Big bluffs and little lies: behind the rise of fast food in Japan – Nikkei Asia

TOKYO -- Japan's restaurant industry experienced a series of transformative events in 1971.

The biggest by far was the opening of the first McDonald's restaurant in Japan at the Mitsukoshi department store in Tokyo's Ginza district on July 20. The restaurant was built in 39 hours of frenzied work that began with the removal of display windows immediately after the store's closing at 6 p.m. on Sunday, July 18, and continued through Monday, Mitsukoshi's regular holiday.

"Daily sales reach 1 million yen ($2,800 at the time) and the outlet is filled with customers day in, day out," boasted Den Fujita, founder of McDonald's Japan (now Japan McDonald's Holdings), to media at the time.

Big words, but the real figure is said to be less than 300,000 yen. Yes, there were crowds in front of the restaurant, but most came simply to gawk. The throngs had no idea how to place an order, or even how to eat hamburgers, which they had never seen.

But Fujita's little lie created quite a buzz for the burger joint. The restaurant eventually became the talk of the town and was soon bustling with diners.

Ray Kroc, de facto founder of the U.S. McDonald's chain, attended the ribbon-cutting ceremony of the Ginza restaurant, but he was uneasy. The American side was opposed to opening an outlet in the upscale shopping district and repeatedly told Fujita not to.

Kroc said that choosing a downtown location was "nonsense," as McDonald's restaurants in the U.S. were in the suburbs where customers mostly arrived in cars. "You're right, Ray," said the accommodating Fujita. "We'll open our first restaurant on a suburban road near the coast of Chigasaki [in Kanagawa Prefecture]."

But Fujita was hardly keen on debuting in out-of-the-way Chigasaki. Years later, he explained why: "Foreign cultures and customs don't become popular unless they take root in the center of a country. In Japan, it's Ginza."

It was his belief and he was not to be dissuaded, even if it involved a little trickery.

Fujita got his start in sundries business in 1950 when he was a University of Tokyo student. He expanded it from jewelry to high-end imported apparel and was a pioneer of the foreign brand business in Japan. Having forged ties with Mitsukoshi as the sales agent for French fashion house Christian Dior, Fujita realized that the Ginza store's power to influence came from its standing as the center of Japanese fashion. He logically assumed that the best place to debut a foreign brand -- albeit one selling cheap hamburgers rather than luxury clothing -- would be in Ginza.

But it was not without a stroke of luck that the store actually debuted in Ginza. The Chigasaki outlet had almost been completed when local authorities balked at issuing a business permit, making it impossible to open the restaurant on July 20 during Kroc's visit. Fujita conveniently failed to inform the U.S. side of this development and secretly hurried preparations for the Ginza opening.

It was not until Kroc arrived in Japan on July 18 that Fujita informed the American that the Ginza restaurant would be the first McDonald's outlet in the country. But there were no signs of a McDonald's at Mitsukoshi. Shocked, Kroc canceled sightseeing in Tokyo and retreated to his luxury hotel room. He attended the opening ceremony with Fujita two days later, but how he must have felt is not hard to guess.

A common misconception that holds true to this day is that McDonald's in Japan was a hit from the get-go. But the next two restaurants that opened in Tokyo days after the Ginza opening fared poorly, briefly forcing the company to freeze expansion. Still, Fujita told employees: "You know, we're not selling hamburgers, we're selling fashion."

He leveraged Ginza's vehicle-free zone on weekends, installing colorful trash cans so young people could eat burgers and fries as they stood and chatted around the bins. Eating while standing was frowned on in Japan, but Fujita promoted it as cool to attract youth who were eager to embrace American culture. The media took notice, helping McDonald's gain traction.

The kanji for Fujita's given name, Den, is a combination of the kanji for "mouth" and "ten," which looks like a cross when written. Legend has it that his Christian mother chose the name in the hope that god would protect her son. Another explanation is that the kanji is a combination of "mouth" and "x" to ensure that Den would never suffer a slip of the tongue.

Whatever the origins, his bluff on Kroc seems to have inspired divine intervention.

Another fast-food giant, Kentucky Fried Chicken, arrived in Japan one year before McDonald's. Following the success of a prototype shop at Osaka Expo, KFC and Mitsubishi Corp. jointly established Kentucky Fried Chicken Japan (now KFC Holdings Japan) in 1970. The first restaurant opened in November that year in Nagoya, where chicken dishes had always been a local favorite. Not so KFC, whose grand opening was an unmitigated disaster. The restaurant was located on a suburban road as instructed by the U.S. company, a decision that failed to sit well with Japanese consumers.

