McDonald's Japan Facing Uphill Battle.

(From Journal of Japanese Trade & Industry (JJTI))

In July 1971, McDonald's Japan opened its first outlet in Japan on the ground floor of the Mitsukoshi department store in Ginza, Tokyo. At the opening, blue-eyed McDonald's campaign girls showed up at the shop front, smiling and marketing hamburgers to passers-by. The girls were chanting, "Why don't you try America's genuine, best-selling food?"

Despite much fanfare, the media coverage of McDonald's Japan's opening event was subdued, partly because it came four days after the abrupt announcement of a visit by U.S. President Richard Nixon to China. The Japanese newspapers were all preoccupied with the so-called "Nixon shock" at that time.

McDonald's hamburgers, selling for \80, were not particularly inexpensive in 1971, especially when compared to full-sized loaf of bread, priced at \60, a bowl of Japanese noodles, priced at \120 and a plate of curry and rice, priced at \180. And yet, McDonald's Japan grew rapidly. In the second year of inauguration, it opened an outlet in Kyoto and another in Nagoya in the third year. The price of its hamburgers also rose quickly to \100, \120 and \150 over the first three years - evidence that many Japanese consumers were keen to try a "taste of America."

More than 30 years later, however, McDonald's Japan cut the price of its regular hamburgers to \59, the lowest in the industry, in August 2002 amid Japan's prolonged deflation. On the first day of the price cut, the fast-food chain attracted 4.1 ...