Unfinished Business Podcast Episode 5 Part 3: Pricing, Efficiency and Growth When Costs Keep Rising

In Part 3 of Unfinished Business Episode 5, Tokyo Lamington co-founder Min Chai brings a pressure familiar to hospitality businesses to the Growth Hotline: customers are watching their spending while ingredients and operating costs continue to rise. Anaita Sarkar and Tim Fung explore team efficiency, pricing confidence, destination experiences, new products and the value of an authentic brand story.

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Rising costs create a difficult balancing act for many small businesses. Especially when customers are watching their spending more closely than ever.

For is Min Chai, the co-founder of Tokyo Lamington, this is an ongoing concern. While the iconic bakery started out as a joke on a park bench in Tokyo it has helped reinvent Aussie classics such as the lamington and fairy bread.

But for all their unplanned success, Min says that the squeeze is real.

Meet Tokyo Lamington: a joke that turned into three bakeries

According to Min, the business began with an unusually simple idea. He and his business partner were sitting on a bench in Tokyo after a few drinks and were joking about selling lamingtons in Japan.

What started as a throwaway conversation slowly became something more serious. Ingredients procured ovens set, and batches poured.

Then COVID arrived.

Back in Australia with a small pool of savings and time to experiment, the pair decided to give the idea a chance. Initially, they expected the business might last three months. But now, six years later, Tokyo Lamington operates multiple bakeries across Sydney and Melbourne.

Build around a philosophy, not a trend

Min believes one reason the business endured is that it wasn't built purely around social media popularity. Instead, the founders focused on creating a business that reflected what they cared about. That included experimentation with flavours, a commitment to sustainability and viewing the lamington as a platform for creativity rather than a fixed product.

“We want a business that reflects ourselves.”

That philosophy shaped everything from product development to packaging.

Customer experience starts before the first bite

When Min displayed the product to the hosts, Anaita quickly becomes fascinated by Tokyo Lamington's packaging.

The recyclable cardboard container includes a lift-out insert that raises the lamington from the box. Not only does this show off the lamington before the customer even touches it, but this clever design also lets customers remove products without reaching inside the package, so they never get their hands dirty.

It's a small detail, but one that reflects a bigger idea.

“It's just part of the whole experience.”

Min explains that the customer experience doesn't begin when someone tastes a lamington. It begins when they receive the product, open the packaging and interact with it for the first time. From that perspective, the packaging is part of the experience, not just a container.

Nostalgia creates value

While Tokyo Lamington is known for inventive flavours such as yuzu meringue and tiramisu, Min points out that nostalgia plays an equally important role. The classic lamington remains the top seller while fairy bread-inspired products continue to resonate with customers.

Thes factors make it clear that customers are often buying more than cake. They're buying a memory, a feeling or a connection to something familiar. The moment of delight when you realise sweet treats are in the future.

“It's about bringing you back to that moment.”

Tokyo Lamington’s allure is that – with a little modern spin – it packages these moments in a way that delights not just the palate but the mind as well.

Managing costs from both directions

Min brings the Growth Hotline a joint challenge that many hospitality businesses will recognise. On one hand, the customers are facing cost-of-living pressures. On the other hand, operating costs are growing.

Either of these factors alone can be tough to handle. But together they create the perfect storm. There is only so much of a price increase customers may be willing to pay, yet ingredients and expenses continue to increase.

So, how do you protect margins without losing customers?

Examine efficiencies before all else

Tim's first suggestion isn't to take on more complexity by hiring staff or cutting costs. It's looking closely at how the team operates.

He argues that businesses often assume more work automatically requires more people, but additional headcount can sometimes create extra complexity rather than solving a problem.

“It's better to have less people in the team but working harder and paid well.”

His experience suggests that a smaller, motivated and well-paid team can sometimes outperform a larger team with more coordination challenges. The more moving pieces involved, the more can go wrong. Logistics is a harsh mistress.

But this isn't presented as a universal formula. Rather, it's an invitation for founders to examine efficiency before defaulting to growing your workforce.

Become a destination

Anaita sees another opportunity that builds on Min’s insights.

At its core, Tokyo Lamington isn't simply selling baked goods. It's selling an experience. When customers discover the business online, they often make a deliberate trip to visit. Families plan outings around it. People arrive expecting more than a transaction.

That changes the value equation.

"I think you are a destination business.”

Tokyo Lamington isn’t just flour and chocolate and desiccated coconut. It’s an experience-led businesses, meaning the destination itself is part of the product. And that’s a valuable addition.

Price for the people who love what you do

Pricing is one of the most uncomfortable topics for founders, and the thought of a price increase causing customers to leave tends to become a strong focus. But what they often overlook are the loyal customers who continue buying because they love the experience.

Tim believes many business owners underestimate how much value customers place on products they genuinely enjoy.

“You're like, If I put my lamington price up by say $2, I'm going to have this massive drop-off ," Tim says.

"If you're building a product that people love, they're okay with $2.”

He isn't suggesting every increase will succeed. His point is that pricing decisions should be based on evidence rather than fear.

Keep creating the next reason to buy

Tim also talks about the S-shaped curve that exists in every new business growth period. He explains that, after launch, sales grow, gain momentum and eventually level out.

But that change in behaviour doesn't mean the business stops growing. It’s a signal to founders that they need to keep creating new reasons for customers to engage.

Tim lists examples such as:

merchandise
loyalty programs
membership offerings
new products and flavours.

While none of these ideas are guaranteed winners, they offer founders new ways to create opportunities for future growth.

Use occasions deliberately

Anaita builds on this idea with a suggestion to start mapping the calendar for seasonal sales events

Mapping out the calendar for possible opportunities, Anaita lists

Father's Day
Halloween
Seasonal events such as New Years Eve
Special occasions (both personal and corporate).

These moments give businesses fresh reasons to connect with customers and introduce products that feel timely and relevant.

Rather than relying entirely on regular trade, occasions can create additional touchpoints throughout the year.

Authentic stories matter

Tim's final piece of advice focuses on authenticity. He believes many customers buy into a brand's story, values and personality as much as the product itself. They connect with founders who genuinely care about something. And whether that's sustainability, food, design or another passion, those interests help make a brand memorable.

“People buy into brands and authentic stories.”

For small businesses, that authenticity can become a meaningful source of differentiation.

Key takeaways for small business owners

1. Understand pressure from both sides

Customers and businesses can experience rising costs at the same time. Know which ones you can work with and which ones you might need to give ground on before making a move.

2. Review efficiency before adding headcount

Better coordination may sometimes create more value than new systems or a larger team.

3. Make experience part of the product

Customer value often extends beyond the item being sold. Nostalgia, experience, novelty, and destination can all add value in addition to the physical inputs of a product.

4. Approach pricing with evidence, not fear

Customers who genuinely value a product may be less price-sensitive than expected.

5. Keep creating new reasons to buy

Fresh products, offers and experiences help maintain momentum.

6. Use occasions strategically

Seasonal events and special events can create valuable opportunities for engagement.

7. Tell authentic stories

People often connect with the values and personalities behind a business as much as the product itself.

Thanks for reading

That's it for Part 3 of our Episode 5 recap.

You can read Part 1 here, and do a recap of Part 2 here

To hear Min Chai’s full conversation with Tim Fung and Anaita Sarkar, watch or listen to Episode 5 of Unfinished Business, proudly published by Vodafone Business: