Genki Global Dining Concepts Corporation

As the Group operates restaurant-related businesses both domestically and overseas, it bears risks not only from domestic economic trends and government policy but also from fluctuations in global political and economic conditions and the political and economic circumstances specific to each country where subsidiaries and franchisees are located. In particular, as overseas expansion progresses, simultaneous deterioration of economic conditions in multiple countries could affect the financial position and operating results. No specific countermeasures are described, leaving a structural vulnerability to changes in the external environment.

The restaurant industry market is in a saturated and mature stage, and competition for differentiation among companies to respond to diversifying customer needs is intensifying further. The Group is working on product development, service improvement, and creating comfortable stores, but if intensified competition leads to a decline in customer traffic or average spending per customer, it may adversely affect the financial position and operating results.

Seafood and agricultural products face risks from fluctuations in harvest volumes due to weather, while imported frozen marine products face risks from fluctuations in domestic market conditions driven by overseas market conditions and exchange rate movements. The Group strives for stable procurement through diversification of production areas and purchasing from multiple companies via Shineitai Co., Ltd., a subsidiary of the parent company Shinmei Holdings Co., Ltd., among others, but if ingredient market prices fluctuate significantly, earnings may be squeezed due to rising procurement costs or ingredient shortages.

Business permits based on the Food Sanitation Act are required, and the Hygiene Management Office conducts periodic inspections of distribution centers and stores, bacterial testing, and employee carrier testing through outsourcing to external agencies. Should hygiene issues arise—whether specific to the Company or broader societal hygiene issues (such as food poisoning or infectious diseases)—business suspension or customer attrition could have a material impact on the financial position and operating results.

Against the backdrop of a declining working-age population, the recruitment environment is becoming increasingly severe, and recruitment costs are trending upward due to rising minimum wages, increased social insurance burdens, and intensifying cross-industry competition for hiring. If the Group cannot secure and develop the necessary human resources, it may be forced to revise store opening plans or shorten business hours or temporarily close stores, directly and adversely affecting sales and profit. The Group is implementing measures such as developing internal training systems, strengthening mid-career hiring, and creating an attractive working environment, but progress in

The Group operates 205 directly-managed stores (as of the end of FY2026 (ending March 2026)) and plans to actively open stores in urban areas, develop new business formats, and expand into the U.S. mainland, but intensifying competition for properties and rising rent levels could make it difficult to open and close stores as planned. In addition, the balance of lease deposits stood at ¥4,276 million as of the end of FY2026 (ending March 2026) (7.2% of consolidated total assets), and if the lessor experiences economic failure or similar events, part or all of this amount may become uncollectible.

The Group has entered into franchise agreements with 9 companies in 10 countries (including regions) across Asia and the Middle East, operating 243 stores, but concentrated store openings in specific regions make it susceptible to geopolitical risk and local economic deterioration. If good relationships with franchisees cannot be maintained due to breakdowns in negotiations or competitive conditions offered by rival companies, this could lead to a decline in royalty income or a contraction of the store network, potentially affecting the financial position and operating results.

The Group bears foreign exchange fluctuation risk when translating the financial statements of overseas consolidated subsidiaries into Japanese yen, and when converting royalty income and other amounts received from overseas franchisees into yen. As the Group conducts multi-currency transactions with the United States (11 directly-managed stores) and Asia and the Middle East (243 franchise stores), a strengthening yen could reduce translated revenue and assets, potentially adversely affecting the financial position and operating results.

The Group relies on information systems across its overall operations, including ingredient procurement and delivery management, touch-panel ordering and sales information management, and employee attendance management. Should a system failure occur, it could hinder efficient store operations and business execution, potentially affecting the financial position and operating results through lost sales opportunities and reduced customer satisfaction.

Shinmei Holdings Co., Ltd. holds 40.8% of the Company's shares, and two directors serve concurrently at both companies, making the Company a subsidiary under the control criteria. Shinmei Holdings has influence over resolutions at shareholders' meetings, such as the election of directors and dividend distributions, and resolutions may be passed that differ from the intentions of other shareholders. Part of the Group's ingredient procurement is conducted through the Shinmei group, but prices are determined through negotiations that take market prices into account.