When I think of America—the first things that come to mind are Coca-Cola, towering skyscrapers, New York City, and, of course, hamburgers. More specifically, McDonald's.

As a kid, I used to watch Adam Sandler movies and other American comedies where the characters devoured burgers with such delight that I couldn't help but crave one myself. I don’t remember exactly when I had my first McDonald’s burger, but I believe it was during a trip abroad in my teenage years. At the time, just tasting a McDonald's burger made me feel "cool" and "trendy." I wanted to tell everyone that I had experienced the famous American burger for myself.

Over the years, I’ve tried McDonald’s in several countries, and—without meaning to shade other places—I have to say that Japan’s McDonald’s is the best. It feels cleaner, cheaper, and tastier. It sounds crazy, but that’s honestly how I feel.

McDonald's is everywhere in Japan. When I lived in Takadanobaba, a student hub in Tokyo, there was a McDonald's right in front of the station. Many students worked there part-time, but they also used it as a place to study or even go on dates. I was one of them—memorizing kanji while sipping a 100-yen coffee with my morning set. The smell of crispy fries always reminded me of the "American dream."

Many of my fellow students did the same—camping out 😃 at McDonald's with free Wi-Fi for hours. Our second go-to spot was Starbucks. As I traveled around Japan, I noticed that most McDonald's locations were strategically placed near major train stations. I thought this is a smart move—people are busy and hungry, so why not grab a burger on the go?

Today, I want to explore McDonald's success story in Japan and how they entered the market. This will be a two-part newsletter, with the second part focusing on the charismatic founder of McDonald's Japan, Fujita Den.

The History of McDonald's in Japan

McDonald's opened its first store in Japan in 1971, bringing American hamburger culture to a nation where rice and fish dominated the diet. By 2021, the company was celebrating its 50th anniversary. As of September 2022, McDonald's Japan had grown to 3,800 locations, holding a 20% market share and generating approximately 317.7 billion yen in sales in 2021 (Source: Nikkei)

During the late 1960s, Japan was experiencing a wave of cultural influence from the West. The Beatles' visit to Japan, the rise of hippie fashion, and the bowling boom were just a few examples. At a time when international travel was still out of reach for most, Japanese people were captivated by foreign lifestyles. It was in this atmosphere that McDonald's Japan was born.

In 1969, Fujita Den—who would go on to become the founder of McDonald's Japan—was running a trading company and traveling the world. He learned that McDonald's Corporation was considering entering the Japanese market and was searching for a business partner.

At the time, hamburgers were immensely popular in the U.S., and Fujita foresaw that Japan would eventually embrace quick-service restaurants. Sensing a huge business opportunity, he immediately reached out to Ray Kroc, the legendary founder of McDonald's.

Several major Japanese corporations had already approached McDonald's headquarters, giving Fujita little advantage in negotiations. He lacked the capital and corporate backing that his competitors had. However, Ray Kroc saw something special in him—his global mindset, communication skills, and entrepreneurial drive. Unlike large trading companies that treated McDonald's as just another business deal, Fujita had a passionate, hands-on approach.

Impressed, Kroc told him:

"Many Japanese businessmen have visited us, but you, Fujita, are the first person I truly want to entrust with the McDonald's business."

Location: The First McDonald's Opens in Ginza

How do you introduce a completely new food culture to a country that worships rice and fish? Fujita had a bold answer:

"The first McDonald's in Japan must open in Ginza—the center of Japanese trends."

And so, on July 20, 1971, Japan’s first McDonald's opened inside Ginza Mitsukoshi, one of Tokyo’s most prestigious department stores.

At the time, beef was still a rarity on Japanese dinner tables due to import restrictions. A menu centered around 100% beef patties was almost unthinkable. Yet, McDonald's insisted on maintaining its American authenticity. The gamble paid off. Young people fascinated by foreign culture flocked to McDonald's, eager to try the now-iconic hamburger. On weekends, the sight of customers strolling through Ginza’s Pedestrian Paradise with burgers in hand made headlines. The media framed McDonald's not as a strange foreign dish, but as a new fashion statement.

Unlike in the U.S., where most McDonald's locations were in suburban areas, Fujita insisted on launching in a high-profile, urban setting. He believed that if McDonald's gained traction in Ginza—Japan’s epicenter of youth culture—it would naturally spread nationwide.

