DOUTOR NICHIRES Holdings Co Ltd

Prices of green coffee beans, the group's main raw material, may fluctuate due to surges in international commodity markets, supply-demand trends in emerging economies, and weather conditions in producing regions, which could impact business performance. While the group hedges through futures purchase contracts based on the New York green coffee bean market and forward foreign exchange contracts within the scope of actual demand, the effectiveness of such hedges may be limited depending on market fluctuations. As countermeasures, the group continuously collects market information from suppliers, develops new production areas, and diversifies procurement.

As a food and beverage service provider, the group is subject to regulation under the Food Sanitation Act, and there is a risk of business suspension or other administrative penalties in the event of food poisoning incidents. Additionally, tightening of legal regulations could also impact business performance. As countermeasures, the group conducts regular bacterial and hygiene inspections by third-party organizations at each store, and relevant departments strive to gather information on regulatory changes.

In the Greater Tokyo Area and other major cities where store openings are concentrated, the occurrence of natural disasters such as earthquakes, typhoons, and abnormal weather, or the spread of infectious diseases such as novel influenza or COVID-19, could damage store and factory equipment or infrastructure, disrupt the supply chain, or make it difficult for employees to commute to work, potentially preventing normal business operations from continuing. As countermeasures, the group has formulated and disseminated an "Emergency Response Manual," established criteria for suspending or continuing store operations, and is developing and strengthening a risk response system to minimize damage in the event of an emergency.

Most offices and directly operated stores are leased properties, and as of the end of February 2025, security deposits and similar amounts across the entire group totaled ¥20.0 billion. If a landlord goes bankrupt or otherwise fails, part of the security deposits may become unrecoverable, potentially impacting business performance. As countermeasures, the group works to reduce this risk through thorough credit management when opening new stores, avoiding concentration of store openings with specific landlords, coordination with landlords by a dedicated in-house department, and information gathering from real estate-related business partners.

Because the group emphasizes profitability when selecting store locations and targets only properties that satisfy certain conditions such as security deposits, rent, trade area population, and competitive conditions, if properties meeting these conditions become scarce, the group may be forced to revise its planned number of new store openings, potentially impacting business performance. As a countermeasure, the group formulates store opening plans responsive to demand by closely examining and analyzing the business performance of existing stores to promptly identify changes in regional consumer needs.

If the profitability of individual stores deteriorates due to changes in the store environment or economic factors, it may become necessary to recognize impairment losses, which could impact business performance. As a countermeasure, the group works to promptly restructure the operations of stores and subsidiaries that have continued to record negative operating profit or loss, aiming to recover the amounts invested.

The group holds customers' personal information, and in the event of a leak, it could cause significant loss to customers as well as damage the group's social credibility. As countermeasures, the group has established an internal system in line with the intent of the Personal Information Protection Act, and works to ensure strict operation of rules based on internal regulations, management manuals, and operational guidelines, together with thorough employee education.

While the group positions overseas business expansion as one of its medium-term growth strategies, various risks exist, including differences in laws and regulations, political, economic, and social conditions, culture and business customs in each country, as well as fluctuations in exchange rates. If unforeseen problems occur, recovery of investment may become difficult, potentially impacting business performance and financial condition. As countermeasures, the group works to reduce risk through appropriate business management and support based on local operating conditions, review of management strategy from a long-term perspective, and coordination among relevant departments.