Forcing through price destruction and the turn to low prices (1994)

Customers won by cheapness, earnings bound by it

The heart of this decision is that, as the means to move a mature market once more, Fujita chose price itself. For a company that had spread dining out into a national habit on convenience, cheapness was a founding strength. Pushing that strength further — piling on customers by cutting prices — brought growth in sales in the short run. But once it set in, cheapness fixed how consumers saw price and became a weight that bound the company’s earnings for years. The more customers it won with cheapness, the less it could earn per unit — price destruction left an intractable contradiction between traffic and profit. The losses from 2002 were that price coming due.

The low-price path Fujita pioneered defined the company’s brand for the next thirty years. The hamburger became shorthand for cheap everyday food, cited at every price war. The current reversed in the 2020s. Against a weak yen and soaring costs of materials and labour, McDonald’s Japan raised prices repeatedly from 2022 and in 2023 introduced an urban pricing that varies by location, revising the nationwide uniform price it had long kept. This time it held customer counts even while raising prices, and kept growing revenue. Cheap everyday food, or a chosen meal — to the question Fujita threw out with price destruction, the company is still searching for an answer.