GINZA RENOIR CO.,LTD

The Company depends on the coffee shop business and related operations for the majority of its sales, resulting in a structure in which changes in the coffee shop industry environment are likely to directly affect performance. Competition has intensified due to an increase in low-price competitors, and if cost reduction and price competition countermeasures fail to function effectively, there is a possibility of an adverse impact on performance. The high degree of dependence on a single business is a risk factor that undermines the stability of earnings.

As of March 31, 2026, the Company operates 103 stores and pursues a policy of nationwide expansion with an emphasis on the Kanto region, but aggressive store openings by competitors and competition from other industries may lead to a decrease in the number of customers and a decline in average spending per customer. If properties meeting store opening conditions (deposit amounts, rent, trade area population, etc.) cannot be secured, the Company may be forced to change its planned number of store openings, which could affect performance. Although selection criteria emphasizing the profitability of individual stores have been established, it can be difficult to respond to changes in the competitive environment.

Store profitability depends heavily on the success of location selection, and external changes such as competitor store openings after opening can significantly reduce profitability. Stores that fall substantially short of profit forecasts, or stores whose leases are terminated due to circumstances on the part of the landlord, may be forced to close even if they are otherwise performing well. In addition, if a landlord becomes insolvent or otherwise defaults, there is a risk that all or part of leasehold deposits and similar amounts may become uncollectible, resulting in losses.

Although the Company conducts regular hygiene checks based on its own manuals in addition to health department sanitary inspections, amid growing consumer concern over food safety, the occurrence of food poisoning or other hygiene-related problems could have a material impact on performance. There is a risk of loss of social credibility and a sharp decline in customer visits, making this one of the most fundamental and important risks for a food service business.

The performance of the coffee shop business is susceptible to seasonal fluctuations, changes in weather, and regional and international events. If specific seasons or prolonged adverse weather occur, sales and profits may fluctuate due to a decrease in the number of customers visiting stores. As this is a factor dependent on the external environment, it is a risk that is difficult for the Company to control.

The Company positions the recruitment and development of excellent personnel as its top priority and conducts mid-career and new graduate recruitment as well as in-house training and OJT; however, if personnel cannot be secured and trained as planned, this could affect performance. Amid worsening labor shortages in the food service and service industries, this risk is directly linked to maintaining and improving the quality of store operations.

The Company holds a large volume of personal information and strives for proper management, but in the event of a leak or unauthorized use, this could affect performance through loss of social credibility and the filing of damage claims, among other consequences. With the advancement of digitalization, risks such as cyberattacks are also increasing, requiring continuous strengthening of management systems.

If stores are damaged by accidents or disasters, this could affect performance through damage to customers, employees, and fixed assets, as well as suspension of operations. Because stores are concentrated in the Kanto region, there is a risk that multiple stores could be simultaneously affected in the event of a large-scale disaster.

If the profitability of individual stores declines significantly due to changes in the business environment or other factors, the application of accounting standards for impairment of fixed assets may require the recording of impairment losses, which could affect performance. With the number of stores reaching 103, there is a risk that the scale of losses could expand if profitability declines simultaneously at multiple stores.

The price of coffee beans, the Company's principal product, fluctuates due to international supply and demand conditions, the political and economic situation in producing regions, weather, and other factors. If purchase prices rise sharply, this could adversely affect performance through an increase in the cost ratio, and in a competitive environment where passing on price increases is difficult, there is a risk that profit pressure could intensify.