When Costco Wholesale opened its warehouse in a rural Japanese town not far from Tokyo last year offering hundreds of jobs at eye-popping pay, a nearby noodle shop chain took a drastic step: it hiked hourly wages by a third. "For us, even a one- or two-yen rise in raw materials costs is tough, so to increase hourly pay by even 10 yen is extremely challenging as we need to generate far more sales," said marketing director Takehiro Ehashi. After a round of internal discussions, Yamada-udon decided to renovate the store, in Meiwa, Gunma prefecture, offering 1,300 yen an hour for the first three months.