①
Nikkan Gendai

Shinichi Ohkubo (80)President and CEO of Daiohs

Developing Japan's first office coffee business.

My father taught me " business is done by heart, not by the brain”.
"In those days, it was common for rice merchants tovisit regularly, receive request orders, and makedeliveries. In our small rice shop, my fatherdelivered rice while hearing customer’s requests,
and my mother kept the store and milled rice. We
had a lot of customers, so usually, there was a call at
late night after work saying, "I don't have any rice toeat tomorrow morning, so I need it delivered rightaway”. My father was often drinking at night, so I
delivered the rice instead.
His father began working as an apprentice at a rice
shop in Asakusa after graduating from elementary
school and after a few years, he established a branchof same shop and started working independently. He
sent his son to an abacus cram school, saying, "He
The most advanced coffee machine, referred to as "Rolls Royce".
only needs to learn abacus and bookkeeping, which
are necessary for business," but he never mentioned anything
Office coffee is a popular way to relax during theabout his studies.
workday and to help stay awake. Daiohs was the firstcompany in Japan to offer office coffee service, which
Ohkubo also thought that after graduating from junior highis also an important method for improving employee
school, he would follow his father's advice and work as ansatisfaction.
apprentice at a rice shop. As he helped out day in and day out,
he began to feel the satisfaction of the business.
Shinichi Ohkubo, President and CEO of Daiohs, hasbeen developing his business for over 50 years since
He said that "It made me happy to see how happy the customers
he started business in 1969, capturing the needs ofwere when I went out late at night to deliver rice for my father.
the times. What he cherished is his father's words
When I received orders for mochi (rice cakes) for New Year's,
saying "business is done by heart, not by the brain.”they would say, ' Thank you so much for all your help, we willorder mochi for all our relatives ' At that time, rice shops had to
Ohkubo was born in 1941 as the first-born son of aoperate in a controlled economy, but they could take orders forrice shop in Asakusa, Tokyo. From the time he was inmochi regardless of the area. I feel that I was able to receive
elementary school, he was helping the familyorders because I served customers with heart and soul on abusiness as a successor.
daily basis. That was the moment I understood what my father

always said business is done by heart, not by the brain."Ohkubo attended Asakusa Elementary School and then
Kuramae Junior High School (now Asakusa Junior HighSchool), both local public schools. After graduating,Ohkubo attended a local public school, and according to
his father's wishes, he planned to study in Osaka, a cityof merchants. However, in his third year of junior highschool, his plans were put on hold when his mother began
to insist that he should go to high school.
"There are many wholesale stores in Kuramae, and all
students are children of merchants. At a parent-teacher
association, the parents talked about how it was time formerchant families to go to high school. My mother was astudious person who went on to all women’s high school(which was rare in those days), so she wanted her son tocomplete his studies as well. After discussion between myparents, my father agreed that a public commercial highschool would be a good place for me to study, consideringthat I would be taking over the family business, so I
decided to take the entrance exam. "Ohkubo himself was not interested in going on to higher
education, but he took the entrance exam to respond tohis mother's wishes. As a result, he passed the Tokyo
Metropolitan Kyobashi Commercial High School (nowHarumi Sogo High School). In this way, his life as the 2nd
successor of rice shop gradually began to change.
(To be continued)

②
Nikkan Gendai

Shinichi Ohkubo (80)President and CEO of Daiohs

Passed the Faculty of Commerce at Chuo University
using his specialty in bookkeeping （accounting）.
achievements, he served as the president of theliterature clubs and also became the chairmanof the student council.
However, in his third year in high school,suddenly a trouble occurred.
"There was a bribery that vice principal wasreceiving money from the lodge where we
stayed during the summer vacation. As
chairman, I denounced the vice principal.
However, instead of admitting any dishonesty,
the vice principal reprimanded me, saying,‘You have dropped the school's credibility down
to earth.’ ”
While atuniversity, he
was a member ofthe photography
club

