OOTOYA Holdings Co., Ltd.

The company outsources all ingredient delivery to Nippon Access Co., Ltd. If an unforeseen event such as an accident occurs at the company's distribution center, there is a risk that a shortage of ingredients could halt operations at all stores. While there are significant benefits in terms of efficiency and cost, alternative means are limited, creating a structure in which supply chain vulnerability directly impacts business performance.

Ootoya's competitive advantage lies in providing high-quality products through in-store cooking, and the development of store managers who combine both "cooking skills" and "management ability" forms the foundation of business continuity. Amid worsening labor shortages across the food service industry as a whole, if personnel development does not proceed as planned, it may affect business performance through declines in store quality and delays in store opening plans.

The food service industry market is in a mature stage, and in addition to competition with other companies in the same industry, competition with different business formats such as convenience stores is also intensifying. If the price of products, store opening plans, or the number of customers changes due to a shrinking market size or changes in competitive dynamics, this may have a material impact on business performance.

While the company thoroughly manages hygiene through the establishment of a food hygiene research institute, investigations by external specialist firms, and regular inspections of supplier factories, in the unlikely event that a serious hygiene issue such as food poisoning occurs, it may have a severe impact on business performance due to damage to the brand image and a sharp decline in the number of customers. There is also a risk of receiving a business suspension order under the Food Sanitation Act.

If ingredient issues such as BSE or avian influenza occur, or if crop failures occur due to bad weather, this could lead to rising procurement prices and difficulty in securing ingredients, affecting business performance. While the company strives to ensure safety through diversification of procurement routes and pursuit of traceability, it is difficult to completely eliminate risks arising from external factors.

In overseas store expansion, there are country risks such as differences in laws, religion, and customs, policy changes, fluctuations in economic conditions and exchange rates, and terrorism or war in the countries where the company operates. Although prior research is conducted, if the expected results are not achieved as planned, losses from overseas operations may affect overall business performance.

At the end of the current consolidated fiscal year, the balance of tangible fixed assets in the Domestic Directly-Managed Stores Business amounted to ¥3,009 million (25.3% of consolidated total assets), and in the Overseas Directly-Managed Stores Business, ¥74 million (0.6% of the same). If store operating income deteriorates without prospects for recovery, or if the market price of fixed assets declines significantly, the recognition of impairment losses may affect business performance and financial condition.

The majority of net sales are generated by "Ootoya Gohandokoro," and while the company is strengthening external sales businesses such as prepared foods, takeout, and frozen food e-commerce, these have not yet reached a sufficient scale to serve as an alternative source of revenue. If sales in the main business format decline significantly due to unforeseen circumstances, it would be difficult to compensate through other businesses, resulting in a significant impact on business performance.

The company holds personal information of customers, shareholders, employees, and others, and strives for proper management. However, in the unlikely event of a leak or unauthorized use, it may affect business performance due to damage to social credibility, a decline in corporate image, and payment of damages.

The company is subject to a wide range of legal regulations, including the Companies Act, the Financial Instruments and Exchange Act, the Labor Standards Act, and the Food Sanitation Act, and responding to regulatory changes incurs costs. Although the company has established compliance regulations and risk management regulations and conducts committee activities, if officers or employees commit legal violations, it may affect business performance through damage to social credibility.