One note first. Gusto is a family restaurant chain in Japan. It has what we call a drink bar. You pay once, and you refill as much as you want.
I went to two offline meetups recently. The first one was at Gusto. The second one was at McDonalds.
At Gusto, the drink bar was 439 yen. I drank four cups.
At McDonalds, a medium coffee was 190 yen.
I sat there for two hours. For 190 yen. That should not be possible. 190 yen, thank you for the coffee. But I could not simply be glad about it.
Cheap. Too cheap. How does a store survive on prices like this?
The Same Coffee Is 490 Yen in America
It bothered me, so I looked it up.
The same McDonalds coffee in America is $2.99 for a medium. At 164 yen to the dollar, that is about 490 yen.
190 yen and 490 yen. Same chain. Same coffee. More than double the price.
I checked Starbucks too.
McDonalds small: 150 yen in Japan, about 390 yen in America.
McDonalds medium: 190 yen in Japan, about 490 yen in America.
Starbucks Tall: 420 yen in Japan, about 435 yen in America.
Starbucks Grande: 465 yen in Japan, about 485 yen in America.
Starbucks costs almost the same in both countries. Only McDonalds is extremely cheap in Japan.
It Was Not the Coffee That Was Different
The beans come from the same family. The machines are the same commercial ones. The manuals are shared globally.
So what is different?
The hourly wage at McDonalds in America is $15 to $20. In Japanese yen, that is 2,460 to 3,280 yen. In Japan, it is 1,000 to 1,200 yen.
The coffee costs more than double, and it was never about the coffee. It was only about the pay of the people who make it.
Japan can sell coffee for 190 yen because Japan is a country where wages let a store run on 190 yen.
Thirty years ago, I hear, Japan and America were not that far apart. The world moved up. Japan stopped.
It is not that the price of the coffee has not changed. It is the price of this country that has not changed.
And do not think prices here are flat. The prices I feel in daily life are going up. Beer went up a little. Not enough to stop me buying it, but at the register I think, was it always this much? Rice is clearly expensive. Compared to a few years ago, maybe double. I looked at the price tag on the bag twice.
Prices go up. Wages do not. They stay stopped while the price of everything else climbs.
And still, McDonalds coffee stays at 190 yen. A store that holds its prices while everything rises. What holds that up, I think, is the pay of the people working there.
190 Yen, Thank You. But I Could Not Just Be Glad
I worked on a manufacturing floor for forty years. This story felt familiar.
From the day I started, efficiency was measured one way: booked cost divided by time. How much cost value you produced per hour. That number decided how the floor was rated.
But some of the work had no cost booked at all. Work that was never priced. We did that work, and it took time, and because its cost was zero, the number never moved. However hard you worked, it did not go up.
Not everything was like that. Some processes had solid cost behind them. Some just broke even. There was up and there was down. But the processes I was assigned to for years were the thin ones. Many times I thought, this cannot be right.
Nobody fixed it. There was no room to fix it, and no ears to hear it.
Raise efficiency. Do the work of two people alone. That was my floor.
Two hours of sitting for 190 yen. I should be grateful. But I could not honestly be glad. Behind this 190 yen, someone is standing at the counter for 1,000 yen an hour.
I did something like that for forty years. Told to raise efficiency, doing the work of two people alone. In the end, it was probably the same story.
A 190 yen coffee I happened to drink at a meetup. At the register I only thought, that is cheap. Then I looked it up, and it turned into this.
190 yen, thank you for the coffee. But honestly, I would not complain at 500 yen. Or at 1,000 yen.
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