FLYING GARDEN CO., LTD.

The company operates 58 suburban restaurant stores under the "Flying Garden" brand across five prefectures: Tochigi, Gunma, Ibaraki, Saitama, and Chiba, and has a high dependence on its mainstay product, "Bakudan Hamburg." Changes in consumer needs, a decline in support for Bakudan Hamburg, or changes in population trends in store operating areas could affect business performance. As countermeasures, the company is pursuing new product development and expansion of its store operating areas.

The outbreak of infectious diseases such as BSE, foot-and-mouth disease, or avian influenza, or radioactive contamination, could cause a decline in consumer spending through direct damage or reputational damage. Given the business characteristic of relying on beef as a mainstay ingredient, social issues related to ingredients pose a risk that directly impacts business performance. The company addresses this through diversification of suppliers.

If large-scale earthquakes, storm and flood damage, or similar events cause damage to stores, factories, or information systems, or if the spread of infectious diseases such as COVID-19 causes a decline in demand or a shortage of employees, store operations could become difficult and affect business performance. The company has implemented shortened business hours and thorough hygiene management, but states that complete prevention is difficult.

If a natural disaster or accident causes damage to the factory, production of Bakudan Hamburg and chicken processing could halt, making it impossible to sell mainstay products. Dependence on a single factory poses a risk that could directly and severely impact business performance. The company is considering measures such as establishing a backup system and installing emergency power supply equipment.

In addition to hygiene management issues caused by the company itself, such as the occurrence of food poisoning, chain reputational damage arising from hygiene issues caused by other restaurant companies could increase consumer distrust and affect business performance. The company implements measures such as regular hygiene inspections by external inspection agencies, internal guidance based on store hygiene manuals, and on-site inspections of agricultural production sites and food factories.

Securing and developing personnel to practice "customer-first" service is an important management issue, and if this does not proceed as planned, it could lead to a decline in service quality and affect business performance. The company conducts extensive new graduate and mid-career recruitment every year and works on personnel development under a comprehensive training system.

The company recorded an impairment loss of ¥9,397 thousand in FY2026 (ending March 2026), and there is a possibility that properties meeting the requirements for new impairment loss recognition may arise in the future due to declining profitability at individual stores, among other factors. Against the background of increasing fixed assets accompanying multi-store expansion, the existence of low-profitability stores poses a financial risk. The company addresses this through monitoring the profitability of individual stores.