Store Closures, Reduced Operating Hours and Lower Sales Due to the Spread of COVID-19

「During the current interim accounting period, there were no new business or other risks, and no material changes to the business or other risks described in the securities report for the previous fiscal year.」

「During the cumulative second quarter under review, the Japanese economy saw restrictions on daily life eased and economic activity move toward normalization following the reclassification of COVID-19 as a Class 5 disease.」

「During the cumulative first quarter under review, the Japanese economy has been on a gradual recovery path as socioeconomic activity has normalized, driven in part by the easing of barriers to travel to Japan and the revival of inbound demand following the downgrading of COVID-19 to Class 5 under the Infectious Diseases Control Law on 8 May, which brought an end to the border control measures that had remained in place.」

「However, uncertainty about the outlook continues, as the eighth wave of COVID-19 infections occurred, prices of raw materials, energy and other items rose against the backdrop of the situation in Ukraine and the weaker yen, price increases were implemented for a wide range of goods and services, and concerns arose over a cooling in consumer sentiment.」

「From the latter half of July, the business was affected by the seventh wave of COVID-19, and the number of customers visiting stores stagnated as the flow of people declined again due to people returning to their hometowns for the Bon holidays, among other factors.」

「During the cumulative first quarter under review, the Japanese economy has been recovering as economic activity resumed following the decline in the number of COVID-19 cases and the full lifting of the state of emergency and other priority preventive measures.」

「In the food service industry, stores were forced to close temporarily or shorten operating hours in response to requests from local governments to refrain from operating, and restrictions were imposed on serving alcohol. In addition, prolonged nationwide heavy rainfall in August, when many customers would normally be expected to visit, kept customer traffic depressed.」

「In the food service industry, stores were forced to close temporarily or shorten operating hours in response to requests from local governments to refrain from operating, and restrictions were imposed on serving alcohol. In addition, prolonged nationwide heavy rainfall in August, when many customers would normally be expected to visit, kept customer traffic depressed.」

「In Japan’s food-service industry, demand for delivery and takeout has been steadily increasing as stay-at-home demand has expanded. However, the operating environment remains challenging, as restrictions on serving alcoholic beverages and requests for shorter operating hours continue in some regions due to the issuance of states of emergency and the continued application of priority preventive measures, along with consumers’ continued reluctance to go out.」

「As the third wave of COVID-19 became pronounced, local governments across Japan, beginning with Tokyo, called for further reductions in operating hours at restaurants serving alcohol. In addition, reduced year-end banquet demand left the izakaya and karaoke businesses in extremely difficult conditions.」

「During the current second-quarter consolidated cumulative period, net sales declined substantially year on year as the company shortened operating hours and closed stores to prevent the spread of COVID-19.」

「For the current first-quarter consolidated cumulative period, net sales were ¥6,072 million, down 51.6% year on year; operating loss was ¥1,593 million, compared with ¥380 million in the same period of the previous year; ordinary loss was ¥1,524 million, compared with ¥354 million; and quarterly net loss attributable to owners of the parent was ¥1,113 million, compared with ¥630 million. The main factors behind the decline in revenue and earnings were the impact of temporary store closures and other measures associated with the spread of COVID-19 in the restaurant, izakaya and karaoke businesses, and the impact of excluding 株式会社アトム北海道 from the scope of consolidation following the transfer of all its shares on 31 March 2020, affecting the restaurant and izakaya businesses.」

「The spread of COVID-19 may affect the performance of the Group through requests to refrain from going out, voluntary suspension of store operations and shortened operating hours. In addition to requests from government authorities to refrain from going out and operating businesses, restrictions on employees working may prevent the Group’s directly operated and franchised stores, factories, food suppliers and delivery providers from operating, which may affect the Group’s performance.」