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McDonalds Hikes Japanese Burger Prices By 20%

Tyler Durden's picture




 

As we have been warning for a while now, Japan wanted inflation and is certainly getting it, just in all the wrong places.

While Abe has been desperate to transfer the collapse in the yen and the (transitory) surge in the Nikkei to the all important increase in wages, and the much sought-after wealth effect, the reality is that corporate input costs are rising far faster than revenues, and wages will be the last thing profit and earnings-conscious companies raise.

As for the Japanese consumer, trained by 30 years of deflation, any profits in the stock market will be promptly converted to cold hard cash and bank deposits which represents that vast majority of Japanese financial assets, which means a double whammy for companies who will also see a drop in sales volumes, crushing margins even more as a result.

One company which could no longer tolerate soaring energy and food costs (both of which we described previously here and here), is McDonalds, and as the FT reports, the fast-food chain announced today that the price of its entry-level hamburger would increase by 20% from ¥100 to ¥120, while a cheeseburger would now cost ¥150 instead of ¥120.

This is the first price increase by McDonalds Japan, the largest corporate affiliate outside of the US which runs 3,300 local fast food restaurants, in five years. 

And now the Japanese, those few who have been trading stocks, and the vast majority who have not, will learn that there is no such thing as a free lunch, and the recent market gains will promptly transform into a sudden and violent 20%+ drop in purchasing power which in turn will manifest itself into surging fury for two entire generations that have never seen rising prices anywhere outside of textbooks.

“If prices go up, I will try to use coupons more and think more carefully what to order,” said Satomi Chiba, a 42-year-old part-time helper at a nursery, who takes her family of four to McDonald’s “two or three” times a month.

But those are problems of the 99%, and as such can be ignored. For now, the world's attention appears transfixed by the sudden surge of "wealth" (sadly wealthy is never merely diluted purchasing power) of the 1%.

Tokyo’s financial district has begun to buzz once more. One visiting banker said it took him eight minutes this week to find a taxi in a street normally lined with idling cabs.

Unfortunately, by now the bulk of the stock market gains have come and gone. And now it is up to everyone else, to pay the price.

Attention is switching to evidence of inflationary pressures building in the broader economy. While the weaker yen has caused costs for fuel and other imports to rise, many companies have so far been reluctant to lift their final prices, for fear of losing market share.

 

Tokyo Shimbun, for example, raised the newsstand price for its morning newspaper from Y100 to Y110 this month – the first increase in 16 years – but left the price of a monthly subscription unchanged.

Something tells us the Japanese BLS is hardly as proficient at "hiding" soaring food and energy prices as the US version. Which means rising inflation will be directly correlated with public anger and inversely so with the popularity of the Abe cabinet, something we discussed previously when we observed that according to Asahi, the favorable rating of Abe has already started to drop precipitously, tumbling to 60% from 71%. The longer the Abenomics experiment drags on, the lower this number will be until finally it hits the same level it did when Abe was forced to resign in disgrace the last time around.

Only this time he won't be able to blame his failure on another bout of explosive diarrhea.

 

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Thu, 04/18/2013 - 20:46 | 3469169 Smegley Wanxalot
Smegley Wanxalot's picture

Price controls will now fix the problem in Japan.  They always work.

Thu, 04/18/2013 - 20:53 | 3469191 Scarlett
Scarlett's picture

Wealth effect  

 

Also, the Ben Bernake tag is missing

Thu, 04/18/2013 - 21:01 | 3469241 James-Morrison
James-Morrison's picture

Wealth effect.

They need to call this one as it is:  Pull the wool over the sheeple's eyes. 

Blinder effect.  

Thu, 04/18/2013 - 21:12 | 3469283 Jacque Itch
Jacque Itch's picture

The Abe/Krugman monetary philosophy has a failure rate of 100% in all world history.  Are guys like this so arrogant that they think it will work if they "do it my way"?

Thu, 04/18/2013 - 21:41 | 3469376 urbanelf
urbanelf's picture

I'm not rovin' it.

Fri, 04/19/2013 - 00:10 | 3469921 Anusocracy
Anusocracy's picture

I'd better buy a spare inflatable doll.

Fri, 04/19/2013 - 00:35 | 3469981 Manthong
Manthong's picture

Two all beef patties, special sauce, lettuce, pickles cheese, onions on a sesame seed bun mo yen fo you mo fo.

Tanky yu..

