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Cheap is king in recession-mired Japan

31 Comments

Dinner at a pub: 270 yen. A bowl of ramen: 290 yen. Yakitori: 280 yen. And so on and so on. You see the signs on which these prices are writ large and wonder, How do such establishments survive, charging so little? The fact is, says Shukan Post (Jan 25), they are not only surviving but thriving. Cheap is king in recession-mired Japan. Thirty years ago, consumers splurged on gold-flecked sushi. Now they flock to where small change suffices.

Japan’s business climate has always been harsh, Shukan Post points out. Land is expensive, natural resources are few. In the U.S. and China, profit margins average 15%; in Japan, 5%. But the fact is, the magazine explains, cheap prices do not necessarily mean low profits – if you master a trick of the trade or two.

Take izakaya pubs, for example. The Kin no Kura Jr chain offers every item on its menu for 270 yen; at the Torikizoku chain it’s 280 yen. On some items – chicken thighs, for example – the pub makes less profit, on others – like chicken livers – they make more. Most customers order a little of this, a little of that. On average, cost price is 30% of what you pay. Seventy percent is clear profit.

It’s partly because overhead is relatively low. Even on prime land near a train station, rent is not too high if you’re on an upper floor of a multi-purpose building, and large signs, visible for blocks around, obviate advertising costs. Touch-panel ordering reduces personnel costs. So don’t fret for the purveyors. They’re making your 270 yen go a long way.

It’s not just restaurants, of course. Lower prices and higher profits have spread throughout the service sector. The trend has brought back the humble barbershop, once swamped by the more expensive and fashionable hair stylist. A barber charging 1,000 yen for a no-frills haircut will have you out of the chair and be attending to another customer in 15 minutes, whereas a 3,500-yen shave-cut-shampoo-set job takes a good 50 minutes. The latter, on average, brings in 25,000 yen in the course of a 6-hour day; the former, 36,000 yen. Consider in addition that most barbershops are run by couples operating out of a corner of their homes. No rent, no staff. Typical annual earnings: 5.2 million yen – not big money, but still, a secure and reasonably comfortable livelihood.

Every neighborhood seems to have one – an inconspicuous little flower shop where you never see a customer. You can’t help feeling sorry for the owners. Don’t. They know what they’re doing, and are profiting handsomely. The secret, Shukan Post informs us, is funerals. “We have contracts with funeral parlors,” explains the owner of one rather forlorn-looking flower shop. Even small funerals need altar flowers, a floral tribute and so on. They order them from us. If we charge 15,000 yen, 80% of that is profit.”

Two “lost decades” have shaped today’s economy of small business, parsimonious consumption and rock-bottom prices. It’s been this way so long it feels normal. Last month a new government charged into office promising robust inflation and muscular growth. How will the pubs, barber shops and flower shops adapt?

© Japan Today

©2019 GPlusMedia Inc.

31 Comments
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And these places are going to be the first to close once "Abenomics" starts rolling and deflation turns to inflation and the imported products that many of these types of places use skyrocket.

7 ( +10 / -3 )

Y280 yakitori is fine but throw in 3 or 4 beers and it's not so cheap. Anyone know what the profit is on say a Y650 draught beer?

4 ( +5 / -1 )

For a 500ml beer, 111 yen goes to taxes. Ingredients costs maybe 30 yen. If it is a bottling, bottling and labeling maybe cost 100-200 yen, depending on the printing costs/style. Labor is probably around 100-200 yen as well.

0 ( +4 / -4 )

Y280 yakitori is fine but throw in 3 or 4 beers and it's not so cheap. Anyone know what the profit is on say a Y650 draught beer?

I was thinking the same. The first line is very misleading. You don't just get one thing at an izakaya and leave, that would be like going to a restaurant and only ordering a coke, and you don't just get one stick of yakitori and go, you get a selection. If the items on offer are chicken liver and thigh then I imagine it's just the normal price of the items anyway, it's not items that are normally more expensive that are being reduced. There's also the seating charge which can often be 2 or 3 hundred yen, which means you're paying 1000yen just for a glass of watery beer and a bit of chicken liver.

I'd go for the ramen.

