Demand Decline Due to the Kumamoto Earthquake, Yen Appreciation and Other Factors

「Although record extreme heat caused summer customer traffic to remain sluggish at some locations, results remained steady due to the effectiveness of various measures, and revenue exceeded both the initial plan and the same period of the previous year.」

「Many people refrained from going out due to the prolonged extreme heat, affecting some hotels. Various disasters during the summer tourism season also resulted in cancelled parties and postponed or cancelled weddings and stays, while the closure of 「アルジェント」 in Ginza at the end of March 2024 also had an impact. However, various measures proved effective, and revenue remained steady across all businesses.」

「In addition to travel demand shifting from overseas to domestic destinations as the yen weakened further during the autumn travel season, inbound demand also continued to perform steadily.」

「The easing of COVID-19-related activity restrictions helped normalize social and economic activity, leading to a recovery in personal consumption and inbound demand. However, in addition to persistent extreme heat and repeated typhoons, the accelerating yen depreciation, rising raw material costs and higher domestic prices associated with soaring energy prices have begun to affect consumer sentiment and corporate activity, leaving the situation uncertain.」

「The easing of activity restrictions progressed following the reclassification of COVID-19 as a Category 5 infectious disease in May 2023, among other factors, and signs of a recovery in personal consumption emerged as economic activity normalized.」

「The environment surrounding dining out was returning to almost pre-COVID levels, except for demand for some large parties, including weddings. Inbound demand also continued to recover, with the number of overseas visitors to Japan reaching approximately 1.82 million in March.」

「Demand for dining out and domestic travel showed a full-scale recovery toward the with-COVID and post-COVID periods. As a result of implementing various measures based on market conditions, together with the market backdrop of a year-end without activity restrictions for the first time in 3 years, revenue increased substantially year on year across all businesses. In particular, monthly revenue in August, October and December reached new record highs for those months.」

「Although some reservations were cancelled due to the seventh wave of COVID-19, demand for dining out and domestic travel showed a full-scale recovery toward the post-COVID and with-COVID periods after the priority preventive measures were lifted in March.」

「As vaccinations progressed, the spread of COVID-19 appeared to be subsiding. However, after domestic cases of the Omicron variant were confirmed in December, it spread rapidly nationwide due to its high transmissibility, and priority preventive measures were declared in various areas, leaving the impact on future results uncertain.」

「Although signs emerged that the pandemic was gradually subsiding as vaccinations progressed, the recovery in demand for dining out and bridal services was expected to take some time. Accordingly, as described in the notice announced on 16 July 2021, titled 「株式会社マルハン太平洋クラブインベストメント及び株式会社太平洋クラブとの株式引受契約及び業務提携契約の締結、株式会社マルハン太平洋クラブインベストメントとの新株予約権引受契約の締結、第三者割当による普通株式及び新株予約権の発行並びに主要株主、主要株主である筆頭株主及びその他の関係会社の異動に関するお知らせ」, the Company is working to stabilize management by raising approximately ¥4.6 billion through a third-party allotment and continuing to request financial institutions to defer principal repayments, thereby strengthening its cash position.」

「Changes in lifestyles, including lower consumption amid calls to refrain from dining and bridal events during the pandemic and the spread of remote work, resulted in an operating loss of ¥2,458,661 thousand and an ordinary loss of ¥2,440,082 thousand for the consolidated fiscal year.」

「The Group experienced a substantial decline in revenue due to lower consumption caused by COVID-19, repeated requests for restaurants to suspend operations, including shorter operating hours and refraining from dining gatherings of 4 or more people, fewer seats to maintain social distancing as a COVID-19 countermeasure, and the cancellation of the Go To Travel and Go To Eat economic stimulus programs.」

「Although the challenging environment continued even after the state of emergency was lifted, with reservations restricted by seating arrangements designed to maintain social distancing, revenue at restaurants mainly in suburban areas and regional cities has begun to recover, centered on celebrations and family dining. In September, inquiries about corporate dining and small parties increased, and some restaurants recorded revenue above the same period of the previous year.」

