MATSUYA FOODS HOLDINGS CO., LTD.

There is a risk that stable procurement of food ingredients could become difficult due to abnormal weather, disease outbreaks in countries of origin, or changes in laws and regulations, as well as a risk of rising ingredient prices due to exchange rate fluctuations and other factors. In particular, since the Gyumeshi Teishoku (beef bowl set meal) business accounts for 78.2% of domestic directly-operated store sales, a surge in raw material prices centered on beef directly affects overall business performance. As countermeasures, the Group is working to optimize inventory levels and diversify production areas and business partners.

In FY2026 (ending March 2026), the Gyumeshi Teishoku (beef bowl set meal) business accounts for a high proportion of domestic directly-operated store sales at 78.2%. If changes in consumer preferences, intensifying competition, or a surge in raw material prices/deterioration in procurement centered on beef occur, this would have a significant impact on the Group's overall business performance and financial condition. The Group is expanding the tonkatsu (pork cutlet) business, sushi business, and others to diversify its business portfolio, but dependence remains high.

In the restaurant industry, where labor shortages continue due to population decline, if it becomes difficult to secure necessary personnel due to rising wage levels and intensifying competition for job candidates, stores may be forced to shorten business hours, suspend operations, or revise store opening plans. There is also a risk that labor cost burdens will increase due to revisions to various labor laws and regulations. As countermeasures, the Group is promoting an increase in self-service stores and improving productivity through quantification of store operations.

Each store is subject to regulation under the Food Sanitation Act, and if an incident such as food poisoning occurs, there is a risk of administrative dispositions such as disposal of food products, revocation of business licenses, prohibition of business operations, or suspension of business. Furthermore, even reputational damage arising from food safety incidents at restaurant companies outside the Group could adversely affect business performance through a decline in social evaluation of the restaurant industry as a whole, regardless of the truth of the matter. The Group complies with legal requirements such as the appointment of food sanitation supervisors and the acquisition of permits from prefectural governors.

The Group holds fixed assets such as buildings, structures, and equipment/fixtures related to numerous stores, as well as goodwill acquired through corporate acquisitions. If expected cash flows cannot be generated due to changes in demand trends or competitive conditions in store locations, or due to rises in raw material prices and labor costs, recognition of impairment losses may become necessary. Recognition of impairment losses would have a direct adverse impact on business performance and financial condition.

The Group utilizes M&A to expand its business scale and achieve sustainable growth, but there is a risk that if the initially expected synergy effects are not achieved due to changes in the business environment or profit structure, impairment losses on goodwill may need to be recognized, or the goodwill amortization burden may exceed the profit contribution of the acquired company. In connection with the acquisition of Matsufuji Co., Ltd., which became a subsidiary in January 2026, a corresponding amount of goodwill and intangible assets is expected to arise, and the amortization burden and other factors may affect business performance and financial condition.

The Group conducts overseas business through local subsidiaries: three companies in China, one in Taiwan, one in Hong Kong, and one in Vietnam. Various inherent risks exist, including unexpected changes in laws and regulations, unfavorable political and economic factors, difficulty in securing human resources, exchange rate fluctuations, and social unrest due to terrorism or war. If these risks materialize, they may adversely affect the performance of overseas operations.

The Group makes extensive use of information systems for supply chain management, store ordering, orders, and payment processing, among other functions. If a system failure occurs due to program defects, hardware failures, communication failures, computer viruses, cyberattacks, or similar causes, efficient store operations and the timely provision of products and services may be impeded, affecting business performance.

A large amount of personal information regarding customers, employees, and shareholders is held at stores and the head office. If information leaks to outside parties, it could damage the corporate image and social credibility and incur response costs, adversely affecting operating results and financial condition. While the supervising department strives for proper management and leak prevention, it is difficult to completely eliminate this risk.

If inappropriate information dissemination on social media or the internet gives rise to reputational damage or concerns about food safety, this may adversely affect the Group's business, performance, brand image, and social credibility, regardless of the truth of the content. There is also a risk that a decline in social evaluation of the restaurant industry as a whole, caused by food safety incidents or scandals at other restaurant companies, could spill over and affect the Group's business performance.