Introducing urban pricing and abandoning the nationwide uniform price (2023)

Thirty years after “price destruction,” the price philosophy inverts

The core of this decision is that McDonald’s Japan, thirty years on, redrew in the opposite direction the pricing principle it had built itself. In 1994 president Den Fujita raised the banner of “price destruction,” cut hamburger prices step by step, and set the ability to buy at the same low price anywhere in the country as the foundation of the brand. In a restaurant trade sliding into deflation, a uniform low price became the pillar of drawing customers, piling up traffic alongside measures like weekday half-price deals. The idea of nationwide, uniform, low pricing hardened then. The full rollout of urban pricing turns that idea inside out. It abandons cheapness and uniformity and rebuilds the pricing design toward raising prices according to location.

What separates the era that won customers by cutting prices from the present that earns per customer by raising them is the tide of prices around the restaurant trade. Under a weak yen and high labour costs, competing on cheapness alone will not keep a store standing. Discarding the clarity of a nationwide uniform price and reflecting each location’s costs into its prices mirrors a departure from a restaurant business premised on deflation. Still, a scheme in which price varies by location breeds the confusion that the same product costs different amounts at different stores. Whether the balance — which holds while customers follow the price rises — can survive when prices and competition change is left to what comes next.