KAPPA CREATE CO.,LTD.

Business Details

This is the core segment of the group, operating domestic and overseas directly-managed stores of the conveyor-belt sushi chain "Kappa Sushi." Domestically, the company pursues store openings along three axes: major-city station-front locations, suburban commercial facilities, and roadside locations, and it also has overseas operations in South Korea and Indonesia. The segment combines price competitiveness centered on tax-included ¥110 items with value appeal through high-value-added products and collaboration campaigns to capture a broad customer base. It is the core business, accounting for approximately 81% of the group's total sales.

Recent Overview

Segment profit deteriorated sharply, down 63.1% year on year, due to a surge in impairment losses

In FY2026 (ending March 2026), the Conveyor-Belt Sushi Business recorded sales of ¥59,245 million (down 0.5% year on year) and segment profit of ¥515 million (down 63.1% year on year). Gross profit margin declined by 1.2 percentage points year on year due to consumers' increased frugality amid rising prices and persistently high raw material costs. Profit was significantly squeezed by the recording of ¥713 million in impairment losses in the fourth quarter, covering 85 domestic stores, 2 overseas stores, and 1 domestic factory. The number of stores at fiscal year-end was 299 (4 stores opened during the fiscal year).

Key Products

Growth Drivers

• Improved customer convenience and labor savings through store renovations and DX investment (22 stores renovated during the fiscal year; cumulative 287 stores with automated guidance systems and 249 stores with self-checkout)
• Planned store openings along three axes—major-city station-front locations, suburban commercial facilities, and roadside locations (4 stores opened during the fiscal year, 299 stores at fiscal year-end)
• Expansion of profitability in the Indonesian business (successful marketing initiatives; 2 new stores opened and 1 store renovated during the fiscal year)
• Reduction in raw material costs through menu development collaboration across group business formats and joint procurement, leveraging synergies with the Colowide Group
• Expansion of the customer base by balancing price appeal (tax-included ¥110 items, all-you-can-eat, tax-included ¥90 value-support pricing items) with value appeal (high-value-added products, collaboration campaigns)
• Standardization of store operations and optimization of staffing through AI-driven work scheduling, shift creation, and DX of training manuals

Risks

• Pressure on gross profit margin from persistently high raw material prices, primarily rice and seafood (down 1.2 percentage points year on year during the fiscal year)
• Rising labor costs and hiring difficulties due to labor shortages
• Impact on customer traffic and spend per customer from consumers' frugality and lifestyle changes
• Risk of impairment of fixed assets (¥713 million in impairment losses recorded during the fiscal year for 85 domestic stores, 2 overseas stores, and 1 domestic factory)
• Damages lawsuit filed by Hama-Sushi Co., Ltd. (claim of ¥511 million; the impact amount is currently difficult to reasonably estimate)
• Risk of delays in improving the profit model amid soaring raw material prices in the overseas business (South Korea)
• Increased logistics and energy costs due to rising oil and energy prices amid heightened Middle East tensions and geopolitical risk