HUB CO.,LTD.

If properties meeting the Company's proprietary store-opening criteria (lease terms, pedestrian traffic in front of the store, trade area characteristics, etc.) cannot be secured, new store openings may not proceed as planned, which could affect business performance. In addition, if profitability declines significantly after opening due to sudden changes in the external environment, there is a risk of recognizing impairment losses, and additional costs such as losses on retirement of fixed assets or penalty fees may arise upon store closure.

The Company's basic store-opening format relies on leased properties, and there is a risk of unplanned store closures due to circumstances on the lessor's side, such as contract cancellation or building reconstruction. As of the end of the fiscal year under review, the amount of lease deposits recorded was ¥1,050 million (excluding deposits for employee housing), representing 17.0% of total assets. If any of these deposits are not returned, in part or in full, for any reason, it could have a material impact on business performance.

Each store operates as a restaurant business with a license obtained from the prefectural governor under the Food Sanitation Act and conducts regular third-party hygiene inspections. However, if a food poisoning incident or similar occurs, the Company could be ordered to suspend operations or have its business license revoked. Since a business suspension leads directly to a decline in sales, the impact on business performance would be significant.

Stores that operate after midnight are subject to regulation under the "Act on Control and Improvement of Amusement and Entertainment Business, etc.," and the Company works to ensure compliance through thorough communication to each store. If the Company violates this law, it could be ordered to suspend business operations for a certain period. Given the characteristics of the British-style PUB format, which has a high proportion of sales during late-night hours, there are concerns about the impact on business performance.

The Company regards securing capable human resources, including part-time workers, as an important management issue, and implements measures such as regular company information sessions, improving employee treatment, and a system for promoting part-time workers to full-time employee status. However, if the Company is unable to secure sufficient personnel due to changes in the recruitment environment or other factors, it could disrupt store operations and affect business performance.

If raw material prices surge due to adverse weather, exchange rate fluctuations, or various other factors, the resulting cost increases could directly squeeze profits in the restaurant business. The Company continuously implements measures to mitigate the impact of price fluctuations, but there is a risk that its responses may not keep pace during periods of sharp price increases.

The Company employs a large number of part-time workers, and if there are changes to laws such as the Labor Standards Act or to systems such as social insurance, or if there are changes in the labor market environment, significant changes may occur in employee treatment. Since increases in labor costs directly affect profitability in the restaurant industry, there are concerns about the impact on business performance.

The Company has concentrated its store openings in the major metropolitan areas of Kanto, Chubu, and Kansai. If a large-scale earthquake or other disaster or power outage occurs in these regions, or if a wave of employee absences occurs due to an infectious disease such as a new strain of influenza, sales could decline significantly due to the suspension of store operations. Due to the high degree of geographic concentration, a widespread disaster in a specific region can easily spread its impact across the entire business.

The Company's business consists of a single format, the British-style PUB business. If economic sentiment worsens, customer consumption patterns and preferences change, or competing stores offering similar brands or services increase, this could directly affect business performance. Because there is no diversification across multiple business formats, the Company is relatively more vulnerable to changes in the market environment.

If reputational damage related to food safety and hygiene, such as food poisoning, or reputational damage arising from posts on the internet occurs and spreads, it could affect the Company's credibility and business performance regardless of the accuracy of the content. Furthermore, even reputational damage concerning competitors could pose a risk that spreads to the Company's business performance if it lowers the overall social evaluation of the restaurant industry.