Fast food chain operator, McDonald’s will increase the prices of about 60% of its offering in Japan from Sept 30, 2022. The price of its signature big Mac hamburger will rise to 410 yen ($2.85) from 390 yen. While the price of its cheeseburgers will increase to 180 yen from 140 reflecting an increase of 10 to 30 yen on many items. Earlier in March 2022, McDonald's increased the price of almost 20% of its menu items in Japan, citing factors including the increasing cost of beef and wheat.
McDonald’s has joined the growing number of companies that are passing the effects of the weakening yen and the soaring inflation in decades on to customers. Even while Asia's second-largest economy has had relatively low inflation compared to other developed countries, it nonetheless rose to a 31-year high of 2.8% in August 2022 owing to rising energy prices brought on by the Russia-Ukraine conflict and supply chain snags.
The rapidly declining value of the yen, coupled with a surging dollar and the ultra-dovish approach of the central bank, has also hurt businesses in Japan, particularly import-dependent ones such as McDonald's, which sources its potatoes from North America for its fries.
According to GlobalData, the Japanese QSR channel registered a decline at a CAGR of 1% to reach yen 2,961 billion (US$28 billion) in 2020 from yen 3,120 billion (US$26 billion) in 2015. The number of transactions increased by 0.5% while the number of outlets registered a decline of 0.9%. McDonald’s is Japan’s largest QSR operator by revenue. Other key chains include Zensho Holdings Co., Ltd., Plenus Co., Ltd., Toridoll Holdings Corp., and Yum! Brands, Inc.
The majority of QSR brands registered a decline in the number of outlets during the year 2020 due to the COVID-19 pandemic. For instance, McDonald’s recorded a decrease from 2,975 outlets in 2019 to 2,924 in 2020. However, in 2021, McDonald’s number of outlets in Japan increased to 2,942. In September 2021, the operator announced a significant reduction in the use of plastic across its Happy Meal toys. The company is working towards reaching its goal in its use of sustainable materials by 2025 and is replacing its Happy Meal toys with recyclable materials to promote environmental responsibility.
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