December 7, 2007

Burgers heat up fast food competition in Japan

Hamburgers are toughening meat competition in the Japanese foodservice sector as some companies are aiming to increase their share of the market through product differentiation, rather than price competition, according to Meat and Livestock Australia.

In the market where consumer spending remains flat, western style fast food - mostly hamburger outlets - has been exceeding sales made in the same month the previous year, for 20 consecutive months.

The estimated market value of the Japanese hamburger industry in 2007 is 611 billion yen, or A$6.18 billion, reports the Toyo Keizai Weekly.

In a bid to outperform every burger chain, fast food outlet Lotteria recently launched a new "Zeppin (meaning exquisite) Cheeseburger" at 360 yen (A$3.64). Australian shoulder and butt cuts are used for the up-sized 80g patty, claiming improved meat texture, flavour and juiciness.

T.G.I Fridays Japan recently changed their standard burger to a 200-grams Aussie beef patty burger named "World Famous Burger" (1,480 yen) in their American style restaurant chains, and sales increased by 30 percent, according to the company.

Another fast food operator Wendy's, uses only chilled patties as opposed to standard frozen patties, to "keep the natural flavour and deliciousness". Wendy's is run by Zensho group, one of the largest Australian beef users.

Meanwhile, McDonald's Japan was reported for false labelling, which may impact their current strong performance.

McDonald's Japan, the largest foodservice business in Japan, has been a strong driver of the growth, launching various seasonal products (including the hugely successful Mega Mac), and offering low-price deals such as 100 yen (A$1.01) cheeseburgers, and meal coupons via the internet. Australia is a dominant supplier of beef to McDonald's Japan.

In the midst of the intense competition, McDonald's reported that four stores run by a Tokyo based franchisee had falsely labelled their products. McDonald's Holding immediately cancelled its franchise agreement and publicly apologised to their customers, however, the incident may cause a negative impact on sales.