-From "Revitalization andTransformation" to "Growth"目次
Table of Contents

1. Review of the Previous Medium-Term
Management Plan

2.

Medium-Term Management Plan 2022-2024-From "Revitalization and Transformation" to "Growth"

20

目次

1. Review of the Previous Medium-Term
Management Plan21

1-1. Outline of Previous Medium-Term Management Plan
◆ Numerical Targets of the Previous Medium-Term Management Plan

(100 million yen)

FY2017
Results

Previous Plan

FY2020ChangeNet sales

1,355

1,500

+ 145

Ordinary income

60

75

+15

◆ Priority Measures in the Previous Medium-Term Management Plan
（2018-2020）

Improved Productivity①Improvement
in quality

Investments inexisting stores②Expansionof business
scaleStore openings inexisting formats

Pursuit of Food and Hospitality/Ideal Business Model
Haral/frozen
meal

Expansion of FC
business③Improvementof efficiency

Invest in in-flight catering and plants④SynergyGroup synergy⑤Work stylereformRecruitment of
human resources⑥CSR

Social contribution

Overseas
expansionDevelop new
business formats
Strengthen R&D

M&A

Efficiency-enhancing
investment

Cooperation with other companies(logistics, purchases, etc.)

Healthy
management

Diversity

Improvement ofworking environment

Creating a store that is indispensable to the community22

1-2. Review of the Previous Medium-Term Management Plan ①◆ Changes in net sales and operating income
3rd
medium-term plan

4th
medium-term plan

5th
medium-term plan(100 million yen)

COVID-19Increase in various costs
Decline in profitability due to intensifiedcompetition for hotels
Slump in new store openings

Increase in sales but decrease in profit for thesecond consecutive year due to such factors

Decreased significantly due to the spread of COVID-19, recording losses in two consecutive periods

23

1-3. Review of the Previous Medium-Term Management Plan ②
Priority Measures in thePrevious Medium-Term Management Plan

Results

Improvement in quality

Increase added value by investing in existing stores

Expansion of business scale

Cultivating the HMR markets(Expand of take-out/delivery business)(Development of FF formats: Lucky Rocky Chicken)(Expand of Food Business: ROYAL DELI)

Improvement of efficiency

Withdrawal from unprofitable stores and rationalization of indirect personnel

Synergy

Create within-group synergy and synergy with Sojitz

Work style reform

Increase female managements and introduce shop holiday of Royal Host

CSR

Humanitarian and disaster relief, support for school education, food loss

From 2018 to 2019, we have steadily implemented priority measures and achieved a certain level of results.

Results for 2020 was significantly affected by COVID-19, forcing us to postpone or change the plan.
24

1-4. Review of the Previous Medium-Term Management Plan ③
COVID-19 pandemic have a significant impact on all segments of our Group→ It has been clear that the majority of our business relies on 'human mobility'.

Promoting Structural Reforms in FY2021

1. Response to Changes
Strengthen sales of take-out and delivery

High added-value strategy

Expansion of hotel sales channels

Revision of B&I contract

2. Management Efficiency
Reduction of fixed costs and reduction of rent

Organizational restructuring(building an efficient system)

Liquidation of unprofitable stores

Optimization of various expenditures

3. Fostering Growth Fields
Expansion of the Food Product Business

Development of take-out formats

Although we have achieved certain results, such as responding to demand for HMR andreducing fixed costs, we are still in the process of structural reform toward "With COVID-19"
era and will continue to promote the reform in FY2022 and beyond.
25

２． Medium-Term Management Plan
2022-2024-From "Revitalization and Transformation"
to "Growth"

26

2-1.

