December 2015 | www.selectasset.com
An idea economic mix for better burgers

After international markets crashed at the end of the last decade and Japan’s already stagnant economy took a near knock-out blow, Japanese consumers started looking at lower prices for clothing, food and even dining out. The market that put premium service and quality above all else was now open to a bargain, and a new generation of Japanese people seemed happy to embrace a less extravagant lifestyle – after all, they’d never seen a boom.

In the years since, discount retail operations such as Aeon Co. Ltd., have done well by offering low-priced (often own-brand) supermarket goods rather than anything extravagant. Indeed, many of the country’s biggest brands started to offer products for pockets on a budget and luxury brands saw a sharp decline.

So here we are heading into 2016, and the economy isn’t exactly taking off. Despite this somewhat blue Christmas season, something very interesting is happening in Japan’s retailing sector.

After Prime Minister Shinzo Abe raised consumption taxes from 5% to 8% in April 2014 as part of a plan ultimately targeting a 10% tax, it seems that Japanese consumers have turned their focus to seeking value rather than just low prices. Instead of simply saving every penny, statistics show that more Japanese are making sure that every penny spent counts.

What’s the Beef with McDonalds?

As the Nikkei Asian Review points out, “Japanese consumers have grown more selective after the April consumption tax hike, seeking higher-quality products that they see as good value, a trend that has ended up hurting retailers focused on low prices.” The Nikkei goes on to report that the nation’s leading retailer Aeon had suffered a sharp profit drop as a recent price-cutting campaign backfired – reporting an operating profit of ¥49.3 billion, down 48% on the year to January 2015.

Within the fast food industry, the move back to value-oriented purchases—not to mention a weaker yen—has attracted foreign business back to Japan. A major catalyst for this, ironically perhaps, has been the misfortune of the world’s most recognized fast food brand, McDonald’s. After a series of food safety scandals and a general changing of consumer tastes in fast food, McDonald’s Holdings Co. (Japan) reported a group net loss of ¥29.28 billion for the January-September 2015 period, the worst result for any nine-month period since its stock listing back in 2001. The Financial Times of London quotes Hisakazu Matsuda, president of the Japan Consumer Marketing Research Institute as saying, “In some ways, the McDonald’s slump is driving the entry of other foreign chains.”

Importing a Better Burger

The self anointed “fine-casual” New York burger chain Shake Shack which went public in the United States in January this year, recently opened the doors to its first Japanese restaurant on November 13 in Meiji-Jingu Gaien Park, prime real estate in the vicinity Tokyo’s cool-posh Aoyama district. To smooth their entry, the chain partnered with Sazaby League, a company that manages over 30 brands in Japan, including Starbucks. Shake Shack plans to open 10 stores in the country by 2020.
Using high-quality ingredients and unique culinary inspiration from fine dining, Shake Shack’s burgers include “all-natural, hormone and antibiotic-free beef.” Burger prices start at 680 for the Shack Burger to 1230 for a Shack Stack – considerably more than McDonald’s offerings.

The funky, organic food focused Bareburger of New York opened its first restaurant in the Queens Borough of New York City in 2009 and now has 28 shops in the U.S.A. and Canada. Their Japan website proudly displays some of the many accolades the company has received, including recommendations in the Michelin guide. The first Bareburger opened to customers in Tokyo’s Jiyugaoka district this year—an area that boasts many organic themed stores—and plans are afoot for a second outlet in Tokyo’s well-heeled Ginza district next year.

Bareburgers range in price from “The Standard” at 1380 to the Ozaki beef “Tomorrow Burger,” which at 2980 will hopefully keep you satisfied until the next day.

Home Grown Gourmet Grub

Of course, burgers from overseas will have to compete with home grown premium burger outlets such as the newly opened Crown House in Kichijoji, a high end burger café and bar brought to us from the already well established Freshness Burger chain whose own “Classic Burger” sells for 500.

Crown House’s luxury menu is rather more expensive and features far more exclusive ingredients. A “Crown Burger” costs 1430 with fries, and a “Foie Gras Burger” will set you back 1800.

No discussion of burgers in Japan should omit arguably Japan’s “favorite” chain, Mos Burger. Mos burgers have always been priced at the higher end of the mass market, but intentionally so. CEO Atsushi Sakurada has stated, “While our emphasis on high quality went against the low-cost strategies of other companies, we believe that customers have appreciated our constant pursuit of perfection.”

Japan is a tough market to break into. Food may be one of the toughest given the complexities of culture and taste, not to mention the choices already available from sushi to sukiyaki. At the same time, it’s burger wars and competition that ensure the very best tasting value reaches Japanese plates and palates. And good taste is always a worthy economic pursuit.