This approach wasn’t just about selling burgers—it was about selling a lifestyle. This same strategy was later used by brands like Uniqlo, whose flagship store in Ginza played a crucial role in its rise to global prominence. From the start, McDonald's Japan wasn’t just introducing fast food—it was creating a new 'eating culture'. For your pleasure a commercial collection of 80 years of Mc Donald in Japan:

Hamburger University

One of the major factors behind McDonald’s success in Japan was the establishment of Hamburger University. Before launching its first store in Ginza, McDonald’s Japan created this in-house training institution to instill not only store operations but also its core management philosophy—QSC&V (Quality, Service, Cleanliness, and Value). Additionally, the university provided business administration and leadership training, essential for store management and human resource development.

This approach wasn't unique to McDonald's. Toyota, one of Japan’s most renowned manufacturing giants, had already established Toyota Gakuen in 1938, a corporate school aimed at training employees in Toyota’s production system. The concept follows the "Iceberg Theory" in management—where a company's visible aspects (such as products and services) are just the tip of the iceberg, while its true strength lies in the unseen foundation of training, leadership, and corporate culture.

Even the current CEO (Tamotsu Hiiro) of McDonald's Japan acknowledged the importance of hands-on training. In an interview, he shared:

“Everyone who joins McDonald's, whether they are mid-career employees or executives, undergoes store internships. Coming from outside the restaurant industry, I told former president Sarah Casanova, ‘I really want to understand the field.’ When I saw my schedule, it was a four-month training period. To be honest, I thought, ‘That long?’ (laughs). I trained at four different stores, wearing a beginner’s badge for a month at each. There were times I struggled with the cash register and made customers wait, but I was encouraged by their kindness. One elderly woman even said, ‘Please do your best.’”

This commitment to hands-on learning ensures that every employee, from part-time workers to top executives, understands the business from the ground up.

Industrialization and Menu Innovation

McDonald's Japan revolutionized the restaurant industry by standardizing operations—ensuring that menu items, pricing, service, and overall customer experience remained consistent across all locations. This efficiency allowed the company to expand rapidly, particularly in major cities.

Just four days after opening its first location in Ginza, McDonald’s opened its second store in Yoyogi, followed by outlets in Oi, Shinjuku and beyond. By 1972, new stores were opening at an average pace of one per month, with expansions into major metropolitan areas across Japan. This rapid growth fueled the rise of the fast-food industry, making dining out an everyday experience for many Japanese consumers. The menu taken from the first location as shown photo below.

Families loaded up their cars with luggage, heading out for leisure trips, while couples enjoyed drives in their stylish new vehicles. By the late 1970s, cars were everywhere in Japan. The expansion of major expressways and trunk roads connecting different regions, combined with rising incomes from rapid economic growth, transformed consumer behavior. The number of registered cars skyrocketed from around 7 million in 1965 to 30 million in just a decade, as domestic automobile manufacturers introduced a diverse range of models. What was once a luxury symbol of the wealthy had now become an everyday necessity, changing the way people traveled and shopped.

Amid this growing trend toward motorization, McDonald's Japan seized the opportunity and opened its first drive-through restaurant in 1977. At the time, full-scale drive-throughs were virtually nonexistent in Japan, making this innovative sales system a hot topic and a game-changer in the fast-food industry.

In the 1980s, McDonald’s Japan continued to innovate:

• Drive-through locations were introduced, catering to the rise of car culture.

• Advanced POS (point-of-sale) registers were developed to improve efficiency—so effective that McDonald's US headquarters later adopted them.

• In 1989, McDonald's Japan launched the Teriyaki McBurger, one of its first Japan-exclusive menu items. The burger's overwhelming success influenced McDonald's global strategy, shifting from a “one-size-fits-all” menu to allowing localized offerings tailored to each country’s tastes. Teriyaki Burger Set today in Japan sells for ¥670, photo below.

  

While McDonald's Japan initially focused on aggressive expansion, the company later shifted its strategy to quality over quantity. Rather than simply increasing store numbers, the company began renovating older stores and carefully selecting franchise partners.

Unlike Mos Burger, where many franchisees are small business owners or former salaried workers, McDonald's Japan prioritizes partnerships with large, well-established companies capable of managing multiple stores. This shift in approach significantly impacted productivity and profitability:

• McDonald's Japan boasts annual sales exceeding 300 billion yen with an operating profit margin of nearly 10%.

