That is too narrow a definition of racism. Merriam Webster defines it as a belief that race is determinant of human traits and capacities and that racial differences produce an inherent superiority of one race over another. Racism is also defined as actions that reflect or foster that belief. It can also be systemic oppression of people based on race.

Based on that, you could maybe argue that language is cultural and not racial, therefore this is cultural discrimination more than racial discrimination, but in a place with an incredibly low ethnic and language diversity for the size of its population that’s just a distinction without a difference.

What this sign indicates is that they only want Japanese reading people, and in Japan that’s going to be almost exclusively native Japanese people, so it’s not a stretch to say that they do not want non-Japanese reading and therefore non-Japanese people. A policy like that is reflective of a belief that non-Japanese people do not belong in that business, and that is racist.