Even though McDonald’s is an easily recognizable global brand, this does not mean that they are completely standardized in each country. It is widely known that McDonalds adapts to meet the needs of each country in which they operate, and along with variety in their menu, operating in various countries also means that they will experience variations in prices.
In recent years, specifically from 2020 to 2023, McDonald’s in Japan is experiencing price increases on most of their products due to escalating prices of raw materials, fluctuations in labor, changes in the global economy, as well as constant changes in exchange rates. To highlight the exchange rate, Japan has been experiencing inflation which is coupled with the depreciation of the Yen. Therefore, since roughly 2021, McDonald’s and other fast-food chains in Japan have been increasing prices to combat the weaking of the Yen. The depreciation of the Japanese currency also plays a significant role regarding the cost of imports. McDonald’s sources many of ingredients from North America, specifically potatoes, which is a focal point to the meals the company advertises. Although the strength of the dollar currently experiences some competition due to trade agreements in other countries, as Japanese McDonald’s outlets rely on products sourced from the United States, imports have become and are becoming more expensive. This is a key factor as to why roughly 70 percent of their offerings in Japan have undergone price increases and will likely continue to do so unless the US dollar weakens, or franchises in Japan are able to rely on producers of raw materials within the country.
Another reason why prices have steadily increased in recent years has been due to the sustainability efforts made by McDonalds. These efforts require the company to make changes towards more sustainable containers as well as overall decreases in plastic usage in their kid’s meals. Further, fluctuations in the labor force as well as the decrease in the number of operating McDonald’s outlets in Japan have also played a significant role in consumers bearing the burden of such events through increased prices. Although the number of outlets in operation have increased following the initial decrease after the onset of the COVID-19 pandemic, they have still not fully recovered to reach the same volume of outlets that they had prior. The pandemic as well as conflicts between other countries have also made supply chain efforts difficult, thus further increasing the costs of imports. In all, price plays into both sustainability efforts and worker salaries as it is one of the methods used by the company to combat higher costs.
Marketing Mix of McDonalds (thestrategywatch.com)
McDonald’s Japan hikes prices for 3rd time in 10 months on surging costs (yahoo.com)
McDonald’s International Strategy: Adapting Around the World (daytranslations.com)
One reply on “McDonald’s Increase Prices in Japan”
Hi Jason! It is clear that several companies are facing pressures in several areas and are increasing prices. It is interesting to see the many aspects that are leading to the price increase of products in Japan at Mcdonald’s. I would love to see the data of consumer habits as a result of these increases in price.