Podcast Summary: The Economics of Everyday Things – Episode 64: Sushi Fish

Released: September 23, 2024
Host: Zachary Crockett
Produced by: Freakonomics Network & Zachary Crockett

1. Introduction to the Episode

In Episode 64 of The Economics of Everyday Things, journalist Zachary Crockett delves into the intricate economics behind one of the world's most beloved cuisines: sushi. This episode explores the journey of sushi fish from the ocean to the plate, highlighting the complex supply chains, pricing strategies, and economic challenges that underpin this culinary art.

2. Profile: David Utterback and Yoshitomo

The episode opens in Omaha, Nebraska, where David Utterback runs Yoshitomo, a sushi restaurant established in 2017 with the ambition to demonstrate that high-quality sushi is not exclusive to coastal cities like New York or San Francisco.

David Utterback [01:26]: "We've got all the nigiri sashimi and sushi rolls and all that. We've got items like our hama toast, which is essentially a yellowtail hamachi sushi bite that's been kind of reworked."

Utterback's goal was to bring authentic sushi to Middle America, ensuring that the selection of fish at Yoshitomo rivals that of top-tier cities.

David Utterback [02:06]: "We carry a pretty standard repertoire of fish. Your tuna, salmon, yellowtail, and then we also carry sort of a daily selection of specialty fish that we fly in from Japan."

3. The Journey of Sushi Fish: From Catch to Plate

Catching Bluefin Tuna: Risks and Economics

Bluefin tuna, once sold cheaply for cat food, have become highly prized for their rich, fatty meat, earning the nickname "diamond of the sea." The process of fishing for bluefin tuna is fraught with economic risks due to high variability in catch and prices.

Sasha Eisenberg [02:41]: "There's no commodity on earth that can lose as much value as quickly as a piece of high quality tuna destined for the sushi market."

Fishing quotas and the unpredictable nature of catching high-quality tuna make the economics of bluefin tuna particularly challenging.

The Role of Dealers and Auctions in Japan

Once caught, bluefin tuna are quickly processed and sold in auctions, particularly in Japan's renowned Toyosu Market. Dealers must decide whether to sell domestically or export, often betting on the highest possible returns from markets like Tokyo.

Zachary Crockett [07:02]: "There's a lot of demand for Atlantic bluefin in Japan, and a 500 pound tuna can often fetch much higher prices there than it can in the US but it's also a gamble."

At auctions, wholesalers assess hundreds of tuna simultaneously, making rapid decisions to maximize profits.

Sasha Eisenberg [07:43]: "These wholesalers make their initial assessment of which of these potentially hundreds of tuna are they going to want to bid on and how much are they going to want to pay."

4. The US Sushi Supply Chain: Distributors like Yama Seafood

In the United States, distributors such as Yama Seafood, led by Nobu Yamanashi, play a crucial role in supplying sushi-grade fish to over 800 clients, ranging from local sushi bars to global chains like Nobu.

Nobu Yamanashi [09:19]: "We sell, you know, maybe 10 to 12,000 pounds of tuna every week, 25, 30,000 pounds of salmon every week, thousands of pounds of hamachi, thousand plus trays of uni, anything like madai shimaji kanekama."

Yama Seafood sources fish both locally and internationally, navigating a non-standardized market where each fish's unique qualities affect pricing and availability.

Nobu Yamanashi [10:09]: "Every single wild fish is just kind of like a negotiation. Sometimes you can pay, you know, upwards of $20 a pound for a whole fish, right? And some days it might be 10 or 8, depending upon how much fish is available in the marketplace."

5. Pricing and Grading of Tuna

Tuna is graded based on several factors, including appearance, size, color, texture, and fat content. Grade 1 is the highest quality, preferred by sushi chefs for its visual and taste appeal, while Grades 2 and 3 serve different market segments.

Nobu Yamanashi [11:24]: "Number one would be your sushi restaurants that use it for raw consumption, like a nigiri. So the fish on top of the rice, right, it has to be aesthetically pleasing."

The grading impacts pricing significantly, with premium cuts like toro (fatty belly) commanding prices upwards of $40 per pound.

