Yen for Living

Before the fall

Good news for beef lovers. On April 10 gyudon (beef bowl) chain Yoshinoya announced it would cut the price of its standard namimori serving by ¥100 to ¥280 starting April 18. Sukiya, the No. 1 gyudon chain, was selling its namimori version for ¥250 until April 12, and No. 3 in the race, Matsuya, was doing the same thing until April 15.

At the press conference where Yoshinoya made the announcement, company president Shuji Abe told reporters that Yoshinoya felt it could not reach its desired sales target “with prices as they are,” and since “price is the biggest factor affecting sales,” they decided to cut it by more than a fourth. Though Yoshinoya’s two rivals are ending their own price-cut campaigns this week, they carry them out on a fairly regular basis, so it’s likely they will react in kind to the announcement.

In reporting the announcement, the Asahi Shimbun reporter remarked that, although consumers will certainly appreciate the lower price, how can Yoshinoya hope to make a profit after such a drastic cut? Moreover, what does the move say about the government’s strategy of boosting inflation? Yoshinoya’s Abe stressed that the business environment has become “even more difficult” owing to the decrease in the yen’s value, which makes importing beef more expensive. But he also said that the company will still be able to turn a profit because it plans to import even more beef and thus can expect cheaper wholesale prices now that the regulations with regard to beef imports have changed.

In 2004, imports were restricted due to the BSE scare, but those restrictions have now been lifted, and beef from older animals can be sold in Japan. In addition, Yoshinoya plans to cut its retail personnel by “making the work routine in restaurants more efficient.” So even if the prices for the main product drop by 25 percent, according to company projections based on past experience the number of customers should increase by 30 percent, and if that happens sales will increase 15 to 20 percent.

A food industry analyst pointed out something else to the Asahi: Fast food in general has become cheaper in the past 10 years or so, and consumers have just become accustomed to the fact. There seems to be an upper limit to what they will pay, and chain businesses know this. What that means is that these businesses will fall into a permanent state of price competition, even as the cost of ingredients goes up. That means personnel costs will not rise; if anything they’ll have to be cut. And restaurants that don’t belong to chains will be squeezed out. For a while Yoshinoya tried to compete in terms of quality and selection by adding new products to their line, but obviously they’ve abandoned that strategy and returned to price competition.

This is not the kind of outcome the government wants, but consumers have become so used to lower prices they probably won’t spend more except for basic necessities, and the retailers who can keep their prices down will make profits through volume. Much has been made in the media of how department stores are suddenly enjoying better sales, but their customers tend to be people with larger amounts of discretionary income through investments in stocks and foreign currencies, both of which are going up. Such people spend their windfalls on expensive watches. They are not representative of the general public, much of which still decide their spending regimens based on wages and salaries, and despite the government’s hopes and efforts those aren’t likely to rise any time soon.

Japan has become a nation of coupon clippers and bargain hunters. It’s a hard habit to break.

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Hit me: One of two Sukiyas near Kamiyacho Station in Tokyo

Last month, many news outlets reported an attempted robbery of the Asaka, Saitama Prefecture branch of the gyudon (beef bowl) chain Sukiya. Though such crimes are still rare in Japan when compared to other countries, this one received a lot of attention because of what the stickup man said as he brandished a knife at the counter person: “Maido onajimi no Sukiya . . . ,” which basically means he comes to Sukiya often, though it isn’t entirely clear if he meant as a customer or as a thief.

Sukiya is the number one gyudon chain in Japan, owing mainly to the fact that it’s got the most branches: about 1,500 nationwide. The next biggest chain, Yoshinoya, operates about 1,200, with Matsuya a distant third with 800. But if Sukiya has an edge over Yoshinoya in terms of sales, in terms of robberies it’s miles ahead. According to the National Police Agency, between January and August, Sukiya branches were the victims of 90 percent of the robberies perpetrated against gyudon restaurants. That’s an impressive portion, though it should also be pointed out that, altogether, there were only 57 robberies of gyudon restaurants nationwide during this period. Robbery, as a matter of fact, has been on the decrease in recent years, though the targeting of gyudon restaurants has risen.

According to an article in the Tokyo Shimbun, there are a variety of reasons for the increase. The main one is that almost all robberies of commercial businesses take place late at night, and over the past decade most gyudon restaurant chains have extended their business hours and are now open round the clock. A lot of other 24-hour food service businesses use vending machines to collect money; and convenience stores, which are also open all the time, have less cash on the premises thanks to the widespread use of e-money, debit cards and prepaid cards. Two thieves who were caught in August after robbing a Sukiya in Tokyo of ¥200,000 told police they had gotten the idea from discussion groups on the Internet. Apparently, would-be robbers often trade intelligence on good places to hit, and because Sukiya is so well-known and there’s a branch on practically every corner, it’s seen as an easy target.

In any case, the Asaka thief wasn’t a particularly good one. The counter person, a part-timer, managed to hit the alarm button and the police captured the robber shortly after he left. Since most Sukiya branches already have alarm systems installed, the police have suggested they, pardon the pun, beef up their late-night staff, though that would obviously defeat the whole purpose of a chain like Sukiya, which charges rock-bottom prices. It’s why they’re number one, even if in surveys real gyudon fans much prefer Yoshinoya.

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