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
I Live in ruralish Japan. And $4ish lunches exist but more often from chains like Yoshinoya and Katsuya rather than small holes in the wall. What you do see fairly often are shacks/tents selling yakoyaki, yakitori skewers or similar for takeout.
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.
Having once administered food truck regulations and being in the process of writing some right now, I want to point out that your source on the cost of licensing a food truck is from just one metropolitan jurisdiction. The cost is a tiny fraction of that in many places. A new food truck in Three Forks, MT, to take one example, can be licensed for less than $200. Same story In “over-regulated” Vermont, both depending a bit on your location. If you’re worried about the cost of starting a mobile business, worry about the cost of insurance! I once owned a similar business - a tour company - and insurance cost us nearly as much as fuel.
Monoply: Insurance companies know you are required to buy their product to operate. There was only one underwriter who would ensure a one-bus company operating in Wyoming.
It also depends on your plans for the truck. If it's going to be used in one location that can be true but if you want to have it at different places on different days then that's different. A friend of mine in Utah found that he needed inspections and licenses from multiple jurisdictions (basically each town/city) and it quickly added up
Since returning to the US from my first visit to Tokyo recently, I’ve been wondering how they’re able to have so many tiny, seemingly successful bars & restaurants! 🤔
"It’s not hourly wages. Japan’s minimum wage ($6.68 an hour) is similar to America’s ($7.25)."
I want to counter this. Yes, the *minimum* wages are similar, but the median wage is very different. People are rarely paid the federal minimum wage in the US.
Another point to note is that Japanese customers will typically do 90% of the table clearing themselves if the restaurant works that way (which is common). Typically the customer takes the tray of used dishes to a hatch/rack by the washing up area so all the restaurant staff needs to do is wipe the table down. That reduces the need for another staff member.
I'm sorry for being insensitive; I wholly agree with the rest of your article.
However, I maintain that the lower prices of Japanese restaurants are in no small part due to lower worker wages. In the US, the median wage for waiters & waitresses is $16.23 per hour (2). Compare this to Japan, where the average wage for restaurant staff is ~1,325.16 USD per month (3).
ZipRecruiter puts average US restaurant staff earnings at 2966 USD per month (4).
This is why PPP is so crucial when comparing cost of living. I agree that it would be much better if restaurants could serve customers with only 1-2 staff, and I think zoning laws in the US are bs—but I just wanted to point out that PPP matters when comparing prices between countries.
I somehow missed notification of your great write up. This is a great point. Thanks for these citations! I wonder how these wages compare to the EU, where they also lack $4 lunches but probably also have lower wages. I’ll noodle on this aspect, PPP is important!
Just to make sure you I understand, you mean that this pulls prices down 1. not just because of how much employee wages contributes to how much restaurants increase prices to offset labor costs, but also 2. that the lower wages means workers can pay less for their meals, thus the market has a strong incentive to provide cheaper meals? :)
Yes for 1, and for 2, from my limited understanding of econ, yes, I think so.
If I recall correctly, it's because in high-income nations, workers in relatively lower-income sectors (e.g. retail, restaurants, etc.) have their incomes pulled up due to increased aggregate labour demand caused by competition by higher-income sectors (e.g. tech, med, finance). This results in higher wages across the board, but also higher prices due to the increased labour costs.
Hence, to properly calculate the real price of something, you have to account for purchasing power parity (PPP).
The best part is that the lunch bowl is treated as a regulatory outcome, not just a cultural preference. Small spaces, mixed-use streets, and manageable health rules become part of the meal itself. That makes the comparison with the U.S. feel less like nostalgia and more like a systems diagnosis.
Thanks Simon I agree. I've been thinking of writing a follow up post explaining that even if you pay a worker $20 an hour, the economics of legalizing a one-staff or two-staff restaurant is how even Tokyo can have $4 lunches.
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
Francis this is so helpful! Your comment about the clean-up was also on point.
Have you lived in Japan a lot? Do the $4 lunches also exist in the car-centric areas of Japan?
I Live in ruralish Japan. And $4ish lunches exist but more often from chains like Yoshinoya and Katsuya rather than small holes in the wall. What you do see fairly often are shacks/tents selling yakoyaki, yakitori skewers or similar for takeout.
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.
Thanks so much Vince! I didn’t realize they’d talked about this. Really makes my day!!
