Major restaurant chains and retailers are pushing new services in an effort to maintain sales levels in the face of Tuesday's hike in the consumption tax rate from 8 percent to 10 percent. Companies are thinking up new ways to try to ease the burden consumers are feeling.
10% discounts
The major beef bowl chain Yoshinoya Co. launched a campaign offering 10 percent discounts on its beef bowls and plates until October 15.
The discount applies to the price before tax. For example, the regular-size beef bowl is usually 352 yen before tax, but during the campaign period it is reduced by 10 percent to 316 yen. At the old tax rate of 8 percent, the usual price came to 380, yen but at the new tax rate of 10 percent, the discounted price comes to 347 yen.
When the consumption tax rate was last raised in April 2014, "it wasn't easy because of the high cost of ingredients," a company official in charge of the matter said. This time, the firm decided to offer this kind of discount.
Some companies are looking to an expected increase in customers who choose take-out meals, which are taxed at only 8 percent.
Ootoya Holdings Co. which has a nationwide chain of set-meal restaurants, rolled out a new take-out menu Tuesday with 13 options, including a teriyaki chicken meatball bento that costs 860 yen including tax.
"Our focus on take-out is designed to make up for any drop in in-store dining," an Ootoya spokesperson said.
In-house rewards
A government reward points system available to consumers who use credit cards, electronic money and other cashless payments began Tuesday. While the system gives reward points worth 5 percent of purchases at small and medium-sized stores and 2 percent at franchises like convenience stores, many companies are trying to attract users by offering even more points for a limited time.
In addition to the 2 percent for the government system, convenience store chain Lawson, Inc. offers customers points equivalent to 4 percent of their purchases if they use a credit card issued by the firm's group. This essentially means a discount of 6 percent, a better deal than before the tax increase. The company expects the number of card members to increase through the rewards policy.
Seven & i Holdings Co. is offering five times the regular number of points for purchases of in-house branded products including foods and daily commodities at group stores such as 7-Eleven and Ito-Yokado when customers use nanaco, a kind of electronic money.
Risk of exhaustion
Such strategies by restaurants and retailers indicate that companies are willing to accept lower profits for the time being in exchange for retaining customers. "While firms's initiatives might ease the burden on consumers, there's a risk that companies will exhaust themselves," said Shun Tanaka, a senior analyst at SBI Securities Co.
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