「Even after the state of emergency was lifted, the challenging environment continued, with people refraining from parties and other events and corporate entertaining, weddings being postponed, and reservations restricted by seating arrangements designed to maintain social distancing.」

「The business environment surrounding the Company remained challenging across the restaurant, bridal and hotel businesses due to repeated natural disasters, intensifying competition, preference for lower prices, labor shortages and other factors. In addition, requests to refrain from going out and to cancel events to prevent the spread of COVID-19 resulted in many weddings being postponed and numerous cancellations of parties and corporate entertaining, causing revenue, operating income, ordinary income and net income attributable to owners of the parent to fall below the results for the same period of the previous year.」

「The business environment surrounding the Company remains challenging across the restaurant, bridal and hotel businesses due to repeated natural disasters, intensifying competition, consumer preference for lower prices, labor shortages and other factors.」

「During the six months ended the second quarter, customer traffic in the restaurant business remained sluggish due to the loss of sales opportunities caused by staff shortages, damage to revenue from the introduction of regular closing days in light of the social issue of work-style reform, and the effects of typhoons, torrential rain and other events in September.」

「During the consolidated fiscal year, the restaurant business generated lower revenue than in the previous year as a result of a substantial decline in wedding revenue due to changes and contraction in the wedding market, the closure of 2 restaurants and transfer of 2 restaurants to improve the efficiency of management resources, and the increase in restaurants introducing regular closing days as part of efforts relating to the social issue of work-style reform.」

「During the nine months ended the third quarter, the restaurant business generated lower revenue than in the same period of the previous year due to weaker customer traffic resulting from natural disasters such as the torrential rain in October, in addition to changes and contraction in the wedding market, and the increase in restaurants with regular closing days in light of the social issue of work-style reform. At the hotel business, revenue from the 3 hotels opened in 2016 was slightly weak due to natural disasters and differences between this season's popular tourist destinations and the locations of the Group's hotels, but remained generally steady.」

「Revenue declined in the six months ended the second quarter because restaurant revenue fell below the same period of the previous year. Factors included changes and contraction in the wedding market, reduced customer traffic due to natural disasters such as earthquakes, typhoons, torrential rain and record heat, the emergence of labor shortages accompanying changes in the social environment surrounding the food-service and service industries, and the introduction of regular closing days in light of the social issue of work-style reform.」

「The hotel business, which made a full-scale entry into the market, continued to perform steadily, with both occupancy rates and average spending per customer exceeding the same period of the previous year. However, revenue declined because restaurant revenue fell below the previous year due to changes and contraction in the wedding market.」

「The existing restaurant business was affected by poor weather and changes and contraction in the wedding market, as well as various effects arising during the transition period following a change in sales strategy implemented as part of the business structural transformation. As a result, company-wide revenue was only slightly above the previous year.」

「During the nine months ended the third quarter, existing restaurants underperformed the same period of the previous year due to poor weather, including typhoons that crossed Japan in September and October, and sluggish use of wedding parties.」

「Restaurant operations weakened slightly from the summer onward due to poor weather and other factors, but were generally steady.」

「The Group's results may be affected if the concepts, cuisine or services offered by its restaurants and hotels are not accepted due to future economic sentiment, market trends, changes in customers' consumption and preferences relating to dining out, environmental risks or other factors.」

「The existing restaurant business was affected by weaker consumer sentiment due to poor summer weather and lower average spending per wedding party amid changes in the market environment. However, as the hotel business, a new business area, performed steadily, revenue was broadly in line with the previous year.」

「Revenue declined in the six months ended the first quarter due to the Kumamoto earthquake, weak spending by affluent consumers amid yen appreciation and falling share prices, and lower average spending per wedding party as smaller dining gatherings became more common. The decline was within the initially expected range.」