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Sunday, Aug. 18, 2002


59 yen burgers wolfed down by bargain-hunters

Late last month, a man in New York filed a lawsuit against four fast-food restaurant chains claiming that they were responsible for his obesity problems. Blaming advertisements that supposedly mislead consumers into thinking that their products "are good for you," the man and his lawyers hope to win their case on grounds similar to those that have been used successfully against the tobacco companies. The fast food industry has called the lawsuit frivolous, saying it's ridiculous to claim that food is addictive.

The parallels with cigarettes are not quite as frivolous as they might seem. True, it's doubtful that most Americans, whether or not they live on hamburgers, fries and sugary soft drinks, really do believe fast food is good for you. But fast food marketing schemes are mostly aimed at children in an obvious attempt to engender certain kinds of eating habits. One of the more insidious schemes in the United States is "supersizing." If you order a cheeseburger, a small Coke and a small order of fries at McDonald's, you can get more than double the volume of beverage and twice as many fries just by adding 79 cents. The caloric increase is almost exactly double. The idea is that once you're used to supersizes, nothing smaller will do.

If the fast food industry in the States needs evidence to counter the claim that their product is addictive, they should come to Japan. The recent pricing changes carried out by McDonald's Japan has proved that Japanese consumers are not hooked on hamburgers. When the company raised the price of a hamburger by a mere 15 yen last February, sales dropped almost 20 percent.

The media didn't make much of this matter until Aug. 5, when McDonald's Japan, in an about-face that news organizations characterized as humiliating (Asahi Shimbun: "McDonald's eats humble pie after price reversal"), reduced the price of a hamburger from 80 yen to 59 yen, which is even lower than the previous low price of 65 yen. As a result, McDonald's has been covered extensively in the media.

It's the kind of publicity that money can't buy, a point that seems to be lost on almost everybody doing the covering. TBS at first treated the new cheaper burger as a mise-dama -- a single product that attracts customers to a store where they then supposedly buy other products. But what TBS found was that people really were going to McDonald's just to buy those cheap hamburgers. One guy went in, bought his burger, and then went out and bought a drink from a vending machine. A group of teenagers had ordered four burgers apiece and nothing else. A drunk salaryman wanted a snack for the train, and the burger was now cheaper than anything he could buy in a convenience store.

Nippon TV followed a pair of Lotteria executives as they surreptitiously visited McDonald's to assess the situation vis-a-vis their own company, which, of all the Japanese fast food chains, copies McDonald's the closest. They even use the same color combination and character fonts on their signs. The media interviewed "rivals" such as Yoshinoya and Mos Burger, but except for Lotteria, they pointedly avoided getting caught up in the frenzy.

And why should they? They don't really see themselves as rivals, and all they'd be doing is helping the media help McDonald's get free advertising. Though the ostensible reason for the price decrease is to regain customers that McDonald's had lost, the long-term strategy is different.

According to the Nikkei Marketing Journal, McDonald's conducted a survey to find out why so many people had stopped coming and discovered that "price" was not as big a reason as "small selection." In other words, people bought McDonald's hamburgers when they were cheap simply because they were cheap, not because they liked hamburgers better than, say, onigiri. In its own survey, MJ found that teenagers were satisfied with cheap hamburgers, but women in their 20s were interested in "sets" if they offered more variety.

The purpose of the price cut is to attract attention to McDonald's so that their new products will also receive attention. In the last several months, the company has doubled its R&D staff. It is introducing a line called McTokyo, which currently only offers salad and soup, but which will be expanded in the fall.

McDonald's figures it needs a 15-20 percent increase in patronage to make up for the price cuts (cheeseburgers and "frankburgers" have also been discounted) and should know if the new strategy works come autumn. Right now, however, the short-term strategy seems to be working.

In the first week after the price reductions went into effect, McDonald's Japan enjoyed its biggest sales ever: 30 million customers, or one out of every four people who live in Japan.

Antiglobalists and followers of the growing "slow food" movement will probably be horrified by these numbers, and while young Japanese dietary habits have certainly become cause for alarm, they have yet to reflect a reality comparable to the situation in the U.S., where fatty fast food is the de facto national cuisine.

The cultural milieu, not to mention the food business in general, is more complicated in Japan. Years ago, McDonald's Japan Chairman Den Fujita facetiously predicted that his company would one day conquer the archipelago, at which point the citizens would develop blue eyes and blonde hair. Well, the blonde hair, at least, is already here, but it has nothing to do with McDonald's.

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