Abe.

Fri, 04/19/2013 - 06:19 | 3470354 IBelieveInMagic
IBelieveInMagic's picture

Finally some good news for the much maligned Japanese people -- they have one more reason to avoid ingesting at least one form of toxic waste. They already get their daily dose of toxicity (Fuku, we have not forgotten you).

Fri, 04/19/2013 - 06:33 | 3470377 GetZeeGold
GetZeeGold's picture

 

 

Oh no.....there goes Tokyo!

Fri, 04/19/2013 - 00:36 | 3469982 colddirt
colddirt's picture

good one.............

Fri, 04/19/2013 - 03:23 | 3470223 Lost My Shorts
Lost My Shorts's picture

Why does everyone say this is the Abe / Krugman monetary philosophy?  Isn't it just the standard medicine?

In the old days, whenever some profilgate developing company got into trouble with too much debt and hot money, the IMF would come in, and say tut tut tut, and demand devaluation of the local currency as a condition for a bail-out.  Japan is unique in not having much debt to foreigners, so they don't need an IMF bail-out, but otherwise isn't the Rx the same?  Japan has been living beyond its means on a river of debt, and needs to stop.  They must admit that they are not as wealthy as it seemed.  Devaluation of the currency forces people to buy fewer imports (lowering their standard of living of course, that is part of the treatment), and makes exports more competitive so the Japanese can do more of earning their way.  Standard medicine, no?

If not, what would you suggest that Japan do?

Fri, 04/19/2013 - 15:34 | 3473528 Scarlett
Scarlett's picture

gut 80% of govt, cancel all promises, default on the debt, let banks fail, let bankruptcies clean out the incompetent

Thu, 04/18/2013 - 21:17 | 3469298 fonzannoon
fonzannoon's picture

Hey OT but WTF is this???

Wang Shiqiang, 60-year-old chairman of the board of supervisors for China Jianyin Investment Securities Co., appeared to have jumped to his death on the afternoon of April 16 from the top of the office tower that houses China Jianyin.

In an issued statement, China Jianyin said the suicide was due to personal issues in Wang’s life, refuting online speculation that the death was tied to heavy losses incurred by gold investments.

It is yet unclear how much risk exposure China Jianyin has to gold futures.

http://www.marketwatch.com/story/china-banker-jumps-to-death-in-beijing-2013-04-18?link=MW_home_latest_news

 

Fri, 04/19/2013 - 00:45 | 3469997 Manthong
Manthong's picture

geez.. probably a paper guy way too wrapped up in the game..

not that it is such a bad end to an investment banker.

Thu, 04/18/2013 - 20:55 | 3469212 nmewn
nmewn's picture

Fucking clowns...how apropos ;-)

Thu, 04/18/2013 - 21:24 | 3469324 New_Meat
New_Meat's picture

Bigu Macku was not so bad, back when, but the fries were done in fish-oil and sucked.  'course, that was back in the day when the US "Mackadonaldos" actually did fries that Julia Child called "the best in the world".

- Ned

{and, above is no-shit}

{{GI ;-)}

Fri, 04/19/2013 - 00:20 | 3469942 Freddie
Freddie's picture

Fries done in Fukashima U235 oil.  Poor Japanese.  Nuked by Westinghouse twice then 4 times by Obama's General Electric scam company.

Thu, 04/18/2013 - 21:52 | 3469410 zorba THE GREEK
zorba THE GREEK's picture

I've got a yen for some Mickey D.

Fri, 04/19/2013 - 01:07 | 3470027 Manthong
Manthong's picture

I hate to date myself, but for the kindred spirits..

I personally hauled 50 pound sacks of potatoes over to the peeling drum in one of the original mcD's then  insert individually into the manual arm press fry slicer, blanch them in a stainless steel sink, hang in stainless baskets, drain, dry, then deep fry,

They were indeed delish..

that was then...   when kids worked..   :-).

Fri, 04/19/2013 - 01:54 | 3470108 iDealMeat
iDealMeat's picture

In Cali  "In n' Out Burger" still does that.. 

Delish indeed..

Fri, 04/19/2013 - 00:13 | 3469923 yogibear
yogibear's picture

Bubble Bernanke and the Fed as well as Krugman want to print to infinity in the US.

The US fed is advising Japan so expect the same here eventually.

Fri, 04/19/2013 - 02:01 | 3470113 Wile-E-Coyote
Wile-E-Coyote's picture

Jeees horse meat must be in demand!

