FLYING GARDEN CO., LTD.

Business Details

A family restaurant business operating suburban roadside directly-operated stores under the "Flying Garden" brand across five prefectures: Tochigi, Gunma, Ibaraki, Saitama, and Chiba. The company positions Bakudan Hamburg as its core menu item and appeals to customers with value-for-money offerings such as 100% Domestic Rice, Free Refills, differentiating itself from competitors. The company adopts a vertically integrated business model in which hamburg steaks and chicken are manufactured in-house at the Tochigi plant, integrating quality control and cost management. This is the company's sole segment, and all revenue and profit are generated from this business.

Recent Overview

FY2026 (ending March 2026) achieved higher revenue and profit, with net income up 29.1% year-on-year, a substantial improvement

In FY2026 (ending March 2026), the company achieved increases across all key metrics: net sales of ¥9,200 million (up 11.3% year-on-year), operating profit of ¥599 million (up 7.3%), ordinary profit of ¥633 million (up 7.5%), and net income of ¥454 million (up 29.1%). The substantial increase in net income was driven by an improvement in income tax adjustment amount (from -¥5 million in the prior period to -¥30 million in the current period) and a reduction in extraordinary losses (from ¥34 million in the prior period to ¥16 million in the current period). On the other hand, the cost of sales ratio rose (from 32.4% in the prior period to 34.6% in the current period), causing the operating margin to decline to 6.5% (from 6.8% in the prior period). For FY2027 (ending March 2027), the company expects net sales of ¥9,600 million (up 4.3%), while forecasting declines in operating profit to ¥560 million (down 6.6%) and net income to ¥350 million (down 23.0%), reflecting continued cost pressure.

Key Products

Growth Drivers

• Steady trends in customer traffic and net sales (full-year net sales for FY2026 (ending March 2026) up 11.3%)
• Continued rollout of limited-time menu items centered on Bakudan Hamburg and a differentiation strategy (including new collaborations with VTubers and anime titles)
• Continued appeal to value-for-money through 100% Domestic Rice, Free Refills and differentiation from competitors
• Expansion of the store network through new store openings (opening of the "Maebashi Kawahara store" in FY2026 (ending March 2026))
• Gradual recovery in personal consumption and expanding inbound demand driven by wage increases and improving employment conditions
• Decline in effective tax rate due to improvement in income tax adjustment amount (net income margin of 4.9%, versus 4.3% in the prior period)

Risks

• Continued rise in raw material (rice, meat, etc.) and energy prices (raw material purchases of ¥2,058 million in the current period, up 27.2% year-on-year)
• Rising labor costs due to chronic labor shortages (total salaries, bonuses, and miscellaneous wages of ¥2,597 million, up 8.9% year-on-year)
• Uncertainty regarding future outlook due to U.S. tariff policy, Middle East tensions, and other factors, and their impact on energy and financial markets
• Impairment risk on store fixed assets (impairment loss of ¥9 million recorded in the current period, versus ¥33 million in the prior period)
• Increased costs for new store openings due to rising construction costs (expenditure on acquisition of tangible fixed assets of ¥433 million)
• Significant projected decline in profit in the FY2027 (ending March 2027) earnings forecast (operating profit down 6.6%, net income down 23.0%)
• Downward pressure on profit margins from the rising trend in cost of sales ratio (32.4% in the prior period to 34.6% in the current period)