Japan Restaurant Prices.

 Article Source: https://mainichi.jp/english/articles/20220921/p2g/00m/0bu/029000c

Article:

TOKYO (Kyodo) -- When Yoshihiko Koyama ordered a fried dumplings set meal at a well-known Chinese chain restaurant in Tokyo in September he noticed something different -- the price was a little higher than his previous visit.

Koyama was charged 710 yen ($4.9) instead of the 670 yen he usually paid for the set menu in a Hidakaya restaurant in the capital's Okachimachi district, illustrating how eateries and restaurant chains such as Hiday Hidaka Corp. are passing on soaring material and energy costs to consumers.

"It feels like a small increase but it's happening at other restaurants too," said 74-year-old Koyama who works in the jewelry industry in the area. "The cumulative effect can be huge."

Ideas:

A 40 yen increase might not seem much for some or most people, but its a very good example of even restaurants are passing on their costs to their customers.

The 40 yen increase is probably not going to turn away customers but if it were significantly higher some customers might think twice about going there.

Most likely the restaurant estimated just how much they can pass on to their customers without losing too many customers.

And yes, the cumulative effect can be huge or potentially be huge if you add up the price increases in all the little things everyday that consumers/customers might experience.

Suppose this person takes the train or bus to work, maybe there has been a price increase there. And then maybe he stops at Lawson, a conbini, for some snacks or something. And he goes to lunch and orders the 710 yen set, and then maybe on his way back to the store he stops at Daiso, and buys something and the price has increased on that item.

So now he is ready to go home and his wife asks him to stop by the local small supermarket and he busy a few small things but the price on them as increase too. By the end of the day he has paid more than normal as the price on many things has gone up even if a just a small amount for each.

Article:

Imported raw materials from cooking oil to flour have become more expensive on the back of the war in Ukraine and the yen's depreciation, which saw it hit a fresh 24-year low against the U.S. dollar in early September, adding to the pressure on consumers in the world's third-largest economy who are already struggling with higher prices for groceries and fuel.

Rising labor costs are also adding to the restaurant sector's woes as it has become more difficult to recruit staff since many eateries cut opening hours or closed temporarily amid the coronavirus pandemic.

According to a survey of 122 Japanese restaurant chains by private credit research firm Tokyo Shoko Research, 71 companies had raised prices or announced plans to do so this year as of early September. Of those, five chains had made such announcements twice, it showed.

Ideas:

So far the article doesn't mention the idea of menu items being downsized as a way to cut costs and save money, as it quite common in package items where a bag of chips or something is only have full and or the package itself has been reduce to save money but the price is the same or more.

Restaurants too probably have little tricks to reduce costs that many customers might not even notice, such as even using different raw material products that are a little less expensive.

If some or many restaurants laid off staff or cut hours and they lost a lot of employees maybe those same employees have moved on to other jobs and now restaurants have to recruit new staff and the only way to get new staff is having to pay higher salaries to get them to work there, which of course now becomes another cost restaurants have to deal with.

Most likely more than 5 chains have increased costs on some of their menu items more than once this year, if its just a small amount. The strategy of course is over time and little increase here and a little increase later where customers maybe don't even notice or don't and or they get used to the increase in prices over time.

Article:

Japanese restaurant chain Yayoiken, which operates more than 360 eateries nationwide, has been charging more for set meals and rice bowl dishes since September due to increased prices for imported beef and pork.

It is now offering its popular ginger pork set meal at 670 yen, up 30 yen, while the price of its pork cutlet rice bowl has been raised by 20 yen to 710 yen.

Diner chain Denny's raised the prices of some of its menu items such as pasta and steak by 10 to 80 yen from Sept. 6, saying, "It has become difficult to strike a balance between prices and quality" amid soaring material costs.

Ideas:

Many restaurants have probably looked into the idea of cheaper items but of course tying too keep the same quality of its offerings.

Companies are fully aware that any increase in prices might cause challenges for some or many customers, so again maybe they use the strategy of just increasing prices a little at a time and trying not to lose too many customers and or cause too much concern among its loyal customer base.

Again the cumulative effect could be significant it you add up all of the small increases related to every small thing or product that a consumer might buy each day or each week.

The small increases might not matter to many consumers and or they notice them but try not to worry too much but for some in the low-income groups or even the fixed income groups all of these small increases can seem huge to then if you add them all together.

Article:

The chain said, however, it was not increasing the prices of some of its popular dishes such as hamburger steak and desserts to retain customers.

Conveyor-belt sushi chain Sushiro has said it will raise prices at its restaurants from October to cover higher material, logistics and labor costs.

McDonald's Co. (Japan), curry restaurant operator Ichibanya Co. and Torikizoku Holdings Co., which operates a chain of "izakaya" Japanese-style pubs, have also passed on higher costs to consumers this year.

