ENVALITH
株式会社ガーデン logo

Garden Co., Ltd.

274A・Standard Market・Retail Trade

株式会社ガーデン logo
Garden Co., Ltd.274A

Business

Garden Co., Ltd. is a restaurant chain operator whose corporate philosophy is "Make Now HAPPY," using M&A-driven corporate turnarounds and brand acquisitions as its growth engine. The company listed on the Standard Market of the Tokyo Stock Exchange in November 2024. Its core brands are Yokohama Iekei ramen chain "Ikkakuya" (128 stores) and "Yamashita Honki Udon" (18 stores), and it operates multiple formats including ramen, udon, steak, and sushi. As of the end of February 2025, the company operated a total of 195 stores, comprising 161 directly managed stores and 32 franchise stores. Its primary customers are individual consumers in the Tokyo metropolitan area, and it also captures inbound demand. The know-how gained from turning around more than 12 companies since its founding is the company's source of competitive advantage.

Business Model

Revenue from directly operated stores (¥17,895 million in FY2026, ending February 2026) serves as the primary revenue source, supplemented by royalties from franchise stores, food ingredient wholesale, and management guidance fees. The company utilizes turnkey properties (former restaurant sites with existing fixtures) and standardized operation manuals to minimize initial investment, achieving an average payback period of 20.0 months for Ikkakuya, with a shortest period of 4 months. Collaboration with the real estate business enables early acquisition of property information, securing a competitive advantage in store opening speed over rivals. Stores and brands acquired through M&A are converted to existing business formats, compressing the cost and time required for business format development.

Company Strengths

Ikkakuya (including Yokohama-do) posted net sales of ¥10,258,841 thousand and operating profit of ¥2,193,161 thousand for FY2025 (ended February 2025), achieving an operating margin of 21.4%. With an average investment payback period of 20.0 months and a shortest case of 4 months—extremely short for a restaurant business format—the company has established a highly profitable structure that enables continued store openings funded by its own capital.

Since its founding, the company has achieved turnarounds at more than 12 companies. By converting the loss-making stores of acquired companies to existing brand formats, the company substantially shortens the time and cost required for property acquisition, and by acquiring brands it can also skip the business format development period. This know-how constitutes a barrier to entry that is not easily replicated by competitors.

The smartphone app introduced from FY2022 (ended February 2022) had surpassed 580,000 downloads as of end-February 2025, with the Ikkakuya app alone exceeding 440,000 downloads. Through visit stamps and coupon distribution, the app promotes repeat visits and accumulates customer data, contributing to more efficient customer acquisition costs through digital marketing.

ENVALITH's Perspective

For 1Q FY2027 (ending February 2027), revenue reached ¥4,786 million (up 6.4% year on year), securing revenue growth, but profits declined sharply, with operating profit of ¥184 million (down 65.1% year on year), ordinary profit of ¥141 million (down 71.6% year on year), and quarterly net profit of ¥131 million (down 60.7% year on year). In addition to a rise in the cost of sales ratio (from ¥1,361 million in the same period last year to ¥1,579 million in the current period), SG&A expenses increased substantially from ¥2,610 million to ¥3,023 million, as accelerated store openings and new brand launch costs weighed on earnings. Achieving the full-year forecast (operating profit of ¥1,410 million, up 8.3% year on year) will require a substantial profit recovery over the remaining three quarters, and the progress rate of only 13.1% warrants close attention.

At the end of 1Q FY2027 (ending February 2027), total assets stood at ¥20,295 million (up ¥3,003 million from the end of the previous fiscal year), while total liabilities surged to ¥12,863 million (up ¥3,268 million). Long-term borrowings (including the current portion due within one year) increased by ¥3,106 million, and the equity ratio declined from 44.5% at the end of the previous fiscal year to 36.6%. Amid an external environment of continued rising market interest rates, interest expenses doubled from ¥14 million in the same period last year to ¥33 million, making clear the structural pressure that rising financial costs are placing on profits. An early recovery in profitability is essential to sustain the aggressive investment strategy.

The dual-brand hybrid strategy combining Ikkakke and Aburasoba Sohonten represents a rational design involving small-scale investment, low cost of goods, and complementary summer demand, and the plan to roll out 100 stores in 100 days can be evaluated as effective utilization of existing store assets. In addition, preparations are progressing for the overseas expansion of Yamashita Honki Udon through a Thai joint venture, with the first store slated to open this autumn. That said, in both cases the near-term profit contribution will be limited, and at this stage they should be positioned as medium- to long-term growth options. The transfer of the Niku Sushi franchise headquarters business (recording a gain on business transfer of ¥70 million) appears to be a reasonable decision as part of portfolio streamlining.

Growth Strategy

Scale expansion driven by four pillars: the 'Nito-Ryu' hybrid strategy, revitalization of M&A brands, aggressive new store openings, and overseas expansion.

A hybrid format that adds the signage and products of Aburasoba Sohonten to existing Ikkakke stores. Stores can be opened with minimal investment limited to signage changes, and aburasoba—positioned as a complementary product to Iekei ramen with its low cost and ability to supplement summer-season demand—is used to strengthen the earnings power of existing stores.

Manbaken (miso ramen), acquired in the previous fiscal year, has shown steady sales through store renovations and operational improvements, and the foundation for multi-store expansion is being put in place. Takadaya (a soba izakaya), whose operations began in March 2026, is undergoing brand rebuilding and productivity improvement measures to build a medium- to long-term growth foundation.

Against the full-year store opening plan of 21 stores for FY2027 (ending February 2027) (excluding the Thai joint venture), lease agreements for 15 stores had already been signed as of the end of the first quarter. Store openings are proceeding at a faster pace than in the same period of the previous year, with a total of 17 stores opened in the first quarter—7 directly operated and 10 franchise stores.

Overseas expansion of 'Yamashita Honki Udon' is being pursued through a joint venture company established in Thailand. Preparations are underway for the opening of the first store this autumn, along with property due diligence for the second and subsequent stores. This represents the company's first entry into an overseas market and forms a medium- to long-term growth option.

Last updated: July 17, 2026