Risk to restaurant visits, operations and business performance from COVID-19

「If a new infectious disease, including COVID-19, emerges, the group's business activities may be disrupted by consumers refraining from going out due to the issuance of a state of emergency, employee infections, temporary store closures and other factors, potentially affecting the group's financial position and operating results.」

「Following the decision to reclassify COVID-19 as a Class 5 disease under Japan's infectious disease legislation, activity restrictions were eased and economic activity showed signs of recovery, but consumers' dining habits changed significantly.」

「In the restaurant industry, customer activity has begun to recover as restrictions on activity have been eased and customer numbers are gradually trending upward. However, the operating environment remains severe due to the impact of soaring raw material prices and utility costs.」

「During the 3-month period of the first quarter of the current consolidated fiscal year, operating loss of ¥186 million, ordinary loss of ¥185 million and quarterly net loss attributable to owners of the parent of ¥187 million were recorded due to the effects of the spread of COVID-19 associated with the seventh wave and other factors」

「Within the group, the spread of COVID-19 has created an uncertain outlook for the operating environment. As the infection spreads and persists, sluggish consumption caused by requests to refrain from going out, the promotion of telework, temporary store closures, shortened operating hours and restrictions on serving alcoholic beverages may affect the group's financial position and operating results.」

「Although it is difficult to accurately forecast the impact of COVID-19, based on information and forecasts available at this time, and assuming that vaccinations will continue to progress steadily, the company assumes that demand for eating out will gradually recover but that the infection will continue to have a certain degree of impact until around December 2022. On this basis, it is assessing the going-concern assumption and making accounting estimates, including impairment accounting for fixed assets.」

「After the state of emergency was lifted in September 2021, there were signs of improvement, including a rapid recovery in sales due to a rebound in stay-at-home demand following the previous restrictions on going out. However, concerns about the impact on consumer activity grew as vigilance over a renewed spread of infections intensified following the emergence of a new variant, Omicron, and the operating environment remains severe.」

「Although it is difficult to accurately forecast the impact of COVID-19, based on information and forecasts available at this time, and assuming that vaccinations will continue to progress steadily, the company expects demand for eating out to gradually recover toward the second half of the fiscal year and assumes that the impact of the infection will be largely eliminated by the end of the fiscal year. On this basis, it is assessing the going-concern assumption and making accounting estimates, including impairment accounting for fixed assets.」

「The company assumed that COVID-19 would continue to have a certain degree of impact until around March 2022 and, on that basis, assessed the going-concern assumption and made accounting estimates, including impairment accounting for fixed assets.」

「Regarding the assumptions used in accounting estimates, the company changed its assumption from the description in the annual securities report for the previous fiscal year, namely that "demand for eating out would gradually recover by March 2021 and the impact of the infection would be largely eliminated by the end of the fiscal year," to the assumption that "although demand for eating out would gradually recover, the infection would continue to have a certain degree of impact until around December 2021." Based on this assumption, the company assessed the going-concern assumption and made accounting estimates, including impairment accounting for fixed assets.」

「In addition to these circumstances, during the cumulative first quarter the company recorded an operating loss of ¥525 million, an ordinary loss of ¥511 million and a quarterly net loss of ¥662 million, due to lower revenue resulting from requests from local governments to shorten business hours and other measures to prevent the spread of COVID-19, the reluctance of customers to visit establishments to avoid the 3 Cs (closed spaces, crowded places and close-contact settings), and the recognition of impairment losses.」

「In response to the declaration of a state of emergency issued as COVID-19 spread and requests from local governments to shorten business hours, the company shortened operating hours and temporarily closed stores. It also closed 40 directly operated stores in anticipation of a prolonged impact.」

「As COVID-19 continued to spread, a severe operating environment persisted, including requests from the national and local governments to refrain from going out.」