Even Ohkubo went to the high school, but he has stillplanned to go to Osaka to serve his apprenticeship after
graduated from high school. However, as he went
through high school, he changed his mind: "I went to acommercial high school, so I had to take bookkeepingclass, but I had been helping out in the family businessfor a long time, so it went smoothly. I always came out on
top in my tests, and I was sometimes praised for pointing
out the teacher's mistakes. It was as if my abilities werebeing recognized, and it gave me confidence.”
Meanwhile, in club activities, he established aphotography club with other photography enthusiasts,
which he was learning about at the time. Because of his

Kyobashi High School of Commerce (highschool where Ohkubo has graduated) was highly trusted by toptier companies such as Mitsubishi Corporation, Mitsui Bussan
Corporation and other trading companies and banks, andnumber of students were employed every year. The vice principal
claimed that Ohkubo's action would cause negative effects when
their students are looking for a job, as "This is a school wherestudents claim their teachers.""I’ve decided that try to join top-level company by myself from thevice principal's attitude. I decided to apply for a job at Mitsukoshi,
the top company in commerce at the time.”

Acquired a job offer from Mitsukoshi, however…
The school had a quota for recommendation from Mitsukoshi, but
he could not enter because of the incident with the viceprincipal. Ohkubo went to Mitsukoshi many times to directly ask
them to let him take the entrance exam. At first, Mitsukoshi
rejected him, but later on, they were impressed Ohkubo's
enthusiasm and they agreed to let him take an interview.
In the end, he received a job offer from a top company.

"An acceptance into Mitsukoshi gave me more
confidence. At that time, it was rare for a student froma high school of commerce to enter a university, and I
had not studied for the entrance exam. However, when
I looked into the subject needed for entrance, I foundout Chuo University's Faculty of Economics had
bookkeeping as one of the subjects for the exam, and if
he could get a perfect score in bookkeeping andmathematics, which I have confidence in, I might beable to pass the exam even if I scored low in the othertwo subjects.
With this in mind, Ohkubo studied hard for the examand he was able to pass.
"I chose Chuo University with my future in mind, but
after passing the exam, I did not want to go forapprentice in Osaka. My father was disappointed,
saying, 'The rice business will end after mygeneration.”
At university, Ohkubo joined the photography cluband was in charge of public relation with otheruniversities. With his leadership skills he had
cultivated since high school, he rose to prominenceand selected as the chairman of the All-Japan
Student Photography Federation, containing around70,000 members.
"There was also a nationwide photographycompetition, and I traveled all over the city formeetings. I was still interested in business, so I
visited the Daiei housewife's store in Osaka and the
Okadaya department store in Mie (both now part of
the AEON Group). I scrapped articles from economic
newspapers and magazines, and especially read thearticles on foreign companies in the magazine"Shougyoukai"(meaning the world of business). And
gradually, I began to wish on working abroad.”(To be continued)

③
Nikkan Gendai

Shinichi Ohkubo (80)President and CEO of Daiohs"Went to the United States since Ohkubo could not give
After graduating from university, Ohkubo began to think
he wanted to work overseas. However, in the early 1960s,
the only companies that had overseas operations inJapan were trading companies.
"This is why I only applied to trading companies when I
was looking for a job, but they didn't hire me because my
English did not surpass their expectation. At that time,
I saw a recruitment at the Yomiuri Advertising Agency
in my university's recruiting department. I thought itwould be interesting to work for it, due to the commerce
will not be possible without marketing in future, so I
decided to apply. “He went abroad on a cargo ship (Ohkubo is on the far left)

After working in the sales department for two years,
then he was transferred to the marketing department,
which he had always wanted to work in.
At that time, the Ministry of International Trade andIndustry (now the Ministry of Economy, Trade andIndustry) was promoting the voluntary chain system tothe retail industry and regularly held seminars withforeign managers. A voluntary chain is a businessstructure in which independent retailers with the same
goal organize themselves to develop chain operations.
Ohkubo attended every seminar and sat in the front row,
listening intently to each and every word of the foreign
managers had to say.
Worked at Seven-Eleven in the United States before firstlanding in Japan.
"'The lecturers were heads of joint purchasingorganizations in the U.S. and retailers’ cooperative inGermany. After the seminar, I asked the MITI
representative to introduce me to the lecturers and soldmyself as someone who wanted to learn about overseas
retailing. Even after they returned to Japan, I kept

