COLOWIDE CO.,LTD.

If doubts arise regarding the safety of ingredients or a food poisoning incident occurs, there is a risk that store sales will decline due to loss of credibility, business suspension, or damages claims. The Group works with business partners to build a database of production areas, processing procedures, and additives to establish traceability, while thoroughly enforcing strict quality and hygiene control at each restaurant and central kitchen.

Epidemics, adverse weather, natural disasters, conflicts, wars, geopolitical risks, and similar factors may make it difficult to secure the necessary quantities of raw materials. In addition, sharp increases in procurement prices due to fluctuations in market prices or exchange rates constitute a risk that could affect operating results and financial position. Since the Group uses a wide variety of ingredients, measures such as diversifying suppliers are required.

Consumer behavior is changing daily due to lifestyle changes, growing health consciousness, and the emergence of new concepts and ingredients, and if the market changes more than the Company anticipates, this may affect operating results and financial position. The Group implements store strategies adapted to lifestyle changes and measures tailored to preference and foot-traffic trends, but the risk remains that its response may not keep pace.

As M&A has been positioned as a key pillar of the growth strategy, goodwill is recorded on the consolidated statement of financial position, and if the appraised value of the underlying assets falls significantly below book value, an impairment loss will be recorded. Recognition of an impairment loss could have a material impact on operating results and financial position, and the risk structurally accumulates as the M&A strategy continues.

The Group operates 420 directly-operated or franchised stores across 16 countries and regions, and holds and records assets, liabilities, and income denominated in local currencies. As overseas store openings are expected to accelerate further, local-currency-denominated assets, liabilities, and income are expected to increase further, and unexpected sharp changes in exchange rates may result in foreign exchange valuation losses.

The Group holds land, equipment, and other assets mainly at its restaurants, and if profit or loss from operating activities at directly-operated stores, etc., declines significantly, or if the market value of assets falls significantly below book value, an impairment loss will be recorded. Since a large number of stores are operated across all 47 prefectures nationwide, the risk of impairment could materialize widely during a downturn in business performance.

If the Group is unable to secure the necessary personnel due to a declining working-age population from the falling birthrate and aging population or a deteriorating hiring environment, or if labor costs rise, this may affect operating results and financial position. The Group is focusing on establishing a recruitment system and developing human resources as a top priority, but there is a risk that the chronic labor shortage in the restaurant industry will continue.

Cyberattacks, unauthorized access, system failures, or improper handling by officers, employees, or outsourcing partners may result in the leakage or unauthorized use of customers' personal information or trade secrets. Should such an event occur, it would lead to a decline in social credibility and give rise to liability for damages, affecting operating results and financial position. The Group strives to maintain appropriate information management across the entire Group.

The businesses operated by the Group are subject to regulation under various laws and regulations, and violations could result in liability for damages or a decline in social credibility. There is also a risk that the introduction of new legal regulations could result in substantial costs. The Group addresses this by keeping timely track of changes in laws and regulations and conducting compliance training.

A decline in dining-out opportunities due to the outbreak of infectious diseases, requests from authorities to restrict business operations, and damage to store facilities or system failures caused by large-scale disasters may affect operating results and financial position. As the Group operates stores across all 47 prefectures, it faces the risk of being significantly affected whenever a disaster occurs in any region. Regarding climate change response, the Group has established a dedicated sustainability department to work on reducing this risk.