KOURAKUEN CORPORATION

Business Details

A restaurant chain business engaged in the manufacturing and direct sales of ramen, gyoza, and other products. In addition to operating 346 directly-operated domestic stores mainly under the "Kourakuen" brand, the company operates 20 franchise stores domestically and overseas (11 domestic, 9 overseas). Under its management philosophy of "providing more delicious products at lower prices, faster, for more everyday dining occasions for more people," the company operates a regionally-focused chain centered on low-price, high-quality ramen, primarily in the Tohoku and Kanto regions. In October 2024, the company absorbed a wholly-owned subsidiary through merger and transitioned to a non-consolidated, standalone business operating structure.

Recent Overview

For FY2026 (ending March 2026) full year, net sales were ¥29,404 million and operating income was ¥1,515 million, achieving a significant increase in earnings

On a reference assumed consolidated basis, substantial year-on-year growth was recorded: net sales up 5.9%, operating income up 42.5%, ordinary income up 49.7%, and net income up 43.1%. During the fiscal year, the company renovated 23 stores and opened 2 new stores (including Kourakuen Aeon Mall Akita), bringing the total to 366 stores at fiscal year-end. 2 new stores were opened in Thailand. The company completed acquisition of land for the new factory, with operations scheduled to begin in December 2028. New graduate hiring was resumed for the first time in 8 years. A change in the estimate of asset retirement obligations was made (increase of ¥115 million). For FY2027 (ending March 2027), the company plans net sales of ¥31,500 million, operating income of ¥1,600 million, and net income of ¥1,250 million.

Key Products

Growth Drivers

• Expansion of the store network through renovation of existing stores (23 stores renovated during the fiscal year) and new store openings (2 stores opened during the fiscal year, target of 10 stores in the next fiscal year), along with unification of the Kourakuen brand image color
• Boosting customer count and average spending per customer through active menu development leveraging in-house manufacturing and direct sales, including seasonal limited-time products (22 varieties during the fiscal year)
• Strengthening of the manufacturing and direct sales structure and improved supply capacity for low-price, high-value-added products through construction of a new factory (operations scheduled to begin December 2028)
• Acquisition of new customers through enhanced product promotion via digital marketing including social media
• Improved convenience and increased customer count through cashless payment options (addition of code-based payment)
• Diversification of revenue sources through expansion of overseas franchises ("President Kourakuen" in Thailand)
• Talent development and improvement of store QSC through resumption of new graduate hiring for the first time in 8 years and enhanced career hiring

Risks

• Rising raw material costs due to persistently high food ingredient prices (rice, wheat, oils and fats, etc.) and yen depreciation
• Profit pressure from labor shortages leading to hiring difficulties and rising personnel costs (salaries and allowances of ¥8,469 million, approximately double the prior year)
• Risk of renewed inflation due to surging energy prices triggered by the US and Israeli attacks on Iran
• Increased costs for new store openings and renovations due to persistently high store construction material prices (capital expenditure on tangible fixed assets of ¥1,486 million)
• Downside risk to restaurant demand from an expected decline in inbound tourism demand (due to rising airfares)
• Consumer preference for low prices and intensifying competition across business formats
• Risks related to large-scale capital investment and cash flow impact associated with construction of the new factory (operations scheduled to begin December 2028)