Integrated Report

2023
Royal Holdings Co., Ltd.

Royal Holdings Co., Ltd.
Head Office
3-28-5 Naka, Hakata-ku, Fukuoka-shi,
Fukuoka 812-0893, JapanTokyo Headquarters
1-34-6 Sakurashimmachi, Setagaya-ku,
Tokyo 154-8584, Japan
URL: https://www.royal-holdings.co.jp/en/

Printed in Japan

ROYAL HOLDINGS Co., Ltd. Integrated Report 2023

Contents

Cover Story

Menu 3

Our Value Creation Story

Royal is in the business of providing food services.
In return for the customer’s patronage, we must
provide:-Delicious food-Cleanliness in food preparation and handling-Cheerful service to provide pleasant atmosphere
Royal’s reward in following these principles will
be a fair profit and continued prosperity.
Established in June 1956

The 70-Year History of the Royal Group 

03Medium-Term Management Plan 2022–2024 

37

The Royal Group Today 

05

Category 1 (Facility-Based Businesses in Existing Domains) 

39

Message from the Chairperson 

07

Category 2 (Facility Based Businesses in Business Creation Domains)  41

Message from the President 

09

The Royal Group’s Value Creation Model 

11

Category 3 and 4 (Non-Facility-Based Businesses in Existing andBusiness Creation Domains) 

43Category 5 (Overseas Business and Foodstuff Development) 

45

The Royal Group’s DX Strategy 

47

Menu 1

Profit and Growth for All (PGA)—A Joint Committee with50
Sojitz Corporation 

Our Management Foundation
List of Directors 

13

Risk Management 

51

Skill Matrix 

15Food Safety and Security 

53

Messages from Outside Directors 

17

Messages from Employees,
Our Support Structure for the Future 

19

Corporate Governance 

21

Message from the Executive Officer in Charge ofFinancial Planning 

25

Menu 4
Financial and Non-Financial Highlights 

55

Corporate Data 

57

Menu 2
Our Sustainability Management
The Royal Group’s Sustainability Management 

27

The Royal Group’s Human Resource Strategy 

29Materiality-Based Initiatives 

33

The Royal Group’s Response to Climate Change 

35

Editorial Policy

Forward-Looking Statements

The Royal Group’s Integrated Report 2023 has been published as a means tocommunicate the Group’s medium- to long-term value creation from both afinancial and non-financial perspective. It is our hope that this report will create abetter understanding among all stakeholders regarding our dedication toinitiatives aimed at realizing a sustainable society, and the Group’s long-term
corporate value creation. This report has been prepared with reference to theIntegrated Reporting Framework produced by the Value Reporting Foundation(VRF) and Guidance for Collaborative Value Creation produced by the Ministry of
Economy, Trade and Industry. For more comprehensive and detailed information,please visit our website.
https://www.royal-holdings.co.jp/en/

Statements in this integrated report with respect to forecasts and other data are
based on the Company’s judgments in light of the latest information available atthe time of this report’s publication. For that reason, due to various changing
factors, future results or forecasts stated in this report are not guaranteed.
Furthermore, information stated in this report may be subject to future change
without prior notice. Therefore, we request that this report, and the information
contained within, be used at the discretion of the reader after confirming withinformation obtained by other means. The Company does not assume responsibility for any damages incurred as a result of this report.

Scope of Reporting

Detailed

Information Provision Framework

Period of Reporting

Corporate Website• Securities Report• F inancial Report,
etc.

This report covers a total of 10 companies, including Royal Holdings Co., Ltd., six
consolidated subsidiaries, and three equity-method affiliates (as of December 31,2022). In instances where the scope of data presented varies from the above, thetarget organizations in question are specified individually.

ROYAL HOLDINGS Co., Ltd.

The Royal Credo

Our Growth Strategy

Integrated Report
FinancialThis report primarily covers fiscal 2022 (January 1, 2022–December 31, 2022).
However, it may also include information for January 1, 2023, and beyond.

• Shareholders’
Report• Corporate
Information

Summary• Corporate Governance
Report• CSR-Related News, etc.

Non-Financial

Detailed02

Cover Story Our Value Creation Story

2019
Restaurant-Quality Ingredientsand Preparation at Home

Operation of Ebina Service Area (Outbound),Boasting Some of the Strongest Sales in Japan

Beginning of FullScale Development ofRoyal Deli Frozen
Meals for Home Use

Highway Royal Co., Ltd.
Becomes a Consolidated
Subsidiary due to Acquisitionof Additional Shares

We have begun offering our Royal Deli brand of frozen meals forhome use, taking advantage of the freezing techniques we havedeveloped over several years. This gives our customers theopportunity to enjoy our carefully cultivated, restaurant-quality
menu of international foods from the comfort of their own homes.

Part of our growth strategy involves further expansion of our highway-related
business. To that end, we have gradually acquired shares of Seiyo­Food-Compass Group Inc. (currently Compass Group Japan Inc.), beginningin February 2020. This company, which operates restaurants, food courts,
and shops at service areas (SAs) and parking areas (PAs), became a consolidated subsidiary after the acquisition of additional shares in December 2022.

Our Founder’s Philosophy

Recognition of the Legitimacy of Japan’s Food and Drink Industry

Kyoichi Egashira Founder (1923–2005)

To cultivate Japan’s food and drink industry into a legitimate way to improve lives. With thisaspiration close to our hearts, we have worked vigorously since our founding to create stores,
restaurants, and other establishments indispensable to their communities by maintaining
three traits: delicious food and proper service; comfortable and clean interiors; and a healthy,
cheerful image. We have held this aspiration, which has fueled our aim to be the­highest-quality food and drink company in Japan, since our founding 70 years ago, and wewill continue to pursue it in the future.

1973
1956
Entry into the Frozen
Food Manufacturing
Business
In 1956, our founder, Mr. Egashira, developed a new technique forpreparing frozen cakes. In 1962 he opened a restaurant in thethen-new Fukuoka Building, a large building located in Tenjin
Chikagai (an underground shopping mall) in Fukuoka Prefecture.
In those days, delivering refrigerated products from a main
factory day after day was an arduous process. Mr. Egashira wasintroduced to the new concept of freezing food by an article
about food preservation on Roald Amundsen’s South Pole expedition, and he decided to try it himself.

The Royal Group has been involved with airport restaurants and shops
since its establishment, and in 1973, around when private vehicle
ownership became popular, the Group opened a restaurant and shop
at a highway parking area. In 1990, the Group established Royal
Marriot & Sc Co., Ltd. (now Royal Contract Service Co., Ltd.) and has
worked to develop food menus that make use of local ingredientsaround airports and highway facilities across Japan.

1969
1959
1951 Founding

ROYAL HOLDINGS Co., Ltd.

03

Launched an in-flightcatering and tea service atItazuke Air Base (currently
Fukuoka Airport)
Constructed a bakery in
Katakasu, Fukuoka


1953
Opened French restaurant
Royal Nakasu (currently
Hananoki) in Higashi
Nakasu, Fukuoka

Opened Royal Shintencho,
a family restaurant with ajointly established confectionery shop
1962
Adopted a central kitchensystem and launched ourindustrial-use frozen meal
manufacturing businessHigh Quality Food and Services for
Airports, Service Areas, and Parking
Areas across Japan

Opened First Highway
Restaurant in Mekari
Parking Area on the
Kanmon Expressway

Development of a Technique toPrepare Frozen Food

2022

2022
1991
Opened the first Sizzler,
a restaurant featuring asalad bar and grilled dishes

2021 
Celebrated our 70th
anniversary
2008
Opened the first Royal
Garden Cafe in­Kita-Aoyama, Tokyo

2023





Switched to a holding
company framework andchanged name to Royal
Holdings Co., Ltd.

2013Entered into a capital and businessalliance with Sojitz Corporation

1983





Listed on the First
Section of the Tokyo
Stock Exchange
Established Tokyo Food
Facility in Funabashi,
Chiba

2006

2015

Made TEN CORPORATION(currently Royal Food
Service Co., Ltd.) a consolidated subsidiary

Established a manufacturing line dedicated to halalmeals at the Fukuoka
Central Kitchen Factory

1971
Opened the first Royal
Host, a suburban family
restaurant, in Kurosaki,
Kitakyushu
The Key to the “Royal Group Flavor”

The Birth of Fukuoka
Central Kitchen
The Royal Group introduced a central kitchen preparation method inwhich sauces and other ingredients are prepared at a factory and final
preparation is done at each establishment before serving. Central kitchensproduce food based on the idea that every meal should deliver warmth,
as if made by a chief chef. Therefore, these kitchens provide a steadysupply of different products developed with great care, from the selection of ingredients to the refinement of flavors and preparation, while
taking advantage of our freezing techniques.

Transitioned to the Prime
Market segment of theTokyo Stock Exchange
following market segment
revisions

2005

1995

Opened the first overseas
franchise store of Tendon
Tenya

Comfortable Accommodations
Placed Consistently among the
Top of Hotel Rankings

Opening of the First
Roynet Hotel(Currently RichmondHotel) in Higashi-Osaka,
Osaka
We operate the Hotel Business segment taking full advantage of thehospitality skills we have cultivated over many years in the Restaurant
Business segment. In 2004 we established RNT Hotels Co., Ltd., which
operates hotels around the country. Our goal is to “provide hotels
that are friendly to both people and nature while constantly improving for the sake of our guests,” which we achieve through spacious
rooms, well-equipped facilities, and a universal design.

Opened the first Lucky Rocky
Chicken, a buttermilk fried chicken
establishment, in Musashi
Koyama, Tokyo

Singapore-based Royal
Sojitz International Pte. Ltd.,a joint venture of Royal
Holdings Co., Ltd. and Sojitz
Corporation, entered into a
joint venture agreementwith YOTEI PTE. LTD., operator of Singapore locationsof Tendon Tenya.

Established subsidiary in
Singapore via a joint ventureagreement with Sojitz Corporation

2023
A Café Management Company Establishedby Royal Holdings Co., Ltd. and Sojitz
Corporation

Full-Scale Introduction of
Costa Coffee to the JapaneseMarketRoyal Holdings Co., Ltd. and Sojitz Corporation have established Sojitz Royal
Café Corporation as a joint venture company aimed at operating andexpanding their café business. Sojitz Royal Café will introduce Costa Coffee’s
authentic, high-quality coffee—hand-brewed by baristas—and expand
store locations in Japan to meet the diversifying needs of café customers,
enrich people’s lives, and realize sustainable growth.

ROYAL HOLDINGS Co., Ltd.

HISTORY

The 70-Year History of the Royal Group04

Cover Story Our Value Creation Story

The Royal Group Today
The Royal Group’s BusinessGroupwide

Consolidated Net Sales

Changes in Ordinary Income

Consolidated Results for Fiscal 2022

¥104,015 million

Consolidated Ordinary Income¥2,156 million

Notes: 1. Consolidated net sales include net sales from other businesses. 2. Net sales for each segment include intersegment sales.

In fiscal 2022, net sales continued to increase significantly year on
year despite the ongoing impact of COVID-19, due to the relaxingof various COVID-related restrictions and the resulting recovery indemand within each business segment.
Notably, ordinary income for the fourth quarter of fiscal 2022,
from October 2022 to December 2022, exceeded that of the fourth
quarter of fiscal 2019, which was prior to the COVID-19 pandemic.
Moreover, ordinary income has been positive for three consecutive
quarters. Ordinary income shifted from ordinary loss in fiscal 2022,
even when excluding subsidy income.

(Billions of yen)

Changes in Fiscal 2021

–19.8

+4.1

–1.0 +1.6+1.1

Fiscal 2022 (full year)

Recovery in sales forexisting stores

Restructuring andimprovements in equity
method affiliates

Sales price revisions, etc.

Rise in electricity/gas
pricesRise in raw material
pricesBusiness
Summary

Decrease in subsidy
income	Development and operation of a wide variety of eating
and drinking establishments, including chains such as the
hospitality-themed restaurant Royal Host, tempura andtempura bowl specialist Tendon Tenya, salad bar and grill
Sizzler, pizza restaurant Shakey’s, as well as beer gardens,
cafés, and a variety of other specialty establishments.

Royal Contract Service Co., Ltd.
Highway Royal Co., Ltd.

Fiscal 2021 (full year)

Business
SummaryGroup
Company

Royal Food Service Co., Ltd.

1,241 million¥

Increase in subsidy
incomeGroup
Company

23,103 million

¥

–1.3

+6.6
Recovery in sales forexisting stores

3,881 million¥

Ordinary Income (Fiscal 2022)

–3.8

+1.9

Renting out of entire
hotels53,523 million¥

Net Sales (Fiscal 2022)+1.4

Restructuring andimprovements in equity
method affiliates

Ordinary Income (Fiscal 2022)

±0

+3.9

Cost reduction

Net Sales (Fiscal 2022)

CONTRACT FOOD SERVICE+9.9 2.1

–4.4
+4.1

Fiscal 2020 (full year)

RESTAURANT BUSINESS

Changes in Fiscal 2022

Fiscal 2022 Results by Segment
From the second quarter of fiscal 2022 onward, the Restaurant Business, Contract Food Service, and Hotel Business segments remained positive.
Ordinary income in the Restaurant Business segment for the fourth quarter (October to December) of fiscal 2022 exceeded that of fourth
quarter 2019, pre-COVID-19 pandemic, while ordinary income for the Contract Food Service and Hotel Business segments recovered to levels
on par with the fourth quarter of fiscal 2019.

Ordinary Income by Segment (Quarterly)	Highway Royal receives contracts from corporations tooperate a wide variety of eating and drinking establishments. These establishments are tailored to their locations,which include airport terminals, highway service areas(SAs) and parking areas (PAs), convention centers, officebuildings, medical and nursing care facilities, department
stores, and government offices.

(Millions of yen)

3,000

2,000

1,000

0

Net Sales (Fiscal 2022)

23,175 million¥

ROYAL HOLDINGS Co., Ltd.

05

Group
Company

Business
Summary

Ordinary Income (Fiscal 2022)

1,189 million¥

RNT Hotels, Co., Ltd.
(Equity-method affiliate: K&R Hotel Development Co., Ltd.)	Operation of Richmond Hotels and other business hotels
across Japan.

FOOD MANUFACTURING
Net Sales (Fiscal 2022)

10,236 million

¥

Group
Company

Business
Summary

Ordinary Loss (Fiscal 2022)–1,000–2,000153 million¥–3,000Royal Co., Ltd.
	Food manufacturing, purchasing, logistics, and otherinfrastructure-related functions for Group businesses, inaddition to manufacturing meals for sale by large retailers
and other companies outside the Group, and Royal Delibrand frozen meals for home consumption.

2019 Q1(Jan. 1–Mar. 31)

Restaurant Business2019 Q2(Apr. 1–
Jun. 30)2019 Q3(Jul. 1–
Sept. 30)2019 Q4(Oct. 1–
Dec. 31)

Contract Food Service

2020 Q1(Jan. 1–Mar. 31)2020 Q2(Apr. 1–
Jun. 30)

Hotel Business2020 Q3(Jul. 1–
Sept. 30)2020 Q4(Oct. 1–
Dec. 31)2021 Q1(Jan. 1–Mar. 31)

Food Manufacturing2021 Q2(Apr. 1–
Jun. 30)2021 Q3(Jul. 1–
Sept. 30)2021 Q4(Oct. 1–
Dec. 31)2022 Q1(Jan. 1–Mar. 31)2022 Q2(Apr. 1–
Jun. 30)2022 Q3(Jul. 1–
Sept. 30)2022 Q4(Oct. 1–
Dec. 31)ROYAL HOLDINGS Co., Ltd.

HOTEL BUSINESS

06

Cover Story Our Value Creation Story

Message from the Chairperson

Sure Steps forward Amid Unsure Business Conditions

expectations of all our stakeholders
while staying true to the valuethat only the Royal Group can provide

3. Organic Integration of Our Portfolio

capital is essential for sustainable company growth. However, I regret

The third perspective requires us to integrate the contents of ourto say that prolonged deflation has led to us paying too much atten-

Fiscal 2022, the inaugural year of Medium-Term Management Plan

portfolio so that it operates as a single organic unit, increasingtion to the cost side of labor. For this reason, it is crucial we return to2022–2024, was a year of high uncertainty, bringing with it thecustomer value. Until now, we have managed our portfolio with an

the original idea that elucidates the value of human resources;

spread of COVID-19, the Russian invasion of Ukraine, and otheremphasis on risk avoidance, but I believe that in the future it will be

employee growth is company growth. In addition, as Japan’s popula-

events. That being said, management conditions for the Royalessential for us to utilize an integrated portfolio to increase value

tion continues to decline, human resources are expected to dwindle

Group made a turn for the better in the second half of the year, and I

for customers.

over the long term, bringing into question the role that people will

am happy to say that this is the first year in some time that we madeThe Group’s locations are frequented by a great many people. I

play in the workforce going forward. Therefore, we will make ana clear shift upward in performance. The COVID-19 pandemic hit all

believe that if we utilize the information obtained at these locations

active effort to make digital technology a part of our human

our businesses and hit them hard. We posted major losses for two

beyond the scope of individual businesses, we can raise customer

resource investments. This will allow us to establish an environment

years straight, making a v-shaped recovery in fiscal 2022 essential,

satisfaction to even greater levels. One initiative we are taking in thisthat affords our employees more leeway when providing services

and I believe that what we were able to achieve constitutes a defi-

regard is the development of a customer relationship management

and meeting the needs of customers.

nite step forward. However, we intend to make Groupwide efforts tosystem, driven by our current efforts to unify customer IDs.

formulate and implement fitting countermeasures to combat soaring prices—particularly for energy and food—and labor shortages.

The Royal Group’s Purpose, Realized through Food and Hospitality
Shifting from a Time for Defense to a Time for Offense

Even before the COVID-19 pandemic, we were hard at work to

In the past, several companies conveyed their policies as a “vision”

diversify the Group’s businesses to minimize the impact of risks

I believe we need to treat soaring commodity prices and otherbut this has since shifted, and these policies are now framed as acaused by the unique fluctuations that occur from business topresent-day changes in the external environment as structuralcompany’s reason for being, or “purpose.” I take this as a reflection

business. But even with a well-functioning portfolio like we had atchanges, as opposed to temporary ones, and take countermeasuresof companies basing their direction entirely on growth of scale.

the time, we were unable to mount a proper response to the waves

accordingly. At the same time, there is only so much one company

Capitalism was originally based on the idea that things are finite,

created by an event like the pandemic—the kind of event thatcan do within its own walls, meaning companies need to adopt a

but then the premise changed to the idea that one day things will

shakes society to its core. As a result, all our businesses sufferedbroader point of view, which can include working together withbe infinite. So, companies began promoting activities that would

greatly. To prevent this from happening again, our portfolio cannot

others. As a result, we entered into a capital and business allianceproliferate with no end in sight. When faced with environmental

revert backward; our portfolio needs to evolve and move forward.

with Sojitz Corporation in March 2021, and have since been conduct-

issues, dwindling resources, and difficulties in acquiring human

Put more specifically, we are working to evolve our portfolio

ing business with their support in a variety of areas. I believe that our

resources, companies must once again grapple with the idea ofaccording to the following three perspectives.

partnership with Sojitz Corporation was particularly beneficial infiniteness and the sense of crisis that follows. This has forced com-

1. Evolution of the Portfolio Itself

helping us overcome higher raw materials costs and other obstacles,

panies to question their reason for being, which is why I believe

I believe our businesses were so roundly affected by the pandemic

allowing us to achieve a profitable fiscal 2022. In January 2023, we“purpose” has become the word of choice.

because, despite being diverse, they all shared a fundamental risk

established Royal Café Corporation with Sojitz Corporation as a joint

We at the Royal Group conduct business rooted in food andin depending on “the flow of people.” Therefore, the first perspec-

venture company with the goal of operating and managing a café

hospitality, and the COVID-19 pandemic presented a true chal-tive we will adopt involves incorporating and increasing the ratio of

business. In addition, Royal Sojitz International Pte. Ltd., a joint ven-

lenge to our purpose. As the pandemic slips into the past, peoplebusinesses in our portfolio that do not depend on this flow. One

ture based in Singapore established with Sojitz Corporation inare resuming their pre-pandemic lives, and the daily routine ofconcrete example of this perspective at work is the growth of Royal

August 2021, entered into a joint venture agreement with YOTEI PTE.

meeting, talking, and sharing meals with people, in-person, is

Deli, a non-facility-based business that sells frozen meals.