Direction of the Medium-Term Management Plan

Task
recognition

Sustainable growth
Ability toadapt to change

Lack ofgroup synergies

Securehuman resources
Develop the next
generation employees≪Vision for Medium-Term Management Plan≫

Providing "food" and "hospitality"
regardless of time and place

Food prices
Labor unit cost
Rising delivery costs

Response tosocial andenvironmental issues

MISSION: Contributing to local
communities and societies
VALUE: High quality, high added value,
responsive to the times

From "Revitalization and Transformation" to "Growth"
Improve profitability ofexisting businesses
・Further enhance the added value in customer service
・Create new customer experience through CX・Improve productivity through capital investment andsystem investment
・Cost reductions through SCM

Create strategic businesses
・Create strategic businesses through collaboration with Sojitz
・Cultivation of growing fields(ROYAL DELI, Business Food, T/O Delivery)
・Promote overseas expansion

Response to changes
・Create new markets in each business・Store openings with an eye on the
future・Develop new business models throughdigital transformation
・Development and growth of humanresources27

2-2. Portfolio Transformation
Existing portfolio
Person-flow
dependence
High

Low

Fixed expenses incurred
High
Low

＜Issues arose from COVID-19＞
Portfolio depending on
person flow

Increase in fixed costs

Lack of resiliencein each business

Under the medium-term management plan, we will redefine our business portfolio,
which is exposed to vulnerabilities due to COVID-19, and redesign it to achievesustainable growth in post‐COVID-19 era.
28

2-3.

Business Strategy Concepts①
 Divide into “Existing domains," “Business creation domains," “Onpremise" and “Off-premise"
 "Existing domains" explore strategies and operations in depth

Existing
DomainFacility-based
Business
Restaurant
Contract
Hotel BusinessBusiness Creation
Domain< Category 1>
・"High-value-added strategy"・Continuous enhancement of takeout and delivery services

On-premise<Category 2>"Develop business format for new lifestyles"<Category 3>
Non-facility-based Off-premiseBusinesses
Food Manufacturingbusiness
OthersOverseas
Business
Foodstuff
Development

・Improve productivity and strengthen
product development capabilities<Category 4>"Repackaging strategy"
Repackage our strengths tocommercialize and expand<Category 5>
Especially in the domains ofcollaboration with Sojitz

Strengthen the Group'sbusiness base

(Note) "on-premise" refers to the provision of food and drinks and lodging services, etc. at the Company's own facilities.
"off-premise" refers to take-out and delivery services, etc.

29

2-4. Business Strategy Concepts②
 36% of the total amount for investment (3-year total) is planned to beinvested in "business creation domains"→ Increase in sales of approximately 10 billion yen(100 million yen)

Investment
amount(3-year total)

Net sales（2021）Net sales（2024）

Existing
domains
（①+③）

124

860

1,293

Business creation
domains（②+④+⑤）

72

95%

150
5%

（-61）

(Internal elimination)

EBITDA
(3-year total)

41

346

90%

10%
（-83）

(Note 1) Investment in existing businesses (3-year total) does notinclude 7.7 billion yen for the acquisition of shares ofHighway Royal, which has already been decided to acquire.
(Note 2) Figures in the lower right corner of net sales arecomposition ratios.

30

2-5. Business Strategy Concepts③
Changes in composition of inbound sales andoff-premise sales
Take-out/Delivery
22％
ROYAL DELI/frozen
meal, etc.
20％

Inbound
4％

Inbound58％

TO/Delivery
58％

2019

ROYAL DELI/frozen
meal, etc.
38％

2021

TO/Delivery
33％

Inbound
33％

ROYAL DELI/frozen
meal, etc.
34％
(Note 1) Inbound sales are calculated
based on direct and indirect
sales.
(Note 2) Inbound sales does not include
in-flight catering sales.

2024

Strategically increase ratio of off-premise ratio
31

2-6.

Business Strategies <Restaurant Business・Contract Food Service>

Existing Domain

Facility-based
Business
Restaurant
Contract
Hotel Business《Target Businesses》

Business Creation Domain

On-premise

Non-facility-based Off-premiseBusinesses
Food Manufacturingbusiness
OthersRoyal Host

Airport/expressway

Tenya

B&I

Specialty restaurants

Senior /healthcare◆ Continue to promote a high-value-added strategy in this our core areas, while
comprehensively enhancing customer experience value through product development,
renovation, and digital transformation (DX).

