Sushi and bento chain Wasabi was hit by an increase in the cost of salmon during 2016, as the company chose not to pass the higher price on to customers.
Turnover grew 21.5 per cent to £98m, as the group expanded the number of restaurants 55. These include two Wasabi branches in New York and the Kimchee restaurant on High Holborn.
But underlying earnings fell from £5.4m to £4.7m.
The cost of sales grew from £50.7m to £63m as food costs increased in 2016 due to inflation, especially for key ingredient salmon.
The group said it had paid an extra £2m for salmon this year, and had largely absorbed the additional cost rather than passing it onto the customer.
In accounts filed at company's house, the group said that reducing any quality of the product could negatively impact sales, while its pricing had to compete with the crowded food-to-go market.
Kimchee, another restaurant founded by Wasabi founder Dong Hyun Kim also filed its own accounts for the year, showing that the chain of three London sites made a loss of £751,675. It is currently funded by Wasabi.
But Kim said that the opening of the Pancras square Kimchee To Go location had improved performance in the first part of 2017 and that it will be profitable by the 2018 financial year.