LTD., operator of Singapore locations of Tendon Tenya, in an effort toreturning. If, in these moments, we can offer our customers deli-

2. Evolution of the Businesses Within Our Portfolio

establish a base for directly managed stores overseas. Until fiscal

cious food served with hospitality, I believe our purpose will be

The second perspective involves an evolution of the individual

2022, we focused on utilizing our alliance in a defensive manner due

made valid. Bearing this in mind, we will continue to meet thebusinesses that make up our portfolio, thereby increasing its resil-to the strong impact of the pandemic, but I look forward to showing

expectations of all our stakeholders while staying true to the value

ience. The Group’s businesses include several “stopover-type” facili-

what our alliance can achieve adopting an offensive approachthat only the Royal Group can provide.

ties such as hotels, highway service areas (SAs), and airport

moving ahead.

restaurants. This is an issue, since a large percentage of these facili-May 2023

ties run into problems when the flow of people is interrupted. To

Tadao Kikuchi

Employee Growth is Company Growth

mitigate this issue, we need to transition these businesses fromROYAL HOLDINGS Co., Ltd.

07

Chairperson

stopover-type businesses to businesses that fulfill a certain purpose.

We work in the service industry. In the service industry, value isThis perspective aligns with our value-added strategy for Royal Host

generated through human capital, namely the people who serveand the renovation of the Richmond Hotel in Oshiage, Tokyo.

customers directly—the employees. Therefore, investing in human

ROYAL HOLDINGS Co., Ltd.

We will continue to meet the08

Cover Story Our Value Creation Story

Message from the President

employees while still acquiring more workers to respond to thisFormulation of Materialty Based on The Royal Credo

We aim to continue contributing tolocal communities by providing

rapid uptick in demand. We intend to keep utilizing digital technolFiscal 2022, my first year serving as president of Royal Holdings, wasogy as a means to increase productivity. In regard to the Contract

Drawing from the Royal Credo, we conduct sustainability manage-a year that required us to adapt to a variety of unexpected changes,

Food Service segment, we expect an increase in customers using

ment with the goal of being a company rooted in the local com-

including, in addition to COVID-19, growing risks regarding geo-

airports and service areas (SAs) as restrictions ease up, so we aremunity and society, with the empathy and support of allpolitics and exchange rates, and rising prices. Amid these condi-

actively working to renovate establishments and convert businessstakeholders. In order to further promote this form of sustainability

tions, we embarked upon Medium-Term Management Plan

formats in order to further recover sales.

management, we gathered the opinions of experts, members of2022–2024, which aims to move us from “revitalization and trans-

management, and a variety of stakeholders, while also referencing

than in the Restaurant Business segment. This is partly due tothe GRI framework to determine our materiality, identifying fiveaccording to a series of categories that I will explain further in thisborder control measures restricting foreign tourists, which werematerial issues in 2023: 1) human resources, 2) food and hospitality,

message. In addition to steady implementation of these measures,

not fully lifted until October 2022. Even so, we are currently in the3) resources and the environment, 4) local communities, and 5)

each and every employee worked with even greater solidarity withprocess of reviewing the roles our hotels will need to fillgovernance. Regarding human resources, we intend to invest

one another toward our goal of growth, striving to recover perfor-­post-pandemic. For instance, at the Richmond Hotel Premier Tokyo

actively, positioning employee growth as our top priority, whilemance while tackling issues in both new and existing businesses.

Schole, which was renovated and then reopened in December

aiming to maintain and improve sound labor practices and work

Thanks to these efforts, we achieved net sales of ¥104.9 billion and2022, room interiors are categorized into four themes—art, travel,

environments, normalize diversity and inclusion, and promote

an operating income of ¥2.1 billion. What is more, we posted achildren, and food—and the facilities and atmosphere of eachother initiatives. As for food and hospitality, we will focus on being

positive ordinary income for the full fiscal year, the first time weroom are designed to match these themes.

health-conscious and improving the added value of food services

have done so since the start of the COVID-19 pandemic.
In Japan, restrictions aimed at preventing the spread of

In categories 3 and 4, which cover the Food Manufacturing

the environment, we aim to reduce CO2 emissions further by­COVID-19 have been rolled back, meaning more and more custom-develop commercial products for Royal Deli, launched in 2019. In

reducing food waste, promoting recycling, and implementing

ers are enjoying eating out, much like before the pandemic. Fiscal

addition to expanding sales in the highly competitive frozen foodenergy-saving measures. For local communities, we will promote2022 was a year in which people could once again enjoy high-market, in the future we intend to expand the functions of oursocial contribution activities in line with the diversifying local andquality food and hospitality, much more so than the previous year

outlet shops and utilize food trucks, both of which are challenges

social needs. Lastly, for governance, we will build a trustworthy

when the pandemic had more power over our activities. We intend

we will take on from the perspective of reducing food loss.

system for food procurement, product labeling, and information

A Strong Start for Medium-Term Management Plan 2022–2024

Overseas Business and Foodstuff Development segments

management, and work to strengthen stakeholder engagement.

comprise Category 5. In this category, we are building momentum

Throughout working toward these materiality-based initiatives, wefor business expansion overseas, taking advantage of the overseas

aim to achieve sustainable growth for the Group as a whole.

network of Sojitz Corporation, with whom we have entered into

The Royal Group is committed to becoming a vital part of local

As I mentioned, fiscal 2022 was also the first year of Medium-Terma capital and business alliance. As of March 2023, Tendon Tenya

communities by providing high-quality food and hospitality and by

Management Plan 2022–2024, which puts forth a vision of provid-

operates 32 overseas establishments spanning five countries andresolving social issues through its business. At the same time, it willing food and hospitality regardless of time and place. One of theregions. We plan to accumulate know-how in overseas franchising,also invest actively in its existing businesses and in the creation ofmajor features of the plan is the division of our business segments

which we can then apply toward building a foundation for direct

new businesses as part of a dual-axis approach to management.

into categories, each with its own strategies. In fiscal 2022, webusiness management, eventually allowing us to manage overseas

Although we celebrated our 70th anniversary in 2021, Medium-rebuilt our business portfolio, based on the issues found in ourRoyal Host establishments in the future.

Term Management Plan 2022–2024 lays the foundation for ourAmong our category-specific measures, we are also promoting

100th anniversary in the years to come. We will make effort after

existing domains and business creation domains for each category.

a DX-based initiative aimed at developing establishments inspired

effort to solidify this foundation, and we aim to continue our con-

For more details, please refer to page 37 of this report.

by fresh, new ideas unbound by the restrictions of our existingtributions to local communities by providing high-quality food andhospitality, not only in Japan, but around the world.

previous portfolio, and implemented a variety of measures in the

ROYAL HOLDINGS Co., Ltd.

Categories 1 and 2 cover the Restaurant Business, Contract

businesses. We have other DX-based initiatives to be achieved by

Food Service, and Hotel Business segments. In the Restaurant

2024 that include reviewing Group processes involving the pro-Business segment, we responded to the recovery in demand at

curement of raw materials, production control, logistics and sales,May 2023

existing restaurants such as Royal Host and Tendon Tenya by offer-streamlining establishment operations, and developing services

Masataka Abe

ing menus with high added value alongside renovating thesethat can be used throughout the Group via a shared system. Please

President and Representative Director

establishments and their kitchens. We also introduced tablet-basedrefer to page 47 of this report for details.

ordering and self-checkout systems to reduce the burden on

not only in Japan, but around the world.

as ways to help create a brighter society. In terms of resources andsegment, we have been working to expand sales channels andto ride this wave forward to further growth for the Royal Group.

09

As for the Hotel Business segment, recovery has been slower

formation” to “growth.” Under this plan, we promoted measureshigh-quality food and hospitality,

ROYAL HOLDINGS Co., Ltd.

Fiscal 2022, a Year for Adaptability

10

Cover Story Our Value Creation Story

Business Strategy

Input

Business Activity

OutputOutcomeValue Creation Cycle
Stakeholders

Management Issues
S ustainable growth andadaptability

Ro

Co
n

Pursuing Safe Food
That Can Be Enjoyedwith Peace of Mind

ya

ab

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le

Gr

t ra

re

c

i ce

uf

es s
s in

Bu

t

el

M

an

ac

tu r

Ho

Realize health management
Optimize in-house personnel andemployee training
Maintain various forms of
employment

Working together
toward our goals

ow

er v

Pursuing Hospitality Infusedwith Empathy

Human Capital

Employees

dS

st a

ur
a

the

ain

Restaurants,
etc.

od
Fo

Financial Capital
Optimal distribution ofmanagement resources
Collaboration with Sojitz
Corporatione ss

Logistics

Natural Capital
Resources for businessactivities
Procurement that
supports a sustainable
societyBh o S h a re i n

Manufacturing

From “Revitalization
and Transformation”
to “Growth”

Food preparation
capabilities for delicious
food and drinks madethrough safe and secure
production and procurement methods

nt

in
us

Procurement

Medium-Term
Management Plan
2022–2024

Manufactured
CapitalR

rc e s W

S u stoo
tF

Long-Term
Management Vision

Hu

R&D capabilities for
proprietary creation

m

an

u
es o

Re

Intellectual Capitalrined Strategy for



do

R
 esponse to social and environmental issues

Employees with expertiseand know-how who haveadopted the Royal Credo

s
Bu

an
tfolio
r
o
ss P

th

R
 ising cost of ingredients,
labor, and distribution

Human CapitalOu

S ecurement of humanresources and cultivation of
the next generationing

Social and
Relationship Capital
A foundation of trustwith stakeholders
cultivated throughout
the Company’s history

Customers
Diverse work styles, better
labor and work conditions,and active human resources

Providing customers withpleasant experiences
Creating spaces forcommunication

Natural Capital

Provide value from richexperiences
Transparent, fair, and equitable procurement

Business Partners

Improved ROA and ROE

Facilitating co-prosperity
and coexistence

Creation of stores that are
indispensable to local
communities

ROYAL HOLDINGS Co., Ltd.

11

The Royal Credo was crafted in 1956. Since then, the Royal Group has maintained this credo as the cornerstone of its corporate activities
in order to be a business group trusted by society. We will continue to make efforts to ensure that all employees of the Royal Group areunited through a shared goal of satisfying customers and are highly committed to their various roles. Through these efforts, we will realize thesustainable growth of the Group and take gradual steps toward continuing to create added value.

Consider a sustainable society whenutilizing resources
Implement a CSR-based purchasing
policySupport sustainable agriculture andfishing industriesContinuing toCreate Added
Value

Financial CapitalUse of sustainable resources

Improve growth and productivity
Carry out balanced investments
Increase shareholder dividends
Distribute profits impartially to all
stakeholders

Shareholders
Providing appropriate
dividends
Building mutual understanding withmanagement

Local Communities
and Society
Serving a societythat needs us

The Royal Group’s Value Creation ModelIntellectual Capital
Pursue food and hospitality
Utilize digital technology to manage
our new portfolio
Utilize accumulated expertise for R&D

Social and Relationship
CapitalCreate stores, restaurants, and otherestablishments that are indispensable
to communities
Contribute to resolving social issues
through business
Provide a space to cultivate the next
generation

S afe and Delicious Food That Can Be Enjoyed with Peace of Mind and Hospitality Infused with Empathy
To ensure customer satisfaction, we must provide safe and delicious food that can be enjoyed with peace of mind. In addition to daily education andtraining, this requires care to make sure every corner of an establishment is well-maintained and a smile that makes customers feel welcome.

Human Resources Who Share in the Royal Credo
Each and every employee constantly thinks about how to satisfy our customers, acts with spirit and feeling, and continuously polishes their performance. We aim for sustainable growth as an entire Group, with our shared Royal Credo as the cornerstone.

Our Business Portfolio and Strategy for Sustainable Growth
To solve the issues found in previous portfolio management that were brought to light during the COVID-19 pandemic, we have highlightedm­ anagement from three perspectives, aiming to create new value and growth for the Group. These perspectives are 1. Evolution of the portfolio itself,
2. Evolution of the businesses within our portfolio, and 3. Organic integration of our portfolio.

ROYAL HOLDINGS Co., Ltd.

L ack of group synergies

Achieving theRoyal Group’s Vision12

1 Our Management Foundation

Hiroto Murai Outside Director
1989

List of Directors

2005(As of March 29, 2023)

2010

2012

2014

2015

Tadao Kikuchi Chairperson
1998
1997
2000
2003
2004

2007

J oined The Nippon Credit Bank, Ltd.
(currently Aozora Bank, Ltd.)Secretariat, Office of the Secretaryof The Nippon Credit Bank, Ltd.
Joined the Tokyo Branch of
Deutsche Bank GroupDirector, Global Corporate Financeof Deutsche Bank GroupJoined the Company; Executive
Officer, Head of Corporate Planning
Department, and Head of Legal
Office of the Company
Director, Head of Corporate Planning
Department, Head of Legal Affairs,and Head of Group Management
Department of the Company

2009

2016

2017

2018

J oined the Company
General Manager, Business
Department of CENTRESTA Co., Ltd.
(currently Royal Contract Service
Co., Ltd.)General Manager, Business Planning
Department of Royal Contract
Service Co., Ltd.
General Manager, Metropolitan
Sales Department of Royal Contract
Service Co., Ltd.
Director and General Manager ofRoyal Contract Service Co., Ltd.

2009

2010
2016
2016
2018
2019
2020

 irector, Head of Administration
D
Headquarters, Head of Corporate
Planning Department, and Head of
Legal Affairs of the Company
President & CEO of the Company
Chairperson & CEO of the Company
Chairperson of Japan Foodservice
Association
Outside Director of
QB Net Holdings Co., Ltd.
Chairperson of the Company(present)
Distinguished Professor of
Graduate School of Management,
Kyoto University (present)2021

 utside Director and Audit andOSupervisory Committee Member of
QB Net Holdings Co., Ltd. (present)

Important positions held at other companies

Outside Director and Audit and Supervisory
Committee Member of QB Net Holdings Co., Ltd.
Distinguished Professor of Graduate Schoolof Management, Kyoto University

2019

2021

2022

2022

1988

1989
2005
2006
2007
2011

J oined Sony Corporation (currently
Sony Group Corporation)
Joined Mitsui Trust Bank, Limited(currently Sumitomo Mitsui Trust
Bank, Limited)Joined The Nippon Credit Bank, Ltd.
(currently Aozora Bank, Ltd.)
Accounting Manager of The Nippon
Credit Bank, Ltd.
Vice President of RoyalManagement Co., Ltd.
Executive Officer and Accounting
Manager of the Company
Director and Accounting Managerof the Company

2013
2019
2020
2022

ROYAL HOLDINGS Co., Ltd.

13

2003

2007

2009

2013

J oined Nissho Iwai Corporation(currently Sojitz Corporation)
General Manager, Corporate
Planning Department ofNissho Iwai American Corporation
General Manager, Corporate
Planning Department of Nissho Iwai
American Corporation and General
Manager, Los Angeles Branch of
Sojitz Corporation of America
General Manager of Human
Resources & General Affairs ofSojitz Corporation
Executive Officer of Sojitz Corporation

1987
1990
1998

2003
2008

2012

2018

2020
2021
2022

 ivision Leader, Automotive
D
Division of Sojitz Corporation
Executive and Division Leader,
Automotive Division ofSojitz Corporation
Division Leader, Retail & Consumer
Service Division of Sojitz Corporation
Outside Director of the Company(present)
Managing Executive Officer COO,
Retail & Consumer Service Divisionof Sojitz Corporation (present)

Important positions held at other companies

Managing Executive Officer COO,
Retail & Consumer Service Division ofSojitz Corporation
Outside Director of JALUX Inc.
Director of Sojitz Foods Corporation
Outside Director of The Marine Foods
Corporation

 resident and RepresentativeP
Director of Royal Contract Service
Co., Ltd.
Executive Officer and Deputy
General Manager, Joint ProjectManagement Project Office of theCompany
Executive Officer and Chairpersonof Executive Officer Liaison
Committee of the Company
President and Representative
Director of the Company (present)

1978
2002

2004

2007

1991

1994
2011

2016
2017

2017

2019
2020
2020

2020

 irector and Audit & SupervisoryD
Committee Member of theCompany (present)

Important positions held at other companies

Managing Director of Egashira Foundation(public interest)J oined The Industrial Bank of Japan,
Limited (currently Mizuho Bank, Ltd.)General Manager of Human
Resources and Human Resources
Training Office of Mizuho Securities
Co., Ltd.
General Manager of Main Office
Corporate Banking Department
No. 1 of Mizuho Corporate Bank, Ltd.
(currently Mizuho Bank, Ltd.)Executive Officer, General Manager
of Fukuoka Corporate Banking
Department

2008

2010
2013
2018

2018

 anaging Executive Officer ofM
KOWA REAL ESTATE CO., LTD.
(currently NIPPON STEEL KOWA
REAL ESTATE CO., LTD.)Senior Managing Director of
KOWA REAL ESTATE CO., LTD.
President of Japan Investor
Solutions & Technologies Co., Ltd.
Outside Director and Audit &Supervisory Committee member of
the Company (present)Outside Director of
ARATA CORPORATION (present)

Important positions held at other companies

Outside Director of ARATA CORPORATION

Hitomi Nakayama Outside Director and Audit & Supervisory Committee Member irector and Head of Financial
D
Planning Division of the Company
Managing Director in charge ofFinancial Planning of the Company
Outside Auditor of HUB CO., LTD.
Managing Director of the Company(present)

2013

2015

J oined the Company (left in 1982)
Joined the Company
Director of the Company(resigned in 1998)
Executive Officer and Head of
Air Catering Department of theCompanyDirector of the Company
Full-Time Auditor of the Company
Managing Director of EgashiraFoundation (public interest)(present)Director and Advisor to the Company

Hideo Ishii Outside Director and Audit & Supervisory Committee Member

Ryutaro Hirai Outside Director
1982

1976

2011

Tomoatsu Kimura Managing Director
1982

2016

Mari Tominaga Director and Full-Time Audit & Supervisory Committee Member

Masataka Abe President and Representative Director
1993J oined Nissho Iwai Corporation(currently Sojitz Corporation)Executive Director of AAPICO Hitech
Public Company Limited (Thailand)Operation Manager, Machinery
Section, Automotive Department 2 ofSojitz Corporation
Operation Manager, Corporate
Planning Department ofSojitz Corporation
Assistant Section Manager,
Automotive Department ofSojitz Corporation
Vice Division Leader, Automotive
Division of Sojitz Corporation

 egistered as an attorney at law;Rjoined Daini Tokyo Bar Association;joined the Kasumigaseki-Sogo Law
OfficesBecame partner at KasumigasekiSogo Law Offices (present)Became Vice-Chair of Daini Tokyo
Bar Association
Managing Director of Japan
Federation of Bar Associations
Auditor of Japan Electric Meters
Inspection Corporation (present)Outside Auditor of Teijin Limited(present)2020

 utside Director and Audit &O
Supervisory Committee Member of
the Company (present)

Important positions held at other companies

Partner at Kasumigaseki-Sogo Law Offices
Outside Auditor of Teijin Limited
Auditor of Japan Electric Meters Inspection
Corporation

Mayumi Umezawa Outside Director and Audit & Supervisory Committee Member
 anaging Executive Officer ofM
Sojitz Corporation
President & CEO of Asia & Oceania
region of Sojitz Corporation,
Managing Director of Sojitz Asia
Pte. Ltd., and General Manager,
Singapore Branch of
Sojitz Corporation
Senior Managing Executive Directorof Sojitz Corporation
Executive Vice President ofSojitz Corporation
Representative Director andExecutive Vice President ofSojitz Corporation (present)2022

 utside Director of the Company
O(present)

Important positions held at other companies

Representative Director and Executive Vice
President of Sojitz Corporation
Representative Director, President & CEO of
Sojitz Professional Share Co., Ltd.
Director of Metal One Corporation
Director of Sojitz Asia Pte. Ltd.
Director and Chairman of Sojitz Australia Ltd.
Director of Sojitz Korea Corporation
Director of Sojitz Taiwan Corporation

2002

2006
2006

2007
2012

J oined Tokyo Office, Tohmatsu & Co.
(currently Deloitte Touche
Tohmatsu LLC)
Registered as certified public
accountant
Opened Mayumi Umezawa CPA
Office; Director of Umezawa
Accountant Office (currently
Mayumi Umezawa CPA Office)(present)
Joined McDonald’s Holdings
Company (Japan), Ltd.
Finance Manager, Disney Store
Department of The Walt DisneyCompany (Japan), Ltd.

2016

2016
2017

2019

2021

 epresentative Director ofR
Accounting Labo (currently
Accounting Labo Co., Ltd.) (present)Outside Audit & Supervisory Board
Member of Retty, Inc.
Outside Director and Audit &Supervisory Committee Member ofRetty, Inc.
Supervisory Director of Japan Hotel
REIT Investment Corporation(present)Outside Director of Wellness
Communications Corporation(present)2022

 utside Director and Audit &O
Supervisory Committee Member of
the Company (present)

Important positions held at other companies

Director of Mayumi Umezawa CPA Office
Representative Director of Accounting Labo
Co., Ltd.
Supervisory Director of Japan Hotel REIT
Investment Corporation
Outside Director of Wellness
Communications Corporation

ROYAL HOLDINGS Co., Ltd.

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14

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1 Our Management Foundation

Skill Matrix

Chairperson

President andRepresentative Director

Managing Director

Outside Director

Outside Director

Director and Full-Time
Audit & Supervisory
Committee Member

Outside Director and Audit& Supervisory Committee
MemberOutside Director and Audit& Supervisory Committee
MemberOutside Director and Audit& Supervisory Committee
Member

Tadao Kikuchi

Masataka Abe

Tomoatsu Kimura

Ryutaro Hirai

Hiroto Murai

Mari Tominaga

Hideo Ishii

Hitomi Nakayama

Mayumi Umezawa

Male

Male

Male

Male

FemaleFemaleFemaleReappointed

Reappointed

Male

Reappointed

OutsideReappointed

OutsideReappointed

Male
OutsideIndependent

OutsideIndependent

OutsideIndependent

Company management
and business operations

Sales and marketing

Finance and accounting

Human resources, labor,
and human resource
strategy

Legal affairs and risk
management

ROYAL HOLDINGS Co., Ltd.

15

Sustainability

International experience

ROYAL HOLDINGS Co., Ltd.

Planning anddevelopment,
innovation, and DX

16

1 Our Management Foundation

Messages from Outside Directors

Hideo Ishii
Outside Director and
Audit & Supervisory
Committee Member

RyutaroHirai
Outside Director

HirotoMurai
Outside Director

ROYAL HOLDINGS Co., Ltd.

17

During the meetings of the Board of Directors in fiscal 2022, members
exchanged candid opinions regarding social needs and the Group’sbusiness outlook, extending to matters discussed at the executive officer
level that had yet to be formally proposed.
I believe these exchanges assisted in making governance over theGroup more transparent and effective. Of these talks, I am most focused onbuilding a foundation for future business overseas. With the easing or
ending of restrictions put in place in Japan and overseas to prevent the
spread of COVID-19, an important question for the Royal Group in terms of
its regrowth is how it will grow its Overseas Business going forward. To
achieve this growth, I believe that the Group must take advantage of Sojitz Corporation’s overseas network and work toward thetimely launch of directly-managed Royal Host establishments while also sowing the seeds for future projects. These on-the-groundchallenges and others like them are absolutely essential and I intend to support the Group in its endeavors.
Moreover, in fiscal 2022, the Company announced an investment policy directed at its human capital that includes anincrease in workers’ base pay. As part of reforming its human resource system, the Company has conducted interviews withmembers of the Human Resource Department. In addition, it has also introduced systems and initiatives from sources outside
the Company, such as Sojitz Corporation. Going forward, I will continue to utilize my many years of experience at Sojitz
Corporation related to overseas business, human resources, and compliance, and share whatever knowledge is needed tohelp the Royal Group develop further.

Since its founding, the Royal Group has implemented strict measures toensure food safety and hygiene based on the Royal Group Code of
Conduct. In addition, as a corporate group centered on food-related
business, it continues to engage in corporate management that maintains
compliance with relevant laws and regulations as a given, but is also
based on high ethical and moral standards.
In fiscal 2022, Royal Holdings formulated Medium-Term Management
Plan 2022–2024. Under its guidance, the Group is working steadily toemerge from the dire management crisis created by the spread of COVID19 and to implement an aggressive strategy toward regrowth. As part ofits medium-term management plan, the Group needs to have an accurate understanding of the traits of its Existing Domains
and Business Creation Domains, then investigate the potential multitude of risks scenarios originating from inside and outside
the Group. From there, it needs to acquire a quantitative grasp of the risks and assess measures to reduce them. This process isvital for the Group to better ensure regrowth takes place. In addition, as part of resolving issues with existing businesses andthe growth strategy for increasing future earnings, the Group needs to review whether each individual measure has beenchecked for feasibility and whether progress is being monitored properly.
As for me, I will make full use of my breadth of businesses experience acquired at trading companies to keep putting
forth proposals to improve the effectiveness of these measures and contribute to the achievement of the Group’s goals within
their defined timeline.

Hitomi
Nakayama
Outside Director and
Audit & Supervisory
Committee Member

MayumiUmezawa
Outside Director and
Audit & Supervisory
Committee Member

During the meetings of the Board of Directors held in fiscal 2022, several
discussions took place, with topics examined from multiple angles based oneach director’s knowledge base. In addition, the Executive Officer Liaison
Committee, established in fiscal 2021, has expanded its agenda beyond
discussions on isolated matters to include broader and strategic themes. As aresult, issues that affect management to its core are being shared among
executive officers, which I believe has a positive effect on management. I also
believe that the committee, and the discussions that take place therein, givethe executive officers a chance to hone their skills.
   Much as in 2022, I have high expectations for the Company’s
DX strategy. In particular, in fiscal 2022, the Company launched two initiatives that take advantage of technology under its
Innovations project: a micro-size store, and a new customer experience (CX). In the future, it will need to extensively investigate DX trends, not only in Japan but also in countries that are leading the charge. I also believe that the Company needs tofoster an environment that heightens employee interest in DX and facilitates the sharing of knowledge.
The Royal Group is promoting a number of challenging initiatives, aimed at medium- to long-term development, including the above-mentioned innovations. I would like to make as many useful proposals as I can to help these initiatives bear
fruit, pulling from my experience of reviewing multiple business plans at banks.

In fiscal 2022, we had discussions at the meetings of the Board of
Directors about how the Company can boldly take on challenges in new
domains while keeping its finger on the pulse of changes in society andconsumer behavior. Some examples include expanding collaborations
with Sojitz Corporation and opening Costa Coffee establishments. In
addition, the Executive Officers Liaison Committee has evolved from its
original purpose as a space for sharing information into a forum for each
executive officer to analyze issues facing the Group as a whole, beyond
their own areas of responsibility.
As in 2022, I will continue to keep a close eye on the Company’s diversity and inclusion initiatives, particularly its efforts to promote the active participation of women. At the 2022 Royal Group
President’s Meeting, a case was made to increase the number of women in management positions. An environment that enables
women at different life stages to put their best foot forward at work is a comfortable one for other employees as well. Making suchan environment a reality will boost innovation and competitiveness as a Group. In that vein, the Company should further reinforce
its efforts related to the Nadeshiko Project, an initiative started in 2017 that promotes the development of workplaces where
women can work comfortably. As a group with strong brands, it also faces considerable reputational risks. I remain committed toexpressing opinions that will help enhance brand strength and ensure appropriate action in emergencies, using my experience inlegal affairs, compliance, and risk management. I hope that by offering proposals based on these perspectives, I can increase thecompetitiveness of the Royal Group.

During the meetings of the Board of Directors that took place in fiscal
2022, a number of discussions focused on human capital. These talks
ranged from discussing the true essence of human resources to focusing
on specific measures. These talks were driven in particular by the results of
the Royal Group’s Employee Satisfaction Survey, which were shared with
the Board.
Key to improving employee satisfaction is creating an environment
where each employee can achieve personal growth. The Group conducts
business with companies, in addition to customers. This allows employees
to acquire a wide range of experiences, and by extension, develop individual skills. To that point, I will continue to dig into human capital as an important topic for discussion so that the Group can
provide even more value not only to its customers but to its employees as well.
Fiscal 2023 will see the establishment of the Marketing Office, which will be the launching point for Groupwide initiatives
for managing customer relationships. However, unified branding as a Group is still a work in progress. To this point as well, I
will leverage my many years of experience in consumer goods to offer recommendations from a boots-on-the-groundperspective. In addition, I will help promote management that is mindful of the full spectrum of stakeholders by bringing
diverse perspectives to Board discussions based on my age, gender, and position, namely as a consumer who is also a motherwith children.

ROYAL HOLDINGS Co., Ltd.

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18

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1 Our Management Foundation
I want to be part of the team that turns Royal Group into an organization with sustainable growth.

Messages from Employees, Our Support Structure for the Future

Theme

The Dreams You Want to Achieve with the Royal Group

From the very moment I joined the Royal Host Business Department, I was assigned to be an acting store manager,
meaning every day was stressful, hurried, and full throttle. But all the while I received the advice of those with moreexperience and the support of my fellow members, who lent me open ears when I needed to share my worries orconcerns. Thanks to them, I was able to make it through those hard times to where I am today. Since I am in my 20s
now, I want to make full use of the Company’s corporate culture, which encourages people to challenge themselves,and increase my experience and knowledge further. By the time I turn 30, I want to be able to play a key part in theGroup's projects, develop into someone worthy of trust from customers, employees, and the Company, and increase
the brand power and added value of the Group.
Restaurant BusinessI want to be the best version of myself as I experience life events and work as a Royal member.
As a manager, I envision a restaurant filled with the smiles of customers and employees. Personally, I love serving customers and watching my staff grow, so work is one of the things I do to enrich my life. After taking on the manager
position, there were plenty of days when I felt frustrated, but I stuck to my motto of “Don’t be afraid to fail, just keep
trying!” I want to work together with staff while sharing the kind words we receive from customers, and make myself avital part of the Company’s growth.
Restaurant Business

Haruna Ohshima, Royal Garden Cafe, Shibuya location

Yu Takayama, Manager, Royal Host, Okurayama Location

I want to join company management so I can help establish an enriching career path forpeople of all ages.
As a store manager, my motto is “give every customer a tempura bowl that brings them happiness and excitement.”
During the rotation training held in my first year after joining the Company, I had a great opportunity to take in thevarious businesses in the Royal Group and learn about the strengths and weaknesses of each one. Our work is madepossible by people. I want to join the Company’s management team in the future, so I can help make the Company anappealing place where employees can grow together while still having good work—life balance, where they can all
shine with positivity and work with excitement, and where they can achieve their dreams.
Restaurant BusinessI want to use my study abroad experience and one day be an active part of Richmond Hotels’
overseas locations.
Right now, I work as a hotel front desk chief, which requires me to view things from a broad perspective while I work. There aremany parts of the job that are difficult and put my own immaturity front and center, but at the same time the work feels very
worthwhile and has a lot of charm. As we welcome different guests day-in and day-out, I am constantly reminded of the importance of teamwork, and that hotel operations are only possible through the combined strength of everyone working together. It
makes me feel so thankful to have people who support me in this way. In the future, I want to better refine how I carry myself,brush up my knowledge as a working adult, and give it my best shot to make my dreams come true, one day at a time.

Shunji Ohno, Manager, Tendon Tenya, Akihabara Location

I want to use food as a way to make everyone involved happy!
I work in the production of cakes and other products at the Tokyo Food Facility. In 2023, I was made the head of development for products under national brand names, and I am hoping to develop products that customers will love over
the years to come. I don’t get many chances to interact with customers face to face, so it makes me very happy whencustomers say our products are “tasty” or “cute” on social media. I want to use food as a way to make various stakeholders, such as customers, business partners, and co-workers, happy, and I am confident the Royal Group can do this.
Food Manufacturing Yuki Kubo, Line Leader, Milchof Cake Production Line, Tokyo Food Facility

Hotel Business Rieko Nomura, Front Chief, Richmond Hotels Premier Tokyo Schole

I want to flourish in my role with the Company’s support and maintain awork–life balance like my senior colleagues.
I work in the development department at the Group’s factory, which serves an important role as the Group’s backkitchen. I am in charge of the production process for products that replicate the sample meals created by the hands ofa chief chef. This direct involvement in the process of moving from a sample to mass production and then to sales issomething unique to my department, so my heart skips a beat whenever I see a customer holding one of our products
in an establishment. In my position, I used to struggle with bringing veteran workers together, but over time I havelearned to foster a sense of unity, and now those prior hardships serve me well in my current work. Looking ahead, I
would like to boost the level of my knowledge and grow by reaching new milestones in my life.

I want to keep shining at a company where I can work cheerfully, happily, and with pride.
Every day, I strive to improve the level of service and operation at our establishments so that our customers can headfor their destinations with a smile on their faces. After joining the Company, I worried over how to be an ideal employee
and how to build trust with customers and my fellow workers, but the guidance and support of my boss and seniorcolleagues helped me overcome these troubles. I also drew confidence from the positive results of the busy season,
made possible through greater teamwork that put a premium on communication with employees. In the future I would
like to keep improving myself, achieve growth, and help make the Company the most attractive in the industry.
Contract Food Service Kotaro Tsunomachi, Manager, Royal Host, Haneda Airport Location

I want to work in an overseas subsidiary while taking on more challenges to advance my career.
ROYAL HOLDINGS Co., Ltd.

19

I am in charge of the Group’s expansion overseas and the efforts to bring overseas brands to Japan, as well as contract
negotiations for overseas businesses and management accounting for local subsidiaries. With each passing year, mywork feels more rewarding and affords me valuable experiences, thanks to business trips abroad and more opportunities to talk business with partner companies. I joined the Company during the COVID-19 pandemic, which means mytraining was conducted online. Although this was difficult, I find myself using this experience when conducting business outside of Japan. As a first goal, I would like to set up a new overseas business and learn all sorts of things, such as
how overseas business progresses and expands, and at the same time, I want to push on toward my dreams.
Overseas Business Mizuki Koga, Overseas Business Development Department

I want to become a chief chef with management skills and be a positive and essential part of
the Company.
As a member of the opening staff for the Backlot Cafe, which opened in June 2023 as part of The Making of Harry Potter
Warner Brothers Studio Tour in Tokyo, I enjoy work each day as I try to figure out the best ways to do my job. Running a
restaurant that sees around 10,000 people a day and uses large equipment not seen in a regular restaurant has its difficulties
for sure, but to me it is uplifting to know that I am providing customers with delicious meals, served quickly and at just theright temperature. I don’t have much experience yet, but I want to be someone who can help out the Company, and so I
am going to keep my mind open to acquiring management skills, improving communication, and being more sensitive.
Contract Food Service Asaka Makiguchi, Backlot Cafe, Warner Bros. Studio Tour Tokyo—The Making of Harry Potter

ROYAL HOLDINGS Co., Ltd.

Food Manufacturing Miyu Tanibuchi, Product Development Section, Fukuoka Central Kitchen Factory

20

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1 Our Management Foundation

Corporate GovernanceCorporate Governance Structure (As of March 30, 2023)
General Meeting of Shareholders

Basic StanceCommittee audits the execution of the duties of directors, ensuring
appropriate operations Groupwide.
Furthermore, in addition to the Royal Credo, the Company has
established the Royal Group Code of Conduct and the Royal Group
Guidelines. These are standards that directors and managerial
employees across the Group should observe at all times while also
striving to foster awareness of compliance Groupwide. At the sametime, the Company has set up the Compliance Helpline for internaland external use and, under the guidance of the Helpline
Committee, implements corrective measures and measures toprevent recurrence, should such actions be necessary, of any itemsof concern.
The Company has also established a risk management system
to deal with a variety of risks in a precise manner, under which the
Risk Management Committee evaluates and analyzes risks for theentire Group, investigates countermeasures, and endeavors tominimize losses.

Management Advisory Committee

Instruct

ReportStanding Committees
Instruct /Supervise

Sustainability Committee

ReportReportInternal Audit
Department

Audit

Helpline
Committee
Audit

Risk Management Committee
Human Resources Advisory Committee

ReportTie-upAccounting Auditor

Internal Control System

ReportRepresentative Director

In order to ensure that directors can execute their duties in an
efficient manner, the Company utilizes a system in which major
issues and initiatives are discussed during meetings of the
Executive Officer Liaison Committee, after which important items
are reported to the Management Council or the Board of Directors
for discussion and decision-making. Other decisions are delegatedto the representative director or the relevant officer based oninternal regulations. This helps speed up the decision-making
process while optimizing management.

Determine /Supervise

Executive Officer Liaison Committee

Propose /ReportAudit & Supervisory Committee Office

Audit / supervise
Management Council

Propose /ReportAppoint / Dismiss

Audit & Supervisory Committee

Consult

Corporate Governance Structure

The Company maintains a basic policy regarding its internal control
system. The Company makes concrete developments to thissystem and executes business in accordance with this policy andfrom the viewpoint of ensuring compliance, risk management, andoperational efficiency.
The Company has also adopted a holding company structure
for the purpose of building a flexible and adaptable management
system. Under this structure, the Company has established asystem with several checks to ensure proper internal control, in
which the directors of the Company, executive officers, or corresponding persons of similar rank are appointed to Group subsidiaries as members of their Board of Directors, while members of
the Audit & Supervisory Committee or the Audit & Supervisory
Committee Office serve as auditors at each subsidiary. In addition,
subsidiaries are obligated to report management information andany other important information on a regular basis.
Moreover, the Internal Audit Department conducts internal
audits of Group companies, and the Audit & Supervisory

Appoint / Dismiss

Board of Directors

Drawing from the Royal Credo, the Royal Group has positioned, as high priority management issues, thorough compliance with laws andregulations and adherence to corporate ethics. These are necessary to achieve sustainable growth and generate corporate value over the
medium to long term.
Specifically, as a food-centered organization, the Group has been deeply committed to food safety and hygiene since its founding. At thesame time, the Royal Group is also a hospitality-centered organization. As such, in July 2005 the Group formulated the Royal Group Code of
Conduct, which is shared with all executives and staff and strives for sensible corporate management underpinned by appropriate compliance, high ethics, and strong morals. Going forward, the Group will continue to review its systems and structure in order to ensure effective
corporate governance under a fair and transparent system.

The Company has established a General Meeting of Shareholders, aBoard of Directors, an Audit & Supervisory Committee, and an
Accounting Auditor, which serve as corporate bodies as stipulated
under the Companies Act.
In addition, the Company has introduced the executive officer
system, appointing executives entrusted with the oversight ofbusinesses, subsidiaries, or other meeting bodies of the Group. It
has also established the Management Council, comprising of
directors and executive officers, to discuss management issues andother matters concerning the Group. Moreover, it has establishedthe Executive Officer Liaison Committee, which is composed of thepresident and executive officers.

Appoint / Dismiss

ReportCommunicate

ReportHelpline Desk

SuperviseInternal

Business sectors, subsidiary companies, and affiliated companies

External

Consult / Communicate

Composition and Description of the Board of Directors and Other Meeting Bodies
Name

Description

Board of Directors

The Board of Directors, chaired by Chairperson Tadao Kikuchi, consists of nine directors, five of whom are independent outside directors. Of
these five, three members serve concurrently on the Audit & Supervisory Committee. The Board of Directors serves as the highest authority
over management and decision-making related to business execution, meeting 13 times a year as a general rule with the ability to holdadditional meetings if necessary. It decides on important management-related issues and oversees business execution and progress.

The Audit & Supervisory Committee consists of four directors who serve concurrently as Audit & Supervisory Committee members,
including three independent outside directors who have specialized knowledge in fields such as law, accounting, finance, and corporate
Audit & Supervisory
management. The committee conducts audits of operations and assets; directors’ execution of duties; and compliance with laws, regulaCommittee
tions, the Articles of Incorporation, etc. The committee is a supervisory body that monitors management and business execution. To fulfill
this role, the committee receives reports pertaining to relevant matters, holds discussions, and makes resolutions.
Management
Advisory
Committee

The Management Advisory Committee consists of four non-executive directors who serve concurrently on the Audit & Supervisory
Committee, three of whom are independent outside directors. The Management Advisory Committee advises the Board regarding
nomination and remuneration decisions for directors and designated executive officers, and ensures the validity and transparency of thedecision-making process.

Management
Council

The Management Council is chaired by President Masataka Abe and comprises nine directors, including five outside directors who attend
on a voluntary basis, and 11 executive officers. The council meets once a month in principle to discuss the Group’s current situation andmanagement issues, aiming to maximize corporate value.

Executive Officer
Liaison Committee

The Executive Officer Liaison Committee is chaired by President Masataka Abe and comprises the president and 11 executive officers. The
committee meets weekly in principle to discuss and share information regarding the Group’s management-related issues and importantinvestments in an effort to promote initiatives that will increase corporate value.

ROYAL HOLDINGS Co., Ltd.

The Company has established the Internal Audit Department,
which comprises five members that work under the head of thedepartment to conduct audits based on the Company’s annual
audit plan and the instructions of representative directors as ameans to ensure that operations throughout the Group are both
legal and socially responsible.

ROYAL HOLDINGS Co., Ltd.

Internal Audits
In addition, as a corporate group that centers its operations
on food, Royal Holdings has established the Quality Assurance
Promotion Department. Eight members work under the head ofthe department to formulate quality assurance standards for theentire Group and to conduct quality assurance audits.

Board of Directors

21

Management Advisory Committee

Executive Officer Liaison Committee22

1 Our Management Foundation

Composition of the Board of Directors

Evaluation of the Effectiveness of the Board of Directors

To become the Group with the highest quality food and hospitality
in Japan, the Group aims for a Board of Directors capable of handing down objective and resolute judgments pertaining to management issues, doing so from diverse and independent points ofview. Therefore, every effort is made to ensure the Board is diverse,
comprising of members with a variety of perspectives, a wealth ofexperience, and high-level skills, and that the number of members
is kept at an appropriate level.

Outside Directors

The Company collected opinions from each director evaluating the effectiveness of the Board of Directors in fiscal 2022. These opinions wereanalyzed and evaluated at the March 2023 meeting of the Board of Directors. The Company will use this evaluation to improve the functionsof the Board.

Inside Directors

TargetAll members of the Board of Directors in fiscal 2022 (including concurrent members of the Audit & Supervisory Committee)

Evaluation andanalysis
methodOpen questionnaire

Description ofquestions

Questions were provided under five main categories
1 Board composition 2 Board operations 3 Meeting agenda and contents

Overview ofresults

1 Board composition• The level of diversity and number of members of the Board of Directors is appropriate to the scale and nature of the Company’s business.
2 Board operations• Although the Board of Directors is generally well-managed and features meaningful discussions, there is room for improvement regarding thetimely distribution of meeting materials and the securing of time for deliberating agenda items.
3 Meeting agenda and contents• The selected number of agenda topics are appropriate.
• Further discussion is expected on the progress of the Company’s medium-term management plan, major risks, risk management systems,
development of a succession plan, and other items.
4 Supporting systems• The secretariat and other management systems are in place to support the Board of Directors, and directors, including outside directors, haveopportunities to obtain necessary information.
• The Company also ensures cooperation between the Audit & Supervisory Committee, the Internal Audit Department, and other relevantbodies. The Audit & Supervisory Committee is given adequate opportunity to collect information.
• The Executive Officer Liaison Committee is expected to serve as a forum for discussing major issues concerning business execution, and will
thereby stimulate discussions on issues that affect the entire Group.

Directors

9
InsideDirectors

OutsideDirectors

44 %

56 %

Reasons for Appointing Outside Directors
Appointing outside directors to the Board of Directors serves toenhance corporate governance by improving management transparency and ensuring objectivity. The Company maintains its own
criteria for the independence of its outside directors. These criteria
are stated in the “Criteria for Determining the Independence ofOutside Directors” section in the Company’s Basic Policy on

Corporate Governance. Outside directors are appointed based on
their career history and relationship with the Company to ensure
they have sufficient independence to perform their duties from aviewpoint that is separate from Company management.

NameReason for Appointment

Ryutaro Hirai

Mr. Hirai has been appointed for his wealth of business experience across several fields, including sales, human resources,
general affairs, and overseas operations, gained from many years working at trading companies. It is expected that he will maximize
collaborative ties with Sojitz Corporation and the Group and thereby contribute to the expansion of the Group’s business and improvement of its corporate value.

Hiroto Murai

Mr. Murai has been appointed as an outside director for his wealth of business experience from many years working at trading companies.
It is expected that he will continue to maximize collaborative ties between Sojitz Corporation and the Group and thereby contribute to
the expansion of the Group’s business and improvement of its corporate value.

Hideo Ishii

Mr. Ishii has been appointed as an outside director and Audit & Supervisory Committee member for his many years of experience working
for financial institutions and his wealth of experience and insight as a manager. It is expected that he will continue to make appropriate
recommendations regarding the general management of the Company.

Hitomi Nakayama

Ms. Nakayama has been appointed as an outside director and Audit & Supervisory Committee member for her specialized knowledge
and ability to provide opinions as a lawyer. It is expected that she will continue to make appropriate recommendations regarding theoverall management of the Company.

Corporate Governance Report (Japanese only)

The total compensation amount for each officer category, the total amount by type of compensation, and the number of officers eligible forcompensation are as follows.
(Fiscal 2022)
Basic compensation

Bonus

Number of officers eligible forcompensation

Directors (excluding Audit & Supervisory Committee
members and outside directors)

134

79

55

6

Directors (Audit & Supervisory Committee members)

25

25

–

5

Outside directors

14

14

–

4

Type of officer



ROYAL HOLDINGS Co., Ltd.

23

Compensation by type (millions of yen)

Note: Two outside officers are not compensated for their role and have therefore not been included in the number of officers.

Overview of Stock Remuneration System for Directors
At the 74th Annual General Meeting of Shareholders, the Company
resolved that it would introduce a performance-linked stock compensation plan, in which company shares and money equivalent tosaid shares would be paid in accordance to the completion ofgoals set within the Company’s medium-term management plan.
The system creates a clear link between director compensation, the Company’s performance, and its stock value. It has been
introduced with the goal of incentivizing directors to reach thetargets put forth in the Company’s medium-term management
plans and to have directors share the same benefits and risks that
affect all shareholders when the stock price rises and falls. These
factors will raise director motivation to improve medium- to longterm results and increase corporate value.
These targets also incorporate the SDGs, therefore the system
also reflects the Company’s commitment to a sustainable society.

5

Other issues and opinions

https://www.royal-holdings.co.jp/material/images/ir/governance.pdf

Message from an Executive Officer

Director Compensation

Total compensation amount(millions of yen)Supporting systems

For details on the Group’s implementation of the Corporate Governance Code, please refer to the latest Corporate Governance Report.

Ms. Umezawa has been appointed as an outside director and Audit & Supervisory Committee member for her wealth of specialized
Mayumi Umezawa knowledge related to finance and accounting and her experience as a certified public accountant. It is expected that she will makeappropriate recommendations regarding the overall management of the Company.



4Akitsugu Tominaga
Executive officer in charge ofcorporate planning and legal affairs,
Head of the Corporate Planning
Department, Head of the Legal OfficeRoyal Holdings established the Executive Officer Liaison Committee for executive officers to work
together in discussing and investigating issues and initiatives that concern business execution. In
fiscal 2022, this committee performed its function effectively from the perspective of enhancing
governance. Specifically, the committee facilitated the sharing of a variety of information regarding execution of the Company’s business among officers in a way that was both timely andappropriate, leading to sound decisions made with a sense of urgency. The committee also
helped with separating management and execution, in that the Board of Directors made decisions regarding important managerial policies for the Company, whereas the Executive Officer
Liaison Committee held discussions on topics that looked into each policy and presented theirfindings to the Board of Directors to continue the discussion.
The real challenge for the committee is setting the topics on its agenda. Since business andmanagement conditions change with each passing moment, the pressing question becomes
whether the committee can have the foresight to autonomously and accurately determine what
the Company currently needs to investigate and what decisions need to be made. When it comesto business execution, mounting a response to everything that comes our way is a daunting task.
There are many questions to consider, such as “In which directions are the food and drink andhotel industries headed?” “Will the global economy be further impacted by geopolitical risks?”“What is the next stage after human capital management and sustainability management?” and“How will AI and quantum computing affect our daily lives?” But I believe the Royal Group needs
to look at these questions and set a timely and fitting agenda to discuss them, forming the basis
for business operations. This is what will lead to high-quality, “true” governance.

ROYAL HOLDINGS Co., Ltd.

Menu

24

Menu

1 Our Management Foundation

Message from the Executive Officer in Charge of Financial Planning
Outlook for Fiscal 2023

In June 2022, I, Satoru Kushida, was appointed as head of the Financial
Planning Division. Here, I will report on the results of fiscal 2022 and thefinancial conditions of the Group, and explain our outlook going forward. Our
performance in the first year of Medium-Term Management Plan 2022–2024
was affected by highly uncertain business conditions, which included
priority measures lasting from January to March aimed at preventing theprolonged spread of COVID-19 as well as a jump in prices, particularly forenergy and food. In addition, spread of COVID-19 in the summer of 2022
led to heavy concern arising at the end of September, the close of the third
quarter, over the prospect of falling short of our yearly earnings forecast.
However, as we entered the fourth quarter, external conditions
changed due to domestic travel opening up, clearing the fog and giving us
a clear path forward. As time passed, the flow of people has recovered, andour business performance has made a steady comeback. As a result, weachieved profit levels exceeding our forecasts. I chalk this up to the RoyalGroup's concerted efforts to “improve the profitability of existing businesses,”
which is one of the tenets of Medium-Term Management Plan 2022–2024.
In terms of the Restaurants Business and Contract Food Service segments,
this meant pursuing higher added value by improving our menus andservices, and our continued and earnest efforts to this end brought withthem the support of our customers. I believe this allowed us to rein in theeffect of higher costs to within our expected range, as shown by the average level of spending per customer. In the Hotel Business segment, we
reviewed our approach to managing revenue and worked to optimize room
prices per unit while simultaneously keeping a close eye on customer
trends. In the Food Manufacturing segment, we increased profitability
primarily through the use of stock keeping units* (SKUs) and cost reductions. I believe that the reasons we were able to achieve these results undersuch strenuous conditions are the efforts made by every Royal Group
employee, every day, and the capital and business alliance we entered intowith Sojitz Corporation in 2021.
Comparing income and expenditures between the fourth quarter offiscal 2019, pre-pandemic, and the fourth quarter of fiscal 2022, when our
performance recovered, one finds that in fiscal 2022 cost of sales and SG&A

ROYAL HOLDINGS Co., Ltd.

25

ratios both decreased while operating profit margin increased 3.2%. These
trends suggest that the improvements we made to our income and expenditure structure, which generated improved results in fiscal 2021, continued
to bear fruit in fiscal 2022. In addition to improving our top line, thisincluded structural reforms made in response to COVID-19, such as closing
unprofitable locations, reorganizing our businesses, and reducing fixed
expenses. One of the indicators we use to calculate productivity, added
value per person, improved 104% from fiscal 2019.
Regarding the balance sheet, total assets at the end of fiscal 2022 stoodat ¥123.5 billion, an increase of ¥13.8 billion compared to the end of theprevious fiscal year, for reasons that include making Highway Royal Co., Ltd.
a consolidated subsidiary. With regard to borrowings, although funds for theacquisition of additional shares of Highway Royal Co., Ltd. were procured asplanned, there were scheduled repayments of existing borrowings, andoverall borrowings decreased. Shareholders’ equity increased approximately¥10.3 billion, to approximately ¥44.2 billion. This increase was due to theissuance of approximately ¥8.3 billion in new shares to Sojitz Corporation
after it exercised its stock acquisition rights, in addition to recording approximately ¥2.7 billion in net profit, dividend payments of approximately¥0.5 billion, and other factors. As a result, shareholders’ equity ratio rose 4.8%,
recovering to 35.8%, bearing in mind that the fiscal 2024 goal under our
medium-term management plan is a shareholders’ equity ratio in the area of40%. In addition, our fixed assets to long-term capital ratio increased by 3.2
percentage points, due to the significant increase in fixed assets, whichstems from the mark-to-market valuation and goodwill recorded in line withthe consolidation of Highway Royal Co., Ltd. Despite this increase in theratio, it still remains below 100%, indicative of a sound financial base.
* The minimum unit used in order placement and inventory management.

Balance Sheet
End of Fiscal
2022

YoY Change

Total assets

109,767

123,570

13,803(Reference) Of which were
cash and deposits

23,11325,6532,540

Interest-bearing debt

59,03355,427–3,606

Borrowings

25,96024,312–1,647(Net debt)(2,846)(–1,341)(–4,187)

Lease obligations

33,073

31,114–1,958

Shareholders’ equity

33,99944,293

10,293

Shareholders’ equity ratio

31.0%

35.8%

4.8pt

Fixed long-term conformity ratio

88.2%

91.4%

3.2pt

Executive officer in charge of financial
planning and sustainability and CSR
planning, Head of Financial Planning
Division, Head of Sustainability andCSR Planning Divisionfluctuating prices, absorb the aforementioned factors that would decrease
profits, and achieve an ordinary profit of ¥3.0 billion.
To achieve the goals of Medium-Term Management Plan 2022–2024
From “Revitalization and Transformation” to “Growth,” we need make a steadyeffort to execute our ¥19.6 billion investment plan. In fiscal 2022, we mainly
invested in existing business areas, but we plan to invest the ¥9.0 billion
allotted to fiscal 2023 by allocating 60% to existing businesses and 40%
toward business creation. In terms of existing businesses, these investments
will focus on the Hotel Business segment as a source of profit, while investments in business creation will include investments in new businesses. In
the Hotel Business segment, these investments will be used to renovate andexpand facilities in order to bring in more visitors. For new businesses, we
intend to establish joint ventures with Sojitz Corporation and operatebusinesses that combine their network with our contents.

Investments by Category (Results from Fiscal 2022, Outlook for Fiscal 2023)

Existing
Domains

Business
Creation
Domains(Billions of yen)

Results from
Fiscal 2022

Outlook for
Fiscal 2023

Investment

Facility-Based Businesses

Category 1

1.8

5.1

New establishments, hotel renovations, CRM, establishment systems

Non-Facility-BasedBusinesses

Category 3

0.2

0.9

Factory manufacturing lines

Facility-Based Businesses

Category 2

0.9

2.1

New Tendon Tenya locations, hotel renovations, innovations, operation of new café chain

Non-Facility-BasedBusinesses

Category 40

1.0

Frozen meal manufacturing lines, support for business openings

Overseas BusinessFoodstuff Development

Category 5

0

0.1

Directly-managed establishments in Singapore

Total

2.9

9.3

(Millions of yen)

End of Fiscal
2021

Satoru KushidaIn the first quarter of fiscal 2023, the Group continued to ride the wave of
the fourth quarter of fiscal 2022 and exceeded results forecasts. Net sales
were ¥1.8 billion lower than the pre-pandemic first quarter of fiscal 2019, but
profits were ¥680 million higher. We have our customers and their continued support to thank for this, as well as the improvements to our income
and expenditure structure implemented during the pandemic, which
involved closing unprofitable locations and reducing fixed expenses.
However, looking to the rest of fiscal 2023, we will need to pay close
attention to surging prices and geopolitical risks; I believe that we need tosteer carefully through the thick fog of uncertainty ahead. Our plan for theyear accounts for price hikes of ¥2.0 to ¥3.0 billion and ¥700 million earmarked for investment in human capital, both of which will lead to a lower
profit than fiscal 2022. However, we intend to revise our menus and implement other effective countermeasures while keeping a close eye on

In fiscal 2023 and fiscal 2024, the latter part of Medium-Term
Management Plan 2022–2024, the Group intends to exercise its preferredshares acquisition clause, pay back the ¥12.0 billion bridge loan taken out toacquire shares of Highway Royal, and invest aggressively toward growth inline with its plans. This will require us to procure a large amount of funds.
For immediate funding, we will procure funds aimed at preventing
hiccups in repaying short-term debt by using long-term loans with scheduled repayments as funds to repay bridge loans in advance. For the medium

term, we recognize the need to find a procurement method that matches
the scale of our growth strategy investments. In fiscal 2023, we anticipate
cash flows from operating activities amounting to roughly ¥9.5 billion. We
will also add a portion of cash and deposits on hand equivalent to roughly
20% of total assets as of the end of fiscal 2022. Our plan going forward is toallocate approximately 60% of these funds to growth investments and theremaining 40% or so to repay interest-bearing debt and return profits toshareholders.

Looking Forward
We need to remain cognizant of the changing conditions that affect the
management of the Group, be they the rising prices of raw materials andenergy, waning consumer sentiment, or otherwise. At the same time, weneed to recognize several issues that exist in terms of sustainability management and invest actively in human capital, enhance hiring and employee
retention, respond to climate change, coexist with local communities, andincrease engagement. We intend to address each of these issues in earnest,
while making a steady push forward with the measures of Medium-Term
Management Plan 2022–2024 to ensure sustainable growth rooted in theRoyal Credo.

Assuming these uncertain times will still be uncertain in fiscal 2024, thefinal year of the plan, we need to 1) invest in business creation domains toensure steady expansion and 2) maintain the positive effects of the improvements to our income and expenditure structure. These steps will keep theGroup on the path toward growth. For the second step, the Financial
Planning Department will continue to take appropriate measures in a timely
manner by ferreting out unprofitable establishments and businesses, looking into prevention measures, and confirming the Group’s ratio of businesses at break-even points. In doing so we intend to bring the Group’s
corporate value to even greater heights.

ROYAL HOLDINGS Co., Ltd.

Review of Fiscal 2022

26

Menu

2 Our Sustainability Management

The Royal Group’s Sustainability Management

Identification of Target Social Issues for the Royal GroupIn order to address a variety of social needs and demands, we highlighted which social issues the Royal Group should focus its efforts on
based on social issues and important issues affecting customers, business partners, and other stakeholders. After giving consideration to theRoyal Group’s business domains and its customers, we identified 68 target issues.

Message from an Executive Officer

Satoru Kushida
Executive officer in charge offinancial planning and sustainability and CSR planning, Headof Financial Planning Division,
Head of Sustainability and CSR
Planning Division

A business involved in food and hospitality such as ours is the sum of three elements: the blessings ofthe earth, a happy, healthy society, and the understanding of all stakeholders. Recently, there havebeen efforts to create a sustainable society on a global scale. For companies to survive, is absolutely
essential that they work in earnest to resolve sustainability issues and actively share their results. As afood company, we strive to combat climate change in order to preserve the abundance of the b­ lessingsof the earth, both on the land and in the sea. We also try to realize a happy, healthy society by providing
products produced with health in mind. Additionally, we promote the creation of a t­ op-notch­workplace that gives each of our employees—vital human capital—the ability to grow as individuals.
In fiscal 2022, under the Group’s Basic Sustainability Policy, we held several discussions withexperts, identified our materiality, and made progress toward disclosure in line with TCFD recommendations. In fiscal 2023, we will delve deeper into our materiality-based initiatives and measures to get
one step closer toward our ideal vision for the Group. We will gain the understanding of all stakeholders from a sustainability management perspective through these initiatives and measures, and withthis understanding, we will achieve both growth and sustainability.

Measuring Importance and Determining Material Issues
Following these steps, we worked with the secretariat and outside experts to measure theimportance of each issue. In addition, we held discussions with company management andmeasured the degree of importance from a business perspective, and also identified potential material issues to be addressed as they pertain to stakeholders and the Company.

Materiality and Medium-Term Management Plan 2022–2024
Determining Materiality
We narrowed down these issues to five, prepared proposals for their materiality based on key themes, and held repeated discussions withexperts. After deliberations and resolutions by the Executive Officer Liaison Committee, which is attended by executive officers, theManagement Committee, which is attended by outside directors, and the Board of Directors, we have determined the materiality of fivematerial issues that the Royal Group should address.

Material Issues

Materiality

Basic Sustainability Policy
As a corporate group focusing on food and hospitality, the Royal Group will actively address social and environmental issues through its businessactivities, thereby contributing to the creation of a bright future and a sustainable society as it enhances its ties with each stakeholder.

Human
Resources

Position employee growth as our
top priority and aim to maintainand improve sound labor practices
and work environments, normalize
diversity and inclusion, andpromote other human resource
initiatives.

Medium-Term Management Plan 2022–2024 Fiscal 2024 Targets
Initiatives

Goals

Increase the ratio of
women in managerial
positions
Promote employment ofpeople with disabilities
Promote healthmanagement

Achieve a 20% ratio of women in managerial positions
Employ people with disabilities at each Group company
Maintain legally mandated employment ratio of 2.5% for
people with disabilities
Maintain certification as an excellent corporation under
the Certified Health & Productivity Management
Organization Recognition Program

Applicable SDGs and Targets

3.4

5.5

8.5

10.2

3.4
3.9

9.2

Royal Group’s Vision for Value Creation
We intend to create social value by keeping the Royal Credo as ourcornerstone and holding strong relationships with our stakeholders
in high regard. In that same vein, we are working to generate
economic value while accumulating intangible assets and building
popularity by providing food and hospitality. By generating bothsocial and economic value, we aim to improve corporate value andcement ourselves as a corporate group that will stand the test of time.

Vital assets
Food andHospitality

Human resources
Local contribution

Business
Food and hospitality

The Royal Credo

We will prioritize food safety andsecurity, focus on being
health-conscious, and improve theadded value of food services asways to create a brighter society.

—

—
12.4

Communities

Resources, environment, governance
Resources,
Environment

Common foundation

We aim to reduce CO2 emissions
further by developing systems to
reduce food waste and promote
recycling, and by continuing to
implement energy-saving
measures.

Reduce food losses
and waste
Respond to climatechangePromote social contribution
activities that meet the diversifying
needs of local communities andsociety in general.

Promote CommunityBased CSR activities

Continue initiatives that include food and other types of
education, reconstruction support, and CSR activities that
correspond to changes in the social environment.

Improve governance1) Comply with the principles of Japan’s revised Corporate
Governance Code2) Continue to evaluate the effectiveness of the Board of
Directors and implement measures based on the results3) Continuously improve the effectiveness of theCompany’s auditing function4) Increase completeness and transparency of disclosure
to stakeholders5) Continue to promote food safety and strict hygiene
management

Reduce food losses and waste by 10% (compared withfiscal 2016)
Formulate a policy to reduce Scope 1 and Scope 2
emissions
Ascertain total emissions (including Scope 3)

7.3

12.3
12.5

13.1
13.2

14.1

15.1
15.2

17.17

2.4

4.4

11.7
11.a

17.17

2.4

8.4
8.7

Materiality and Material Issues
In February 2023, we examined and investigated a variety of social issues, as they concern both the Royal Group’s business and its stakeholders, and confirmed the materiality of five issues (material issues). Going forward, we will promote Groupwide activities based on a full awareness of stakeholder issues, and continue the process of permeating and deepening sustainability management.
ROYAL HOLDINGS Co., Ltd.

27

Communities

Process of Determining Materiality
Collect potential
issues forconsideration

Analyze risk andAssess company

opportunities

situation

Map importanceand impact on theGroup andstakeholders

Determine
potential
material issues

Determinemateriality

Plan and propose

Determine

initiatives andindicators andmeasurestargets (set KPIs)

Governance

Build a trustworthy system for foodprocurement, product labeling,
and information management,
and strengthen stakeholder
engagement.

10.3
16.4
16.5

12.2
12.3
12.4
12.5

ROYAL HOLDINGS Co., Ltd.

The Royal Group’s Materiality

28

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2 Our Sustainability Management

The Royal Group’s Human Resource Strategy
Message from an Executive Officer

Kenji Ohsaka
Executive Officer in charge of
DX Project, systems and humanresource planning
President and Representative
Director, Royal Management
Co., Ltd.

We are investing actively in human resources, aiming to become a team of professionals that continue
to evolve and provide food and hospitality of the highest quality in Japan. In the past, humanresources were regarded as one economic resource among “people, things, and money” and investments in people were treated as costs. Now, we see employee growth and company growth as one
and the same, and human resources are treated as an important form of capital that generates newvalue for companies and society. To maximize the value of human capital, we are promoting humanresource initiatives in terms of four V’s. These four V’s are: 1) Variety, or diversity of human resources andwork styles; 2) Value, or the increase of employee experience, knowledge, and motivation levels; 3)
Vitality, or work–life balance made possible via employee health and a comfortable workplace; and
4) Visualization, or the image created by quantifying and understanding the results of measures basedon V's 1–3, which can lead to further improvements.
The ideal the Royal Group should work toward is to be the first choice of employees in terms of job
satisfaction and how well the Group allows them to execute their duties. At the same time, we must
maintain our virtuous cycle in which the growth of each employee leads to the growth of the company. Investment in human resources leads to job satisfaction for employees, which helps improvecustomer satisfaction, and as a result, the Royal Group can continue to grow in a sustainable manner.
We aim to harness this virtuous cycle to become a leader in the industry.

Vision for the Future
Risks—Downward Spiral

Vision—Virtuous Cycle Aimed at Growth

Employee Growth = Company Growth
Comfortable
work
environment• Recovery from the COVID-19 pandemic• Decrease in working population

Labor
shortage

Worsening
employeetreatment

ROYAL HOLDINGS Co., Ltd.

29

The Royal Credo

Our Aims
Become a team of professionals that continue to evolve and provide food and hospitality of the highest quality in Japan.

• Outflow to other industries

Building
dissatisfaction

Decrease inrevenue andprofit• Customer
dissatisfaction• Employee
dissatisfaction• Decrease in customers• Closing of unprofitable locations

Activeinvestment in
human capital• Increase salary andbonuses• Enhance educationand training• Improve engagement• Increase hiring

Variety

Value

Vitality

Visualize

Diverse human resources,
diverse work styles

Increase human resource
experience, knowledge, andmotivation to improve value

Health management by
establishing good work
environments

Measure, grasp, visualize,
and disclose

We will bolster our ability torespond to change by developing a system that allows
human resources with diverse
attributes, values, and work
styles to flourish.

We intend to improve thevalue of our human resources
by maximizing quality andquantity. We will build ahuman resource system aimed
at improving value in a sustainable manner, with recruitment
and retention of young
employees and the development of the next generation of
executives as the most important issues.

We will build relationships oftrust between the Company
and employees by being mindful of physical and mental
health, supporting work–lifebalance, and improving work
environments.

We will gain a quantitative
understanding of the costeffectiveness of each measure
in order to improve them, andpromote appropriate disclosure to stakeholders.

Promote active participation ofwomen

Promote steady recruitment ofyoung employees

Promote health management

Develop data visualization tools

Promote hiring of people withdisabilities

Select young employees for
executive training

Support work–life balance

Quantify results of each measure

Utilize employees over 60

Cultivating the next generation of
executives

Improve labor conditions

Disclose to stakeholders

Utilize overseas human resources

Cultivate expert employees

Acquire Kurumin certification

Diversify workstyles

Establish education and training
systems

Greatersatisfaction• Improve customer
satisfaction

Higher revenue
and profit• Improve labor
conditions• Increase customers• Improve employee
satisfaction• Open new locations

Diversify forms of employment(full-time, part-time, temporary, remote, etc.)

Improve crew treatment further

ROYAL HOLDINGS Co., Ltd.

We, the Royal Group, regard all human resources as a source of added value, and we will actively invest in both securing and training humanresources and improving working environments as a top priority. We will also strive to improve the position of the restaurant industry in thelabor market and become an industry leader.

• Exiting employees

As part of Medium-Term Management Plan 2022–2024, we have formulated a human resource strategy rooted in four V’s, aiming tobecome a team of professionals that continue to evolve and provide food and hospitality of the highest quality in Japan.

A Human Resource Strategy Rooted in the Four V’s (The V4 Strategy)

Basic Stance• Decreased salaryand bonuses

Medium-Term Management Plan 2022–2024

30

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2 Our Sustainability Management

Priority Measures and Targets

Education and Training System

Ratio of female managers 
20%
Ratio of employees that take70%
paternal leave 
2.7%
Ratio of employees with disabilities Gender pay gap (full-time employees)  20%• Establish education and training
systems• Cultivate the next generation of
executives and managers• Promote steady recruitment of young
employees

Formulated a position-based education
programCreated a group of candidates for executive
and managerial positions
Employees that left the Company within
49%
three years 

Number of training participants  approx. 2000
Number of employees that received
approx. 100­personnel transfers 
Employees that left the Company within
20%
three years • Maintain certification as an excellent
corporation under the CertifiedHealth & Productivity Management
Organization Recognition Program• Improve labor conditions

Rate of employees completing annual
100%
medical examinations 
60%
Rate of second stage examinations 
Maintained certification as an excellent
corporation under the Certified Health &Productivity Management Organization
Recognition Program
Ratio of employees that fully utilized annual
11.4%
paid leave Rate of employees completing annual
100%
medical examinations 
70%Rate of second stage examinations 
Maintain certification as an excellent corporation under the Certified Health & Productivity
Management Organization Recognition
Program
Ratio of employees that utilized annual
50%
paid leave Upon promotion

Management

11.9%
Ratio of female managers 
Ratio of employees that take54%
paternal leave 
Ratio of employees with disabilities  2.69%
Gender pay gap (full-time employees)  24%

Upon promotion

Increasing experience

Increasing experience

Increasing experience

Skill developmenttraining(executive candidates)
Training upon
promotion

Training upon
promotion

Outside theGroup

Skill developmenttraining(managerial
candidates)

Expert candidate
training

In-Group
personneltransfer

Manager /chief chef training

Follow-up training foryoung employees
Introductory training

Skill education foryoung employees

External jointly-run
training

Mentor system

E-learning (self-development support)• Increase the ratio of women in managerial positions• Increase the ratio of employees thattake paternal leave• Promote employment of people withdisabilities and maintain legally mandated employment ratio• Close gender pay gap

Life planning seminars

Vitality2024 Targets

In-house recruitment

Value

2022 Results

Staff

Variety

Priority Measures

The Royal Group revised its human resource system in April 2023. Under this new system, we have revamped position-based education andtraining, creating opportunities for employees to acquire the knowledge and skills needed for their level of employment. We also intend tocreate opportunities for employees to gain a range of experience through in-Group personnel transfers, developing human resources who
can carry the torch of Group management in the future.

Managers /chief chefs

We have set the following as priority measures within Medium-Term Management Plan 2022–2024, and are working to achieve the targets
stated below.

Initiatives to Promote Health Management
The Royal Group unveiled its Health Management Declaration in June 2022. Under the Group’s system for promoting health management,
headed by the president, we are working in tandem with each operating company, the health insurance society, and the labor union to
implement a variety of measures.
The Royal Group’s Health Management Declaration

Initiatives to Increase the Ratio of Women in Managerial Positions
In fiscal 2022, we conducted skill development training for managerial candidates.
Of the participants, 43% were women, and we will make an active effort to appoint
these women to managerial positions.

Employee health is an important asset of the Royal Group.
Therefore, we must help each and every employee and their family members lead lives with good physical and mental
health, thereby establishing a lively workplace.
We will work to maintain and improve employee health, and, by doing so, generate sustainable growth for the Royal Group.

Masataka Abe
President andRepresentative Director
June 1st, 2022

Please visit our corporate website for basic information and a visual representation of our strategy regarding health management.
https://www.royal-holdings.co.jp/assets/pdf/sustainability/management/health-management-map.pdf

Initiatives to Increase the Ratio of Employees that Take Paternal Leave
We have set up a page on the Company intranet that promotes support for balancing work and family life, featuring reports from employees who have taken childcare
leave. These examples help alleviate hesitance toward utilizing paternal leave andspread awareness of the various support systems at employees’ disposal.

Initiatives to Promote Employment of People with Disabilities
The Royal Group works proactively to accept students with disabilities, under cooperative systems with special needs schools, to provide practical training at its establishments. Even after people with disabilities join the Group, we maintain regularcontact with them in an effort to create an environment where they can work withpeace of mind.

Priority Items
 chieve 100% rate of employees completing annualA
medical examinations
Address presenteeism revent aggravation of high blood pressure, diabetes, andP
other lifestyle-related diseases, eliminate smoking, establish exercise habitsProtect mental healthS upport work–life balance (restrict long working hours,
encourage employees to take annual paid leave, support
child and nursing care)

2018

2019

2020

2021

2022

100%

100%

100%

97.7%

97.8%

100%

2 Rate of anomaly observation for medical
examination

65.1%

64.7%

67.1%

70.3%

72.5%

74.7%

3 Rate of second stage examinations

69.0%

76.3%

85.0%

61.5%

58.8%

60.7%

4 Smoking rate

32.6%

31.2%

29.4%

26.7%

26.2%

26.8%

5 Stress check submission rate

89.8%

84.3%

82.2%

79.7%

84.1%

77.4%

6 Ratio of stress checks showing high stress

16.9%

16.8%

17.7%

12.4%

14.8%

18.7%

Royal Holdings Co., Ltd.

ROYAL HOLDINGS Co., Ltd.

June
2015

June
2016

June
2017

June
2018

June
2019

June
2020

June
2021

June
2022

Employment rate 2.25%

2.37%

2.53%

2.59%

2.65%

2.68%

2.76%

2.69%

Number of
employees

158

169

167

166

171

141

136

Labor union

Secretariat
Human Resources
Planning Division

Royal Food Service Co., Ltd.
President andRepresentative Director

Royal Contract Service Co., Ltd.
President andRepresentative Director

Person responsible for health management
Executive Officer in charge of humanresources planning

Royal Co., Ltd.
President andRepresentative Director

RNT Hotels Co., Ltd.
President andRepresentative Director

Collaborative healthHighway Royal Co., Ltd.
President andRepresentative Director

Royal Health Insurance Society

Royal Management Co., Ltd.
President andRepresentative Director

ROYAL HOLDINGS Co., Ltd.

President and Representative Director

Employment Rate of People with Disabilities

151

2017
1 Rate of employees completing annual
medical examination

Operating companies
Operating companies
Operating companies
Operating companies
Operating companies
Operating companies
Health and Safety Committee Health and Safety Committee Health and Safety Committee Health and Safety Committee Health and Safety Committee Health and Safety Committee

31

32

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2 Our Sustainability Management

Materiality-Based Initiatives

Material Issues

Materiality

Vision for Fiscal 2024

Initiatives

Reduction of food waste• Step up current efforts to reduce food waste• Focus on efforts such as separating waste to improve food recycling.
• Reevaluate the adequacy of the current rules for determining sell-by
dates and expiry dates

Promotion System
To promote sustainability management within theRoyal Group, the executive officer in charge of sustainability and CSR planning submits agenda items to the
Executive Officer Liaison Committee, a forum for discussion among executive officers, where the items
undergo repeated discussion and a course of action isdetermined in line with decision-making standards.
These proceedings are reported to the Management
Council and the Board of Directors.

System for Promoting Sustainability and Addressing Sustainability Issues

Reduction of CO2 emissions

Board of Directors / Management Council
Delegation
SystemSustainability Committee
Chair: President and Representative Director
Members: Executive officers, operating company presidents,
other designated persons

Resources,
Environment

We aim to reduce CO2 emissions further by developing
systems to reduce food waste
and promote recycling, and bycontinuing to implement
energy-saving measures.

Be a company that remains
mindful of the environment, reduces food losses
and waste, and works
toward a decarbonizedsociety.

Executive Officer Liaison Committee
Promotion
SystemRelevant departments at each
operating company
Each department of Royal Holdings

Sustainability andCSR Planning Department• Focus on reducing electricity and gas usage (Scope 1 and 2 emissions)
Promote energy-saving activities• Actively use renewable energy—Investigate use of green electricity and generation of renewableenergySupply Chain• Reduce environmental impact through development of supply
change management (SCM) system—Revamp supply chain system—Optimize amount of physical resources through automated ordering and other digital technology—Reorganize logistics bases—Reduce environmental impact through procurement and jointdelivery in collaboration with other companies in the industry
Coexistence and co-prosperity with local communities

Initiatives to Realize our Vision for Fiscal 2024
Management and executives-in-charge promote action plans based on repeated discussions from their respective viewpoints, and tackle avariety of issues. This process helps achieve sustainable corporate growth while resolving social issues. We are also dedicated to growing as acompany that has a notable presence within society. Separate action plans are developed for each initiative and measures to be promoted,
primarily by the executive-in-charge. The Executive Officer Liaison Committee confirms the progress of these measures on a regular basis.

Material Issues

Materiality

Vision for Fiscal 2024

Human
Resources

Position employee growth as
our top priority and aim to
maintain and improve soundlabor practices and work
environments, normalize
diversity and inclusion, andpromote other humanresource initiatives.

Be the company of choicefor employees and lead theindustry via active investment in securing humanresources, training them,and improving working
environment

Communities

Creation of a comfortable working environment
Maintain governance system• Improve labor conditions• Increase the ratio of women in managerial positions• Promote employment of people with disabilities• Promote health management• Promote steady recruitment of young employees
Active investment in human resources

Governance• Cultivate the next generation of executives and expert employees• Establish education and training systems for all employees

Enhance risk management

Health-consciousness• Provide products produced with health in mind
Improvement of added value

ROYAL HOLDINGS Co., Ltd.

• Improve hospitality mindset further• Implement training for treating customers better• Provide value via “hospitality with technology”• Reflect customer feedback in company services

Chief chef training

33

Be a company that maintains strong Group governance worthy of praisefrom its stakeholders• Handle a range of management risks, natural disasters, workplace
accidents, and man-made disasters in an appropriate manner—Eliminate the factors that hinder achievement of management
goals, improve corporate value, and fulfill social responsibilities• Continuously update quality assurance system in accordance withquality assurance standards
Be a company that consistently provides highquality, from planning todevelopment to operations

Build a trustworthy system forfood procurement, productlabeling, and information
management, and strengthen
stakeholder engagement.

• Spread greater awareness of governance through training and othermethods• Conduct diligent CSR procurement, in line with the Group’s Basic
Purchasing Policy, and in compliance with laws and regulations• Continue disclosure that can win customer trust• Promote comprehensive measures to prevent information leaks

ROYAL HOLDINGS Co., Ltd.

Food andHospitality

Be a company that remains
an essential part of local
areas by deepening cooperative ties with the community and its economy

Initiatives

Food safety and security
We will prioritize food safety
and security, focus on being
health-conscious, and improve
the added value of foodservices as ways to create abrighter society.

Promote social contribution
activities that meet the diversifying needs of local communities and society in general.

• Promote initiatives that help revitalize regions—Emphasize local production for local consumption—Communicate with the local community through sales of outlet
products• Conduct collaborative industry—academic projects and other activities to help cultivate the next generation• Provide learning opportunities by holding classes at local elementaryand junior high schools• Continue activities that provide assistance during disasters• Provide lodging for people separated from their homes during disasters, support reconstruction efforts

Vocational lecture at a junior high school34

2 Our Sustainability Management

The Royal Group’s Response to Climate Change

Identified Risks and Opportunities

GovernanceOne of the elements tackled by our Basic Sustainability Policy isenvironmental issues, one of which is climate change. We believethat by challenging ourselves with new efforts in these areas, we
can evolve as a group to become an indispensable part of society.
The Sustainability Committee discusses and investigates issues
related to climate change, reporting and offering proposals to theBoard of Directors on a regular basis. Through this process, we areworking to integrate our response to climate change into ourmanagement strategy.

Governance and Risk Management System Related to
Climate Change
Board of Directors
President and Representative Director

Sustainability Committee

Risk Management Division

Operating Companies

Risk Management
Our climate change response is integrated into our Companywide
risk management system, led by the president. Risk in terms ofGroup activities is managed by the Risk Management Division,
while response and investigation into these and other
Companywide risks are handled by the Risk Management

Committee, which is chaired by the executive officer in charge ofrisk management. Any risks identified and assessed are reported to
the Board of Directors to determine the basic policy for any
countermeasures.

Strategy
When identifying and assessing the future impact of climatechange in cases where such impacts and countermeasures areunclear, the Group references scenarios produced by theInternational Energy Agency (IEA) and the Intergovernmental Panelon Climate Change (IPCC). Based on these scenarios, we havedeveloped two hypothetical scenarios; one in which the world issubject to worsening global warming, and one in which the world
achieves carbon neutrality by 2050 after efforts toward decarbonization. Using these two hypotheticals, we conducted a scenario
analysis for 2030.

4°C Scenario

1.5°C Scenario

Global warming worsens
In this scenario the average global temperature rises 4°C by the end of the
21st century, compared with the Industrial Revolution. Since climatechange policies will not be strengthened beyond the regulations in effectas of 2021 and the transition to decarbonization has not been promoted,
the impact of global warming increases as does the scale and frequency ofdisasters.

Efforts are made toward decarbonization
In this scenario, the rise in the average global temperature is kept within
2°C by the end of 21st century, compared with the Industrial Revolution.
The impact of transition risks increase as aggressive environmental policies
are promoted in an effort to achieve carbon neutrality.

(Referenced scenarios)
IPCC: RCP 8.5/4.5 IEA 2021: STEPS(Referenced scenarios)
IPCC: RCP 2.6 IEA 2021: SDS / NZE2050

Impact of the transition to a decarbonized society

Initiatives

Impact in Fiscal 2030

Physical impact of global warming

Menu

Assessment
Factors

Impacts

Carbon pricing• Increased business operation costs due to introduction ofcarbon tax• Increased spending to reduce GHG emissions

Strongerrecycling
regulations

Classification

Risk• Increased requirements to reduce food loss and improve
food recycling due to stricter regulation

Low

Risk

Current Initiatives and Response Policies

4°C
1.5°C
Scenario Scenario

Low

High

S et CO2 reduction targets and promote efforts to reach themIntroduce green electricity

MediumS ell food remaining from manufacturing processes (cake cuttings, ice
cream etc.) via food trucks
Introduce services for taking home
leftovers• Soaring electricity prices due to switching to electricity
Changes inderived from renewable sources, etc.
energy prices • Increased transportation costs due to changes in demand forfossil fuels

Risk• Changes in the flow of people mindful of decarbonization(decrease in business trips, greater need for local production
for local consumption, etc.)

Risk

Low

MediumOpportunity

Low

MediumChange incustomer
behaviors• Growing interest in ethical consumption

Medium Medium pgrade to LED lightingUIntroduce gas cogeneration system
Promote SCM reforms, including
collaboration between companies isclose region of origin for ingrediDents used in dishes
Develop dishes based on local production for local consumption concept and deploy by region• Tighter regulations for agriculture and livestock industries
Change in raw and lower production due to promotion of decarbonizationmaterials• Smaller harvest, lower production, and decline in quality inpricesagriculture, livestock, and fishing industries due to global
warming

Risk

High Medium evelop and deploy alternativeD
menus
Formulate and implement a Basic
Purchasing Policy• L osses from damage to offices, production sites, orIntensification establishmentsof natural•D isruption of the supply chain
disasters• F ewer opportunities for customers to leave homes and lessdemand for eating out

RiskHigh Medium

Enhance business continuity plan (BCP)

Risk

Low

Low

S witch to high-efficiency equipment
at establishments
Upgrade to LED lighting

LowE xpand sales of frozen meals forhome useImprove convenience of delivery
services• Increase in air-conditioning costs at establishments
Rise in average
globaltemperature • Increased demand for delivery services• Greater demand for eating at home

Based on the results of this analysis, the Royal Group is looking into
countermeasures and promoting initiatives in preparation for a
future full of uncertainty. Current initiatives include the introductionof green electricity and gas cogeneration systems at some establishments, hotels, and headquarters in an effort to reduce the Group’s
environmental impact. The Executive Officer Liaison Committee will
also continue discussions regarding initiatives aimed at reducing
food loss and improving our food recycling rate, and will promote
effective countermeasures. In addition, we will remain committed toOpportunity Medium

thorough management of our disaster response, focusing on­countermeasures such as having become the first in the restaurant
industry to acquire the DBJ BCM (Business Continuity Management)
Rating, and utilizing analysis to reconfirm response capabilities oflocations identified as having a high hazard risk. We will also work
actively to create opportunities based on the world’s response toenvironmental issues. This includes meeting the demand for­home-cooked and ready-made meals in anticipation of the frequentabnormal weather conditions associated with global warming.

Indicators and Targets

ROYAL HOLDINGS Co., Ltd.

35

Scope

Volume of Emissions
Fiscal 2021

Scope 1

18,029.8

Scope 2

62,106.2

Scope 1+2

80,136.0

Expanding sales of Royal Deli frozen meals forhome use

Food truck with a menu that uses ingredientsthat would otherwise be thrown away

mottECO packaging for taking leftovers home

Hotel with energy-saving features

ROYAL HOLDINGS Co., Ltd.

(t-CO2)

Achieving carbon neutrality by 2050 is one of the world’s toppriorities, as evidenced by the adoption of the Paris Agreement in2015 and the global agreement to achieve the 1.5°C target at
COP26 in 2021. The Royal Group is also promoting activities toreduce greenhouse gas (GHG) emissions with the goal of achieving
Scope 1 and 2 carbon neutrality by 2050, with a 2030 interim goalof reducing emissions by 46% compared with 2013 levels.

Introduce green electricity

36

3 Our Growth Strategy
Medium-Term Management Plan 2022–2024

From “Revitalization and Transformation” to “Growth”

From “Revitalization and Transformation”
to “Growth”
Though we are faced with a harsh business environment, we formulated Medium-Term Management Plan 2022–2024 with theintention of brightening local communities and society and providing high-quality, high-value-added products in line with thechanging times. The plan has a vision of providing food and hospitality regardless of time and place. The plan also aims to pursue
revitalization and transformation to form a clear path toward growth, and then expand business and increase corporate value.

• Further enhance the added value in customer experiences• Create new customer experiences through CX strategies• Improve productivity through capital investment and system investment• Reduce costs through supply chain management (SCM)

Provide food and hospitality regardless of time and place
VALUE High quality, high added value, and responsiveness to the times¥136.0 billion

Ordinary income ¥ 6.5 billion

EBITDA ¥14.0 billion

Equity ratio

Approx.

40 %catered to businesses)

Results and Plans by Category
Earnings per share Approx. ¥ 80
Return on equity

Above

8%

The business portfolio that we have maintained to date was categorized by business type and format, and we aimed for sustainable growth
by working on priority measures by business segment. We thought this portfolio was rock-solid, but the COVID-19 pandemic exposed cracks
in this facade; namely, a portfolio dependent on the flow of people, increasing fixed expenses, and a lack of resilience in each businesssegment.
In response, we have redesigned our portfolio to fix these cracks and continue our pursuit of sustainable growth.
First, we have divided each business segment according to whether they are facility-based businesses (on premises) or non-facility-based
businesses (off premises). These were then divided further into existing domains and business creation domains to form four categories. We
also added a fifth category for new business domains to form five categories.

Category 2

 usinesses are classified as facility-based businesses (on premises) or non-facility-based businesses (off premises) and then dividedBfurther into existing domains or business creation domains. An additional fifth category, namely overseas business and foodstuff development was made for new business domains.

ROYAL HOLDINGS Co., Ltd.

37

Non-FacilityBasedBusinesses
Food
Manufacturing
Others1

Category 1

Category 22•D evelop business formats for new lifestyles

Overseas
Business3

4

Category 3

Fiscal 2022 (Results)

Fiscal 2023 (Plan)• Promoted a high-value-added strategy throughmenu-related measures and renovations• Resumed operations at establishments in airport
international terminals• Revitalized existing brands by changing businessformats• Recommence opening establishments in the
Restaurant Business (opened new Royal Hostestablishments for the first time in four years)• Open establishments in entertainment facilities.
Redouble efforts as a business domain withpotential for growth.

• Renovated hotels to offer experiences that meetleisure demands• Tested operations of new fast food businessformat• Open next-generation establishments• Investigate development of new chains throughjoint ventures with Sojitz Corporation• Utilize DX to accelerate store openings (tempura
establishments, etc.)• Improved factory productivity through initiatives
to reduce food losses and waste, etc.
•C onsolidated product development functions toform a subsidiary handling the Food
Manufacturing segment• Minimize labor needed on manufacturing lines by
updating and upgrading equipment• Optimize sales prices and product composition
through controlling the budget for manufacturing costs• Expand sales for Royal Deli frozen meals• Strengthen B-to-B businesses by selling products
to major retailers and food manufacturers• Develop and improve Royal Deli frozen meals andother national brand (NB) products• Strengthen B-to-B businesses by selling products
to major retailers and food manufacturers• Opened seven Tendon Tenya franchise locations
overseas (31 stores total as of the end of fiscal
2022)• Royal Holdings, Sojitz Group, and Unitec Foods
entered into a strategic business alliance agreement regarding a plant-based meat business(January 2022)• Increase the number of countries where Tendon
Tenya and overseas franchise locations operate• Expand directly-operated restaurants, using
Singapore as a hub• I mplement a high-value-added strategy• E nhance take-out and delivery businesses

5

OffPremises(Facility Based Businesses
in Business Creation
Domains)(Non-Facility-BasedBusinesses in Existing
Domains)

Under existing domains, strategies and operations are explored in depth.

On
Premises

growth• Promote overseas expansion

Business Portfolio in Our Medium-Term Management Plan

Business Creation
Domains• Promote human resource development and• Foster growth fields (Royal Deli, takeout and delivery services, meals

Category 1

Facility-BasedBusinesses
Restaurant
Business
Contract Food
Service
Hotel Businessstrategies• Collaborate with Sojitz Corporation(Facility-Based Businesses
in Existing Domains)

Existing
Domains• Create new markets in each business segment• Develop new business models through DX

Key Financial Targets for Fiscal 2024
Net sales 

Respond to Changes• Open stores with an eye on the future

Create Strategic Businesses

VisionMISSION Contribute to local communities and society

Improve the Profitability of Existing Businesses

Foodstuff
Development

Category 3• I mprove productivity and strengthen
product development capabilities
Category 4• I mplement a repackaging strategy•R epackage our strengths to commercialize
and expand
Category 5

Emphasis on business creation incollaboration with Sojitz Corporation
For details related to Medium-Term Management Plan 2022–2024, please refer to the following URL.
https://www.royal-holdings.co.jp/en/ir/pdf/mid_term_2022-2024.pdf

Category 4(Non-Facility-BasedBusinesses in Business
Creation Domains)• S trengthen the Group’s business baseCategory 5(Overseas Businessand Foodstuff
Development)

ROYAL HOLDINGS Co., Ltd.

Menu

38

Menu

3 Our Growth Strategy

Category 1(Facility-Based Businesses in Existing Domains)
Message from an Executive Officer

Naoki Ikuta
Executive Officer in charge of theRestaurant Business segment,
President and Representative Directorof Royal Food Service Co., Ltd.

Message from an Executive Officer

In the Restaurant Business segment in fiscal 2022, we revised product prices to counter the rapid rise of raw
materials and utility costs, and worked to provide products with high added value at Royal Host establishments.
This resulted in an increase in average spending per customer. Furthermore, the relaxing of restrictions put inplace during the COVID-19 pandemic led to a considerable increase in the number of customers visiting existing
establishments, which in turn boosted sales to pre-pandemic levels.
On the other hand, the rising prices are expected to affect personal consumption in the future, due to agreater desire among consumers to save money. Our response in Category 1 is to leverage a business plan basedon creating new customers, achieving a high QSCA* level, and improving work environments in order to recoverprofitability and reform our income and expenditure structure. Specifically, we made aggressive investments
toward improving our menus to create new Royal Host customers and also toward renovating kitchens to improve
productivity. In addition, we are working to improve employee engagement by conducting employee satisfaction
surveys in order to grasp the current state of the organization and visualize the progress of improvements.
In the future, we will continue to provide high value-added products under brands such as Royal Host andTendon Tenya. At the same time, we will also work on how we pitch these brands in order to open doors to newchallenges. In fiscal 2023, it will be important to improve our ability to respond to the ever-changing times andimprove our brand strength. Therefore, we will enhance collaboration across the Group, develop a system thatenables each business to flesh out existing businesses while also venturing into new domains, and ultimately
help grow the Royal Group’s business.

Norihisa Sasaki
Managing Executive Officer incharge of the Contract Food Service
segment, President andRepresentative Director of Royal
Contract Service Co., Ltd.

In the Contract Food Service segment, we are targeting growth in existing domains, which involves spreadingout our locations to increase scale and selecting and focusing on key locations to build a foundation for business
continuity. In fiscal 2022, we opened three establishments in airports and service areas (SAs). We also converted
the business formats of seven existing establishments in order to unify their brands and develop these brands
using external resources. In fiscal 2023, we plan to open 10 new establishments. On the other hand, we also
closed 11 establishments, including offices and specialty establishments, after reorganizing our portfolio. Overall,food and labor costs decreased, while profit margins increased.
One issue we face going forward is a limited number of human resources, meaning we need to focus onhuman resource development to maximize them. Due to the nature of B-to-B businesses, it is crucial to cultivate
human resources who can propose appealing plans to clients, have the flexibility to use resources outside theGroup, and are able to conduct product-related negotiations with stakeholders. To that end, it is important toclarify the responsibilities of each position and create a support system that ensures that human resources canfulfill their respective responsibilities. These efforts will allow us to achieve QSCA to a high level, expand businessscale, and increase profitability. In doing so, we aim to be a corporate group where every employee aspires to grow.

* Quality, Service, Cleanliness, and Atmosphere

Revitalize Existing Establishments
Greater Value from Customer Experience and Productivity Through Our High-Value Added Strategy and Renovation

Restaurant BusinessWe offer special and regular menus that make use of seasonal ingredients and ingredients with high added value. At Royal Host, this means customers
can enjoy Western cuisine from its menu of long-beloved meals prepared in the Royal tradition. At Tendon Tenya, customers are treated to limited-time
menus tailored to the season.
Our Royal Host establishments also provide value in the form of a positive customer experience, thanks to high-quality beverage counters that
customers can enjoy according to their own tastes. In April 2023, we opened Royal Host Hikarigaoka IMA, the first opening of a directly managed
establishment in about four years. This establishment features semi-private rooms, tablet-based ordering, and new kitchen equipment with the hopethat it can win over the local community.

Restaurant BusinessIn the Restaurant Business segment, we changed the business formats of existing establishments, which resulted in
opening two specialty establishments in Fukuoka City, Fukuoka Prefecture.
APETITO CAFE Metro (Fukuoka City, Fukuoka Prefecture)
This establishment reopened as a café capable of meeting a variety of needs. The café features salads and deli meats in a
“make your own plate” format, while also offering take-home products of frozen breads and baked goods, Western-style
sweets, and Royal Deli frozen meals for home use.
Mrs. Elizabeth Muffin, Hakata Station Ming location (Fukuoka City, Fukuoka Prefecture)
We converted this former APETITO CAFE and seller of Royal-brand bread, sandwiches, and Western sweets to a Mrs.
Elizabeth Muffin location, a specialty establishment featuring American-style muffins baked carefully on site.

 roducts for sale at theP
Mrs. Elizabeth Muffin
Hakata Station Ming
locationContract Food Service

T endon Tenya
Menus with seasonal flavors

 oyal HostR
Glass washer (installed in approx. 130 storesas of May 2023)

ROYAL HOLDINGS Co., Ltd.

39

Hotel BusinessRoyal Host, Nagoya Hoshigaoka location

 OGANEIRO NO BUTA, Nasu Kogen SA
K
location (Tohoku Expressway, Tochigi
Prefecture)

At Richmond Hotels, we upgraded guest room facilities with updated
showers and beds, offering a greater level of comfort to customers.
 oyal HostR
Beverage counter

Royal Host Hikarigaoka IMA locationI n-store shop showcase at Royal Host
Hikarigaoka IMA location

ReFa FINE BUBBLE showerhead, Airweave mattress, and clothing steamer

ROYAL HOLDINGS Co., Ltd.

 oyal HostR
Meal from the Royal Host 50th Anniversary
special menu

In the Contract Food Service segment, we are working actively to resume operations at establishments in
airport international terminals and to convert establishments with existing brands to new businessformats or to the Royal Host brand.
Royal Host, Nagoya Hoshigaoka location (Mitsukoshi Isetan, Hoshigaoka, Aichi Prefecture)
We are working to convert department store restaurants to Royal Host locations in light of their ability as
a business format to respond to a variety of food-related needs. This will enable these restaurants to servea wider range of customers.
KOGANEIRO NO BUTA, Nasu Kogen SA location (Tohoku Expressway, Tochigi Prefecture)
We have opened establishments at SAs under brands already active at airport terminals. These SA establishments offer meals utilizing local ingredients.
Chinese Cuisine Manshoen (Kagoshima Airport, Kagoshima Prefecture)
We are utilizing external resources and developing a business format that allows customers to enjoy
restaurants that are popular in the local area from within an airport.

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3 Our Growth Strategy

Category 2 (Facility-Based Businesses in Business Creation Domains)
Message from an Executive Officer

Kohei Motoyama
Executive Officer in charge of HotelBusiness segment, President andRepresentative Director of RNT Hotels
Co., Ltd.

Under Category 2, the Hotel Business segment is developing business formats that accommodate new lifestyles.
To date, the Hotel Business’s main source of income has been limited service hotels with food and beverages(F&B), but recent shifts in lifestyle and macroeconomics are expected to shrink demand. To ensure stable demandin this new era, we reopened the former Richmond Hotel Premier Tokyo Oshiage as Richmond Hotel PremierTokyo Schole. Under this new banner, we will offer customers a variety of experiences, making the hotel experience itself the most appealing point.
As for other Richmond Hotels, we intend to clarify their target audience, ranging from business-focusedcustomers to leisure-focused customers. To do this, we will categorize each one based on a comprehensive
assessment of their location, guest room layouts (single, twin, etc.,) and customer attributes. In the future, we will
drive up competitiveness in each market by providing added value that suits each type of customer.
An important factor in future growth is how we utilize the Group’s resources to create added value that only
it can create. Being in charge of investor relations at Royal Holdings for four years has given me a good understanding of the strengths of the Restaurant Business, the Contract Food Service, the Food Manufacturing, and theOverseas Business segments, in addition to the Hotel Business segment. I plan to use this knowledge and experience to help generate even greater synergy within the Group.