◆ Focus on creating and developing new businesses to create pillars of future earnings<Category 1> Existing domains"High-value-added strategy"(Royal Host, Specialty Store)

Restaurant
Business

Contract
Food
Service・Increase the value provided to customers
through improving CX, including productdevelopment and renovation, and promote DX・Increase in the number of items purchased
through CRM improvement

Enhance take-out anddelivery services
・Improve CX through mobile orders, etc.
(Tenya)"Strengthenrisk tolerance"<Category 2> Business creation domains

・In response to rising material and personnel
costs,①Improve productivity per staff②Cost reductions through SCM reforms, etc.

Develop businessformatfor new lifestyles

・Develop next-generation
models using DX (see below)
・Expand take-out and delivery
services (Lucky Rocky Chicken,
etc.)・Continue the unit-cost increase program
implemented in 2021
"High value-added strategy"
and business base expansion ・In parallel with improving profitability, expandbases (open stores + consolidate highway
royalties)

32

2-7.

Business Strategies <Hotel Business>
Existing Domain

Facility-based
Business
Restaurant
Contract
Hotel BusinessBusiness Creation Domain《Target Businesses》

On-premise

Hotel

Non-facility-based Off-premiseBusinesses
Food Manufacturingbusiness
Others◆Convert from a business-centric hotel to a hotel that can also be used for
leisure, and consider hotel development centered on leisure use to promote ahigh value-added strategy◆ Ensure profitability level before COVID-19 by promoting efficiency in hotelmanagement in parallel while improving occupancy rates and ADRs throughCRM enhancement and revenue management<Category 1> Existing domains"High-value-added
strategy"

Hotel"Strengthenrisk tolerance"[Business-use demand]
・Improve customer convenience throughCX improvement activities
・Propose appropriate prices by operating
the Revenue Management Center
・Various initiatives to reduce fixed costs(e.g., in-house cleaning)<Category 2> Business creation domains

Develop businessformatfor new lifestyles[Non-business demand]・Renovation of existing urban
hotels(Attempt to take up leisuredemand)・Development of DX-based
hotels33

2-8.

Business Strategies <Food Manufacturing Business>
Existing Domain

Facility-based
Business
Restaurant
Contract
Hotel BusinessBusiness Creation Domain《Target Businesses》

On-premise

Non-facility-based Off-premiseBusinesses
Food Manufacturingbusiness
OthersFood Manufacturing
Business
Overseas
Business
Foodstuff
Development◆ Position frozen meals including ROYAL DELI brands as a growth-generating
business (Business creation domains) and expand business scale byimproving CX and strengthening partnerships with major retailers.
◆ Strengthen development capabilities by consolidating the Group's productdevelopment functions, and improve productivity and strengthen
competitiveness by promoting DX<Category 3> Existing domains

Food
Manufacturing
Business

・Improve production skills throughconsolidation of productdevelopment functions
Improve・Improve productivity andproductivity
Strengthen development
strengthen product competitivenesscapabilities
through capital investment and DX
・Expand sales of competitive
products such as sweet potatoes<Category 4> Business creation domains

Use of skills andknow-how・Expansion of frozen meal business
Positioning ROYAL DELI as a top priority product・Develop high-value-added products utilizing skills
and expertise gained in the Restaurant Business・Expand sales channels through collaboration withleading companies
・Develop products using food techs such as meatalternatives

34

2-9.

Business Strategies ＜Overseas＞
Existing Domain

Facility-based
Business
Restaurant
Contract
Hotel BusinessBusiness Creation Domain《Target Businesses》

On-premise

Non-facility-based Off-premiseBusinesses
Food Manufacturingbusiness
OthersOverseas
Overseas
Business
Foodstuff
Development◆ Create strategic businesses in overseas growth markets by
expanding the Tenya FC business and establishing a directly
managed business foundation through M&A and business alliances

Expand Tenya FC
business

・Enter into new countries (China and others)
・Establish a foundation to have 100
overseas stores
・Introduce new models suitable for market
changeEstablish a
directly managed
business foundation

・Multi-country development in ASEAN,
etc.
・Use networks in Royal Sojitz
International and Sojitz
・Cooperation with local partners
・Focus on restaurant and food
manufacturing areas(Next-generation F&B, MD function, etc.)

