To Our Shareholders

Trends in the Food Service Industry

　In the food service industry, the top line is recovering due to a recovery in demand and a certain degree of effectiveness of price revisions by various companies, but the business environment remains unpredictable due to upward pressure on costs and chronic labor shortages. In addition, the lifestyle changes that followed the Corona disaster, such as a decrease in the number of customers using late-night hours, have taken root, and in addition, the stagnation of real wages has led to increased thriftiness and selectivity in the restaurant scene.
　Under these circumstances, the Group is strengthening its efforts to create a brand that is chosen by consumers in line with their changing lifestyles, and is continuing its efforts to respond to changes in the business environment over the medium term.

Sales Strategies

　In terms of product measures, each brand is striving to refine its mainstay products, which are the foundation of its ability to attract customers, and to enhance the value of the experience through menus that utilize high-value-added ingredients and other products. For example, Kappa Sushi offers more than 100 kinds of products priced at 100 yen (110 yen including tax) to maintain price competitiveness, and to further enhance added value, Kappa Sushi uses luxurious ingredients and collaborates with famous brand restaurants.
　Sales promotion measures included TV commercials featuring popular celebrities to enhance the image of brands with a certain network of stores in Japan, such as Gyu-Kaku, OOTOYA, and Kappa Sushi, as well as Freshness Burger's participation in a popular project on the TBS TV program “Job Tune,” which was well received, and also continued to focus on PR activities. Overseas, we are also developing promotions that make full use of Social media in response to the market environment in each country, and in the U.S., we are engaging in customer retention through “Meat Day” projects, etc. via the Gyu-Kaku app.

Store Strategies

　We are promoting the renovation of stores that have deteriorated over time with the aim of maintaining a comfortable space for customers, and our major themes include improving the convenience of Kappa Sushi by full made-to-order system, in addition refreshing the interior and exterior of Gyu-Kaku as well as improving the efficiency of in-store operations. And, in order to maintain appropriate QSCA standards, we are focusing on recruiting and training store personnel, and we are also continuing to make use of food serving robots, smartphone ordering, and self-checkout systems.
　With respect to investment in new stores, the Company is aggressively working to respond to changing restaurant needs and trade areas, primarily by reviewing the balance of food categories and locations and recovering thenet decrease in directly managed stores during the Corona disaster period. Specifically, in Japan, we have been increasing the number of restaurants, such as Gyu-Kaku and OOTOYA, located mainly in suburban and roadside areas, and overseas, also increasing mainly Gyu-Kaku and its derivatives in shopping malls, which have high customer attraction power, as major locations.

Response to Rising Costs

　In response to rising costs, through the full-scale operation of the “COLOWIDE MD R&D Center,” we have improved efficiency, such as by improving the yield rate of food ingredients through the integration of the product development departments of group companies, and have made changes to the grand menu and revised product prices in response to the procurement environment.
　Furthermore, to address the “2024 problem” of logistics, the number of distribution centers has been consolidated from 16 to 12 nationwide, and the frequency of food delivery has been optimized to reduce the delivery frequency from 6 days a week to 5 days a week at most of our distribution centers.

Catering Service Business

　In the catering service business, which is one of our mid-term missions, we are working to increase the number of contracts from business establishments and universities, and in order to enter the catering service business for hospitals and nursing care facilities, which is our main focus, we acquired all shares of Nifs Co., Ltd., which specializes in catering service in the healthcare field, on March 25 and welcomed it into the Group. In addition, we have established a new logistics scheme with Yamato Transport Co., Ltd. to meet diverse delivery needs, such as small-lot deliveries of food materials, and are steadily accumulating and utilizing know-how in the catering service business.

Sustainability Initiatives

　We continue to focus on sustainability initiatives, and as one example, we have achieved a “100% food recycling rate” at all 10 plants of our group companies. In addition, we are working to improve the capacity utilization rate of soybean meat production lines and commercializing products under brands such as Steak Miya and Kappa Sushi. Furthermore, we have taken a stake in an agricultural production corporation to ensure a stable supply of vegetables, and we are working toward sustainable procurement of food ingredients from a supply chain perspective.
　The Company is also promoting activities for the purpose of the growth and respect for diversity of its workforce, such as training for female leaders and providing a variety of employment options to ensure a comfortable work environment, then in March, the Company was certified as a “Corporation with Excellent Health Management 2024 (Large-Scale Corporation Division).
　The “Children's Cafeteria (Kodomo Shokudo)”, which we have been working on as a measure to contribute to the local community and society, has served more than 90,000 people in total.

Store Openings and Closings

　Regarding store openings and closings, the Company opened 94 directly managed restaurants and 12 directly managed izakaya (Japanese-style pub) restaurants, for a total of 106 stores, while closing 48 directly managed restaurants and 19 directly managed izakaya (Japanese-style pub) restaurants, for a total of 67 stores. As a result, the number of directly managed stores at the end of the current fiscal year was 1,403, and the total number of stores including franchised stores was 2,583. The ratio of restaurant business to the total number of stores is 90%, and we are steadily optimizing our business portfolio.

Financial Results for the Fiscal Year Ending March 2024

　As a result of the efforts above, the consolidated financial results for the current fiscal year show that although the recovery of the performance of consolidated subsidiary ATOM CORPORATION has been delayed, the performance of other consolidated subsidiaries, mainly REINS international inc., has been recovered remarkably, revenue amounted to 241,284 million yen, business profit to 8,712 million yen, profit to 4,064 million yen, and profit attributable to owners of the parent to 2,905 million yen.

Outlook and Future Prospects

　For the fiscal year ending March 31, 2025, there is a growing concern about the global economic slowdown due to the persistent inflation and high interest rate policy in the U.S. and the stagnant Chinese economy. In Japan, although economic activity will maintain a recovery trend due to high earnings, especially among large companies, personal consumption is expected to continue to be frugal and selective due to the slow growth of real wages, in addition to a lull in the demand recovery since the end of the Corona disaster. The food service industry is expected to continue to face a situation that does not allow for optimism, as upward pressure on costs and labor shortages continue to mount.
　Under these circumstances, the Group is striving to promote business based on our medium-term management plan, “COLOWIDE Vision 2030,” with a view to increasing our corporate value over the medium to long term. While maintaining the domestic food service business as our business base, we will strive to enhance corporate value, aiming to achieve consolidated revenue of 500 billion yen by the fiscal year ending March 31, 2030, through growth in the overseas food service business, where market expansion is expected, and in the catering service business, which we have newly entered.
　In the domestic food service business, we will continue to open new stores, mainly in the restaurant business, renovate and change the business format of aging deteriorated stores, and expand our market share through M&A.
　In the overseas food service business, in addition to strengthening business in Asian countries and North America, where we are already operating, we will promote the development of areas where we have yet to open new restaurants. We plan to open new stores mainly in the yakiniku and conveyor-belt sushi categories in selected markets where there is significant room for growth, focusing mainly on the working-age population.
　In the catering service business, we are proceeding with full-scale entry and business expansion into the catering service business for hospitals and nursing care facilities, using the acquisition of shares in Nifs Co., Ltd. as a foothold. We aim to leverage our superiority as a food service company through our menu development capabilities and high operational efficiency cultivated through competition in the restaurant market, as well as improved cooking efficiency through meal kits utilizing our central kitchen.
　To further fulfill our social responsibilities and continue our long-term growth, we are also focusing on promoting sustainability. Our activities will continue to be based on the five key materialities (priority issues) that we, as a company, have identified: “Contribution to the Global Environment”, “Food Safety and Security”, “Workplace Diversity and Growth&”, “Contribution to our Community and Society”, and “Strengthen Business Management Foundation”.
　We kindly ask our shareholders for your continued support and encouragement in the future.