Japan:US fast food picks the right ingredients for us

McDonald's
Rebuffed once in the 1980s, a slew of US fast-food chains from Taco Bell to Carl’s Jr are flocking back to the land of tofu and sushi. Their return comes amid a backlash in Japan against America’s best-known burger brand – McDonald’s – following food safety scandals.

“In some ways, McDonald’s slump is driving the entry of other foreign chains,” says Hisakazu Matsuda, president of Japan Consumer Marketing Research Institute.

But the influx of foreign chains also underscores a broader shift in consumer trends away from the country’s traditional fish- and rice-based cuisine.

Just as Japan’s sushi and ramen noodles are hits in New York and London, the country’s younger generation will queue to eat Eggs’n Things pancakes from Hawaii. Government data show rice consumption in Japan has halved over the past half-century while meat eating has more than tripled. Demand for convenient cuisine has increased, with the proportion of spending on dining out or eating ready-to-cook dishes at roughly 44 per cent, from less than 30 per cent in the mid-1970s, according to Foodservice Industry Research Institute.

Word of the latest culinary booms in Paris or Los Angeles also spreads fast due to Twitter and social media, making it easier for foreign brands to gain a foothold in the Japanese market.

“The world has changed so much,” said Melissa Lora, president of Taco Bell International, on the opening day of its first store in Tokyo last week. “People are interested in new and interesting flavours. It’s the perfect timing for us.”

Yum Brands, the Kentucky-based operator of Taco Bell, KFC and Pizza Hut, is trying to boost the international presence of its restaurants as sales wane in China due to food safety concerns. Last summer, one of Yum’s suppliers – also used by McDonald’s – was exposed selling out-of-date meat.

Mr Matsuda says companies are putting the lessons learnt from their brief stints in Japan in the 1980s to use by returning with strong local franchise operators and adapting to tastes.

Taco Bell, for instance, is selling shrimp and avocado burrito for Y590 ($US4.94) and a taco rice bowl for Y530, at prices cheaper than the ones offered at Mexican restaurants in Japan.

Combined with shifts in consumer tastes, Prime Minister Shinzo Abe’s efforts to stoke inflation have also played a role. Yuiko Mitani, research analyst at Euromonitor, says the weaker yen against the US dollar makes it cheaper for US-based companies to invest in Japan. The relaxing of restrictions on beef imports have also helped, with conditions set to improve if a Pacific trade deal can be reached between US, Japan and 10 other nations. In addition to Taco Bell, CKE Restaurants, which owns California-based burger chain Carl’s Jr, plans to open its first store in Tokyo in the autumn and expand across Japan in a decade.

New York burger chain Shake Shack, which went public in the US in January, is making its first foray into Asia with a store in Japan next year. It plans to open 10 stores by 2020. It is not just burger chains that are moving in: 800 Degrees Neapolitan Pizzeria, which operates mainly in California and Las Vegas, is set to open next year.

Industry experts say Japan will still be a tough market to crack. Burger chains such as Wendy’s have already exited and returned with a smaller footprint. Euromonitor data project Japan’s fast-food market grew about 16 per cent in total to $US43 billion from 2009 to 2014, but is expected to expand at an annual rate of less than 1 per cent over the next three years, with the burger category declining most steeply.

Amid a shift toward healthier foods, Shake Shack calls itself “fine casual”, setting itself apart from traditional fast-food chains. It markets its ShackBurger as “100 per cent all-natural Angus beef. No hormones and no antibiotics ever”.

Ryota Tsunoda of Sazaby League, Shake Shack’s local partner, which introduced Starbucks to Japan, said: “It’s not a regular fast food restaurant.”

Among the crowds at Taco Bell in Tokyo was Tomoko Ikeda, a 42-year- old web designer, who opts for fast food chains that serve a lot of vegetables. “I want to eat fast food that is healthier,” she said. “So I want to try Shake Shack next.”

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