• In contrast, Mos Burger generates under 80 billion yen in sales with roughly half the profit margin of McDonald's.

The visionary behind McDonald's Japan, Den Fujita, was not only strategic about store locations but also set an ambitious goal: annual sales of 100 billion yen. He believed that for the restaurant business to be considered an "industry" rather than just a business model imported from America, it needed to reach an industrial scale.

“We’re not just trying to profit by copying a successful American business model,” Fujita declared.
“Our goal is to create an entirely new industry—one that doesn’t yet exist in Japan.”

Challenges of McDonald's in Japan

McDonald's Japan faced significant hurdles as the country’s economic landscape shifted. Following the collapse of Japan’s asset bubble and the onset of deflation, the fast-food giant’s long-standing success began to waver. In 2000, the company introduced half-price meals on weekdays, slashing the price of its ¥210 hamburgers to just ¥65. This strategy attracted budget-conscious salarymen in their forties, who were adjusting to reduced allowances amid the recession. However, while this move initially boosted foot traffic, it also marked the beginning of a damaging price collapse. McDonald's Japan was momentarily celebrated as a deflation-era success story.

The celebration was short-lived. In 2002, McDonald’s Japan ended its half-price promotion in an attempt to raise average customer spending, which had declined significantly. The move triggered a strong backlash, leading the company to report its first-ever financial loss. As a result, founder Den Fujita stepped down as CEO, later resigning as chairman in 2003. He passed away from a heart attack in April 2004.

Throughout its 50-year history, McDonald's Japan has faced two major crises. The first crisis, spanning from the mid-1990s to 2002, was a combination of aging restaurants from its rapid expansion period and an aggressive discounting strategy that ultimately weakened the brand. While the company had a record-high 3,891 stores in 2002, sales at existing locations had been in continuous decline for seven years.

Although McDonald’s Japan gradually recovered, another setback emerged in 2010, and by 2014, it faced its most severe crisis: the expired chicken scandal. A Chinese supplier was found to have been altering expiration dates on chicken nuggets, sparking outrage. Then-CEO Sarah Casanova's vague response—that McDonald's had been "tricked" by its supplier—failed to reassure the public, further damaging the company’s reputation. Source: Nissei

Current Situation

Over the past five decades, McDonald's Japan has navigated an evolving market, challenged by the rise of convenience stores, growing food safety concerns, and the impact of the COVID-19 pandemic. The company's philosophy emphasizes continuous evolution, summed up in its belief that "the most dangerous thing is to be in a state of improvement." Even when business is going well, stagnation is inevitable without constant innovation.

Japan’s prolonged deflation—spanning nearly 30 years—has contributed to a unique pricing mindset. Unlike other countries, Japan requires companies to announce price increases to the media, often comparing them to past lows. This scrutiny reinforces the deflationary mindset, making price adjustments difficult. However, McDonald’s Japan acknowledges that sustainable pricing is essential. Higher profits enable investments in wage increases and employee training, ultimately driving productivity and consumption.

Since 2022, inflation and a weaker yen have significantly increased raw material costs. With approximately 60% of McDonald's Japan’s ingredients imported—and 70% of its stores operated by franchisees—the rising procurement costs directly impact profitability.

McDonald’s Japan operates on a business model known as the "Three-Legged Stool", which emphasizes balance between McDonald's itself, franchise owners, and suppliers. As the company adapts to economic pressures, it must ensure that all three elements remain stable. In the words of its leadership:

"If any of the three legs are missing, or if any are too long or too short, the chair will not be stable. For customers to feel comfortable, all three legs must be healthy. A well-planned pricing strategy is essential to maintaining this balance." Source: Business Insider

New menus are also offered in different seasons that are special editions only for Japan Store. Check this Hamburger NY style and Potato chips with Ume(pickled plum) flavor and garlic.

References

1. Nippon.com. McDonald's Japan: Success, Challenges, and Reinvention.

2. McDonald’s Japan. 50th Anniversary: McDonald’s History and Social Impact.

3. Tokyo Weekender. Den Fujita: Japan’s McDonald’s Man in the Spotlight.

4. Tameshiyo. Book Preview: The History of McDonald’s Japan.

5. Nikkei: McDonald’s Japan and Its Business Strategy.

6. Funai Soken Five Key Factors Behind McDonald’s Japan’s 50-Year Success.

7. Business Insider Japan: McDonald's Japan’s Three-Legged Business Model and Pricing Strategy