Ikka Holdings.,Ltd

In the food and beverage industry, there are risks from selective personal consumption, growth of the home-meal replacement market, and intensifying price competition. In the Bridal Business, there is a risk of market contraction due to the declining birthrate and rising rate of non-marriage. In particular, the bridal market is expected to contract over the medium to long term, and there is also a need to respond to the diversification of wedding styles (e.g., small-scale weddings, weddings held overseas). The Group is responding through quality improvements, new menu development, and proposals for wedding style planning, but a deterioration in the market environment beyond expectations would directly affect business performance.

For both full-time employees and part-time/temporary staff, difficulty in securing human resources and rising labor costs continue against the backdrop of a declining working-age population. Part-time and temporary workers form the main labor force for store and facility operations, and if legal amendments regarding the treatment of short-time workers are made, there is a risk of increased labor costs and a decrease in the number of job seekers. The Group is responding through active recruitment activities, development of personnel systems, and strengthening of education and training systems, but if the planned staffing levels cannot be secured, it may hinder business development.

Since the Group provides food and beverage products at its restaurants, bridal facilities, and leisure facilities, if a sanitary accident such as food poisoning occurs, there is a risk of business license revocation or a business suspension order. In addition to monetary losses, a decline in social credibility could seriously affect business performance. The Group has established a hygiene management system that includes daily hygiene checks, periodic inspections by external specialized institutions, and stool testing, but complete elimination of such risk is difficult.

Since restaurants, bridal facilities, and BBQ and leisure facilities are concentrated in the Greater Tokyo area, if a large-scale earthquake, typhoon, epidemic, terrorist attack, or similar event occurs, there is a risk of decreased customer visits, business suspension, and substantial repair costs due to facility damage. Losses that cannot be covered by insurance may also occur, and there are concerns about soaring procurement costs due to supply chain disruptions. Diversification measures against this geographic concentration risk are limited, and the impact on business performance and financial condition could be significant.

To secure capital expenditure funds for store openings and working capital, the Group relies mainly on borrowings from financial institutions for fundraising. Although there has been no request for interest rate hikes at present, if interest rates rise significantly due to future changes in financial conditions, an increase in financial costs could affect business performance. The Group strives to maintain good relationships with financial institutions, but it can be difficult to respond to changes in the external environment.

The Group leases buildings for its offices, stores, and facilities, and in particular, bridal facilities are leased under fixed-term lease agreements, so there is a risk that the lessor may be unable to renew the contract due to circumstances on the lessor's side. The Bridal Business accounts for a high proportion of the Group's business performance, so the loss of a facility would have a significant impact on business results. There is also a risk that security deposits paid at the time of new store openings may become uncollectible due to the lessor's financial deterioration or bankruptcy.

Since the ingredients used and products procured are diverse, there is a risk that difficulty in securing raw materials due to disease, poor weather, or natural disasters, or a rise in procurement prices due to market conditions or exchange rate fluctuations, could push up the cost of sales. The Group continues to hedge such risks through developing new production areas and diversifying procurement sources, but it is difficult to completely control price fluctuations caused by external factors.

The Group relies on information systems for core operations such as sales management, customer information management, payroll calculation, and accounting processing. If unauthorized access, computer viruses, system downtime, or similar incidents occur, there is a risk of reduced operational efficiency and a loss of social credibility due to the leakage of confidential or personal information. The Group has implemented measures such as prevention of external unauthorized access, data backups, and access rights management, but complete protection cannot be guaranteed given the increasing sophistication of cyber threats.

The Group applies impairment accounting for fixed assets, and if future cash flows generated from held assets deteriorate, impairment losses may occur, affecting business performance. In a phase where the profitability of stores and facilities continues to decline, there is a risk that the simultaneous impairment of multiple assets could significantly worsen the financial condition.

The Group is subject to a wide range of legal regulations, including the Food Sanitation Act, the Act on Control and Improvement of Amusement Business, the Health Promotion Act, the Building Standards Act, the Fire Service Act, and labor-related laws and regulations. If a violation of laws and regulations occurs, there is a risk of receiving a corrective action order or facing obstacles to business plans. In addition, if legal amendments regarding the treatment of short-time workers or other regulatory tightening occur, additional costs or constraints on business operations may arise. The Group strives to establish a compliance system, but it must continuously respond to changes in the regulatory environment.