S2 E9: How McDonald’s Said Kon’nichiwa to Japan
When McDonald’s CEO Ray Kroc arrived in Tokyo three days before the grand opening of their first international franchise in Japan, he was shocked to see that construction had not yet begun on the restaurant.
Enter Japanese businessman Den Fujita. After buying the rights to bring McDonald’s to the Land of the Rising Sun, and with no existing blueprint for international success with McDonald’s, Den had to invent the playbook for Japan.
Join The Wolf for the incredible story of how Den was able to construct and open the first international McDonald’s within 36 hours, then go on to become the third-largest international stage for the McDonald’s franchise.
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The Wolf of Franchises:
Welcome to Franchise Empires, where aspiring entrepreneurs learn exactly what it takes to become a successful franchise owner. From one location to 10 and beyond, I’m the Wolf of franchises. Hey everyone. It’s The Wolf. For today’s podcast, I did something a little different. Rather than have a guest, we have a short form story. This is repurposed for my Twitter feed, and I’ll only be doing this occasionally and only with the most popular tweets. Today I’m telling the story of how McDonald’s got started in Japan. Hope you enjoy.
The Wolf of Franchises is the CEO of Wolf Pack Franchising, as well as a creator at Workweek Media. All opinions expressed by the Wolf and podcast guests are solely their own opinions and do not reflect the opinion of Wolf Pack franchising or workweek. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. The Wolf Workweek and Wolf Pack Franchising may maintain positions in the franchises discussed on this podcast.
The Wolf of Franchises:
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In 1970, a businessman bought the rights to bring McDonald’s to Japan. But when C E o Ray Crock arrived three days before the first store was set to open, he was shocked. Construction on the first location hadn’t even started. Here’s how D Fujita built a McDonald’s in 36 hours and grew an empire in Japan. Den Fujita was born in 1926 in Osaka, Japan. The city unfortunately got decimated during World War II and took the lives of Fuji’s father and two sisters. Despite the hardship in his childhood, he still went on to attend law school at the University of Tokyo, one of the country’s most prestigious universities. While in law school, Fujita started a side hustle to help pay his tuition. He’d import foreign goods, then sell them to Japanese retailers. This eventually turned into a full fledged business, so we decided to forego a career in law to run it full-time.
Starting in 1951, the company was called Fujita and Co. Fujita and CO would go on to specialize in high-end fashion brands and become the leading importer and wholesaler of clothing from brands like Christian Dior and Long Champ. The client network he built from doing business in Japan’s retail department stores would be an invaluable asset. Later on, fast forward to 1970, and Fuji’s business was growing via travels to the us. He had eaten at a McDonald’s as early as 1967. After hearing from a colleague that they were expanding internationally, Fujita immediately arranged a meeting with then c e o and co-founder of McDonald’s. Ray Crock. Crock was happy to hear a Fuji’s experience with global brands and his familiarity with Japanese consumer tastes. Because of that, despite Fujita having less money than other suitors for McDonald’s Japan, CRO decided to go with Fujita. Fujita said to him, I was only interested if it was a 50 50 joint venture with a Japanese president.
Ray Croc’s reply was that his only condition was that they succeed, so they went ahead on the venture with no blueprint for international success at that time. For McDonald’s Den Fujita had to invent the playbook for Japan. His success can largely be boiled down to two strategic decisions. One was cultural. Fujita concluded that the company had to look a hundred percent Japanese. This wasn’t a luxury fashion brand that high-end wealthy consumers were longing for. It was McDonald’s, a fast food burger restaurant, so he had to position it as if it was an authentic Japanese brand. He made some changes such as turning McDonald’s to Naka Rudo and Ronald McDonald becoming Donald McDonald. Fujita also altered the menu to incorporate local favorites. The second part of the strategy was real estate. The go-to strategy for McDonald’s was to build stores in the suburbs and cater to the drive-in eating habits of Americans.
But Fujita believed that the younger generation in Japan was the key to his success. This meant he focused on urban markets. First, Fujita believed that the older Japanese eating habits were far too conservative, but he thought that they could teach the younger generation that the hamburger was a good thing for them. So Fujita chose Tokyo Shopping District for the first location and was able to secure prime real estate thanks to the network he built running Fujita Enco. A quote from Fujita reads, American tourists eating hamburgers in Tokyo would be an eye catcher. Japanese seeing that with think Americans are eating it, it must be good. But Fuji’s real estate was inside a store called Mitsu Kashi. That’s Japan’s largest department store, and that prime real estate came with the condition. Mitsu Kashi said that Fuji’s construction of building the McDonald’s could not interfere with their regular business hours.
What this ultimately meant is that Fujita had a 39 hour window during a holiday to build the entire restaurant. Rather than complain, he rented a warehouse and hired a crew of engineers to practice the process from start to finish. After three trials, they figured out how to get the construction time down to just 36 hours. So when Ray Crock arrived and his executive team was quite literally watching Fujita, him and the team executed. And on July 20th, 1971, the first McDonald’s opens in Japan. Despite no advertising, that restaurant was an immediate hit, and within a few months, it set the record for most sales in a day, Fred Turner, who was then an executive, but eventually became CEO after Ray Crock said this, Japan was really the acid test. After that, we realized that the American menu could fly abroad with proof of concept behind him. Fujita expanded and executed at breakneck speed. From 1971 until 1999, he opened to 3000 locations. That’s about two openings per week for 28 years straight. Today, Japan is the third largest market for McDonald’s behind only China and the United States. Of course, looking back, Fujita proudly told an anecdote that demonstrated the success of his approach. There was a group of Japanese boy scouts that visited the US and were interviewed by a local TV station. One of the Japanese boys said, I didn’t know they had McDonald’s in the US too.
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