I doubt you were misunderstanding the mechanics. I started it recently and the beginning is simply very difficult, but the funny thing is for as sharp a difficulty spike as it is (is it a “spike” if the line graph starts up there?) it immediately drops off once you have a full party, which is essentially the first thing you are tasked with doing. I don’t know about others but I just ran around the first two rooms and abused saves until I succeeded at three demon conversations.
Getting game overs is annoying because the cutscene is ridiculously long and if you don’t want to lose progress you have to pay a substantial sum of macca to be revived, which isn’t something you can afford to do that early in the game (I assume macca becomes more abundant later). Save often and use both save slots!