Monday, April 24, 2017
Japanese Fast Food Chains Feel a Squeeze
Japan has always had a thriving fast food market and it has continued to grow. The Economist states, "since 2008 the market has grown from $35 billion to $45 billion". However, this market is starting to feel a squeeze in which, foreign competition and higher wages are making it harder to have these vibrant restaurants around.
In 2019 there is an expected value added tax that could hurt these restaurant chains. This tax will not apply to konbinis which are convenience stores that account for one third of the fast food market alone.
To combat this change, restaurants are focusing on the service side of restaurants. Changes in the production of food and doing made to order food in unlikely areas like train stations and outlets is giving restaurants a fighting chance to bounce back and increase the consumption of their products.
With local restaurants changing the way they produce food and changing the service of restaurants, foreign competition is making changes as well. McDonalds-Japan is adding new burgers that are more appealing to Japanese consumers and foreign firms have seen an increase in profits. However, foreign competition is still lagging behind local/domestic restaurants since local restaurants are transparent in where their food comes from and farm to plate style restaurants are keeping freshness a priority.
"Japanese Fast-food Chains Feel a Squeeze." The Economist. The Economist Newspaper, 22 Apr. 2017. Web. 24 Apr. 2017.
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6 comments:
That is pretty significant growth over the past seven years. It's interesting that some of these American brands really make a lot of their profits globally and American is no longer the #1 priority for them. It seems that domestically in the United States consumers are very much interested where their food comes from as well, so these companies also have to adapt here too. I wonder what McDonald's food adaptations for Japanese customers will look like.
It's interesting that Japan is imposing a value added tax. This idea has been thrown around within the US but has been met with harsh opposition. I wonder if this value added tax will become a trend or an anomaly.
I think its a genius idea that they are adding items that are more appealing to Japanese customers which could expand its target market in Japan. It seems that many American brands to increase profits have begun to make products that are more appealing to the people living in that certain area. In India, Mcdonald's started the vegetarian burger as a large part of the population does not eat meat. In my opinion, consumers in the U.S aren't worried about adaptions but more about variety and even quality to an extent.
This is an interesting article and I agree with Khadija that it's important for American brands to revised their menus to the local market. Besides the tax that influences the restaurant industry, there are many other influential factors. For example, in many large cities in China, however, convenience stores are facing a great challenge because of the aggressive development of food delivery service. With the development of food delivery service, people tend to order food at home instead of buying fast food in convenience store.
it will be interesting to see how people respond to this value added tax because in the U.S this idea was talked about but was not liked by many people. it will be interesting to see how this affects businesses.
I am curious to know how much these restaurants will be effected by the value tax. I believe that Japans local fast food restaurants need to do more than just change service and the way they produce food. I would recommend that they add more to their menu, just like their foreign competitors.
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