Between Japanica and Kiso: The Capital Market's Appetite for the Restaurant Business Faces a Test
Criminal incidents at Japanica branches have coincided with a peak in investment interest in the Israeli restaurant sector. Experts are debating whether market fears are justified and if the growth potential remains for other chains preparing for IPOs.
The grenades and gunfire at Japanica branches caught the Israeli restaurant market at the peak of an investment wave. After long years in which major entities kept their distance due to fears of volatility and labor shortages, financial entities have recently identified significant upside. Now, the events at Japanica, along with the shift in sentiment on the Tel Aviv Stock Exchange, are leading to questions regarding the valuation of investments in the industry. Was the appetite that investors developed for this hot sector premature?
"The restaurant market did not interest institutional investors at all for years," says a veteran source in the capital market. According to him, the reasons include the instability in the industry. This is reflected in the dizzying rate of restaurant closures; according to the CBS, about 800 restaurants closed in Israel in 2024, twice the number that opened. However, "in recent years, the field has become very legitimate, thanks to multi-branch chains like Kiso, Landora, Nono, and Mimi, which showed that it is possible to present revenues of hundreds of millions of shekels alongside profitability."
"There is no situation where Leumi Partners made a deal without checking"
Bank Leumi, through its investment arm Leumi Partners, recently purchased 20% of the shares of Landora, owner of the Asian restaurant chain Japanica, at a valuation of about 1 billion shekels. But then Japanica found itself in the eye of the storm when criminal incidents occurred at its branches. Despite the fact that the company has no connection to the conflict between criminal organizations, capital market fears began to surface.
"Such an event could harm the sentiment towards other companies in the field, because the market still does not know how to digest them," says a capital market source. However, he adds: "It is very important to distinguish between what happened at Japanica and the field as a whole. This could happen just as well at a supermarket branch or at a contractor's construction site, so now Shufersal or Tidhar will not be public companies?"
In recent weeks, another Asian restaurant chain, Kiso, has been preparing for an IPO. The chain, controlled by entrepreneurs Rotem Tahan and Noam Gabay, filed a prospectus at a valuation of 400 million shekels. Despite the cooling in the IPO market, sources in the company's environment estimate that the offering will go ahead in the near future.
"The biggest growth potential in the country"
Kiso has shown continuous growth in revenues, finishing 2025 with about 307 million shekels, a 15% increase compared to 2024. Net profit grew by 57% to about 25 million shekels (8% of revenues). "We are not talking about individual restaurants here. These are organized chains with proven business models, constant cash flow, and high profit margins," notes an industry source. The accelerated entry of Wolt also contributed to this, allowing chains to increase their customer base without operating complex delivery systems themselves.
The chains warming up on the sidelines
Besides Landora and Kiso, other local chains have received institutional investments. At the end of last year, Leumi Partners and the investment house Mor invested 120 million shekels in the Nono Mimi chain (Italian restaurants NONO and cafes MIMI). The group also purchased the Giraffe chain and the Taqueria chain. Other financial bodies, such as Poalim Equity and the insurance company Harel, purchased 49% of the Yerzin-Sela catering arm in 2021 and the franchise for the American fast food chain Shake Shack.