1 ( +3 / -2 )

The Kin no Kura Jr chain offers every item on its menu for 270 yen; at the Torikizoku chain it's 280 yen

Hmm I wish just one item would equal "dinner" for me. Yeah these places are cheaper but add booze (when in Rome) and you still part with 2-3 thousand yen quite easily.

The 1000/1200 yen all you can booze for two hours at any of these places means you can get super charming, funny and good looking at a reasonable price. Gotta buy a number of food items but this presents no problem and end up ordering more anyway. Again looking at around 3 thousand yen.

I wonder what the average outlay would be per customer? It certainly isn't 270 or 280 yen.

270 yen or thereabouts? Sukiya/Yoshinoya/Matsuya or any of the other rice bowls will do it.

1 ( +1 / -0 )

It is cheaper still to go to a reasonably priced market to buy your food and prepare it at home. It is also healthier if you know how to shop. Also, you don't have to suffer other people's cigarette smoke.

5 ( +8 / -3 )

It is cheaper still to go to a reasonably priced market to buy your food and prepare it at home

Some people like to go out every now and then.

It is also healthier if you know how to shop

Put item in trolley.....proceed to register.....flirt with staff.....winning.

Also, you don't have to suffer other people's cigarette smoke

Usually not a problem unless it's a ma-and-pa establishment where ma and pa don't want to upset the establishment.

3 ( +4 / -1 )

And these places are going to be the first to close once "Abenomics" starts rolling and deflation turns to inflation and the imported products that many of these types of places use skyrocket.

Absolutely correct. The economically illiterate see "low" prices and they think "cheap." When in reality it's just a reflection of a healthy, strong currency.

Absent any fat-fingered government intervention, prices ALWAYS tend to decrease, because with a stable money supply, and new products being introduced every year, prices will naturally get lower and lower. Same amount of currency, more products.

This is FANTASTIC for the common man, because simply by saving ten percent of their earnings, they are getting wealthier and wealthier, as their saved money is worth more each and every year.

Shops can charge less for their products, and STILL make a profit, as indicated in this article.

However, this FORCES governments to live within their budgets, which they CANNOT DO.

So their only recourse is to PRINT MORE MONEY so they can SPEND MORE MONEY.

They do this by conning people that DEFLATION IS BAD and INFLATION IS GOOD.

Sadly, most people buy the lie hook, line, and sinker. And you have world class economies whose currencies get weaker and weaker year by year.

Seriously, who BUT THE GOVERNMENT would want a bowl of ramen to double every five years? How in the world can that be considered a good thing.

They throw around the word "inflation" like it's some magical voodoo that would fix everything.

But if they, instead of using the word, "inflation," they said, "We're going to try to make EVERYTHING more expensive, every single year, that should get us out of this recession," people would recognize them for the thieves they are.

That is EXACTLY what Abe is doing. He couldn't be more transparent if he walked around, pointed out affordable prices, and said, "This is just too cheap. We need to force EVERYBODY to raise their prices."

7 ( +13 / -7 )

Japan and America are two prime examples of countries where people are always whining about how bad the economy is, high gas prices, a high cost of living, etc. Most people have no idea how GOOD they really have it. Count your blessings. In many so-called "Third-World" countries, a lot of people don't even make 270 yen a day.

5 ( +7 / -2 )

Sengoku 38, when one considers that these fixed costs (bottling equip and repair, labor) are spread out over litterally several hundred million bottles of beer, the likely cost is in the tens, not hundreds of yen per bottle (although I lack specific figures)

Gaijin Info: Deflation is horrible for an economy and I don't need caps to proove it. Deflation is worse than inflation for two reasons. First it starts a downward spiral of lower prices, lower revenues, bankrupsty, unemployment, and lower tax revenues that becomes self-sustaining. Secondly deflation is much harder to stop than inflation because while the government could theoretically raise interest rates to infinity,it can only lower them to zero. After that, the only tool lift in the box is money printing. In effect, inflation is an ear infection - deflation is like multi-drug resistant TB.

Almost all rational govts, want a stable money supply and a small amount of positive inflation because inflation = zero means very close to deflation. Inflation of 1 to 3% is the ideal for most countries. In order for your bowl of ramen to double in 5 years, the inflation rate would have to be approximately 14.5% which would indeed be a problem.

Deflation is good for those with very stable jobs or those on fixed incomes (like the retired.) For everybody else, it is not good at all, thus the inflation target.

