Sagami Holdings Corporation

In the event of large-scale natural disasters, war/terrorism, epidemics, or other social disruptions, consumer motivation to dine out could decline significantly, potentially causing a sharp drop in sales. Abnormal weather, earthquakes, typhoons, etc. during peak seasons also directly affect business performance. Because the restaurant business is the core operation, sales sensitivity to changes in the external environment is high.

There is a risk that procurement prices could rise sharply due to epidemics such as avian influenza, large-scale natural disasters, or significant fluctuations in foreign exchange rates. In addition, the supply volume of ingredients could fluctuate significantly due to livestock epidemics or catch limits on fisheries. The company seeks to mitigate this risk by securing multiple procurement routes and strengthening cooperation with suppliers, but complete avoidance is difficult.

If the operating profit/loss of stores using owned fixed assets deteriorates without a short-term recovery expected, or if the market value of land or other assets declines significantly, impairment accounting will be applied, potentially having a material impact on business results. When closing unprofitable stores, penalties for leased properties and provisions related to fixed asset disposal may also arise. The larger the scale of chain operations, the greater the potential loss amount.

Continuously securing excellent personnel is a key management challenge in operating a restaurant chain, and if planned recruitment and training do not progress, the company may be forced to halt new store openings or shorten operating hours. The company is working to strengthen recruitment activities and invest in training, but there is a risk that securing personnel will become difficult due to intensifying competition in the labor market.

A large number of part-time employees are engaged in operations, and if changes occur in various systems related to social insurance or working conditions, personnel costs could increase, affecting business results and financial condition. The restaurant industry is highly dependent on part-time labor, making it structurally susceptible to the effects of system changes.

The company holds a large amount of personal information, including app member information, customer information from surveys, and employee information, and if this information were to leak for any reason, it could result in claims for damages and a decline in social credibility. Although the company strives to develop its management systems, it is difficult to completely eliminate the risk of information leakage.

There is a risk that information systems could stop functioning due to computer viruses or software/hardware failures, or that important information could be improperly obtained or used by third parties. The company continuously works on upgrading and maintaining its core systems and group infrastructure, but if damage occurs due to unforeseen circumstances, it could lead to claims for damages and a decline in social credibility.

The restaurant business is subject to various laws and regulations, including the Food Sanitation Act, and if a serious hygiene problem occurs, it could have a severe impact on business results and financial condition. The Internal Control Audit Office pays utmost attention to employee training and system development, ingredient quality control, and hygiene management at stores and factories, but the risk cannot be completely eliminated.

In acquisitions of other companies aimed at business expansion or strengthening competitiveness, expected synergies may not materialize due to changes in the economic environment or unexpected risks discovered after integration. The company conducts pre-acquisition due diligence and multiple rounds of deliberation at board meetings, but it is difficult to identify all risks in advance.

While overseas store openings are one of the company's growth strategies, unforeseen natural disasters, economic fluctuations, currency exchange rate movements, or political and social unrest caused by terrorism, war, or civil strife could make business continuation impossible, forcing withdrawal. Risks specific to overseas markets are more difficult to address compared to domestic operations, and could affect business results and financial condition.