Mitsubishi began to cut back on supplying the new restaurants with chicken, as poor sales forced the chain to use its capital to stay afloat and increased its credit risk. Takeshi Okawara, who later became the company's president, was the manager of the first restaurant after joining KFC Japan from Dai Nippon Printing -- the company that was supplying product packaging at the time. He used his own connections to arrange an appointment with Sumitomo Corp., begging the trading house to sign a contract to procure chicken. He claimed that KFC Japan had the backing of Mitsubishi.

Though not an outright lie, it was a brilliant bluff because Mitsubishi was about to pull out of the joint venture.

Okawara then approached another trading house, Marubeni, to hedge risks. He asked the company to join, saying Mitsubishi and Sumitomo were already on board. Marubeni agreed. Then he told Mitsubishi that the other two were going to be the suppliers and asked what it would like to do. Mitsubishi agreed to continue the contract.

The three trading houses not only supported the fast-food chain but also helped with the vertical integration of the poultry industry, from raising chickens and growing feed to processing meat and distribution. The effort significantly changed the chicken industry in Japan and is credited with cultivating Japan's appetite for chicken.

But even after stabilizing its supply chains, KFC Japan struggled with its first three restaurants. Okawara remained cheerful, telling employees that they were "going to get rich and spend their days drinking martinis and wearing tuxedos while lounging around a beautiful Hawaiian sea."

A silly motivational pitch some might say, but he instilled confidence in his teams. KFC in the U.S. adopted a franchise system and was called "the world's biggest billionaire maker." Years later, KFC's founding members in Japan had a drink in Hawaii to celebrate their success.

KFC Japan finally gained a foothold with its fourth restaurant, which opened in the Tor Road shopping street in Kobe in April 1971. The city's traditional openness to Western culture helped. After that, the chain opened an outlet in Tokyo's Aoyama district, renowned for its many embassies. This location goes down in the history of Japan's restaurant industry as the birthplace of the "Kentucky Fried Chicken at Christmas" custom.

It began with a request from a nearby Christian kindergarten, which said it would buy fried chicken on Christmas Eve if the outlet would send someone dressed as Santa Claus. The kindergarten teachers were mostly short women who could never be mistaken for Santa Claus. Okawara, who had become head of marketing, accepted the request and became Santa for a day.

After several annual visits to the kindergarten, the media took notice. When a reporter asked whether it was an American custom to eat fried chicken on Christmas, Okawara replied in the affirmative, igniting a fried chicken boom in Japan. This was again another little lie as Americans generally prefer turkey to chicken during the Christmas season.

As U.S. fast-food giants were trying to gain a foothold in Japan in the autumn of 1971, Atsushi Sakurada, former chairman of the popular Mos Burger restaurant chain operated by Mos Food Services, was selling rice balls in a van along the Koshu highway, which links Tokyo with Yamanashi.

McDonald's was much talked about at the time. Satoshi Sakurada -- Atsushi's uncle and the company founder -- had worked in the U.S. and had a hunch that the fast-food business was going to be big. He came up with the idea of selling rice balls in a van. But the venture ended within days as police warned him that he was violating traffic laws.

But the rice balls formed the basis of the homegrown hamburger chain. "There's a Japanese word teate (placing a hand on something)," Satoshi said when he recalled the company's early years. "By shaping rice balls with your hands, you are imbuing the food with power. That's why we stick to preparing food by hand.

"McDonald's and KFC had capital, but we started by bringing together all the money we had. So homemade dishes were all we could offer," he explained. This strategy led to megahits, including soy sauce teriyaki burgers and rice burgers.

The founders of the three fast-food chains had different management philosophies. For Fujita, "might is right" is the golden rule. Okawara aims for "marketing that doesn't lose," while Sakurada's credo is "fail and learn."

Over the past 50 years, the three giants have had their share of ups and downs, sometimes being driven to the edge of failure. But they have all managed to come back. They believe in the dishes their founders developed and have kept updating them to lure back customers who had stopped coming.

Today, the restaurant industry is bearing the brunt of the COVID-19 fallout. But the three chains were among the first to focus on take-away and delivery services to meet the demands of a pandemic-ravaged environment. They also started to digitize before the pandemic, helping accelerate order processing and improve marketing.

In the early years of the Japanese fast-food business, the three founders were confident in what was then a bewildering market, and they all experienced failure. But they overcame the odds with their mental toughness and business dexterity, occasionally accompanied by a side of big bluffs and little lies.

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Big bluffs and little lies: behind the rise of fast food in Japan - Nikkei Asia