Choushimaru Co.,Ltd.

In the sushi industry, competition is intensifying due to continued store openings by major chains and entry from other industries. If the restaurant market contracts or competition with rivals, including prepared-food (nakashoku) operators, further intensifies, this could affect the Company's business performance. The Company has established the provision of "true sincerity" (magokoro) as its management philosophy and is working to improve profitability through differentiation measures.

Because the Company operates a single-business structure centered on sushi, fluctuations in market prices or supply shortages of seafood, including tuna, and rice directly affect its business performance. There is a risk that market prices for key items could fluctuate significantly due to global conditions, exchange rates, catch volumes, and other factors. The Company seeks to mitigate this risk by entering into long-term contracts at fixed prices and diversifying procurement channels, but there is no guarantee of the effectiveness of these measures.

As a business handling fresh perishable ingredients, the occurrence of a food poisoning incident could have a serious impact on the Company's very survival. In recent years, food poisoning caused by parasites such as Anisakis, believed to be linked to global warming, has been on the rise, and incidents at other companies in the industry pose a risk of undermining consumer confidence in the sushi industry as a whole. The Company has established a HACCP-aligned hygiene management system, with its Hygiene Management Office conducting regular sample collection, stool testing, and store guidance.

Wage pressure is increasing amid a tightening labor market caused by a shrinking working-age population, and rising prices due to persistently high fuel costs stemming from the global energy crisis and yen depreciation have also become apparent. If utility costs and other expenses rise sharply following the end of electricity subsidies, this could affect the Company's business performance. The Company is promoting work-style reforms and revising its compensation system, but it recognizes the cost increases as an unavoidable burden necessary for building its business foundation.

As the Company expands its business scale through an increasing number of stores, securing and developing human resources in both quantity and quality has become a key challenge. If labor cost increases exceed the Company's expectations due to revisions to labor laws and regulations or a tightening labor market, or if the Company is unable to secure and train personnel to staff new store openings, this could affect its business performance. The Company is working to secure and improve retention of personnel through improvements to the working environment and revisions to its compensation system.

The Company has built a proprietary logistics system that delivers fresh fish, procured early in the morning at seafood wholesale markets, to all stores on the same day, which serves as a differentiating factor versus other conveyor-belt sushi chains. If the Company becomes unable to maintain and continue this system, it could lose its competitive advantage and affect business performance. In addition, because delivery must occur before store opening, there may be geographic constraints on the selection of sites for new store openings.

The Company operates a total of 91 stores across the Tokyo metropolitan area (Chiba, Tokyo, Saitama, and Kanagawa) and intends to continue actively opening new stores, but there may be cases where properties meeting the desired conditions cannot be found, preventing the Company from opening stores as planned. Significant changes in the surrounding environment after a store opens could also affect business performance. There is also a risk that security deposits and guarantee money may become unrecoverable due to the financial failure of landlords of leased properties.

If related laws and regulations such as the Food Sanitation Act, the Fire Service Act, and the Food Recycling Act are strengthened, the resulting new compliance costs could affect the Company's business performance. Under the Food Recycling Act, a target has been set for the industry as a whole to achieve a 50% implementation rate for food waste recycling and other measures by fiscal 2029, which may require additional response measures. In addition, because the Company has a high proportion of part-time and short-hour employees, revisions to labor laws concerning the treatment of part-time and temporary staff pose a risk of increasing labor cost burdens.

If store operations are disrupted by natural disasters such as earthquakes or typhoons, or by fires or accidents, this could affect business performance through decreased sales and the incurrence of restoration costs. The outbreak or spread of infectious diseases, including COVID-19, or a prolonged period before their resolution, could also affect business performance through reduced outings and other factors. Because the Company concentrates its store openings in the Tokyo metropolitan area, it faces a structural risk of being significantly affected in the event of a large-scale disaster occurring in a specific region.

The Company collects and manages personal information, such as customer survey data, and if such personal information were to be leaked for any reason, this could affect business performance through claims for damages and a decline in social trust. While the Company states that it takes thorough care in managing personal information, specific details of its security measures have not been disclosed.