HIDAY HIDAKA Corp.

The Company develops directly-managed stores mainly in busy areas around stations in the Tokyo metropolitan area, but if properties matching desired conditions cannot be found, store openings may not proceed as planned. In addition, changes in consumer preferences, intensifying competition, rising raw material prices, social disruption due to natural disasters and epidemics, declining sales at existing stores, and losses from withdrawing unprofitable stores may also affect business performance. With the expansion of the store opening policy toward suburban roadside locations, new trading-area risks are also arising.

As business expands, it is necessary to increase the hiring of employees and Friend employees, but changes in employment conditions, a declining youth population, and an increase in resignations may prevent talent acquisition from proceeding as planned. If an appropriate labor management system is not established, it may become difficult to retain talent, potentially leading to labor disputes or litigation and adversely affecting brand image and recruiting activities.

As of the end of February 2026, 471 of 472 stores were leased properties, and lease and guarantee deposits account for 12.8% of total assets. Deterioration in the financial condition of lessors may hinder the return of deposits or the continued operation of stores, and there is a risk that even profitable stores may be forced to close due to termination or non-renewal of lease agreements.

If the operating profit or loss of stores using owned fixed assets deteriorates without prospect of recovery, or if real estate market values decline significantly, it may become necessary to apply impairment accounting. The recognition of impairment losses may have a direct impact on the Company's business performance.

Food ingredient procurement and the manufacturing of noodles, gyoza, and seasonings are concentrated at the Gyoda Plant (Food Manufacturing & Logistics Function) (Gyoda City, Saitama Prefecture), with manufacturing functions consolidated at a single site. If the Gyoda Plant's business license is revoked or suspended due to a food poisoning incident or violation of the Food Sanitation Act, the supply of ingredients to all stores would stop, potentially causing significant disruption to core business activities. Temporary suspension of plant operations or a decline in the operating rate could also affect the supply of ingredients to each store.

As of the end of February 2026, the Company employed 11,182 Friend employees (part-time workers), and due to the nature of the industry, a large number of part-time workers are employed. If laws and regulations concerning part-time workers are revised or abolished, or if the eligibility criteria for employees' pension insurance enrollment are expanded, this may affect business performance due to an increase in insurance premiums borne by the Company, among other factors.

If information leaks via social media or information leaks or unauthorized tampering due to cyberattacks occur, this could have a significant impact on the Company's credibility and business performance. The Company relies on information and communication systems for in-store ordering, payment, and supply chain management, and if these systems become inoperable due to computer viruses or hardware failures, there is a risk of disruption to store operations and the incurrence of response costs. Reputational damage on the internet is also a factor that could harm brand image and social credibility.

Climate change issues are recognized as a risk affecting the Company's business activities and earnings, and the Company has set CO2 emissions reduction as an environmental management goal and is proceeding with related initiatives. Analysis and disclosure of risks and opportunities in line with TCFD recommendations are required, and insufficient response may affect the Company's evaluation by investors and society.

If a store serves alcohol to a person under 20 years of age or to a customer who intends to drive, this constitutes a legal violation and carries the risk of penalties such as business suspension. If details of a violation spread via social media, brand image could be damaged, potentially becoming a factor in a long-term downturn in business performance. The Company works to reduce this risk by thoroughly confirming the age and driving status of all customers ordering alcoholic beverages and through internal training.

Revisions to various laws such as the Labor Standards Act, the Food Labeling Act, and the Act against Unjustifiable Premiums and Misleading Representations, as well as the enforcement of new laws, may result in response costs that affect business performance. If contractual disputes with customers, business partners, and others develop into litigation, this carries the risk of incurring time and costs as well as damaging brand image.