AMIYAKI TEI CO., LTD.

If food safety risks such as BSE, contamination by foreign matter, or allergen labeling issues materialize, a decline in customer traffic could lead to decreased sales and lower operating profit. As countermeasures, the Company has strengthened hygiene and temperature control at its central kitchens through the introduction of HACCP-based concepts, rigorous selection, guidance, and training of suppliers, and strict inspection and quality control.

Due to the declining labor population from the falling birthrate and aging population, along with tightening labor supply and demand, there is a risk that securing and developing the necessary human resources—both in quality and quantity—including full-time employees, part-timers, and part-time workers, may become difficult. If plans are not achieved, service quality decline, rising labor costs, and delays in opening new stores may occur, potentially affecting the Company's reputation and business performance. As a countermeasure, the Company is focusing on promoting respect for human rights and diversity and inclusion, as well as creating a workplace environment where diverse talent can thrive.

The restaurant industry is significantly affected by changes in consumers' eating habits and preferences, and given low barriers to entry, it faces intense competition from numerous operators ranging from individually-run establishments to chain restaurants. If the Company fails to establish a competitive advantage over its peers, this could affect its business performance and financial condition. As a countermeasure, the Company aims to establish a competitive advantage by providing products that are "delicious and good value" and enhancing services that encourage repeat visits.

While the Internal Audit Office, outside directors, and Audit & Supervisory Board members are working to strengthen governance, if corporate governance and internal controls fail to function properly, this could lead to a decline in social reputation, an impact on the stock price, and adverse effects on the Company's reputation and business performance. As a countermeasure, the Company maintains and builds appropriate governance and internal controls and conducts continuous monitoring.

If misconduct or criminal acts by employees or others occur, this could affect the reputation and business performance of the Group. As a countermeasure, the Company is working to ensure thorough legal compliance through employee training and strengthened internal controls.

With stores and factories concentrated in Aichi, Gifu, Mie, Shiga, Shizuoka, Kanagawa, Tokyo, Saitama, and Chiba, large-scale earthquakes, wind and flood damage, fires, and other events could cause significant damage to operations and the supply chain system. Business performance and financial condition could also be affected if customers or employees suffer harm. As a countermeasure, the Company seeks to minimize damage through the formulation of business continuity plans and the implementation of disaster prevention drills, although recovery may take a certain amount of time.

For various food ingredients such as beef, pork, chicken, vegetables, and fruit, there is a risk of reduced import volumes due to abnormal weather, natural disasters, and geopolitical risks both domestically and abroad, as well as price increases resulting from inflation, exchange rate fluctuations, and crude oil price movements. Soaring raw material and supply procurement prices lead to higher cost of sales, significantly affecting business performance and financial condition. As a countermeasure, the Company implements risk hedging through supplier diversification, long-term contracts, and the development of new suppliers.

If a new infectious disease emerges that is equal to or more severe than COVID-19 and behavioral restrictions are imposed, the Company may be forced to shorten business hours, suspend alcohol service, and take other measures, which could significantly affect business performance and financial condition. During the COVID-19 pandemic, the Company implemented vertical separation of administrative departments from sales and production departments and conducted satellite office trials. As a countermeasure, the Company continues to comply with government requests and implement measures to prevent the spread of infectious diseases.

In addition to the risk of increased cost and investment burdens due to the introduction of new tax systems and regulations aimed at curbing global warming, there is a risk that abnormal weather could reduce or halt the operation of factories, stores, and the supply chain, and cause quality deterioration or price increases in food ingredients. These risks could affect business performance and financial condition. The Group recognizes the importance of climate change and is proceeding with consideration of countermeasures.

The Company holds operating assets such as store buildings and goodwill, and if profitability declines due to economic changes or business deterioration exceeding expectations, making book value recovery uncertain, additional impairment losses may be required, potentially affecting business performance and financial condition. As a countermeasure, the Board of Directors thoroughly deliberates the appropriateness and effectiveness of investment plans such as new store openings, and appropriately monitors the situation after investments are made.