Nobu Yamanashi [14:23]: "It could go upwards of like $40 a pound or more."

6. Challenges in Distribution and Cost Management

Distributors face substantial costs, including transportation and the loss of weight during fish processing. For instance, cutting a whole fish can result in a 50-60% weight loss, driving up costs.

Zachary Crockett [13:10]: "You break down a fish, right, head on, like a sea bream, for example, you lose about 50%, 60% of the fish. So if you're paying, let's say, $20 a pound for it, the actual cost of the fish is way more."

Moreover, air freight costs for transporting fish to landlocked areas like Nebraska can be prohibitive, limiting access to high-quality fish and forcing restaurants to adjust pricing or accept losses.

David Utterback [20:14]: "Whether it's coming from Jersey or Japan. Getting sushi fish to Nebraska involves air freight costs, usually somewhere around 150 or 200 bucks. For a 100 pound box, that cost can be hard to swallow."

7. The Economics of Sushi Menu Pricing

To manage high costs associated with premium fish, sushi restaurants often subsidize expensive items with more affordable dishes like sushi rolls. Rolls can be made inexpensively and sold at a higher margin, balancing the overall menu profitability.

David Utterback [21:43]: "The engine of the sushi restaurant is the sushi roll. And they're just like cheeseburgers, man. They don't cost terribly a lot to make. Your basic California roll costs maybe 90 cents to make, but you can turn that around for eight, nine dollars, sometimes more, depending upon where you're at. The rolls pay for everything else."

This strategy allows restaurants to offer high-quality sushi without prohibitive costs for consumers, maintaining a balanced and profitable menu.

8. Insights from Sasha Eisenberg on the Sushi Economy

Sasha Eisenberg, author of The Sushi Economy, provides historical and economic context, explaining how sushi evolved from a street food in 19th century Japan to a global luxury item.

Sasha Eisenberg [04:12]: "You talk to a middle class Japanese person, maybe they would go on their birthday or they would think of it as, oh, that's the place that the politicians go for lunch."

Eisenberg highlights the adaptability of sushi in different markets, such as the creation of the spicy tuna roll in America to mask less desirable fish qualities.

Sasha Eisenberg [22:34]: "Spicy tuna was developed by American chefs and popularized because they realized if you put a spicy sauce or mayonnaise or such on tuna, you can begin to mask an increasingly undesirable color or flavorlessness or maybe even a smell."

9. Conclusion: The Fascinating Economics Behind Sushi

Despite the complexities and economic hurdles, David Utterback remains passionate about delivering high-quality sushi to Omaha.

David Utterback [23:36]: "It's crazy. 500 years ago, if you wanted an ingredient like a spice, 500 people would get on three ships and like a hundred would come back and you would have curry. Now I can just send a text message to somebody who I've met just a handful of times in Japan, and I can get something extremely special that I can serve in the most landlocked state in our country."

The episode underscores that the modern sushi experience is a marvel of logistics, technology, and economic strategy, enabling people in even the most unexpected locations to enjoy this delicate cuisine.

David Utterback [23:36]: "When you think about it, we eat better than any king or emperor in the history of humanity."

Notable Quotes with Timestamps

• David Utterback [01:26]: "We've got all the nigiri sashimi and sushi rolls and all that."
• Sasha Eisenberg [02:41]: "There's no commodity on earth that can lose as much value as quickly as a piece of high quality tuna destined for the sushi market."
• Nobu Yamanashi [09:19]: "We sell, you know, maybe 10 to 12,000 pounds of tuna every week..."
• Sasha Eisenberg [22:34]: "Spicy tuna was developed by American chefs..."
• David Utterback [23:36]: "When you think about it, we eat better than any king or emperor in the history of humanity."

Final Thoughts

Episode 64 of The Economics of Everyday Things offers an in-depth look into the world of sushi, revealing the economic intricacies that enable this global culinary staple to grace plates from Tokyo to Omaha. Through interviews with industry experts and insightful analysis, Zachary Crockett illuminates the hidden economic forces shaping our everyday dining experiences.