Ideas:

Restaurants and supermarkets know what are their best sellers and probably don't want to lose customers by increasing prices on those items, or maybe increase prices just enough to where customers don't seem to worry too much. They might not too worried if they don't sell as many but still hoping to cover costs.

Most likely there is a market leader or market leaders among the different groups in the restaurant industry and when the market leader increases it prices than others do the same thing.

Lets say Royal House is the market leader in their group and Denny's sees Royal House has increased its prices on some or many items, so Denny's and others within the family restaurant group will do the same to make sure they too can maintain there profit margins and cover costs.

And the same if McDonald's increases its prices and Mos Burger, Fresh Burger, and Lotteria see it too so they also will increase their prices at or near the same time.

Or the opposite strategy might happen, which is quite common as each place might have loss-leaders, meaning selling some items below cost to get more customers into the places of business, with idea the customers might buy something else besides the loss leader item.

Supermarkets have used this strategy a lot in getting customers into the stores and then with the wide array of products they offer customers will not only buy the loss-leader item but then add more products to their baskets before checking out.

Article:

Wu Haokai, a student from China who is enrolled in an MBA program at J.F. Oberlin University in Japan, said that as he supports himself with a part-time job, he is concerned the recent price increases will add to his financial burden.

"It worries me that those restaurants I often visit are raising prices," the 25-year-old said. "It's hard to cut back on the frequency of eating out as I enjoy doing so with my friends."

With a growing number of restaurants forced to increase prices, many in the sector are anxious about losing customers.

Ideas:

Most likely Japanese consumers and others have become too used to the lower prices in Japan. The challenge doesn't seem to be the 10, 20, 50, 70 yen increase here or there on many items but the real challenge is wages have not kept pace with inflation and some or many items as consumer are seeing the cumulative effect of all of the increases on products.

Another problem might be as energy prices, raw material prices increase companies might begin to cut back on the hours of their part-time staff as a way to reduces costs.

Because of Japanese labor laws maybe they can't lay them off or fire them but they can reduce the hours of their workers especially part-time workers and contract workers.

The challenge is not that restaurants are going to or potentially going to lose some customers but many related to the services sector might begin to see a decrease in customers and even how much they spend as inflation continues on in Japan.

All of this will have, again, a cumulative effect on many sectors and areas in the Japanese economy especially anything related to services, or anything where consumers use their extra or disposable income to spend here or there or even if they have a budget for such items their budgets are not able to buy as much as before.

Article:

While Skylark Holdings Co., the operator of the Gusto restaurant chain, is feeling the negative impact of price increases implemented in July, it said it may raise prices again if it cannot absorb higher costs.

"Customers are becoming increasingly cautious about their budgets," Skylark President Makoto Tani said. "Our customers are decreasing, especially in rural areas."

The company said in August that it plans to close about 100 of its group restaurants due to rising costs.

Ideas:

Households and consumers only have so much extra income or disposable income to spend on things outside of the home and as that extra income becomes less and less as prices increases on many items in the Japanese economy, unfortunately some companies and businesses are going to be challenge with less customers and or customers not spending as much as before.

So its a two-edged sword in the economy. Companies are feeling the challenges of increased material costs and energy cost increases and need to increase prices as they no longer can continue to absorb the costs.

So they increase prices knowing they are going to maybe customers because of it but they have no choice, and then customers, being challenged with less extra income have to make a choice on what to spend on the remaining extra income they now have.

So then, again unfortunately, companies begin to maybe reduce the hours of some of its workers, as a way to reduce costs, as sales continue to decrease over time.

Article:

Shun Tanaka, a senior analyst at SBI Securities Co., said, "A  lot of people became accustomed to buying ready-made food at supermarkets or cooking at home instead of eating out during the coronavirus pandemic."

If restaurants cannot offer added value such as better ingredients, they could lose customers, he said. "Demand has not recovered yet. We might see more restaurant closures in the future."

Ideas:

There are always positives and negatives in an economy at any time as there are many things happening all at once. What is a positive maybe now for supermarkets of course is maybe not a negative for restaurants as consumers buying habits have changed to buying more take-out items at supermarkets and not going to restaurants as much.

Restaurants now have to find ways to lure customers back to their places of business but its going to be a real challenge as they too now are increasing their prices and again consumers only have so much extra income and or most consumes going to a restaurant these days might be seen as not a necessity.

So restaurants are in a very challenging position as they increase prices and must have something that customers want.

Demand might not recover any time soon and maybe might get worse as inflation continues to increase in Japan.

Some might say, if possible, restaurants and other service type companies re-set their expectations for the future because of higher material and energy costs and as the same time less customers because of inflation in the Japanese economy.

Have a nice day and be safe!