Develop Business Formats for New Lifestyles
Hotel BusinessIn the Hotel Business segment, we held the grand opening of the Richmond Hotel Premier Tokyo Schole, the first experience-based hotel under theRichmond Hotel brand. The word “schole” is a Greek word that refers to spending one’s time in one’s own way, or put more simply, “leisure.” In the spiritof schole, we want visitors to enjoy culture to their heart’s content, whether that means immersing one’s self in a hobby, or relaxing in a sauna. The
hotel’s SHARE LOUNGE combines the convenience of a shared office with the comfort of a lounge, while rooms on the Concept Floor each feature atheme, such as “BOOK”, “Video,” “Game,” and “Japan.” The hotel also features a sauna, which is a resting place for healing. Customers can choose rooms
and spaces according to their specific likes and various needs.

Next-Generation Initiatives
Restaurant BusinessContract Food Service

At Tendon Tenya, we have developed NEW Tenya, a next-generation
establishment with stress-free services that allow customers to orderand pay in their own time. To improve operations, we are introducing
kitchen displays that provide kitchen information in order to increase
the customer turnover rate during peak hours.

SHARE LOUNGE—a space for sharing ideas

The Contract Food Service segment operates next-generation cafes
and restaurants in collaboration with OryLab Inc., which develops andprovides the remote-controlled avatar robot, “OriHime.”
OriHime enables people who have difficulty going out, due to intractable diseases, disabilities, or other reasons, to serve customers, thereby
providing support for remote work. Workplaces equipped with OriHime
will help realize a future where everyone can maintain their connection
with society.

Concept Floor—where people encounter new cultureSemi-self checkout registers

T endon Tenya Equia Kitasenju
location

ROYAL HOLDINGS Co., Ltd.

41

Tablet ordering

Kitchen display
Spa Premier Twin Bedroom, featuring a healing sauna room

ROYAL HOLDINGS Co., Ltd.

OriHime robot avatar

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3 Our Growth Strategy

Category 3 and 4(Non-Facility-Based Businesses in Existing
and Business Creation Domains)

Message from an Executive Officer

Atsuko Fujita
Executive Officer in charge of theFood Manufacturing segment,
President and Representative
Director of Royal Co., Ltd.

In Category 3 of the Food Manufacturing segment, which refers to Existing Domains, we are focused primarily on
improving productivity and strengthening our development capabilities. To be more specific, we integrated our two
bread factories in Tokyo and Fukuoka, improving our profit margin in fiscal 2022 by 8% compared to the previous fiscal
year. In terms of internal sales, we have consolidated various departments across the Group’s operating companies that
fulfill the same purpose, including planning and development departments, as well as purchasing, logistics, and Royal
Deli departments, and have constructed an organizational structure in collaboration with factories. These efforts havehelped strengthen product development capabilities.
Within Category 4, which targets Business Creation Domains, we see Royal Deli as a strength of the Royal Group.
Therefore, we are working to expand the brand via our repackaging strategy while also working with Sojitz Corporation
to boost business with major retailers and other B-to-B businesses. Using these tactics, we aim to achieve net sales under
the Royal Deli brand amounting to ¥3.0 billion in fiscal 2025.
However, one issue that has come to light is the greater burden on factory production and manufacturing departments as a result of recovering consumption. To counter this phenomenon, we are implementing four projects toimprove production efficiency: 1) enhancing internal sales, 2) strengthening cost controls per stock keeping unit (SKU)*,
3) improving factory productivity, and 4) enhancing external sales. These efforts will help the Food Manufacturing
segment serve as an even stronger engine for the Royal Group’s sustainable growth.

Implement a Repackaging Strategy
Food Manufacturing (Category 4)
We are implementing a repackaging strategy that involves increasing sales of Royal Deli frozen meals, which feature a collection of international dishes
carefully developed by the Royal Group. These meals allow people to enjoy the true flavor that comes with quality ingredients and careful preparation.

* The minimum unit used in order placement and inventory management.

Improve Productivity

Strengthen Product Development Capabilities

Food Manufacturing (Category 3)

Food Manufacturing (Category 3)

In order to reduce food loss and waste, we utilize food trucks for outlet salesof factory products. We also changed the business format of Royal Factory’s
direct sales store, the Fukuoka Food Factory. Prior to renovation, the store
sold factory-made bread and sweets. Post-renovation and reopening, thestore sells non-standard products and frozen meals that are approaching
their expiration date. These products are sold at outlet prices.

 LASSIC Yoshoku—Western food with aC
Japanese twist
Enjoy classic Western dishes prepared in
the traditional Royal way—dishes
long adored by a multitude of people overthe Group’s long history.

 sian CuisineA
Feel like a traveler in Asia as you enjoy these
local dishes from India and the rest of Asia.

E uropean Cuisine
Enjoy popular European dished that preserve the delicious taste of the ingredients.

I talian Cuisine
Feel free to partake in Italian culture and its
love for food from the comfort of your home.

 merican CuisineA
Taste the variety of flavors unique toAmerica, the land of freedom.

We are working to achieve rapid and high-quality product development bytransferring and consolidating the product development departments ofother operating companies to the Food Manufacturing segment. We also
aim to reduce the number of product items, stabilize quality, and improvefactory utilization rates by using common ingredients and standardizing
menus across the Contract Food Service segment.

Expand B-to-B Business

ROYAL HOLDINGS Co., Ltd.

43

Food Manufacturing (Category 4)
 oyal Host seasonal dessert
R
Sweet Strawberry 1st Season Sundae

To promote B-to-B business, we have started selling private brand (PB) products to major retailers alongside products developed in collaboration withmajor food manufacturers. In addition, we are promoting the planning and proposal of repackaged products for mass retailers, smaller-scale retailers,
e-commerce, and hotels in order to develop new customers in other business categories.

Outlet products for sale (Royal Factory direct sales store)
Product Development Department

 EON TOPVALU CO., LTD.
A
Professional’s Recipe series

 issin Seifun Weina Inc.
N
Ao no Dokutu pasta sauce for frozen foods

ROYAL HOLDINGS Co., Ltd.

Food truck

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3 Our Growth Strategy

Category 5 (Overseas Business and Foodstuff Development)
Increase the number of Tendon Tenya overseas franchise locations

Message from an Executive Officer

Satoshi Fujioka
Executive Officer in charge ofOverseas Business and design anddevelopment of establishments

To strengthen the Group’s business foundation, we have positioned the acquisition of business opportunities inoverseas growth markets as one of our Group strategies. To promote this strategy, we are working to develop
business overseas by expanding our franchise business and also establishing a base for directly-managed business. In the overseas franchise business, we opened seven Tendon Tenya establishments in fiscal 2022, bringing
our total to 31. In terms of directly-managed overseas business, we are preparing to develop our first­directly-managed overseas Royal Host establishment in Singapore as a joint venture, as announced in March
2023. Compared to the Japanese market, there are an increasing number of growth markets overseas where
population is on the rise and consumer purchasing power is expected to follow suit. With that said, each market
brings with it unique issues that need to be understood and addressed, such as their respective food preferences
and lifestyles. At the same time, we also need to address global issues, such as securing labor and conducting
business from a perspective of sustainability. Therefore, we plan to work with business partners familiar with local
markets, update business models in keeping with changes in these markets, and utilize technology to improve
operational efficiency. Taking these steps will promote Overseas Business and better enable customers outside
Japan to enjoy the food and hospitality that the Royal Group has to offer.

7 locations in fiscal 2022
Note: Opened first location in
Guangdong Province of China

32

locations (as of March 31, 2023)‌ Guangdong, China 1 location

Expand Overseas Franchise Business and Establish a Base for Directly-Managed Business Overseas
Overseas BusinessHong Kong 5 locations

In August 2021 we established Royal Sojitz International Pte. Ltd., a Singapore-based joint venture with Sojitz Corporation as part of Overseas Businessaimed at establishing a foundation for directly-managed overseas business. We also entered into a joint venture agreement with YOTEI PTE. LTD.,
operator of Singapore locations of Tendon Tenya, as part of our effort to expand our overseas franchise business. In the future, we will ramp up operations of directly-managed restaurants and the domestic operations of overseas brands.

Expand Tendon Tenya franchise chain

Establish a foundation for­directly-managed restaurants business• Ramp up store openings in existing
countries of operation• Develop business via Royal Sojitz
International• Expand Group-owned content overseas

Note: O perate establishments using new models
suited to changing market conditions• Collaborate with Sojitz Corporation• Discover collaborative business opportunities with local partners• Enter new countries and regions

Make new breakthroughs• Expand overseas brands within Japan

Tendon Tenya Tuen Mun location

Thailand 12 locations

Take Part in Food Technology
Plant-Based Meat BusinessSingapore 3 locations

Philippines 11 locations

TENYA Parkway Parade

TENYA Mitsukoshimall Food court

ROYAL HOLDINGS Co., Ltd.

45

Thai-style spicy rice made with NIKUVEGEMeals at Royal Garden Cafe Aoyama made with NIKUVEGETENYA Glorietta

ROYAL HOLDINGS Co., Ltd.

In January 2022, Royal Holdings, Sojitz Group, and Unitec Foods entered into a strategic business alliance agreement regarding a plant-based meatbusiness. We have developed NIKUVEGE brand soy meat that does not use animal ingredients, and we offer it at a competitive price and quality at
Royal Host restaurants. In addition, Royal Garden Cafe Aoyama served pasta, hamburgers, and other menu items using NIKUVEGE on a limited-timebasis.

46

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3 Our Growth Strategy

Special Feature

The Royal Group’s

DX Strategy

The vision put forth by Medium-Term Management Plan 2022–2024 is “providing food and hospitality
regardless of time and place.” We intend to use digital technology as a means to achieve this vision.
In response to the demand for high quality and added value that has come to be expected of theRoyal Group, we have built a platform that can offer a quick and flexible response to changes in structure
and the environment. This takes our existing high-quality services and adds deeper, more evolved digital
capabilities, giving customers an experience that provides new forms of enjoyment and satisfaction.
On the other hand, we also plan to implement work style reforms for employees and develop various means to increase their engagement. Our DX initiatives entail a new challenge, one that will be taken
up by every employee and operating company as we look to reform the Group for the next generation.
This new formation will carry on the positive culture that we have cultivated alongside our customers,
while also building the foundation for a new business model that takes full advantage of technology.

Forward-Facing Challenges 
The Royal Group is working to take on two challenges that will lead it forward into the future. We have utilized a backcasting approach to tackle thesechallenges, working backward from our ideal vision of the future. Using this approach, we will try to create new CX utilizing, highly efficient and highvalue-added microstores and technology. Our aim is to achieve three goals: 1) establish a new profit model, 2) create new customers (endeavor toprovide new value,) and 3) create value by improving the employee experience (work-style reforms.)

We will fulfill our social responsibility by giving back the high quality service that we can achieve throughdigitalization as a token of our appreciation. At the same time, we will build and promote digital platforms that enable sustainable growth so that we can improve the value of our corporate culture andcontribute to society.

Microstores

New CX by Utilizing Technology

A one-of-a-kind experience

Be chic and cool with your favorite tempura dishHiroaki Ohsawa
Royal Management Co., Ltd.
Head of Systems

Basic StancePurpose• Build a business model with high added value by selecting
the most productive areas and adding value• Solve structural problems in the restaurant industry• Enhance value created through customer experience(customer creation and individualized response)• Enhance value created through employee experience

Current
situation• Openings of short-term, low-investment locations• Operation of highly productive, labor-saving locations that
require little space• Elimination of indirect store operations to focus on cooking
and customer service• Use of tokens for personal homepages, personalized tablet
experiences, etc.
• Community-building with customers, establishments, andproducers• Use of automated ordering and automated work scheduling

Future• Develop a variety of specialty products• Develop a wide range of highly productive business formats• Equip robots with AI-driven cooking capabilities and automate
ordering and food preparation• Enhance community-wide value (CX and EX)• Establish restaurant platform, connect with producers

The DX Project aims to make full use of cutting-edge technology as a way to provide new value to customers and optimize operations, while also
tackling food loss, food waste, and other social issues. As an example, we intend to develop and commercialize DX establishments—new types of
establishments that take advantage of digital technology. By verifying the efficacy of these establishments, we hope to improve our existing­businesses and build a resilient business portfolio.

Build a new portfolio management system that responds to change
and grow sustainably by fully utilizing digital technology

New Business
FormatROYAL HOLDINGS Co., Ltd.

47

< Target Innovations >• New CX and revenue model• Utilize an environmentally friendly model

Current situation and future plans• Opened first “microstore”, a compact-format establishment, in December 2022
(Komagome Tendon)• Opened TEN Labo in April 2023, a location that utilizes various types of­cutting-edge technology• Endeavor to further digitalize technology-based locations (consider use of robot
operation)• Create a model to provide food and hospitality thatpeople will invite others to enjoy
Customer• Utilize a common authentication ID to provide returns toRelationshipcustomers in the form of services
Management• Acquire input to forecast the market, identify needs, anddevelop new products and services• Determined detailed conditions for points system, and launched system• Launched electronic discount coupons for employees in May 2023
• Launch first phase of CRM in fiscal 2024
• Develop a data utilization platform system that uses AI• Reduce the amount of indirect operations• Reform store operations through digital technology
New Store
Management • Improve accuracy of store management through AI
technology• Finalized proof of concept at existing test locations• Began verification of proof of concept at innovation (test) stores• Determine business requirements and initiate system development, aiming forlaunch in fiscal 2024

• Comprehensive management from raw material procurement to sales
Supply Chain
Management • P rocurement based on demand forecasts•O ptimization of production and inventory management• Launched unified master data management system (cost and purchasing loss
board) that handles data ranging from purchased products to finished products• Formulated plan to revise logistics system in fiscal 2023
• Started verification testing for automated ordering system• Improve and reform scalability, availability, and reliability
assurance
UpdatedShared• Develop infrastructure while considering easy connectivInfrastructure
ity between systems• Enhance data utilization infrastructure• Utilize enterprise architecture to visualize data pertaining to the entire Royal Group• Formulate plan to restructure network in order to increase convenience atestablishments and headquarters• Began investigation of next-generation points of sale (POS) for operating companies

Customer Relationship Management (CRM) —Build a Solid and Close
Customer Base that Will Contribute to the Future Growth of the Group 
We have begun planning and designing Group member programs (points programs and status programs) in order to create medium-to long-term
relationships that are closer than ever before.

•P romote sales by leveraging group synergies•P rovide personalized One to One offers

Build a solid and close customer base that will contributeto the future growth of the Group1) Expand customer contact points and deepen our understanding of customers through digitalization2) Increase customer loyalty to the Group and create a fanbase

ENvitation

The Royal Group• Digitalize corporate discountcoupons (ENvitation)

Customers• I ncrease number of fans
• I ncrease average spending per customer
and frequency of use•U tilize various services within the Group3) Increase average spending per customer and frequency ofuse, and encourage mutual transfer of customers between
Group companies, etc.
4) Digitalize corporate discount coupons, which were previously provided on a paper basis. The digital platform has
been given the name ENvitation , with the hope that bonds
can be created due to the ability of employees to invite
family and acquaintances to use the service

ROYAL HOLDINGS Co., Ltd.

Goals of the DX Project

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3 Our Growth Strategy

Special Feature

Supply Chain Management (SCM) —Promote Reforms Across the Group 
We began SCM in 2021, and we are taking it a step further in Medium-Term Management Plan 2022–2024. We are moving forward with reforms thatwill integrate supply chain frameworks, reorganize system infrastructure and logistics bases, and aid collaboration between companies in the same
industry. We aim to leverage these efforts to build an efficient and stable supply chain that can mount a flexible response to fluctuations in supply
and demand.

Profit and Growth for All (PGA) —Our Vision for SCM System Infrastructure (Establishments, Factories, Logistics Centers, and Suppliers in a Streamlined Supply Chain)
Starting from the point of sale (POS), we will develop an SCM system infrastructure that can manage requirements for development, automatedorders, demand forecasting, inventory management, and restocking commands. The resulting system will be able to provide efficient and flexible
support for the supply chain, from procurement and manufacture to restocking inventory and delivery to establishments.

with Sojitz Corporation

Suppliers

Factories

Logistics Centers

Wholesalers andmanufacturers
Production,
procurement, andimport planning

Production control
Procurement of raw
materials

Procurement

Restocking

Chain restaurants

Logistics centers

Automated ordering

Management
delivery plans

Profit and Growth for All (PGA) is a joint committee between the Royal Group and Sojitz Corporation. To
promote growth of the Royal Group, the committee applies a Plan-Do-Check-Act (PDCA) cycle to each
topic discussed during its meetings. Specifically, the committee has held wide-ranging discussions regarding all five categories highlighted under Medium-Term Management Plan 2022–2024, pertaining to theenhancement of existing business, the creation of new businesses, and overseas expansion. Thanks to thework of the committee, in fiscal 2022 we made preparations to open a Royal Host establishment in
Singapore, and began utilizing NIKUVEGE plant-based meat manufactured by the Sojitz Group. The committee also conducted a simulation of the rising costs and their impact, then revised menus and prices basedon the results, doing so in a prompt fashion.
On the other hand, the challenge going forward will be making rapid decisions amid drastically changing conditions in a way that can be accepted by other members of the Group. To make this possible we will
utilize quantitative data to an even greater extent, and foster a data-driven business culture. In addition, inorder to maximize the synergy between the Royal Group and Sojitz Corporation, we will set ambitious
shared goals and promote each other’s activities. Alongside expanding overseas business further, we will
use fiscal 2023 to explore new initiatives that take advantage of our know-how and business foundation in
the Business Creation Domains of Category 4. Not only will these actions increase the Royal Group’s profits,
they will also help revitalize the restaurant industry as a whole going forward.

Establishments

Central Kitchen
Procurement

A Joint Committee

Shipping

Restocking
recommendations

Sales

Other business formats

Point of sales (POS)(meal services, specialty
establishments, etc.)
Planned ordering

Procurement
commands

Supply and demand
adjustments/support
Optimized restocking for centers
Restocking recommendations
for suppliers

Demand forecasting
Automated ordering

Bill of materials (BOM)

Order support forestablishments
Forecasting establishment
output and stock usage

Integration of SCM masterdata
Menu and recipemanagement
Bill of materials explosion

Restocking commands

Delivery management
Prevention of delivery/
shipping errors
Shipping status visualization

Warehouse management
system (WMS)
Inventory visualization at
centers and establishments
Inventory support

Ordering portal
Automated ordering linkage
Blanket ordering forheadquarters

Masatoshi Kuno

SCM System Infrastructure

Executive Officer in charge of marketing,
Head of Strategy Department
and Marketing Office

Our Vision for 2025 = Our Strategic Goal
Resilience A flexible supply chain that can adjust to changes in supply and demandAn efficient supply chain that eliminates waste, overburden, and unevenness

FairnessA sustainable supply chain that addresses social issues

We aim to realize a sustainable supply chain—one that combines resilience, efficiency, and fairness—by 2025 through the SCM reforms put forth in MediumTerm Management Plan 2022-2024. To that end, we are systematically executing the following 10 strategic actions as projects that cross departmental lines.

During PGA meetings, members of Sojitz Corporation and the Royal Group apply their respective points of view and knowledge to discuss ways to improve
the Group’s performance and corporate value. Following is a table of activities and achievements accomplished since establishing the alliance in 2021.
Theme

Strategic Actions

ROYAL HOLDINGS Co., Ltd.

