ENVALITH
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PEPPER FOOD SERVICE CO.,LTD.

3053・Standard Market・Retail Trade

Official website
株式会社ペッパーフードサービス logo
PEPPER FOOD SERVICE CO.,LTD.3053

Business

Pepper Food Service Co., Ltd. is a restaurant chain company founded in 1970. Its mainstay format, "Ikinari! Steak" (a thick-cut steak concept), offers high-quality thick-cut steaks at reasonable prices through a proprietary store operation system using induction cookers equipped with heat sensors. As of the end of December 2025, the company operated a total of 192 stores domestically and overseas (183 stores in the Ikinari! Steak business and 9 stores in the Restaurant business). The company combines three formats—directly-operated, franchise, and consignment—and is expanding overseas into Taiwan, the Philippines, and Indonesia. It also operates multiple other formats such as "Sumiyaki Steak Kuni," "Sukihana," and "Kairi," and handles EC sales of frozen foods and seasonings.

Business Model

In the core Ikinari! Steak Business, directly operated stores (130 locations) serve as a testing function for products and services, while franchisees (21 companies, 37 stores) provide franchise fees, ingredient wholesale payments, and sales-linked royalties. Consignment stores (5 stores) generate revenue through business consignment fees. Overseas, area franchise and master franchise agreements generate rights fees and royalties. In the Product Sales Business, royalty income from the company's own e-commerce operations and licensing agreements is also added. The structure is such that, while maintaining a cost of sales ratio of 39.5% (a 1.3 point improvement year on year), controlling SG&A expenses is key to improving profitability.

Company Strengths

Achieved 1.5 million official app members in May 2025. Coupon distribution linked to the "Niku Mileage" program and the addition of new features such as "Ikinari! Darts" have improved visit frequency and secured repeat customers. Integration with social media (X, Instagram, TikTok, YouTube) has also strengthened the ability to spread brand information.

In FY2025 (ending December 2025), segment sales of the Ikinari! Steak Business were ¥13,832 million (up 2.3% year on year), segment profit was ¥1,532 million (up 18.8% year on year), and the segment profit margin was 11.1%. The cost of sales ratio improved by 1.3 percentage points due to menu price revisions and changes in the sales composition ratio, driving companywide operating profit into the black for a second consecutive period.

In Taiwan, multiple area franchise agreements were signed and a second store was opened. In the Philippines, a master franchise agreement was signed in April 2025, and two stores have been opened. In Indonesia, three stores have opened following the master franchise agreement signed in September 2024. With 12 overseas stores (as of the end of December 2025), the company is building a revenue base in the Asian region.

ENVALITH's Perspective

For Q1 FY2026 (ending December 2026), net sales were ¥3,821 million (up 10.7% year on year), and operating profit was ¥89 million, turning positive from an operating loss of ¥24 million in the same period of the prior year. However, against the full-year earnings forecast (net sales of ¥15,548 million, operating profit of ¥101 million), the company projects a cumulative operating loss of ¥48 million for the first half through Q2, leaving it unclear whether the strong Q1 performance will be sustained through the full year. As an external factor, there is a risk that a surge in resource prices, yen depreciation, and rising import prices amid escalating tensions in the Middle East could push up food ingredient costs in the second half.

In Q1 FY2026 (ending December 2026) as well, the Ikinari! Steak business recorded an impairment loss of ¥13 million (compared with ¥2 million in the same period of the prior year). Total extraordinary losses of ¥13 million compressed pre-tax profit to ¥80 million, creating a divergence from the operating profit of ¥89 million. This suggests that profitability variation remains across the store portfolio, and continued recording of impairment losses going forward warrants attention as a structural issue that could hinder improvement in net profit levels.

The restaurant business saw rapid expansion in Q1 FY2026 (ending December 2026), with net sales of ¥195 million (up 46.2% year on year), while the segment loss widened to ¥11 million (compared with ¥0 million in the same period of the prior year). The business is in an investment phase for new formats such as "Kairi," and the deterioration in profit and loss alongside sales growth is a factor weighing on short-term profitability. Amid rising labor costs due to labor shortages weighing heavily on the restaurant industry as a whole, the timing of when this business reaches breakeven will be an important point for investment decisions.

Growth Strategy

Aiming for medium- to long-term growth through overseas franchise expansion and new business format development, built on a foundation of DX and profit stabilization in existing businesses

The company is pursuing simultaneous increases in customer count and average spend per customer, along with cost efficiency improvements, by combining digital marketing (IP collaborations and limited-time products) leveraging its official app membership base with DX promotion in store operations. In Q1 of FY2026 (ending December 2026), segment profit for the Ikinari! Steak business improved significantly, up 43.7% year-on-year, confirming the effectiveness of these initiatives.

The company is promoting overseas expansion through area franchise arrangements in Indonesia, Taiwan, the Philippines, and other markets. In February 2026, it opened its 6th Indonesian location, the "Ikinari Steak One Satrio" store, and continues to open new stores. Through the accumulation of royalty income, the company aims to diversify revenue away from dependence on the domestic business. Southeast Asia expansion is positioned as a key priority in the medium-term management plan.

The company operates multiple directly-managed restaurant formats, including "Sumiyaki Steak Kuni," "Katsukitei," "Sukihana," and "Kairi," reducing dependence on the Ikinari! Steak business. Revenue in Q1 of FY2026 (ending December 2026) expanded rapidly, up 46.2% year-on-year, though the investment phase continues, with a segment loss of ¥11 million. The company aims to achieve profit/loss breakeven through the introduction of seasonal limited-time menus and course menus, as well as enhanced brand recognition via SNS utilization.

The company sells frozen wild steak, frozen garlic rice, frozen hamburg steak, original spices, sauces, and other products through major e-commerce malls, expanding brand touchpoints outside of stores. Revenue in Q1 of FY2026 (ending December 2026) was ¥12 million (down 4.7% year-on-year), a slight decline, while profit/loss remained at a breakeven level. Expanding the product lineup to increase average customer spend and purchase frequency remains a challenge.

Last updated: July 17, 2026