Business strengthening based on the Medium-Term Management Plan "Hiramatsu's New Challenge"

「As the first year of the Medium-Term Management Plan 2030, the Group promoted measures aimed at improving productivity and strengthening and expanding its business foundation, while expanding revenue opportunities through measures such as strengthening value-added proposals and optimizing prices, which each business had pursued previously.」

「Based on the "New Medium-Term Management Plan" announced on 13 May 2022, covering the fiscal years ending March 2023 to March 2025, we made 3 policy investments in anticipation of the future recovery in food-service and domestic travel demand. Specifically, these were investments in repairs to store facilities to improve service quality for customers, investments to secure and develop talented personnel, and investments in marketing and branding to further expand sales.」

「In terms of profit, although we continued policy investments based on the "New Medium-Term Management Plan" announced on 13 May 2022, covering the fiscal years ending March 2023 to March 2025, the impact of the industry-wide labor shortage in the restaurant and hotel sectors that became pronounced during and after COVID-19 has also affected the Group」

「Progress under the "New Medium-Term Management Plan" announced on 13 May 2022 was strong. Revenue was 13.5% above plan, while operating loss, ordinary loss and quarterly net loss were each 25.1%, 29.1% and 28.7% lower than planned, respectively, exceeding the plan.」

「Based on the management foundation built to date, we formulated a new 3-year Medium-Term Management Plan beginning in the fiscal year ending March 2023 to shift to a more proactive growth strategy in anticipation of the post-COVID business environment. Under this plan, we aim to generate positive operating cash flow in the first year, return to operating profitability in the second year, and achieve operating income of ¥1 billion in the final year. We aim to achieve an early return to profitability by thoroughly enhancing and effectively utilizing our assets and further expanding business areas that offer overwhelming differentiation from competitors.」

「We also actively worked to refine menus and promotional methods to enhance customer experience value, a key theme of the Medium-Term Management Plan, and to strengthen new external sales channels such as takeout and delivery.」

「To address the challenging management environment surrounding the Company, we will carry out fundamental business structure reforms in each business, centered on the steady implementation of restructuring measures supporting our earnings base and the strengthening of company-wide CRM initiatives. We aim to restore the competitiveness of our core Restaurant Business and achieve growth based on the value of our restaurants.」

「Amid the challenging management environment facing the food-service and service industries, we have formulated a Medium-Term Management Plan with the mission of returning to a customer perspective and a frontline-first approach, and further refining the competitive advantages in food and service cultivated since our founding. Taking into account the impact of the spread of COVID-19, among other factors, we aim to achieve breakthrough growth by accelerating the restructuring of the restaurant and bridal businesses and the development of new business models.」

「Based on this mission and vision, we formulated a Medium-Term Management Plan, with the fiscal year ending March 2025 as its final year, that redefines our business portfolio, and aim to achieve breakthrough growth.」

「In response to these circumstances, under the new management structure, the Group is working to further enhance the competitive advantages of its brand, improve earnings, maximize the value of its existing businesses, strengthen its human capital base, and pursue business structure transformation, including strengthening its management infrastructure, as well as its financial foundation.」

「Under these circumstances, we will further enhance the competitive advantages of our brand and improve earnings by developing our initiatives to date, while pursuing business structure transformation, including maximizing the value of our existing businesses, strengthening our human capital base and strengthening our management infrastructure. To ensure that this transformation succeeds, we will clarify the respective roles of management and business execution, transition to a new management structure that will enable us to respond swiftly to the management challenges we face, and seek to enhance corporate value.」

「Under this project team, we are pursuing fundamental reforms, including structural reforms in each of the Company's business areas and management issues such as recruitment and finance, in order to achieve at an early stage steady growth in corporate value accompanying the strengthening of the management foundation and improvement in profitability of the new Hiramatsu.」

「Since June 2016, the Company has established a new management structure and pursued business structure transformation aimed at strengthening and promoting its existing businesses, developing hotels as a new business, and establishing its brand as a hotel and restaurant company. To accelerate this transformation, the Company entered into a business partnership agreement with Advantage Advisors Co., Ltd. dated 9 August 2019.」

「As in the previous consolidated fiscal year, the company will continue working to expand corporate value by pursuing phased hotel development and steadily implementing changes to its business structure.」

「The Group is pursuing business structure transformation aimed at sustainable growth in corporate value as a diversified food company, through phased hotel development and the establishment of hotel and restaurant brands.」

「Amid major changes in the environment surrounding the food-service and service industries, the Group has begun and is advancing initiatives to build a robust management foundation that will enhance the long-term continuity of its businesses, based on a 5-year plan formulated in light of the economic environment and management challenges.」

「Since transitioning to a new management structure two fiscal years ago, the Group has been in a transitional phase of transforming itself from a single-restaurant company into a diversified food company by entering the Japanese cuisine and hotel businesses. In addition to continued investment accompanying the promotion of the Hotel Business and ongoing efforts to develop human resources, we are building an operating structure to ensure that each location steadily achieves its targets and pursuing internal organizational reforms in response to changes in the social environment.」

「As we shifted toward intensifying proactive investment for future growth, including preparations for the new hotels already announced, Okinawa (scheduled to open in July 2018), Kyoto (winter 2019), Karuizawa (spring 2020) and Nasu (summer 2020), advertising and promotional activities to strengthen brand equity, and the strengthening and development of talent, profit margins declined from the same period of the previous year.」

「As stated in the notice concerning the opening of a new hotel announced today, the company decided to open a hotel in central Kyoto, in Nakagyo Ward. Scheduled to open in winter of fiscal 2019, this will be the Group's first urban hotel, with a planned total of 29 guest rooms and restaurants in 2 formats. The company will develop the business in Kyoto, one of the world's leading tourist destinations, as a major first step into the urban hotel segment, the third chapter of its hotel business.」

「Of the maximum aggregate estimated net proceeds of ¥5,917,886,000 from the public offering and third-party allotment disposal of treasury shares, ¥2,236,000,000 is scheduled to be allocated by July 2018 to capital investment for the new THE HIRAMATSU HOTELS & RESORTS Okinawa Ginoza, ¥2,949,000,000 by June 2020 to capital investment for the new hotel in Miyota, Karuizawa, and the remaining amount by September 2020 to capital investment for the new hotel in Nasu Onsen.」

「During the current consolidated fiscal year, we opened 3 hotels and made a full-scale entry into the new Hotel Business, creating a new market for the "restaurant you stay in." Going forward, in addition to the hotel planned for Ginoza, Okinawa, scheduled to open in July 2018, as previously announced, we will promote the opening of hotels as "restaurants you stay in," primarily in resort areas throughout Japan. In the next stage, we plan to develop resort-style hotels with 20–50 rooms, followed in the third stage by urban luxury hotels with approximately 50 rooms.」

「Under this system, we will develop and train senior employees and craftspeople who will play central roles in the hotels and restaurants going forward. At the same time, we will strengthen the existing Restaurant Business and expand our earnings base, while developing new businesses centered on the Hotel Business.」