Thu, 04/18/2013 - 20:48 | 3469177 Stackers
Stackers's picture

:0

Thu, 04/18/2013 - 20:49 | 3469178 A Lunatic
A Lunatic's picture

I ate at McDonalds once, in 1989.

Thu, 04/18/2013 - 20:58 | 3469189 IridiumRebel
IridiumRebel's picture

The shit is still somewhere in your intestines too.......

Thu, 04/18/2013 - 20:52 | 3469194 TumblingDice
TumblingDice's picture

You lunatic! Why would you do that?

Thu, 04/18/2013 - 22:27 | 3469567 JustObserving
JustObserving's picture

Maybe he felt suicidal that day. Or masochistic.  Or both.

Thu, 04/18/2013 - 20:55 | 3469213 HD
HD's picture

How was your McDLT?  Was the hot side hot and the cool side cool?

Thu, 04/18/2013 - 20:49 | 3469183 q99x2
q99x2's picture

Holy McFwuck

Thu, 04/18/2013 - 20:50 | 3469185 IridiumRebel
IridiumRebel's picture

Kono hennii Ronodudo Makodunadudo arimasuka?

Thu, 04/18/2013 - 20:50 | 3469186 TumblingDice
TumblingDice's picture

Must...destroy...middle class...everywhere.

Thu, 04/18/2013 - 20:51 | 3469193 spanish inquisition
spanish inquisition's picture

Damn, more bad news for silver and gold.

Thu, 04/18/2013 - 20:51 | 3469199 vulcanraven
vulcanraven's picture

Hory Infration

Thu, 04/18/2013 - 20:59 | 3469224 HD
HD's picture

Yoo bery raciss.

You feel bad. You feel bad long time.

Thu, 04/18/2013 - 20:53 | 3469202 SILVERGEDDON
SILVERGEDDON's picture

We're SCREWED. Japanese will sic Godzilla on to us for jacking up the price of the glow in the dark Fuk - u - Mac.

Fri, 04/19/2013 - 00:18 | 3469940 Anusocracy
Anusocracy's picture

I think it will be the Mothra Drones they will use.

Thu, 04/18/2013 - 20:54 | 3469206 Capitalist
Capitalist's picture

Japan just went up a couple of notches on the PPP Big Mac Index

Thu, 04/18/2013 - 23:35 | 3469824 Flagit
Flagit's picture

i was just chomping at the bit to mention the big mac index.

saw it explained on tv one day, back when i used to watch. before internet was everywhere. guess it stands to reason there is a website.

now i download. same, but different. arrrggg.

Thu, 04/18/2013 - 20:57 | 3469210 NoDebt
NoDebt's picture

I'd rather have "Pennywise" from the Stephen King novel "IT" looking over my shoulder while I eat than that Japanese Ronald McDonald.  Distrurbing.

Thu, 04/18/2013 - 20:57 | 3469215 Manipuflation
Manipuflation's picture

Get your ten percent "discount" burgers.

Thu, 04/18/2013 - 20:57 | 3469216 Dr. Engali
Dr. Engali's picture

It's transitory ... Kind of like McDonald's food.

Thu, 04/18/2013 - 21:01 | 3469236 noob
noob's picture

£¥$€ Me

Thu, 04/18/2013 - 21:04 | 3469245 A Lunatic
A Lunatic's picture

Radiated meat ain't cheap..........

Thu, 04/18/2013 - 21:06 | 3469250 ziggy59
ziggy59's picture

...'cause real mystery meat is expensive..

Thu, 04/18/2013 - 21:09 | 3469262 GOSPLAN HERO
GOSPLAN HERO's picture

McShit is a great stock.

Thu, 04/18/2013 - 21:10 | 3469270 Dr. No
Dr. No's picture

The BOJ, like all CBs are interested in lining the pockets of the big banks. If they were interested in increasing wages, the would do a negative withholding on paychecks. What they say in meeting minutes are mearly an attempt to disguise their primary goal of making the bank boards rich.

Thu, 04/18/2013 - 21:19 | 3469314 Tree of Liberty
Tree of Liberty's picture

Horse meat is getting expensive, eh!

Thu, 04/18/2013 - 21:32 | 3469347 SmittyinLA
SmittyinLA's picture

I think they'd go for horsemeat, its nostalgic

Thu, 04/18/2013 - 21:21 | 3469316 gold mans sack
gold mans sack's picture

It's OK. Lagarde approves of the easing measures.

