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At a large suburban restaurant last Sunday morning, the Slow Food movement radiated its languid charm to the local breakfast crowd. Unhurried table service. Pancakes waited 22 minutes. A primal feeling of gratitude when they show up.

Pleasant, but also part of the Genoa or Santorini landscape; a bustling McDonald’s outside Yokohama, unexpectedly.

The slowness is unintentional and sorry, the point is not to complain, but the difference. The restaurant was literally packed with customers but had an unrealistically small number of staff. Not only can you tell the relief from the unfamiliar long waits under the golden arches, but also from the prominent signs next to the counter that tell of labor shortages for each shift, imploring future employees to fill the vacancies.

The problem, as Japan has yet to fully admit, is that essential workers may not come, and the temporary solution – a tactic best thought of as “service inflation” – cannot fool customers forever.

For years, Japan’s simultaneous superpower and kryptonite has been quality of service, especially in the food and retail sectors. Over time and fierce competition, the standards here have raised customer expectations for cleanliness, punctuality, efficiency, knowledge and attention to detail to heights unparalleled in the world. However, it makes the absence of these standards a more glaring failure than elsewhere.

Even global brands like McDonald’s that seek to replicate a particular dining experience around the world know they have to up their game in Japan — and have historically done so.

The wild card today is Japan’s chronic labor shortage — a slow-burn demographic crisis and hesitancy to immigrate that, as underscored on an almost daily basis, is taking hold across the economy. Last week, a Kyodo news agency survey of 114 of Japan’s largest companies found that 49 percent reported a shortage of employees. At the same time, the Tokyo Shoko Research report said that in the first six months of this year, the number of bankruptcies directly caused by staff shortages increased by 2.5 times compared to the same period in 2022.

Versions of this crisis are everywhere — some disturbing. In a country where most of the land is hills and valleys, members of the Japan Society of Civil Engineers worry about a huge shortage of expertise in bridges and tunnels across the country.

But at least for now, much of consumer-facing Japan is entering a complex guessing game that seems to be taking inspiration from another corporate game trick. After years of deflation and loss of pricing power, Japanese food companies have become absolute masters of the dark art of “deflationary inflation” — reducing product quantities while maintaining familiar package sizes. Japan isn’t alone in taking this approach, but caution about raising prices means it’s becoming a more entrenched habit than others.

Grumpy Japanese Sites Detailed tracking of shrinkage and expansion reduces the length of a favorite popsicle, the number of slices in a pack of processed cheese, or the amount in a bag of Melty Kiss chocolates by how, by measurement and over time. One of the most popular jokes is about Fujiya’s popular Country Ma’am chocolate chip cookies, and the prediction that each cookie will be bigger than a $1 coin by 2040 at current inflation rates. Be small.

Shrink-and-expand cheats leverage the visual consistency of packaging to anchor expectations while reducing delivery. It also postpones fundamental changes in relationships with customers as long as possible.

Japan’s service industry – amazing 24-hour convenience stores and restaurants, well-staffed stores, ubiquitous vending machines, crazy scheduled trains, etc. – looks like it has to play the deflationary game at the same time two parts. Companies in other countries may shrug it off and offer worse service depending on the situation, while Japanese businesses are in trouble for their historical refusal to do so.

The outer packaging will remain as constant as possible, but Japan’s long-perfected and promised experience will wind down—shorter hours, longer lines, slower fast food, fewer trains, more self-checkouts. Eventually, it will reach the point where it cannot be concealed.

Food companies hit consumers with higher prices when the conundrum of product shrinkage and inflation can no longer fool consumers. When service deflation no longer works in Japan, broader expectations must be reset in a society marred by excellence.

leo.lewis@ft.com

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