5 ( +8 / -3 )

I feel that living in Japan can be incredibly cheap if you don't live in Tokyo, don't drive everywhere, don't insist on eating like a tourist or living like a spoilt expense-account expat, and don't have any obnoxious habits like drinking or smoking or gambling. Oh, and don't have kids!

6 ( +10 / -4 )

Oh, and don't have kids!

Making kids isn't expensive, it's kind of fun practicing too!

3 ( +4 / -1 )

Sorry, but when I pass through Hankyu Department store (newly renovated) in Osaka and see heaps of housewives and young women waiting an our in line to pay thousands of yen for a couple of pieces of cake because they're told the cake is delicious, I disagree. Middle-aged men who get a tiny stipend every day for lunch from their wives, yes, I see them at Yoshinoya or Matsuya all the time, often penny-pinching so they have enough left for a pack of smokes, but this is the only nation I know, and some Japanese the only people I've ever heard of, that say "expensive" is a positive meaning adjective.

6 ( +8 / -2 )

Come to think of it, I have seen queues of people waiting in line to pay several thousand yen for cakes and delicacies, mainly outside department store basements in Osaka (must be a Kansai thing). And come to think of it, they are almost all women. And come to think of it, those women are probably housewives if they can afford to stand in line for an hour or so in the middle of the day.

And only a few metres away are those stand-up udon or hamburger joints ... almost always populated by salarymen, especially during the lunch hour.

Guess which tribe I belong to?

1 ( +5 / -4 )

but this is the only nation I know, and some Japanese the only people I've ever heard of, that say "expensive" is a positive meaning adjective.

I guess they have the money to spend on luxuries like that because I've met so many Japanese housewives that do the most extreme things to save money to the point that they only spend on average, 10,000 yen a month on all utilities (gas, telephone, water, electricity) even in summer and winter, and another 20,000 yen per month on food. Having the whole family use the toilet on one flush is one extreme measure I've heard of. Another thing a lot of housewives in Japan do is to get a ton of free stuff through poscard mailing. They do it so well that they always get some gift of food or luxury item free (well, minus the cost of a postage stamp) for every postcard they send in.

3 ( +4 / -1 )

Another problem with the food mentioned here is that they're not exactly healthy - Yoshinoya offering Japanese rice topped with beef - I assume the onions are supposed to act as your daily servings of vegetables.

While eating out here can be as cheap as back home - one thing I'd like to see is supermarket food become cheaper. Every time I go home to visit relatives, I can't stop laughing at how cheap stuff can be - and the choices are getting better and better. You can get practically everything including Asian stuff. The when I come back - it's depressing looking at the prices.

1 ( +4 / -3 )

Yoshinoya offering Japanese rice topped with beef

I think Yoshinoya is comparable to a McDonald's or Denny's back home in America - terrible. I can't believe how much grease and undescribable goo is covered over the food served at a typical American Denny's. Not to mention how wilted the French fries always tends to look at Denny's (at least the McDonald's fries almost always looks better).

In Japan, at least there is always Matsuya serving a more balanced food set. I once had a hamburg lunch set there with garden salad, miso soup and a bowl of rice for only 560 yen. Actually, the best deals for food in Japan are at university school cafeterias. Well-balanced, tasty, and extremely reasonable. And you don't have to be a student to go there. I often go to the university cafeteria in my area and get a shogayaki teishoku with a side salad, tofu, and miso soup all for about 350 yen. They also have free tea or water there.

3 ( +4 / -1 )

Inflation, deflation can obviously be either good or bad depending.............

I'd say with Japan decades of high prices & POOR value for money for a lot of things that some deflation & forcing retailers/business to offer BETTER VALUE is sorely needed, especially wrt housing for example.

So I say Japan Inc MUST start offering more & more value, along with lower prices, the old system is simply TOO expensive for most, the math doesnt compute, & thats a HUGE part of why the number of kids is dropping & is going to get much worse.

As for cheap eats in this blurb, there were always places that offered low prices, its just that there are more of them now & this has put some pressure on pricing so the deals are quite good! Been a long time coming having more choice at the lower end, these places aint causing anyone any grief in the big scheme of things, good on'em I say

So I vehemently disagree with abe, shooting your mouth to lower the yen will only go so far, if abe wants a better future, then Japan Inc & their ilk need to start offering better value.

