Thorough comparison of "Yoshinoya" and "Suddenly! Steak", which business is suffering from inflation?

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10/05/2022
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Thorough comparison of "Yoshinoya" and "Suddenly! Steak", which business is suffering from inflation?

Against the backdrop of soaring raw material prices worldwide, a number of businesses have announced price increases. If the price continues to rise, consumers' pockets will become tighter, but businesses will have to be enthusiastic about maintaining profits. If businesses do not make good profits, they will eventually bounce back into people's lives in the form of wages, which is a headache for both businesses and consumers.

Economic commentator Keiichi Kaya

Keiichi Kaya Economic commentator Born in Sendai City, Miyagi Prefecture in 1969. After graduating from the Department of Nuclear Engineering, Faculty of Engineering, Tohoku University, he joined Nikkei BP as a reporter. He changed to an investment fund management company of Nomura Securities Group and is in charge of corporate evaluation and investment business. After he became independent, he engaged in consulting work for central ministries and government-affiliated financial institutions. Currently, he is writing in various fields such as economy, finance, business, and IT. His books include "Poor Country Japan" (Gentosha Shinsho), "The Road to Millionaires is in Economics" (Cross Media Publishing), "Feeling Economics" (SB Creative), and "Post-New Industrial Revolution". (CCC Media House), "Study of the New Wealthy Class-A New Mechanism to Change the Japanese Economy" (Shodensha New Book), "The Essentials of War and Economy I Want to Learn as a Culture" (Comprehensive Law Publishing).

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Price increases are unlikely to subside immediately

Inflation, which has been progressing recently, is mainly due to the rapid increase in demand due to the expectation of economic recovery after the corona and the disruption of the supply chain. The supply chain has been disrupted worldwide due to the corona crisis, and it is hard to say that it is fully recovering at this point. On the other hand, the market is turning to look at the corona, and there is a mismatch between the expanding demand and the supply system that does not improve at all. This is a short-term factor, but there are many views that this rise in prices is not the only cause. Due to the rapid economic growth of emerging countries, global demand is increasing, and prices are likely to rise in the first place. Moreover, due to the political conflict between the United States and China, the economic zones of both countries are procuring goods individually, and the cost is rising due to the disappearance of economies of scale. These factors are structural and long-term, and if these effects are significant, inflation will not subside immediately. The other day, following the Yoshinoya restaurant chain, suddenly! Steak has announced a price increase, but beef is a symbol of inflation today. Beef prices have continued to rise steadily even before the sharp rise in prices, but the biggest reason is the economic growth of emerging countries. Many beef bowl chains use a part called a short plate made in the United States, but this part is not used for food in the United States, and Japanese companies could procure it cheaply. However, due to China's tremendous economic growth, demand for short plates for hot pots has skyrocketed. It has come to compete with Japanese companies in procurement. It is empirically known that consumption of various foodstuffs such as beef will increase as emerging countries achieve economic growth and raise their standard of living. In the future, not only China but also Asian countries will become richer and consume more foodstuffs, but there is a limit to the increase in food production. Even if the price increase this time has subsided, it is likely that the upward trend will continue in the long run. Similar phenomena are occurring in fields other than foodstuffs, and many companies are facing rising raw material prices. So how do these soaring prices affect corporate profits? Suddenly with the Yoshinoya! Let's consider the case of steak.

Inflation-resistant and vulnerable businesses

With this price increase, the Yoshinoya raised the average price from 387 yen including tax by 39 yen to 426 yen. The price of the short plate has risen 1.5 times in two years, so I should have wanted to raise the price further, but it seems that the reason why I kept it at 426 yen is related to the egg. Many people in the Yoshinoya order beef bowl and egg at the same time, and the price of the egg is 74 yen. If the beef bowl is 426 yen, even if you add the egg, it will fit for 500 yen. If it exceeds 500 yen, it is highly likely that the sales volume is likely to decrease sharply. On the other hand, suddenly! As for steak, "Wild Steak" (150 grams) increased from 880 yen including tax to 1,045 yen, 200 grams from 1,133 yen to 1,408 yen, and 300 grams from 1,419 yen to 1,804 yen. The price increase rate is about 19% for 150 grams, 24% for 200 grams, and 27% for 300 grams, but prices for hamburgers and chicken remain unchanged. The Yoshinoya has only raised the price by about 10%, and the price is set to protect within one coin, but suddenly! The price of steak will increase significantly, and we are prepared to increase the number of digits. It can be seen that there is a big difference in inflation tolerance between the two companies even if the menu uses the same beef. In the early stages of inflation, low-priced products and services that are close to daily necessities are at a disadvantage. Even if the price of these products and services rises a little, consumers are sensitive to it, so it is difficult to raise the price. On the other hand, sales of products and services that have a high unit price and have a luxury aspect do not drop so much even if the price rises a little. Suddenly! Steak is a restaurant that offers steaks to the masses, but the unit price is still high, and steak lovers gather at the restaurant. While it was decided that users would accept the price increase of about 20%, the reason why the prices of hamburger steak and chicken were left unchanged is probably because consumers are price-sensitive products like beef bowl. However, it is only in the early stages that products and services with high unit prices are more resistant to inflation. If prices continue to rise, businesses that provide daily necessities will in turn have an advantage. Necessities are things that must be bought in any situation, and if companies raise prices all at once, consumers have no choice but to accept it. In such a phase, consumers restrain the purchase of high-priced products and allocate the floating amount to the purchase of daily necessities, which in turn makes the sales of high-priced products worse. [Next page] How was it during the oil crisis?What kind of industry was hit?