49

Efforts Related to the Capital and Business Alliance with Sojitz Corporation

1

Consolidate procurement routes and increase competitiveness and transparency(optimize procurement costs, conduct multiple purchases, hold regular bidding competitions)

2

Engage in development purchasing and vertical merchandising(strengthen ties with upstream supply chain, refine quality and cost of goods)

3

Promote joint purchasing and logistics(conduct joint purchasing with other companies and joint logistics for local and remote areas)

4

Engage in sustainable procurement(promote decarbonization, reduction of food loss and waste, responsible procurement, and the White Logistics Movement)

5

Promote DX in the supply chain(visualize, automate, and optimize management of supply chain operations)

6

Enhance supply-demand adjustment and inventory management(eliminate unsold inventory and losses from product shortages, improve turnover)7

Reorganize logistics bases and networks(optimize bases, procurement logistics, and delivery costs)

8

Optimize logistics management system(introduce cost centers and pay-as-you-go contracts, manage KPIs, and transition to third-party logistics)

9

Enhance risk management, safety, and security(prevent quality risks and logistics accidents, implement HACCP, audits, and internal controls)

10

Promote SCM, human resources, and organizational development(develop human resources with SCM skills and leaders for the next generation, develop planning and operational systems)

Supply Chain
Management

Categories

1
3

Royal Deli
CentralKitchen2
4

53

Promoted efforts to reduce procurement costs, visualize rising costs, review prices based on visualization, execute SCM
reform projects (ongoing), engage in competitive purchasing in league with the Sojitz Group to reduce costs, etc. The
Group collaborated with Sojitz to launch products containing NIKUVEGE plant-based meat
Promoted efforts to enhance and review growth strategy, utilize existing channels, and expand channels, etc.

41

Theme Activities and Achievements

4

Promoted activities to strengthen external sales and increase the procurement ratio of CK products at each Group company; the Group collaborated with Sojitz to expand external sales in cooperation with major retailers

In-Flight
Meals—

Worked to expand business for non-airline companies during the COVID-19 pandemic as part of a joint business with Sojitz;
promoted activities to expand business in anticipation of pandemic recovery

Contract
Food Service

1

The Group conducted activities in collaboration with Sojitz Group companies to expand business overseas, aiming to
improve average spending per customer at service areas and parking areas

Overseas
Business

5

The Group conducted activities to expand business overseas in collaboration with Sojitz, including activities to expand
overseas franchises in Japan, and carrying out the joint plan to open a Royal Host in Singapore

CustomerExperience5

Conducted activities to improve customer experience at Richmond Hotels, Royal Host establishments, and other Groupbusinesses, increasing customer loyalty and return rates

Hotel
Business

1

Promoted stronger measures to improve value for customers, revisions to pricing strategy, and measures to better capture
demand for leisure activities

ROYAL HOLDINGS Co., Ltd.

Efficiency

50

3 Our Growth Strategy

Risk Management

Risk Management System

Basic Stance

The Risk Management Committee holds regular meetings in order to isolate and identify risks, conduct an analysis, provide an assessment,
develop a response, and then conduct monitoring. These efforts help ensure effective risk management as a whole. In light of the recent
business conditions, the Group also established the Risk Management Supervisory Office, which is tasked with developing a comprehensive
response to risks that are of growing concern, such as labor shortages, food safety and security, natural disasters, and cybersecurity. This
response includes preparing systems to respond to a variety of risks and addressing major risk cases.

In an effort to maintain and improve corporate value, the Royal Group looks at the factors that could impede achievement of its management
goals from a top-down vantage point and addresses a variety of management risks such as natural disasters, man-made disasters (accidents,etc.), and changes in the social landscape in a prompt and accurate manner.

Determine a basic policy
Audit Committee

Board of Directors

Major Risks and Measures

Management at the Company level

ISO 31000: 2018, an international standard for risk management, defines risk as “the effect of uncertainty on objectives.” The representative
risks that have a major effect of uncertainty on the Group’s business, as well as the Group’s countermeasures, are as follows.

Cooperation

Companywide evaluation andinvesting responses

President & CEO
Internal Audit Department

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51

Global Trends

Strengthen management capabilities through the Risk Management
Supervisory Office
Manage external risks via the Risk
Management Committee
Ensure compliance with regulations

Management Strategy• Lower earnings due to investments and acquisitions• Continuity of new businesses gained through investments and acquisitions• Inability to collect security deposits from leaseagreements

Enhance corporate governancestructure

Supply Chain• Fluctuations in the cost of ingredients and other items• Increased demand for food safety from society• Shortage of human resources in logistics• Increased dependence on Company production
facilities and business partners• Increased demand for quality assurance from society

Develop solid connections between
production, quality assurance, andbusiness partners

L egal Affairs,
Compliance, andGovernance• Stricter labor laws and regulations• Strengthening of various regulations• Delayed compliance and insufficient guidance• Decline in profitability due to changes in accounting
and taxation systems, etc.

Utilize the Financial Planning
Division, the Human Resources
Planning Division, and the Legal
Affairs Office to collect and analyze
information

Company Assets• Leaked technology and techniques due to improperly
trained human resources• Increased occurrence of accidents and injuries due toaging facilities

Implement systemized humanresource development andpromote facility maintenance

Information Systems• Loss of trust due to personal information leaks• Loss of trust and decline in profitability due to leaks ofconfidential information• Suspension of store operations due to suspension of
payment functions

Promote thorough management of
the Human Resources Division, theCorporate Communication Division,and the System Division

Sales and Marketing• Decline in competitiveness due to insufficientconsideration of our brand strategy

Rebuild existing brands• Poor evaluation of SDG-related initiatives• Increased costs as a result of response• Greater demand on company resources to enhance thesystem for responding to SDGs

Select target items within the SDGs,
visualize progress toward addressing these items, and disclose
information

 Response to SDGs

Operating companies

Support andsupervision

Risk Management
Supervisory Office

Management at theactivity level

Message from an Executive Officer
The Company’s risk management consists of two systems: risk management for normal conditions
and crisis management for emergencies. In the former, we employ a PDCA cycle in which we
formulate and implement response plans based on our risk assessments, while also conducting
monitoring to make improvements. Conversely, we use the latter system to respond to incidents
that are either unexpected or exceed our expectations. This system enables us to quickly andaccurately grasp the situation and circumstances, and systematically determine response policies.
In addition to suppressing the impact, we strive to investigate the cause and prevent recurrence,and incorporate measures into normal risk management as necessary.
In fiscal 2022, we conducted drills in preparation for disasters, and worked to ensure that
employees at headquarters and establishments were fully informed about COVID-19 countermeasures implemented in line with government and industry guidelines. In addition, we continue tomonitor risks that could affect human life. Specifically, to ensure a quick response to natural disasters, which are growing both in frequency and scale, and to prevent accidents caused by aging
equipment, we will inspect and maintain facilities on a daily basis. We have also introduced
e-learning for employees from fiscal 2023 as a way to increase knowledge.
We will continue to implement risk management for normal situations while also remaining
mindful of our initial response should an emergency occur, and make sure our systems remainsustainable.

Kenichiro Uehara
Executive Officer in charge ofrisk management supervision,
Head of the Risk Management
Supervisory Office and Customer
Service Office

Risk Management

Crisis Management

5
Improvemonitoring
4
Respondto risk3
Assess risk

1
Identify risk
and scope2
Analyze risk

Occurrence or detectionof an incident that
affects business

Investigate cause and prevent
recurrence

Business
Operations andManagement
Infrastructure

Auditing ofmanagement system

Prevent spread and confusion

Strategy andPlanning• Unstable economic trends• Intensifying competition• Labor shortages• Unstable situations overseas• Increasing frequency and scale of natural disasters• Spread of epidemics

Measures

Form / implement response policy
and responding organization

External Factors

Risks Identified

Confirm facts and mount initial
response

Risk Category

Risk Management Committee(risk management and compliance)

ROYAL HOLDINGS Co., Ltd.

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52

Menu

3 Our Growth Strategy

Food Safety and Security
Safety Confirmation
Groupwide Initiatives 

IT Initiatives and Food Allergy Labeling 

Based on the Royal Credo and the Royal Group
Code of Conduct, we have adopted the following
basic approach regarding food safety and security.

The Group has established the “Royal Group Quality & Food Safety
Standards,” covering purchasing, design and development, logistics,
cooking, and manufacturing. In addition, we have established the
Quality Assurance Promotion Department, an organization under
the direct control of the president, to ensure that these processes
are interconnected and function as a Group system. This department also works to obtain information on changes in internal andexternal environments and makes corresponding revisions to theRoyal Group Quality & Food Safety Standards, sets new guidelines
and standards, and disseminates them within the Group.

Since 2005, the Group has been digitizing raw material specifications, starting with the Manufacturing Division. This helps ensure
accurate information disclosure, which is particularly importantfrom the perspective of customers with food allergies. In addition,
all ingredients have been organized in a standardized digital format
with the 28 allergens designated under Japan’s Food Sanitation Act
appropriately highlighted. With this data, we are developing asystem that generates a uniform list of the allergens present at
each establishment and in each product.
Additionally, information on all products manufactured at theTokyo Food Facility and Fukuoka Food Facility is converted into
data, including raw material and product specifications, to ensure
accurate food and allergen labeling.

1.
Food Safety
andSecurity
A Trusted
System2.
Continuous
Improvement

SafetyConfirmation

A Trusted
System3.

Continuous
Improvement

Confirm safety and develop a systemthat earns the trust of stakeholders
Improve this system continuously toensure an appropriate response tochanges in internal and external
environments

Make steady efforts toward 1 and 2 tofoster peace of mind (security) among
stakeholders

Security

Message from an Executive Officer 

ROYAL HOLDINGS Co., Ltd.

53

The Quality Assurance Department remains vigilant of changes in the business environmentas part of its constant work to better ensure food safety and security, aiming to increase
corporate value and raise the level of trust bestowed upon the Group by its stakeholders.
The Royal Group strives to guarantee the quality required in the upstream and downstream stages of the supply chain, such as design, purchasing, manufacturing, shipping, andsales. As part of this effort, we need to adopt a buyer perspective and take the initiative toprotect against defects and problems. In addition, it is our responsibility to further increase
the level of quality in all of these processes as a means to build more customer trust.
This trust, as well as the sense of security that allows customer to continue patronizing
Royal Group establishments, are essential to both the Group’s growth and its very survival. To
that end, we focus meticulously on appropriate hygiene management and quality control
based on Hazard Analysis and Critical Control Points (HACCP*), and make continuous improvements. We ensure that all employees remain ever-aware of compliance, and we require that
operating companies produce a monthly report on internal quality assurance. This and otherefforts ensure that we can collect and closely manage information sufficient to maintain andimprove Group transparency and strong quality assurance going forward. We will continue topromote and develop quality assurance initiatives in these ways, so that both the Royal Groupand its members can enjoy the “continued prosperity” stated in the Royal Credo.
* A sanitation control method for ensuring food safety.

Masanori Ariyoshi
Executive Officer in charge of quality assurance promotion and internal audits,
Head of Quality Assurance Promotion Department

A Trusted System
Continuous System Improvement 
To facilitate the full and mandatory implementation of HACCP
programs, the Group prepared a hygiene management system inJune 2021. Under this system, the Quality Assurance Promotion
Department conducts unannounced audits of each operatingcompany’s stores to confirm their effectiveness. At the same time,
we conduct annual audits based on a systems approach for purchasing, design development, logistics processes, and our manufacturing processes.
Based on the results, we categorize and identify issues by site,
operating company, and process, then make continuous efforts toimprove. In the Manufacturing Division, the Tokyo Food Facility(excluding its bread and dressing department) and the Fukuoka
Central Kitchen have acquired certification under international
standard FSSC 22000*1 in an effort to improve food safety.
We have also formulated our own guidelines regarding fooddefense and conduct regular inspections every year, mainly in the
manufacturing division of each operation company, and we areworking to improve both hardware and software.
*1 Food Safety System Certification 22000. An international standard for food safety
management systems.

Continuous Improvement
Systems at Each Subsidiary 

Inspection Validity 

The Group’s operating companies formulate and implement theirown regulations based on the Royal Group Quality & Food Safety
Standards. In addition to the audits conducted by the Quality
Assurance Promotion Department, operating companies conduct
regular independent and internal audits. The results of these audits
are shared with the Quality Assurance Promotion Department andused to support continuous improvements.
All operating companies also maintain their own respective
quality assurance departments. These departments are required tosubmit monthly reports to the Quality Assurance Promotion
Department detailing quality assurance within their organization.
In addition, those in charge of these departments must fulfill established competency requirements and participate in training conducted by the Quality Assurance Promotion Department. These
steps serve to maintain and improve the level of quality assuranceof the Group as a whole.

The Group has established an Inspection Office within the Quality
Assurance Promotion Department to conduct a variety of objective
inspections*2. To ensure suitable food inspections, we acquired ISO/IEC 17025: 2005*3 in 2013 for our Hygiene Inspection Laboratory inTokyo, among other efforts.
*2 Inspections include microbiological inspections, physical and chemical inspections,food allergen inspections, radioactive substance inspections, nutritional component
analysis, and foreign object inspections*3 An international standard granted by a third-party certification body to determine
whether a laboratory possess the competency to produce accurate measurements aspart of conducting product inspections, analysis and other forms of testing or
calibrations.
Products covered by certification: Processed foods for the Group manufactured at theTokyo Food Facility of Royal Co., Ltd.
Certified inspections: Viable count, coliforms, staphylococcus aureus, Escherichia coli
(E. coli)

ROYAL HOLDINGS Co., Ltd.

SafetyConfirmation

Our Approach to Food Safety and Security

54

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4

Financial and Non-Financial Highlights (Fiscal 2012–2022)
2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

114,957

120,730

124,857

130,327

133,025

135,563

137,701

140,578

84,304

83,975104,015

Operating income (loss)

2,623

3,498

4,417

4,899

5,222

5,952

5,709

4,648

(19,269)(7,366)

2,192

Ordinary income (loss)

2,817

3,761

4,579

5,021

5,205

6,056

5,765

4,639

(19,855)(4,498)2,156

Profit (loss) attributable to owners of parent

1,137

1,663

1,866

2,728

2,377

3,533

2,791

1,923

(27,532)(2,873)

2,754

Total assets

76,75979,583

81,91690,912

94,07097,13899,262

102,540

105,896

109,767

123,570

Net assets

40,741

43,33844,58846,634

48,234

51,97351,12552,02821,011

33,99944,808

Earnings per share

29.49

43.14

48.40

70.79

62.18

93.06

73.71

51.54

(737.44)(68.60)52.86

Net assets per share

1,040.71

1,107.98

1,138.48

1,198.16

1,247.30

1,343.02

1,336.77

1,361.56

559.62640.47833.31Dividend per share

12

14

16

20

20

26

28

28

0

5

10

Cash flows from operating activities

6,038

7,377

8,206

8,179

9,212

9,350

8,478

9,849

(7,234)(1,886)

7,389

Cash flows from investing activities(1,964)(5,453)(4,931)(5,081)(5,961)(4,279)(6,121)(5,941)(9,918)2,061(8,552)

Cash flows from financing activities(4,480)(2,031)(3,395)(3,366)(2,650)(2,580)(4,591)(4,774)

26,590

9,070

3,702

Return on equity

2.9

4.0

4.3

6.1

5.1

7.2

5.5

3.8

–

–

7.0

Return on assets

3.6

4.8

5.7

5.8

5.6

6.3

5.9

4.6

–

–

1.8

Equity ratio

52.3

53.7

53.6

50.4

50.3

52.5

50.3

49.6

19.7

31.0

35.8

Operating Results (Millions of yen)
Net sales

Financial Position (Millions of yen)

Per-Share Information (Yen)

Cash Flows (Millions of yen)Management Indicators (%)

Non-Financial Data

2,400

2,646

(%)

8.73
ROYAL HOLDINGS Co., Ltd.

55

2,686

2,706
9.37

8.91

11.25
2,680 10.53
1,894

1,600

11.70

1,875

0
2018

Number of employees (left axis)

2019

2020

2021

12
9

800

2017

Number of Employees with Disabilities and Employment Rate

新入社員採用数(Number of people) (Number of people) 

財務・非財務(Number of people)

3,200

Number of New Graduates Employed (Career-Track Employees)

80
60

44

48
150

30
6

40

3

20

0

0

2022

Ratio of women in managerial positions (right axis)

100

26

2017
Men

(%)

4

200

39

Women

31

2018

25

2019

28

2020

169
2.53

167
2.59

166

8
3

5
5

2022

2018

2.65

Number of employees (left axis)

2019

(%)

2020

12

7,128.4

3
141
136
2.69
2.76
2.68

6,000

2

4,000

1

2,000

0

0

0
2017

(t) 

8,000

171

50

2021

Amount of Food Waste / Food Recycling Rate

2021

2022

(as of June of each fiscal year)
Employment rate (right axis)

Note: The legally mandated employment rate is 2.3% (as of March 2021).

52.7

6,635.3 6,576.2
53.5

57.5

49.7
3,808.1

5,049.7
50.8

5,554.6
53.0

9
6
3
0

2017

2018

Amount of food waste (left axis)

2019

2020

2021

2022

Food recycling rate (right axis)

Note: The target food recycling rate for the Restaurant Business and Food Manufacturing
segments is 50%.

ROYAL HOLDINGS Co., Ltd.

Number of Employees (Consolidated) /Ratio of Women in Managerial Positions (Consolidated)

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4

Corporate Data (As of December 31, 2022)
Company Information

Company Name Royal Holdings Co., Ltd.

Date of Establishment 

April 1950

Capital ¥17,830,138,262

Number of Employees 

1,875 (Consolidated)

Head Office Tokyo Headquarters 

Major Shareholders

Name of Shareholder

Number of Shares(Thousands)

Shareholding Ratio(%)

Sojitz Corporation

9,933

19.97

3-28-5 Naka, Hakata-ku, Fukuoka-shi, Fukuoka, 812-0893

The Master Trust Bank of Japan, Ltd. (Trust account)

3,707

7.45

1-34-6 Sakurashimmachi, Setagaya-ku, Tokyo, 154-8584

Egashira Foundation (public interest)

2,452

4.93

Kilroy Kosan Co., Ltd.

1,624

3.26

DUSKIN CO., LTD.

1,400

2.81

Custody Bank of Japan, Ltd. (Trust account)

1,140

2.29

THE NISHI-NIPPON CITY BANK, LTD.

952

1.91

Nippon Life Insurance Company

803

1.61

HANEWFOODS INC.

692

1.39

Isetan Mitsukoshi Holdings Ltd.

681

1.37

URL: https://www.royal-holdings.co.jp/en
Business 

Investor Information

Pure holding company that oversees and manages Group
operations

Market Listing Tokyo Stock Exchange, Prime Market segment; Fukuoka
Stock Exchange

Securities Code 

8179

IPO Date August 1978

Note: The Company owns 118,000 shares of treasury stock.

Total Number of Authorized Shares  120,000,000
Total Number of Issued Shares 

49,861,862

Number of Shares per Unit 

100Number of Shareholders 26,118

Breakdown of
Shareholders
by Investor TypeJapanese financial institutions
and securities firms

Treasury stock

0.2 %18.9 %

Individual investors, otherGroup Overview
Restaurant
Business

Royal Holdings
Co., Ltd.

37.3 %

Royal Food Service Co., Ltd.

Contract Food
ServiceRoyal Contract Service Co., Ltd.
Highway Royal Co., Ltd.

Hotel BusinessRNT Hotels Co., Ltd.

Food
Manufacturing

Royal Co., Ltd.

Royal Management Co., Ltd.

Foreign institutions

Other institutions

5.1%

38.5 %

Stock Price

Stock price (yen)Note: January 2019–May 2023

3,500
3,000

ROYAL HOLDINGS Co., Ltd.

57

K&R Hotel Development Co., Ltd.

2,000

Sojitz Royal In-flight Catering Co., Ltd.

1,500

JAL Royal Catering Co., Ltd.

1,000
500
0
2

4

6
2019

8

10 12

2

4

6
2020

8

10 12

2

4

6
2021

8

10 12

2

4

6
2022

8

10 12

2

4

2023

ROYAL HOLDINGS Co., Ltd.

2,500
Equity-Method Affiliates

58