TEN ALLIED CO.,LTD.

There is a risk that sales may fall short of plan due to economic downturns, social instability such as wars and terrorism, natural disasters such as floods, earthquakes, and epidemics, the opening of competitor stores, or delays in the Company's own store openings. Given the characteristics of the food service industry, changes in the external environment directly affect the number of customers and sales, raising concerns about the impact on consolidated business performance. No specific countermeasures are disclosed in the Annual Securities Report.

There is a risk that procurement costs for ingredients may rise, or procurement itself may become difficult, due to the outbreak of diseases such as avian influenza, poor agricultural harvests caused by cool summers or abnormal weather, and the impact of ocean pollution on seafood. Ensuring food safety is the most critical issue for the food service industry, and procurement disruptions could directly affect the menu offerings and profitability of the Company.

As a regulatory response based on the Food Sanitation Act, the Company implements enhanced inspection of ingredients, hygiene environment improvements at stores and Central Kitchens, hygiene education, and store-wide hygiene audits and bacterial testing. However, if an incident such as food poisoning occurs, there is a risk of administrative dispositions such as business suspension or revocation of business license. This could have a significant impact on consolidated business performance through the suspension of store operations and damage to social credibility.

Labor shortages across the food service industry have led to a serious rise in labor costs, and although the Company is implementing various countermeasures, if it is unable to secure sufficient necessary personnel, this may hinder store operations and affect consolidated business performance. Chronic labor shortages may also lead to increased recruitment costs and increased burden on existing employees.

If amendments to labor-related laws and regulations or changes in the labor environment (such as minimum wage increases) occur, labor costs may increase, potentially affecting business results. The food service industry has a high proportion of part-time and temporary workers, so fluctuations in minimum wage levels directly affect the cost structure.

The Company utilizes personal information such as survey data and membership information for sales promotion, and implements strict management in accordance with the Personal Information Protection Act. However, if customer information is leaked due to fraudulent acts or other causes, this could affect consolidated business performance through the occurrence of damages and a decline in social credibility.

The prolonged Russia-Ukraine situation continues to pose risks of rising raw material prices and increases in electricity and gas rates due to energy shortages. These cost increases directly impact the profit structure of the food service industry and may affect the consolidated business performance of the Group.

Instability in the Middle East situation poses risks of rising electricity rates due to energy shortages, and rising prices of packaging materials and plastics due to higher naphtha prices stemming from increased crude oil prices. These increases in material costs directly affect store operating costs and may put pressure on consolidated business performance.