sending letters to them and was able to get their consent foroverseas training.”
Once he decided to go abroad, Ohkubo worked hard to learn
English (his weak point) by listening to English conversation
programs on TV and radio, attending English conversation
schools, and even accepting homestays from foreigners visiting toJapan. After receiving introductions to local experts from MITI
(Ministry of Economy, Trade and Industry) officials and theeditor-in-chief of the magazine “Shougyoukai” (world of business),
Ohkubo set off for the United States on the bottom of a cargo shipin 1967.
"While working at a supermarket, I visited the headquarters twodays a week and visited Professor Maginnis of the University ofSouthern California, an authority on business administration,

who was introduced to me by
the editor-in-chief Shougyoukai
magazine. The professor
introduced me to distribution
companies such as Macy's andKmart, as well as stores thatwere the talk of the town, and I
studied them. After working at
a supermarket for six months,
I went to Dallas, Texas, where
I also studied at a SevenEleven store that had not yet
landed in Japan. “After completing nine months of training in the U.S.,
Ohkubo went to Europe to study in the U.K. and at theworld's largest voluntary chain, EDEKA in West
Germany. During this time, he did not stay at any hotels,
but stayed with host families all the time, which gave
him a chance to see the culture of an ordinary Westernfamily. He began to dream of eventually starting abusiness in the United States.
However, after returning to Japan after two years of
training, he decided to succeed in his father's rice shop.
"In fact, my first son was born just before I left for theUnited States. However, I could not take my wife andchildren with me because I was not guaranteed a life
abroad. I asked my parents to take care of my wife andchildren, promising to develop the No.1 rice shop in
Japan when I returned home. My father accepted therequest and even paid for my passage to the UnitedStates. “(To be continued)

④
Nikkan Gendai

To develop family's rice shop to No.1 in Japan,
Ohkubo started to prepare even before he went
to the United States. He told the headquartersof the National Federation of Food Business
Cooperatives(Zenryoren,
currently
the
National
Rice
Sales
Cooperative),
anorganization of nationwide rice wholesaler, that
he wanted to start a new rice shop business after
returning from his training in Europe and theUnited States, and obtained their cooperation.

Shinichi Ohkubo (80)President and CEO of Daiohs

A plan to make the family business No.1 rice shop in Japan

Concept of Delivery Supermarket
increase as much as expected, because the margins onfood and sundries essential for daily life, such as soy
sauce and oil, were low due to price competition among
stores.
"We decided that in order to make more money, we
needed to offer new and attractive products that were
not available anywhere else. As we tried out various
products, we focused on Duskin's Chemical Absorbing
Cloth”

Ohkubo says, "In business, it is important to set a
milestone to promote business to advance smoothly.”
After returning to Japan, he joined his family's rice shopand founded Komeya Ohkubo (Meaning Rice Shop
Ohkubo).

Focus on Duskin's Chemical Cloth
Duskin's Chemical Absorbing Cloth launched in 1964,
was the most advanced products of their time, withspecial adsorbents that removed dirt without the water.
However, since its effectiveness of a new product was notrecognized, it was necessary to persuade consumers topurchase. Duskin, still a small company, signed afranchise agreement with a store that would sell the
product.

"In those days, rice shops had their own sales areas, sothey could not increase their customer base. Many ofthem were not in good locations because they take orders
and deliver them to customers. However, if you change
your way of thinking, the mature order-taking anddelivery function would lead to great chances. Even
though the sales area is fixed, there are no restrictions
on the products, so we thought we could use thevoluntary chain system to increase sales by purchasing
products other than rice in bulk, asking for help, anddelivering them."
At that time, shopping was done by bicycle at best, andmost people went out on foot. There were no large
supermarkets, and people often went to various stores tobuy products. Moreover, there were no plastic bottles yet,and soy sauce and oil were sold in glass bottles.
"It is hard to buy heavy and bulky things to take home,
so it would be nice if we could ask around and havethem delivered. I thought that if we could reduce costsby purchasing in bulk and selling at the same price as in stores,
we would surely get orders. "With the cooperation of Zenryoren, Ohkubo first started asupermarket delivery service in Tokyo with a group of young
businessmen who agreed with him. The idea was a hit and thebusiness was very popular. However, profits did not"There are other places that have the same system, suchas liquor stores and dry-cleaning stores, but it is difficult
to sell new products and it was common knowledge inthose times that rags were made from used cloth. People
would not pay money to buy them. However, we weremaking our customers happy at the delivery
supermarkets, so they listened to us and said, 'We'll goout with you because you've always been so helpful to us,'and they signed the contract."
Just as he did with rice cakes when he was a child,
Ohkubo was convinced that "business is all about theheart. The sales of the rice shop gradually increased.”(To be continued)