Having once administered food truck regulations and being in the process of writing some right now, I want to point out that your source on the cost of licensing a food truck is from just one metropolitan jurisdiction. The cost is a tiny fraction of that in many places. A new food truck in Three Forks, MT, to take one example, can be licensed for less than $200. Same story In “over-regulated” Vermont, both depending a bit on your location. If you’re worried about the cost of starting a mobile business, worry about the cost of insurance! I once owned a similar business - a tour company - and insurance cost us nearly as much as fuel.
This is such great info, thank you Lee! I really appreciate it. By chance, why would insurance be so high? O.o
Monoply: Insurance companies know you are required to buy their product to operate. There was only one underwriter who would ensure a one-bus company operating in Wyoming.
It also depends on your plans for the truck. If it's going to be used in one location that can be true but if you want to have it at different places on different days then that's different. A friend of mine in Utah found that he needed inspections and licenses from multiple jurisdictions (basically each town/city) and it quickly added up
Since returning to the US from my first visit to Tokyo recently, I’ve been wondering how they’re able to have so many tiny, seemingly successful bars & restaurants! 🤔
I was blown away too! People are so creative, especially when a tiny business lets you test out a quirky idea!
"It’s not hourly wages. Japan’s minimum wage ($6.68 an hour) is similar to America’s ($7.25)."
I want to counter this. Yes, the *minimum* wages are similar, but the median wage is very different. People are rarely paid the federal minimum wage in the US.
As someone who worked for minimum wage for 5+ years, and whose parent did too - that's such great news!
Even if the worker gets paid $15 though, the restaurant can still offer cheap food because it saves so much by only needing 1-2 staff.
Another point to note is that Japanese customers will typically do 90% of the table clearing themselves if the restaurant works that way (which is common). Typically the customer takes the tray of used dishes to a hatch/rack by the washing up area so all the restaurant staff needs to do is wipe the table down. That reduces the need for another staff member.
Excellent point that no one has flagged yet! Thank you Francis!!
I'm sorry for being insensitive; I wholly agree with the rest of your article.
However, I maintain that the lower prices of Japanese restaurants are in no small part due to lower worker wages. In the US, the median wage for waiters & waitresses is $16.23 per hour (2). Compare this to Japan, where the average wage for restaurant staff is ~1,325.16 USD per month (3).
ZipRecruiter puts average US restaurant staff earnings at 2966 USD per month (4).
This is why PPP is so crucial when comparing cost of living. I agree that it would be much better if restaurants could serve customers with only 1-2 staff, and I think zoning laws in the US are bs—but I just wanted to point out that PPP matters when comparing prices between countries.
1 - https://www.bls.gov/opub/reports/minimum-wage/2023/
2 - https://www.glassdoor.ca/Salaries/tokyo-japan-restaurant-staff-salary-SRCH_IL.0,11_IM1071_KO12,28.htm
3 - https://www.ziprecruiter.com/Salaries/Restaurant-Worker-Salary#Monthly
I somehow missed notification of your great write up. This is a great point. Thanks for these citations! I wonder how these wages compare to the EU, where they also lack $4 lunches but probably also have lower wages. I’ll noodle on this aspect, PPP is important!
Just to make sure you I understand, you mean that this pulls prices down 1. not just because of how much employee wages contributes to how much restaurants increase prices to offset labor costs, but also 2. that the lower wages means workers can pay less for their meals, thus the market has a strong incentive to provide cheaper meals? :)
Yes for 1, and for 2, from my limited understanding of econ, yes, I think so.
If I recall correctly, it's because in high-income nations, workers in relatively lower-income sectors (e.g. retail, restaurants, etc.) have their incomes pulled up due to increased aggregate labour demand caused by competition by higher-income sectors (e.g. tech, med, finance). This results in higher wages across the board, but also higher prices due to the increased labour costs.
Hence, to properly calculate the real price of something, you have to account for purchasing power parity (PPP).
Good article, but the picture is from Korea not Japan.
The best part is that the lunch bowl is treated as a regulatory outcome, not just a cultural preference. Small spaces, mixed-use streets, and manageable health rules become part of the meal itself. That makes the comparison with the U.S. feel less like nostalgia and more like a systems diagnosis.
"It’s not hourly wages. Japan’s minimum wage ($6.68 an hour) is similar to America’s ($7.25)."
The minimum wage is much higher in any major city
Thanks Simon I agree. I've been thinking of writing a follow up post explaining that even if you pay a worker $20 an hour, the economics of legalizing a one-staff or two-staff restaurant is how even Tokyo can have $4 lunches.