5 ms·

Am I missing something? There is a 30 year waitlist, but they make a loss on every croquette sold because they refuse to raise the price?

osobo 4y ago
It's marketing, done well.
QuercusMax 4y ago
Sounds like it's basically a loss leader for their main business, which is selling Kobe beef.
pjscott 4y ago
And they limit the number made each day. If the numbers given in the article are accurate, they're losing about $450 per day on ingredients for this loss-leader -- and for that price, they've bought fame around the world.
- chii 4y ago
  But how does this fame lead to future profit? Do people buy other things (which is profitable) when they can't get the apparently world famous croquette?
  - pjscott 4y ago
    They're mainly a fancy butcher shop, and I assume they have positive profit margins on the rest of the products.
  - doikor 4y ago
    It is basically their marketing budget. You could at the same time ask how any advertising turns into profit. Normal retail stores do this all the time. Sell something relatively cheap on a small loss to get you through the door and hope to make it up when you buy something else while you are there.
    - gambiting 4y ago
      No, I get that, but if you can't actually buy the product, then how is it going to tempt anyone to buy anything else? Like with Costco's hot dogs, I might go in for a hot dog and buy other stuff. But if there was a 30 year waiting list for their hot dogs then I'm simply not going into Costco.
      - eru 4y ago
        Presumably you can order their other products with less of a waiting list?
  - numpad0 4y ago
    I think the real answer is it's a mom-and-pop meat shop and they are not growth oriented. Japanese things that are needlessly world-class and made by growth-avoidant producers is not unheard of.
pcurve 4y ago
"half of the people who try the croquettes end up ordering their Kobe beef, so it’s a sound marketing strategy." The notoriety also has led to increased orders of other products from customers far away through the internet. I guess the 30 year waitlist also helps with the marketing. Presumably, almost no one will actually wait that long.
- ec109685 4y ago
  Raise prices, make twice as many, and have double the people eating their beef. Wish the author had at least asked that question.
  - pcurve 4y ago
    They did raise the price significantly, and also quintupled the production.
  - rtpg 4y ago
    To state the maybe-not-obvious here: beef croquettes are frying up a thing and fundamentally are totally fine and delicious with any meat. They of course taste _better_ with better meat, but it's honestly a bit of a waste of very high quality meat. To state a more obvious thing: you can sell many croquettes, but selling larger portions of beef means you are gong to be involved in less transactions per yen. And the margins are going to be much better anyways. Another thing that is true with more family oriented businesses is that the objective is often not to maximize profit. Of course people want sales, and healthy and stable businesses, but Japan in particular is rife with stories of something becoming very popular all of a sudden and the restaurant owner just gets overwhelmed and overall is negative on the extra business. This is probably the top point, the whole exercise of running a butcher is up to the personal whims of the people working there, and so often is not about min-maxing.
readthenotes1 4y ago
they did raise the price, but in a surprising turn of events, their costs went up and outstripped their price increase
wodenokoto 4y ago
Yes, you missed two things: They did raise the price. They do it as a promotion and they believe that associated/follow up sales outweighs the cost. Not mentioned in the article: it also got them on cnn and probably a lot of other news outlets. If you are a believer in “any promotion is good promotion”. They got a lot of press coverage out of 200 daily croquettes.
tromp 4y ago
Instead of raising the price, they could make them smaller. Then more people can enjoy them, the waiting list will shrink, and they'll make a profit...
fomine3 4y ago
Japanese love to join waiting list for unknown reason. It's sign of good deal for restaurants.
petesergeant 4y ago
There was a very popular info product I used to affiliate sell ~15 years ago, where the cost was $20, but they’d give you a $40 referral, because their follow up game was strong enough that they just saw it as paying $20 for qualified leads who were willing to get their wallet out.

osobo 4y ago

It's marketing, done well.

QuercusMax 4y ago

Sounds like it's basically a loss leader for their main business, which is selling Kobe beef.

pjscott 4y ago

And they limit the number made each day. If the numbers given in the article are accurate, they're losing about $450 per day on ingredients for this loss-leader -- and for that price, they've bought fame around the world.

chii 4y ago
But how does this fame lead to future profit? Do people buy other things (which is profitable) when they can't get the apparently world famous croquette?
- pjscott 4y ago
  They're mainly a fancy butcher shop, and I assume they have positive profit margins on the rest of the products.
- doikor 4y ago
  It is basically their marketing budget. You could at the same time ask how any advertising turns into profit. Normal retail stores do this all the time. Sell something relatively cheap on a small loss to get you through the door and hope to make it up when you buy something else while you are there.
  - gambiting 4y ago
    No, I get that, but if you can't actually buy the product, then how is it going to tempt anyone to buy anything else? Like with Costco's hot dogs, I might go in for a hot dog and buy other stuff. But if there was a 30 year waiting list for their hot dogs then I'm simply not going into Costco.
    - eru 4y ago
      Presumably you can order their other products with less of a waiting list?
- numpad0 4y ago
  I think the real answer is it's a mom-and-pop meat shop and they are not growth oriented. Japanese things that are needlessly world-class and made by growth-avoidant producers is not unheard of.

pcurve 4y ago

"half of the people who try the croquettes end up ordering their Kobe beef, so it’s a sound marketing strategy." The notoriety also has led to increased orders of other products from customers far away through the internet. I guess the 30 year waitlist also helps with the marketing. Presumably, almost no one will actually wait that long.

ec109685 4y ago
Raise prices, make twice as many, and have double the people eating their beef. Wish the author had at least asked that question.
- pcurve 4y ago
  They did raise the price significantly, and also quintupled the production.
- rtpg 4y ago
  To state the maybe-not-obvious here: beef croquettes are frying up a thing and fundamentally are totally fine and delicious with any meat. They of course taste _better_ with better meat, but it's honestly a bit of a waste of very high quality meat. To state a more obvious thing: you can sell many croquettes, but selling larger portions of beef means you are gong to be involved in less transactions per yen. And the margins are going to be much better anyways. Another thing that is true with more family oriented businesses is that the objective is often not to maximize profit. Of course people want sales, and healthy and stable businesses, but Japan in particular is rife with stories of something becoming very popular all of a sudden and the restaurant owner just gets overwhelmed and overall is negative on the extra business. This is probably the top point, the whole exercise of running a butcher is up to the personal whims of the people working there, and so often is not about min-maxing.

readthenotes1 4y ago

they did raise the price, but in a surprising turn of events, their costs went up and outstripped their price increase

wodenokoto 4y ago

Yes, you missed two things: They did raise the price. They do it as a promotion and they believe that associated/follow up sales outweighs the cost. Not mentioned in the article: it also got them on cnn and probably a lot of other news outlets. If you are a believer in “any promotion is good promotion”. They got a lot of press coverage out of 200 daily croquettes.

tromp 4y ago

Instead of raising the price, they could make them smaller. Then more people can enjoy them, the waiting list will shrink, and they'll make a profit...

fomine3 4y ago

Japanese love to join waiting list for unknown reason. It's sign of good deal for restaurants.

petesergeant 4y ago

There was a very popular info product I used to affiliate sell ~15 years ago, where the cost was $20, but they’d give you a $40 referral, because their follow up game was strong enough that they just saw it as paying $20 for qualified leads who were willing to get their wallet out.