Overseas（Stores）

Trends in the number of
Tenya stores overseas

352-10.

DX Project

Build a new portfolio management that responds to change
and grow sustainably by fully utilizing digital technology
Current concepts(development of agile projects)

DX project
BusinessformatCRM<Island>・ New CX and revenue model
・ Environmentally friendly items

Existing business<Expected effect>

Transfer"Improve unit prices andcustomer traffic"
・Increase unit price andfrequency of store
visits throughproposals tailored topreferences and eachlifestyle and life stage
・Intra-group customertransfers

・ Aim: "Food" and "Hospitality" that makes people want to recommend and invite
others・ Method: Implementation of common authentication-ID (tentative name) "ROYAL
Pass".
"Know individuals"
・ Overview: through the common authentication infrastructure, users can use
various services related to common IDs across the group stores.

Store management
system・ Indirect business reduction
・ Enhancement service level through cooperation
with SCM and CRM

SCM

・ Overall management of raw material procurement andsales
・ Procurement based on demand forecasts
・ Optimize production and inventory management

Network・ Scalability, availability and reliability assurance
infrastructure ・ Easy connection with other systems： Scope of projects

・ Challenge for labor
shortage・ Improvement of
productivity per staff

Transferand sharing

・・

Cost reductions
Decrease of food loss・ Flexible response toenvironmental changes

362-11.

SCM Reform
Promoting SCM reforms across the Group■ In January 22, we integrated SCM's core functions into Royal
Co., Ltd. (product development and shopping distribution)■ Establishment of SCM system infrastructure■ Alliance with Sojitz

Consolidation and rationalization of
procurement routes
Reorganization of logistic bases andnetworks

Reduction of procurement and logistics costs

Strengthen supply-demand adjustments andinventory management

Supply chain DX

Ensure stable energy supplies

Strengthen development purchase andvertical MD

Enhance product value

Sustainable procurement
White logistics
Strengthen risk management and safety andsecurity

Actions for environment and society372-12. Human Resource StrategyDevelopment of an attractive work and workplace environment for employees and recruitments is
a top priority.
Consider reviewing the comprehensive human resources system in view of ensuring businesspersonnel, etc.
Consider gradual improvement of treatment.

Employee

Crew

Recruitment

Multiple route combination①New graduates (Continuous human resource
securing)②Carrier employees (secure skilled workers)③Job-focused employees (required post)

Use of external services①Support for data collection andoperation②Use of recruitment companies③Technical intern trainees (at plant)

Retention

Provision of options and environmental
improvement①Diverse ways of working (e.g., compatibility withparenting)②Diplomatic HR (managerial or professional)③Improve work environments

Active recruitment of employees
from store crews

Development

Active human resources development①Secure opportunities for active participation andmanagement personnel②Establish workplaces and systems that enablefemale employees to play active roles

Efforts to improve motivation①Sharing of positive cases②Crew contest
Enhance the work environment38

２-13．Initiatives to Address Sustainability Issues[Basic Sustainability Policy]
As a corporate group focusing on "food" and "hospitality" , the Royal Group will actively
address social and environmental issues through its business activities, thereby
contributing to the creation of a bright future and the creation of a sustainable society
while enhancing its ties with each stakeholder.
Connections with stakeholders andresponse to SDGs items
Human
RightsLabor
Practices

For employees
Create a healthy and vibrantwork environment
Achieve treatment thatenriches life

Corporate
GovernanceFor shareholders andInvestors
Improve information
disclosure
Enhance capital efficiency

Community
IssuesFor community and society
Establish stores that are
indispensable to thecommunity
Contribution to local
communities

Targets (by2024)

ConsumerissuesReduction of foodloss

Reduce food loss by 10% (compared to
2016)(Long-term target: Halve from 2000
level by 2030)