Fri, 04/19/2013 - 07:01 | 3470471 fiddy pence haf...
fiddy pence haff pound's picture

I would say QUALitative easing, but McChucks has nothing to do with quality.

They oughta study what mental defect makes Japanese buy that shit. Where

I grew up, i just knew it was brainwashing of children. Old fashioned capitalism.

Thu, 04/18/2013 - 21:27 | 3469328 Hopium Dealer
Hopium Dealer's picture

but...but, Japanese is experiencing deflation!?!?!

Thu, 04/18/2013 - 21:25 | 3469329 marcusfenix
marcusfenix's picture

they jacked up the price on GMO pink slime...

 

Thu, 04/18/2013 - 21:31 | 3469344 SmittyinLA
SmittyinLA's picture

hey you pink slimed before i did!

Thu, 04/18/2013 - 21:30 | 3469341 SmittyinLA
SmittyinLA's picture

the PinkSlime Obamacare tab has to be monetized somewhere. 

Thu, 04/18/2013 - 21:29 | 3469342 Seer
Seer's picture

Food-producers have been operating with very small margins for way too long.  I watched reports on the cattle and hog industry noting how much they were losing per animal- I'd asked if one didn't wonder just how long that that could persist.

Eventually the problem of margins is going to surface on everyone's lap.

Folks in the West have some of the cheapest (yeah, and shittiest) food that there has ever been.  This WILL change.  When you start pushing 40% or so of your income toward food you'll start to see/feel what most of the world has been doing for a LONG time.

Thu, 04/18/2013 - 21:31 | 3469348 pitz
pitz's picture

Don't feel bad for those SUKI (tm) members (members of the motherfucking religion, The New World Religion (tm)) in Japan affected by this move.  The RELIGION's investments have been doing very well lately. 

Fri, 04/19/2013 - 02:51 | 3470185 Vlad Tepid
Vlad Tepid's picture

No one would have ever heard of  SUKI (wtf) if you didn't keeop mentioning it.  Go peddle you're reverse psychology evangelism elsewhere.

Thu, 04/18/2013 - 21:40 | 3469378 robertocarlos
robertocarlos's picture

That's dirt cheap still.

Thu, 04/18/2013 - 21:41 | 3469381 buzzsaw99
buzzsaw99's picture

¥150 for a cheeseburger is still dirt cheap imo.

Thu, 04/18/2013 - 22:43 | 3469665 Yen Cross
Yen Cross's picture

     It is Buzz. usd/jpy currently trading @ 98.50, so roughly $1.50.

Thu, 04/18/2013 - 23:32 | 3469812 Clever Name
Clever Name's picture

Depends on your definition of 'cheeseburger'. I dont think Mac actually serves one.

Fri, 04/19/2013 - 07:42 | 3470636 Non Passaran
Non Passaran's picture

Wtf it is a fuckng McD cheeseburger in Japan vs another bought for the dollar in the US.
That has nothing to do with the quali or taste of food

Thu, 04/18/2013 - 21:44 | 3469389 razorthin
razorthin's picture

Would you like a mortgage for your burger?

Thu, 04/18/2013 - 21:46 | 3469395 Angus McHugepenis
Angus McHugepenis's picture

20% of fuck all is still fuck all.

Thu, 04/18/2013 - 22:11 | 3469472 Not My Real Name
Not My Real Name's picture

McInflation

Thu, 04/18/2013 - 22:20 | 3469533 chinaboy
chinaboy's picture

Congratulation. They are closer to to the 2% goal. And I'm sure the inflation won't stop there. 

Thu, 04/18/2013 - 22:28 | 3469569 CheapBastard
CheapBastard's picture

Lets look at the wealth effect on usa wgaes....

...inflation has been running 6-12% since TARP...and wages...well, not so much.

Ex: COLA zero for most of the last five years.

BTW, Thank u Japan for the radiation-saturated Alaska salmon, prob no longer fit to eat safely from what I read...

Rotsa Ruck! Japan.

Thu, 04/18/2013 - 22:27 | 3469579 Freewheelin Franklin
Freewheelin Franklin's picture

Meeso hungry. Me feed you long time. 

