America could have $4 lunch bowls like Japan—but our zoning laws make them illegal
Zoning and food safety laws add up to outlaw tiny restaurants operated by one or two staff.
In Japan, workers rely on healthy lunch bowls for under $4. Japanese media literally tracks these prices because they're a daily staple for working people. The Japanese media reported on a surge in their price from $2.63 to $4.25 in 2021.
In America, we track grocery prices. Restaurants are luxury goods.
The U.S. lacks this budget restaurant tier! There's obviously demand for it. We'd buy $4 balanced meals if we had the option.
How does Japan’s restaurant market do this?
It’s not grocery prices; Japan’s grocery prices are ~18% higher than the United States.
It’s not hourly wages. Japan’s minimum wage ($6.68 an hour) is similar to America’s ($7.25).
Japan’s zoning and health codes allow tiny businesses!
Japan allows businesses that are only a few feet wide. Japanese restaurants can operate in small spaces, like one floor of a narrow single-stair case building (no wasted space or resources on a shared lobby).
"Koreatown manhattan 2009" by chensiyuan, CC BY-SA 4.0. Grabbed from Noah Smith.
In Japan, someone can even build a tiny coffeeshop in front of their home.
Because of small setups like these, many Japanese restaurants have only one or two staff. Some restaurants are physically so small that they can only seat two to five people. In some, you even eat standing up.
A tiny restaurant staffed by just a single person, their stove, and a rice cooker can sell you lunch for a similar price you'd pay at home.
The overhead is minimal.
But in the US, tiny restaurants are illegal.
Our zoning laws require almost every business to:
Maintain a large building footprint
Provide 2-4 parking spaces per business
Operate at a scale that requires multiple employees
Food trucks could help if they were allowed at scale. But the restaurant industry fights to limit food trucks. On average, food trucks must handle 45 separate regulatory procedures and spend $28,276 on associated fees.
Relatedly, our health code regulations also effectively outlaw people from opening restaurants in small spaces. Most jurisdictions require at least 3-4 different sinks—one for washing dishes (usually a large three-part sink), separate ones for washing hands, one for mopping, and often another for prepping food. This makes small commercial kitchens in under 200 square feet much harder.
America’s food regulations are also not set up for a single person to manage. The U.S. has 3,000 different agencies handling food regulations. The whole system, scattered across eight places in the municipal code, is basically uncoordinated and varies depending on where you are.
When you force every restaurant to be big, expensive, and car-dependent, cheap daily food becomes harder.
Density also drives prices down.
Singapore has $3 hawker center meals. Hong Kong serves $4 lunch boxes. Even Manhattan has 99 cent pizza slices. These use a tiny storefront model that maximizes foot-traffic volume.
Foot traffic from dense neighborhoods provides a constant source of customers, so restaurants can profit from high volumes of sales, rather than high prices.
Japanese cities let restaurants cluster in mixed-use buildings where people live, work, and transit. A 20-seat ramen shop near a station sees hundreds of potential customers during lunch rush.
American zoning typically separates commercial and residential areas.
Outside of New York City, most U.S. restaurants need customers to make destination trips via car. That friction means fewer total customers, requiring higher prices to stay profitable.
Zoning and city design doesn’t just impact housing supply.
Half of Americans spend nearly an hour a day cooking, partly because there's no sub-$4 option. A lot of us hate cooking but don’t want to spend $11 at Chipotle.
This category of restaurant is a form of basic infrastructure in Singapore, Hong Kong, and Japan.
When regulations prevent everyday people from starting businesses on small lots, we don't just lose those businesses. We lose the price points they make possible.
Individual regulations, each reasonable in isolation, can combine to lock out exactly the small-scale solutions that would help working families most. We can rewrite the rules to enable the neighborhood businesses that working families actually need.
Another area of regulatory issues is the ADA. Many of the tiny Japanese restaurants would fail any ADA compliance audit because you could not even enter them in a wheelchair, let alone sit/stand and eat. Nor could you get to the toilet (if one existed) etc. etc.
I believe there's some minimum customer size requirement (10?) before you start having to be compliant with the Japanese equivalent regulations. I could be wrong about the size because I can think of a number of ~20 seat establishments that are not wheelchair accessible due to steps. However all chain restaurants seem to be basically ADA compliant, but then those are almost always larger.
BTW in the countryside in Japan car parking space is also important. Everyone outside the large metro areas in Japan drives, just as they do in the US and for that matter Europe
Fantastic system level analysis. Two weeks after you published this, Ezra Klein on Trevor Noah’s show mentioned how much better the Tokyo regulatory regime is for small businesses. Trevor asked why the media don’t talk about these things. Love to see the discussion actually flourishing in these circles.