For clients
Provide services that meet
diversified needs
Compatible with consumer
satisfaction and sustainableconsumption

Improving the ratioof femalemanagers

Target 20% ratio of female managers(Long-term target: 30% by 2030)

Promotion ofhandicapped
employment

Maintain the statutory employment rateof 2.3% at each Group company at all
times

Promotion ofhealthmanagement

Maintaining Accreditation of Good
Health Care Practices

Fair operating
practices
For partners
Realize fair exchanges
Promote human rights andenvironmental considerationsin the supply chain

Responding to
Climate Change

Environment
For future and global
environment
Develop sustainable businessactivities
Promote Foodtech initiatives

CO2 emissions reduction
Establishment of a reduction policy for scope① and ②
Grasping the total amount including scope ③

Improving
Governance

Response to all principles of the
Corporate Governance Code (including
the introduction of an officer stockcompensation system)

Promotion ofcommunity-based
CSR activities

Including support for food education,
education, and reconstruction,
Continuing efforts and promoting CSR
activities tailored to changes in the social
environment39

2-14. Relationships with Stakeholders
Customers
Providing rich experience value through"food" and "hospitality" regardless of timeand place

Employees

Shareholders/Investors

Working together to improve the working
environment and compensation to achieve
our goals.

Aiming to achieve sustainable growth andincrease corporate value in post-COVID-19
era

Business Partners
Conducting transparent, fair, and fairtransactions, building good relationships, anddeveloping together

Local Communities/ Society
Striving to protect the environment andstriving to be an indispensable presence inlocal communities and society

A company that contributes to the realization of a sustainable
society and that enjoys the sympathy and support of all
stakeholders40

2-15. FY2024 Key Financial Targets and Shareholder Return Policy

Financial goals
Strengthen
profitability
Create shareholder
valueSoundness of thefinancial baseEnhance capitalefficiency

 Net sales: 136 billion yen Ordinary income:6.5 billion yen
 EBITDA: 14 billion yen

 EPS: Approx. 80 yen Equity ratio: Approx. 40%

 ROE: More than 8%

Shareholder Returns Policy
Seek early recovery to pre-COVID-19 levels
412-16. Performance Indicators ①
Strengthen profitability: Plan to achieve net sales of 136 billion yen, the same level as
before COVID-19(100 million yen)Strengthen profitability: Ordinary income is expected to be 6.5 billion yen, higher than
before COVID-19.
(100 million yen)42

2-17. Performance Indicators ②
Strengthen profitability: EBITDA is expected to be around 14 billion yen, higher than
before COVID-19(100 million yen)140

Creation of shareholder value: Planned EPS of around 80 yen
(Yen)
80

-737.4443

2-18. Performance Indicators ③
Soundness of financial base: Plan for equity ratio of around 40%

40.0%



Improve capital efficiency: Plan for ROE of 8% or more

8.0%

-76.8%

44

2-19.

Financial Targets (Business Segments)(Million yen)

2024
（Medium-Term Management Plan）

2021
Ordinary
incomeNet sales

Ordinary
incomeNet sales

Profit ratio

ChangeOrdinary
incomeNet sales

Restaurant
Business

45,0593,339

57,100

4,600

8.1%

12,041

1,261

Contract Food Service

17,268-336

41,500

2,300

5.5%

24,232

2,636

Hotel Business

16,710-2,78428,600

2,800

9.8%

11,8905,584

Food
manufacturing
Businesses

9,526

-290

14,700

500

3.4%

5,174

790

Other
Business

576

-812

300

300

100.1%

-276

1,112

Offsetting among
Segments-5,167－-6,2000－%-1,033－Company-wide－-3,615－-4,000

－%

－

-385

83,975-4,498136,000

6,500

4.8%

52,025

10,998Total

45

2-20. The Royal Credo and Our Missions

MissionContinue to adapt to changes in the environment andcontribute to the community and society through theprovision of "food" and "hospitality" under the basic
management philosophy
46