takahashi chronicled this beloved curry house with photos that illustrate the full article. The shot above captures the bustle of the restaurant’s bright interior, a colorful reflection of the restaurant’s welcoming spirit and its homebase of New Orleans East. Behind this alluring exterior lies a bitter truth for entrepreneurs. They face cost challenges like never before in an era deeply rooted in inflation.
As Japan’s economy continues to move beyond its decades-long deflationary state, small businesses are still feeling their way through the unknown. Inflation in key ingredients and increased operational costs have put owners in a serious pinch. They generally heavily larded stable prices into their financial planning as a baseline.
The article emphasizes the larger consequences of this economic pivot for Japan. Small businesses – recently defined as those with 1-49 employees – account for half of the country’s employment and economic activity. If they struggle to adjust, it can have reverberations throughout the entire economy. As these mom and pop shops close their doors for good, communities will lose far more than their favorite local dining options. They’ll lose important sources of jobs and regional character.