Hiramatsu Inc.

Changes in economic sentiment, shifts in consumer trends and preferences in the dining-out market, fluctuations in inbound demand, and responses to environmental issues, among other factors, may cause the restaurant and hotel concepts, cuisine, and services offered by the Group to fail to meet market needs. Should such changes occur, they may affect the Group's business performance.

If issues arise related to food safety, customer service, compliance violations, reputational damage via social media, harassment incidents, or leakage of personal information, the Group's social credibility and brand image may be damaged, potentially affecting its business performance. In addition, for brands based on partnership agreements with overseas chefs, difficulty in continuing such agreements may also affect brand value and business performance.

Unfavorable weather, natural disasters, surging crude oil prices, exchange rate fluctuations, changes in international conditions, and other factors may cause raw material prices, energy prices, logistics costs, and other costs to rise, leading to increased costs. While a certain range of such increases can be addressed through menu price revisions and similar measures, if cost increases exceed a certain range, they may affect business performance.

The Group handles personal information as defined under the Act on the Protection of Personal Information, and pays close attention to its management structure and handling. However, if personal information such as customer data is leaked, the Group's social credibility may be undermined and its brand image significantly damaged due to potential claims for damages, among other consequences. As a result, this may affect the Group's business performance.

The Group is subject to various legal regulations related to restaurant and hotel operations, including the Food Sanitation Act, the Labor Standards Act, and the Fire Service Act. If changes occur in these legal regulations, new costs may arise to address them, potentially affecting the Group's business performance.

If large-scale natural disasters such as earthquakes, floods, or typhoons, or the outbreak and spread of infectious diseases occur, normal business activities may become difficult due to store closures, reduced operating hours, or requests to refrain from going out, among other factors. In addition, if disruptions occur in logistics networks or in the procurement of raw materials, this may also affect the Group's business performance.

The Group's service quality and brand value depend heavily on human resources such as chefs, service staff, and hotel staff. If the recruitment and development of excellent personnel does not proceed as planned, or if there is an outflow of personnel, this may lead to a decline in service quality and affect business operations. The Group is advancing the establishment of a new personnel system and strengthening human resource development measures based on the Medium-Term Management Plan 2030; however, if these measures do not function as expected, they may affect medium- to long-term competitiveness.

The Group applies accounting standards related to the impairment of fixed assets. If profitability significantly deteriorates due to changes in consumption trends or the business environment, among other factors, the Group may recognize impairment losses. The recognition of impairment losses may directly affect the Group's business performance.