Thu, 04/18/2013 - 22:39 | 3469641 Yen Cross
Yen Cross's picture

   Explosive Diarrhea...  That's some funny shit Tyler ! :-)

Thu, 04/18/2013 - 23:34 | 3469815 Clever Name
Clever Name's picture

I coulda done without that one...

Thu, 04/18/2013 - 23:02 | 3469719 RaceToTheBottom
RaceToTheBottom's picture

I love the McDonalds PPP index.  It is probably the only real piece of economic data left

Thu, 04/18/2013 - 23:09 | 3469757 Artful Dodger
Artful Dodger's picture

Fuck McDonalds. Making people sick.

Thu, 04/18/2013 - 23:20 | 3469777 the grateful un...
the grateful unemployed's picture

entry-level hamburger? i want the management level hamburger

Thu, 04/18/2013 - 23:52 | 3469869 Flagit
Flagit's picture

first of all, lets get everyone in the mood.

http://www.veoh.com/watch/v16036274NPTQq7zE?h1=John+Belushi+-+Samurai+De...

yea yea, im gettin there.

the back story here is this kid spent his whole childhood in prison. 5 kids standing around, gun was fired, someone died, he did the time. so all this kid has known his whole life, is a beat-down. i think after he turns 18 0r 21, he gets parole and a job at...you guessed it. mcdonalds. enter 2 drunk "women" with a $50 that dosent pass the test. hilarity ensues. a must watch for anyone who ever worked a food-service job.

http://www.teamliquid.net/forum/viewmessage.php?topic_id=387856

or

http://www.youtube.com/watch?v=ljKZp2QMyow

Fri, 04/19/2013 - 00:20 | 3469947 holgerdanske
holgerdanske's picture

A singular positive move for the health of the Japanese citizens.

Fri, 04/19/2013 - 01:00 | 3470025 Non Passaran
Non Passaran's picture

Statist

Fri, 04/19/2013 - 00:26 | 3469961 Joe A
Joe A's picture

While of course one should be paid to eat this crap made by McD.

Fri, 04/19/2013 - 00:44 | 3470003 jonjon831983
jonjon831983's picture

At least they aren't using horse meat instead of expensive beef right?

Fri, 04/19/2013 - 01:51 | 3470103 Haager
Haager's picture

my first question about McD hamburgers in Japan is if it glows in the dark. That feature would explain the price-hike.

Fri, 04/19/2013 - 03:51 | 3470246 Nussi34
Nussi34's picture

Japanese profiting from the weak Jen the same way the Germans are "profiting" from the weak Euro!

Fri, 04/19/2013 - 04:33 | 3470269 e-recep
e-recep's picture

early stages of hyperinflation?

Fri, 04/19/2013 - 04:48 | 3470279 forrestdweller
forrestdweller's picture

all fol amelica

Fri, 04/19/2013 - 05:10 | 3470295 Magnum
Magnum's picture

Speaking of McDonalds have you tasted the burgers lately?  Is it just me or has the quality gotten even worse, barely edible what they sell as a hamburger these days.

Fri, 04/19/2013 - 06:50 | 3470436 forrestdweller
forrestdweller's picture

they were always pieces of shit, these burgers. i have never understood why people come back to places like that after 1 visit. you know it's unhealthy, you know it makes you fat, you know they piss on the environment and on the labour-rights, and still people eat there. must be because it tastes so good. it's just because the natural human tendency towards laziness.

Fri, 04/19/2013 - 06:16 | 3470346 zetsurin
zetsurin's picture

Still cheap compared to the price in Australia.  It boggles my mind that people in Aus often still ask "was Japan expensive" when I tell them I used to live there.  The jokes on you Aussies!

Fri, 04/19/2013 - 06:37 | 3470391 world_debt_slave
world_debt_slave's picture

When I stayed in Japan for about three months, I ate the indigenous food and stayed away from the American restaurants and food. It was always cheaper than the McD crap and better tasting. The Japanese are more resourceful than Americans, e.g. eating the whole fish, eating fresh picked foilage and making a tempura.

Fri, 04/19/2013 - 10:39 | 3471733 mess nonster
mess nonster's picture

When the deflationary dynamic settles in, all manipulations will make the deflation worse. Rising food prices will cause consumer cutbacks elsewhere, which will contract the economy more as wages stay flat amnd companies continue to cut back on hiring and expansion. No-one will seek loans, and lloans will be unavailable to those who do.

Deflation bitchez, held over in Japan, but coming, inevitably, to a theater near you.

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