⑤
Nikkan Gendai

Shinichi Ohkubo (80)President and CEO of Daiohs

The key to victory was focusing on the office market
N o . 1 i n s a l e s a m o n g D u s k i n Fr a n c h i s e G r o u p
Ohkubo, who had increased his store's sales by becominga Duskin franchisee, saw the potential in Duskin
products. However, as long as the sales area wasdetermined by the rules of the rice shop, there was alimit to how much he could sell to existing customers.
How could he increase the number of customers without
breaking the rules? Ohkubo focused on the commercial
market.

employees, and we held a series of meetings to formulate
ideas for new businesses.

During his training in Europe and the U.S., Ohkubo had
seen that in the local offices always have been placed
regular coffee machines and employees were drinking
freely. In Japan, on the other hand, the office beverage
market was dominated by Japanese tea. If you wanted todrink coffee, it was either instant coffee or delivery froma local coffee shop.

"At that time, Duskin products were mainly for home
use and although Duskin had rental products forbusiness use, such as mops and entrance mats, they did
not put much efforts. However, I thought there would bedemand from small and medium-sized businesses that
do not have cleaning companies like large companies.
The rice shop rules did not apply to business use, so I
tried to do business by myself and finally earned acontract," Ohkubo said.
Ohkubo created a system where he could earn two to
three times the market rate based on the performance ofthe contract, and hired students from top universities as
part-time workers. When they graduated, he persuaded
them to become his employees, and the company
expanded in size and sales. Five years after joining the
Duskin franchise, the company ranked No.1 sales out of
2,000 franchisees.
Ohkubo said, "I am thankful to my employees who cameto a start-up company like ours, even though they could
have found jobs at large companies. It is my duty to givethem a new dream. Now that we have succeeded as afranchisee, let's start a business where we can become
the headquarters of the franchise. That is what I told myOnce a contract is signed, sales are guaranteed for atleast one year. I thought in order to achieve stable
income, the business needs to be continued, not a oneway business that ends after the instant sale. Based onthese conditions, I suggested the Office Coffee Service(OCS) to everyone, which rents out regular coffee
machines to offices.

"However, as McDonald's and other American fast-foodrestaurants entered the Japanese market, the culture ofdrinking regular coffee was spreading, especially among
young people. I was convinced that the time would comewhen people would drink regular coffee in their offices inJapan. I was convinced of this.”From his experience at Duskin,
Ohkubo set three conditions forthe new business: One, the new
business must be anticipated theneeds of the current age. Two, thenew business had to utilize the
BtoB network he had cultivated.
Three, it has to be a business
which could be used continuously.

Ohkubo has researched and foundcompanies that which the OCS businesshad been established in the United States.
Ohkubo sent letters to the world's largest
OCS company and other successful
American companies to get appointment tovisit, and then went back to the UnitedStates to learn the successful methods of
the OCS business and brought it back toJapan.
(To be continued)"Duskin's business products weresold on an annual contract basis.
Daiohs vehicles can often be seen on the streets⑥
Nikkan Gendai

would cost huge amount. In light of the maintenanceissues, Ohkubo decided to make its original product inJapan.
"Instant coffee was 10 yen per cup, and the market price fordelivery from a coffee shop was 200-300 yen at that time.
Therefore, I thought if I could prepare regular coffee at a costof about 30 yen per cup, it would be accepted. If we could sell
hundreds of cups a day like McDonald's, the imported
machine would be profitable, but for a small office, it would
probably be 10 cups a day at most. That is why it wasnecessary to develop the coffee machine in Japan.”

