Maruchiyo Yamaokaya Corporation

The Company's segments consist almost entirely of the ramen business, so if external factors such as a deterioration or stagnation of the domestic economy, or Company-specific issues, disrupt business operations, the impact will directly affect overall performance. All 188 stores (as of January 31, 2025) are operated directly and open year-round, so the diversification effect from business diversification is limited. The Company currently continues an expansion policy centered on the Kanto, Tokai, and Kansai regions, but structural vulnerability to changes in the external environment remains.

Pork for char siu and pork bones for soup are the Company's primary ingredients, and if a pork safety issue were to occur, it could affect performance through a rise in cost of sales and lost sales opportunities. Although risk is diversified through procurement from multiple suppliers, the dependency structure specific to pork has not been eliminated. The occurrence of pork-related diseases or infections, or a spike in market prices, poses a risk on both the cost and quality sides, as switching to alternative ingredients is difficult.

The Company's store opening policy is limited to locations along high-traffic arterial roads, so if properties meeting these conditions cannot be secured, expanding stores as planned becomes difficult. Even after opening, there is a risk that intensifying competition with restaurants and other companies in the same industry, including family restaurants and convenience stores, as well as changes in the surrounding environment, could significantly affect sales. While the Company is working to improve the accuracy of candidate site selection by expanding its property information channels, alternative means are limited given its location-dependent business model.

Under the policy of operating all stores directly, continuous recruitment and development of supervisors and store staff is essential to promote multi-store expansion, and if this does not proceed as planned, it could lead to a decline in service quality and delays in store opening plans. The Company conducts mid-career and new graduate recruitment along with OJT training led by dedicated training staff, but competition for hiring is intense amid the ongoing labor shortage across the restaurant industry as a whole. Since labor shortages directly affect the operational quality of existing stores, the impact on performance could be widespread.

The balance of lease and guarantee deposits paid for the leasing of land and stores reached ¥583,005 thousand (4.0% of total assets) as of the end of FY2025 (ending January 2025), and there is a risk that recovery may become difficult due to a deterioration in the financial condition of lessors. In addition, if an unprofitable store is terminated early at the Company's discretion, part or all of the lease and guarantee deposits may not be returned depending on the contract terms. As long as the Company continues its store opening strategy based primarily on leasing, this balance is expected to remain at a certain level going forward.

The Company's stores are subject to various legal regulations, including the Food Sanitation Act, as restaurant establishments, and if regulations are tightened or newly established, new response costs such as capital expenditures may arise, potentially affecting performance. The regulatory environment surrounding the restaurant industry continues to change in areas such as food safety, labor, and the environment, and the risk of increased compliance costs persists on an ongoing basis. At present, no specific details of regulatory tightening have been identified, but the impact would be significant if a simultaneous response across all 188 stores were required.

Since its founding, there have been no cases of administrative disposition due to food poisoning or similar incidents; however, if hygiene problems occur despite the implementation of hygiene management measures, or if a chain reputational damage arises from another operator's mishandling, or if a food ingredient manufacturer uses unauthorized additives, performance could be materially affected. The Company works to prevent such issues by stationing a food hygiene manager at every store, thoroughly implementing hygiene management manuals, and conducting regular hygiene inspections by specialized institutions. However, if a society-wide hygiene issue (such as an infectious disease) were to occur, there is a risk of impact beyond the scope of the Company's countermeasures.

Capital expenditures associated with store openings are financed mainly through borrowings, and the balance of interest-bearing debt stood at ¥2,547,199 thousand (17.6% of total assets) as of the end of FY2025 (ending January 2025). While the low interest rate environment in recent years has kept interest expenses (¥29,184 thousand in FY2025 (ending January 2025)) suppressed, if interest rates were to rise going forward, financial costs would increase, potentially affecting performance. Note that the equity ratio improved from 29.1% in FY2023 (ending January 2023) to 46.1% in FY2025 (ending January 2025), indicating an improving trend in financial soundness.

The Company in principle owns its store equipment directly, and if a store's operating profit or loss deteriorates without a near-term recovery expected, an impairment loss on fixed assets may be recorded, potentially affecting performance and financial condition. As the Company continues capital investment under its all-directly-operated store policy, the balance of fixed assets remains at a substantial scale, creating a structure in which impairment risk tends to materialize during phases of profit deterioration caused by economic downturns or intensified competition. The ability to carry out scrap-and-build of unprofitable stores serves as a certain risk-mitigating factor.

If a large-scale natural disaster such as an earthquake or typhoon occurs, in addition to a decline in sales due to a significant reduction in consumer motivation to visit stores, there is a risk of impact on financial condition due to physical damage to store facilities. Since the basic policy is to open stores along arterial roads, damage to road infrastructure poses a risk of directly reducing the number of store visitors. The securities report does not mention specific details regarding the status of BCP (business continuity plan) preparation.