Fleecing the local population with no longer work!

0 ( +1 / -1 )

Actually, the best deals for food in Japan are at university school cafeterias. Well-balanced, tasty, and extremely reasonable.

I absolutely agree! Also, certain companies open their employee cafeterias to the public for lunch, and even breakfast (I have no idea why).

You know those places around the stations where you have to buy a ticket from a vending machine before you order? The places that seem to specialise in noodles and teishoku? Well, I've never in my life had a bad meal at one of those places. I've also never paid more than 600 yen (usually more like 300). Obviously I wouldn't want to dine there every single day, but it sure beats eating at some nasty hamburger joint, or living on cup ramen. I maintain that it's entirely possible to eat cheaply and (relatively) healthily in Japan, compared to other countries. Just follow the students and salarymen.

0 ( +2 / -2 )

I worked in hospitality for over 10 years. All profits are in drink sales, not food. You can barely break even on even a regular menu, let alone a cheap one!

3 ( +3 / -0 )

There used to be a place in Gotanda that sold nama beer for 50円. The food was also quite cheap so even if we ate and drank our fill the bill usually came out at less than 2000円. I always wondered how that place made a profit.

0 ( +0 / -0 )

^^ It would have been Happoshu, not real beer i am guessing.

As for the posters commenting that beer is expensive at these cheap izakayas, obviously they havent been there. Kin no kura and Torikizoku both have beers for 270yen as well.

Torikizoku seems more expensive (270 vs 280yen), but they dont give you an otooshi (mandatory dish) which kinnnokura does (edamame). You can go there, as i did last night, order the kamameshi and a few beers, and still come out at under 1500yen each

1 ( +1 / -0 )

Torikizoku also offer very large glasses of about 700ml of kirin tanrei (not real beer but close enough) for 280円 and their Gin & Tonic uses Beefeater gin. You can have a cheap night out as long as you don't mind eating chicken and chicken offal all night.

0 ( +0 / -0 )

Cheap is indeed king. Which is why Abe's inflation plan makes zero sense. With so many underemployed people in Japan, rising prices will hurt them deeply. I just hope that cheap options survive Abe-flation.

-2 ( +0 / -2 )

it s always good to support the local shops as it keeps your job going as well. We are all in this together. But of course those you learn to survive on less always win during hard times. When layoffs hit companies, those who create small businesses can survive.

0 ( +0 / -0 )

tkoind2. Abe's plan makes no sense to us because it is designed to put more money in the hands of the rich. Gaijininfo pretty much said it all. I think that all these cheap shops will have to raise their prices with the higher Yen. Things are quite nice now. Can often find beer for 350 Yen now. Was 500-600 when I came to Japan 15 years ago. Torikizoku is great. Everything is 280 Yen. Ram a couple of onigiri down your throat before going there and you can have a very cheap night indeed.

-1 ( +0 / -1 )

Neil McDonald

and their Gin & Tonic uses Beefeater gin.

They might pour you something from a Beefeater gin bottle, but...

0 ( +0 / -0 )

It's the real thing. I hope that with inflation, wages also will increase. I don't know how people working baito on 800円 can have a reasonable quality of life.

0 ( +0 / -0 )

Cheap is expensive when you buy just because it is cheap. Even free becomes expensive when you have to further invest down the road for whatever purpose you have with the cheap or free merchandise or service. I have been there.

0 ( +0 / -0 )

I love this article. It actually describes the actual situation in Japan, rather than the idotic belief of the government that we need inflation to save the economy. These cheap places are cleaning up because the economy has forced them to introduce really new (in Japan), cool and novel concepts: efficiency, combined with volume sales (vs ridiculous profit margins).

Instead of trying to "save" the Japan remembered by the old guard, they should embrace this new, hungrier and leaner (and eventually more innovative) economy!

0 ( +0 / -0 )

Tessa

I feel that living in Japan can be incredibly cheap if you don't live in Tokyo, don't drive everywhere, don't insist on eating like a tourist or living like a spoilt expense-account expat, and don't have any obnoxious habits like drinking or smoking or gambling. Oh, and don't have kids!

Lots of don'ts here. what is there to do that is cheap and fun then?

0 ( +0 / -0 )

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