Shinichi Ohkubo (80)President and CEO of Daiohs

OCS because they have a regular relationship with us.
They said they would give it a try if they could drink it
for one-tenth the price of delivery, and they signed thecontract.
In 1978, he established the Daiohs OCS franchise chain.
Office coffee became a hot topic in the mass media, andthe company steadily built up its track record. In 1976,
the year before he started this service, Ohkubo changed
the company name to Daiohs Corporation. In 1983, hechanged the company name to Daiohs Corp. because hewanted to become a company like Daiei Inc. which wasThis is how Japan's first office coffeeservice was born.

Ohkubo was preparing for the first office coffeeservice (OCS) business in Japan. He had planned toimport the coffee machine which would be the key ofthe business from the United States. However, itturned out the machine needed to be modified toJapanese specifications in accordance with theElectrical Appliance and Material Safety Law, which

With Japan's technological capabilities, it was not difficult
to find a company that could manufacture the machine.
However, in addition to the development cost, we had to finda customer who would contract us for a lot of 2000 machines,
Ohkubo recalls that this was solved by the trust given to him.
"The bank gave us a loan to cover the development costs
because we had a good track record. On the other hand,when it came to developing customers, I had originallyplanned to start a franchise, so I approached myacquaintance and they said, 'We would love to start abusiness with you, Mr. Ohkubo. Later on, we started thebusiness with total of four stores, two directly managed andtwo franchised."

gaining momentum in the distribution industry at thattime, and the "オ"（The fifth Japanese character）cameafter "エ" (The fourth Japanese character).

"Changing the Company Name to "Daioh" in Order to Become "Daiei”

That is what Ohkubo said. As a matter of fact, he hadalready made the preparations to enter the US market
at that time.
(To be continued)

In 1977, when Ohkubo was 36 years old, the first OCS
business in Japan was launched. Since he had manycustomers at his office, he was able to acquire contracts formore than one thousand and a few hundred units in one year.
He said, "This is also because of our existing customer
network. The customers also listened to the explanation of

It was in 1988, 20 years after the company's
establishment, that Daiohs entered the US market.
"It was my dream since I went to the U.S. for training.
But we started as a small rice shop in Asakusa andbecame the top Duskin franchisee, and our OCS
business in Japan was on track. When I thought about
what to do as the third pillar of our business on the20th anniversary of our founding, I knew I wanted tochallenge the OCS business in the United States, thehome of OCS.”

⑦
Nikkan Gendai

Shinichi Ohkubo (80)President and CEO of Daiohs

Entered the U.S. market, expanding business through M&A and hefocused on "forging the solid footing.’’
In order to develop the OCS business in the U.S.,
Ohkubo established Daiohs USA at California in 1988.
However, in reality, he had been looking at the OCS
market in the US for 10 years before.
"In 1977, I became a regular international member ofOhkubo did not leave Southern California for a while, since
he would be weeded out if he tried to expand unnecessarily
in a mature market, so he focused on solidifying his footing.

"At that time, the number of competitors in the janitorial
equipment rental business was increasing, and pricedestruction, especially in the commercial market, wasmaking it difficult to continue the business. In thissituation, Duskin entered the OCS business. Franchiseheadquarters and franchisees were now competing witheach other.”the National Office Coffee Service Association (NCSA)
after visiting the OCS business in the United States.
Since then, I traveled to the U.S. three or four times ayear with my employees to learn about the U.S. market,
and I invited NCSA members to Japan every year tosolidify our friendship.”In the midst of this situation, Ohkubo decided to go
independent and started his own brand of clean careservice business. He worked hard to procure new
products, and bowed to customers to gain theirunderstanding.

Ohkubo, who was well aware of the American market,
was convinced that Japanese methods would not be
accepted in the US, where the market was more maturethan in Japan.
"What should we do to succeed in the US? The first thing
I decided to do was to merge and acquire an OCS
company with a proven result.”
Ohkubo chose Southern California because there was acompany there that caught his attention. The owner ofthe company was still young, in his 40s at the time, but
it was an excellent company that had received several
national awards as the best operator from the National
Office Coffee Service Association.
"The company was well known in the industry, so after
the acquisition, I asked the owner to acquire othercompanies in the same industry in Southern California.
So that we could expand our business through a seriesof mergers and acquisitions with good companies at thecore.”

Despite this steady expansion, Daiohs has experienced aperiod of crisis. In 2000, Daiohs became independent
from the Duskin franchise.

"For the first ten years, we focused on California, first inSouthern California and then in Northern California. Thenwe expanded to the West Coast area west of the Rocky
Mountains. We now have a presence in about 25 states, andhave the largest market share on the West Coast and thethird largest in the United States. However, since there are
50 states in the U.S., I believe there is still room for
growth.”Withdrawal from Franchise due to Competition with Duskin"After that, products from water dispensers, air
purifiers, to green services such as houseplants
increased spontaneously. However, all of them are
multi-year contract products that meet the needs ofcustomers and make use of the BtoB network. It's aconsistent continuous recurring service."
Currently, the Japanese market consists of two major
segments: beverage services, mainly OCS, andenvironmental sanitation services, which include clean
care and cleaning services for business establishments.
However, this reminds me of the words of thecompany's founder, "We will turn a small rice shop in
Asakusa into the best rice shop in Japan.
I wonder what has become of these words.
(To be continued)

⑧
Nikkan Gendai

Shinichi Ohkubo (80)President and CEO of Daiohs

Returning back to the Origin, Focusing on "Kozo Sushi“"I think it was around the time
when I became the No. 1 franchiseeof Duskin in Japan that my father
said to me, 'What happened to yourplan to become the No. 1 rice shop
in Japan? At that time, thecompany name was KomeyaOhkubo(meaning
rice shop
Ohkubo), and I stopped suddenly.
And then started thinking of how I
could increase the sales of rice.”

Daiohs is now focusing
most of its efforts on
Southeast Asia, where
theyestablishedjoint
ventures in Singapore andMalaysia.
"Asia is a market that willgrow in the future, but
there
are
no
other
companies in the officecoffeeservice(OCS)
industry in Asia like there
Ohkubo turned his attention toare in the U.S. Since we
Kozo Sushi. They were rapidly
cannot expand throughgaining momentum by franchising
M&A, we decided to form atake-out sushi. This would allow
partnershipwithahim to greatly increase the sales
company that is involved
volume of rice. A fellow rice shop
in BtoB business after
who owned a Kozo Sushi restaurant
repeated trial and error.
introduced me the president of the
We formed a joint venturecompany, and I succeeded inwith a company that deals
becoming the headquarters forin office equipment inTokyo and Chiba, where I developed
Singaporeandwater
more than a hundred Kozo Sushi
dispensers in Malaysia.
Ohkubo explaining
restaurants.
Since we were using their“business is done by heart, not by the brain”
existing network, we were"In 1979, Kozo Sushi ranked first in the nation in theaccepted smoothly and were able to exceed the break-even point
restaurant industry in terms of total annual sales of its
in a short period of time.”
member stores. We greatly increased the volume of rice
we handled, which made my father extremely satisfied.”
Although the business is currently suspended due to the effectsof the Covid-19, Ohkubo says he would like to continue
In 2007, Daiohs was listed on the First Section of the
expanding the business by forming partnerships with local
Tokyo Stock Exchange, and has expanded its business tocompanies. In the past, he used to travel overseas about 200 days
Beijing, Shanghai, Taiwan, Seoul, and Hong Kong.
a year, but now that the Covid-19 has taken its toll, he visits

domestic sites every day. Instead of announcing that heis the president, he wears the Daiohs uniform and visits
200,000 clients in both Japan and abroad saying, "Please
give me a chance to visit and learn.”"Recently, for example, there has been a growing
demand for Franke, a top-quality coffee machine madein Switzerland, and "specialty coffee" supervised byPhilocoffea representative Tetsu Kasuya, a barista who
became a champion in world coffee brewing
competition. As more people work remotely due to the
Covid-19, there seems to be a desire in the world toimprove the environment at work. We have a corporate
philosophy of "anticipating the new needs of the times
and creating new markets. In order to do this, it isimportant for us to visit the actual sites.”