Financial Results Explanatory Materials for the Fiscal Year Ended
SRS HOLDINGS CO.,LTD. March 2018 and New Medium-term Business Plan
(Securities Code: 8163)

May 17, 2018 1

Contents
Review of the Previous
Medium-term Business Plan

FY3/18 Overview of Financial Results
Financial Highlights

4

Consolidated Statement of Income

5

Changes in Net Sales and Operating Profit

6

The New Medium-term Business plan

Existing Restaurant Sales in Core Business
Formats

7

Management Philosophy, Policy and
Vision22

SRS Group Restaurants

8

Business Climate and Policies

23

Main Themes

25

Numerical Targets

28

Initiatives and Measures

29

Progress Report on Restaurant Initiatives
Washoku Sato/Santen

10

Nigiri Chojiro/Chojiro,
Miyamoto Munashi, Katsuya

11

Other Initiatives

12

FY3/19 Earnings Forecasts
Earnings Forecasts

14

Changes in Net Sales and Operating Profit

15

Restaurant Opening Plan

16

Major Restaurant Initiatives

17

Accomplishments of the Previous
Medium-term Business Plan

19

Appendix
Major Companies and Size of Chain for
Different Formats

37

Consolidated Balance Sheet

38

Cash Flow Statement392FY3/18
Overview of Financial Results3FY3/18 Financial Highlights♦ Net sales ¥44,155 million+¥800 million YoY +1.8% YoY

 Sales declined due to the sale of the Sushi-han business, but this was offset by higher sales of

MIYAMOTO MUNASHI CO., LTD., which was consolidated in FY3/17, and the opening of newSanten and other restaurants.

♦ Operating profit
Ordinary profit¥741 million¥592 million+¥335 million YoY+¥175 million YoY

 Operating profit and ordinary profit increased due to growth in earnings at subsidiaries, adecline in expenses because of the advisory fee one year earlier involving the acquisition andother factors.

Profit attributable to♦ owners of parent¥108 million +¥342 million YoY

 Profit attributable to owners of parent increased due to a gain of ¥284 million on the sale ofthe shares of a subsidiary following the sale of the Sushi-han business and other factors.
4

FY3/18 Consolidated Statement of Income (PL)Sales were higher than planned and earnings below the plan Sales surpassed the plan but operating profit was below the plan. The main causes of the earnings shortfall were higher
personnel and utilities expenses and the first inclusion in the consolidated financial statements of the Taiwan subsidiary
due to its increasing significance.
 Ordinary profit was below the plan because of a foreign exchange valuation loss caused by the yen’s strength and an
impairment loss for business and other assets impacted profit attributable to owners of parent.

(Ref.)
FY3/17

FY3/18(Millions of yen)Plan
Net sales

Results

44,000Vs. plan(ratio)44,155 100.4%

Vs. plan(amount)

Results+155

43,354

Operating profit

750

741

98.8%

(8)

405

Ordinary profit

700

592

84.7%

(107)

416

Profit attributable toowners of parent

270

108

40.2%

(161)

(234)
5

FY3/18 Changes in Net Sales and Operating Profit
 Sales increased and earnings were higher as the first full-year sales contribution from MIYAMOTO MUNASHI CO., LTD.,
which was consolidated in FY3/17, the opening of new Santen and other restaurants, and other factors more than offset
the lower gross margin caused by the higher cost of food and other items.

Increase in Lower grossprofit due tomarginhigher sales

New
restaurants, etc.

-220

1,251
Sale of
Sushi-hanHigher sales
fromEffect ofexisting
Miyamoto
Munashi restaurants

150

540

Tighter
control of
personnel
expenses

3

Others13

44,155741-1,90043,354(Millions of yen)

Operating Profit

Net Sales

1,300
405

FY3/17

FY3/18

FY3/17

FY3/186

FY3/18 4Q Existing Restaurant Sales in Core Business
Formats
 At Washoku Sato, sales are moving up because of higher sales of Sato-Shabu and Sato-Suki (all-you-can-eat shabushabu/sukiyaki) and the popularity of Sato Bar and Sato Café, a new all-you-can-drink format; installation of thesebar/café facilities has been completed.
 Nigiri Chojiro sales per customer were lower compared with the high level of one year earlier but sales were much higher
because of the larger number of customers.
Washoku Sato: YoY change at existing restaurants
adjusted for characteristics of day of week
%
110

1Q

2Q

3Q

4Q

Nigiri Chojiro: YoY change at existing restaurants
adjusted for characteristics of day of week
%
110

105

105

100

100

95

95

90

90
Apr. 5月
May 6月Jun. 7月
Jul. 8月
Aug. 9月
Sep. 10月
Oct. 11月
Nov. 12月
Dec. 1月
Jan. 2月
Feb. 3月
Mar.
4月

Sales
売上高

Number
客数 ofcustomers

Average
客単価 sales
per customer

1Q

2Q

3Q

4Q

Apr.
Oct. 11月
Nov. 12月
Dec. 1月Jan.
4月 May5月 Jun.
6月 Jul.
7月 Aug.
8月 Sep.
9月 10月Sales
売上高

Number of客数
customers

Feb. 3月
Mar.
2月

Average sales
客単価
per customer

7

FY3/18 SRS Group Restaurants
FY3/17

FY3/18

No. of restaurants
at the end of period

No. ofrestaurants
planned to open

OpenedClosed

2

1

3

200

13 (5)

6 (1)

-

46

3

1

1

57

No. of restaurants at theend of period

Washoku Sato

202

Santen40

Nigiri Chojiro/Chojiro

57

Miyamoto Munashi

69

(7)

1

2

5 (1)

66

(6)

Katsuya

36

(19)

5 (3)

3 *1

3 (3)

36

(16)

Meotozenzai

1

-

-

-

1

Home Delivery Sushi(Nigiri Chujiro/Miyakobito)

21

-

-

1 (1)

20

(13)

Sushi-han *2

13

-

-

13

-

-

Overseas restaurants

6

(4)

1

-

-

6

(4)

Group total

445

(45)

25 (8)

13 (1)

26 (5)

432

(41)

(1)

(14)

(2)

Note: Numbers in parentheses represent franchised restaurants (domestic) and joint venture restaurants (overseas).

*1: Two newly opened Katsuya restaurants were converted from franchised to directly managed.
*2: Sushi-han business was sold at April 1, 2017.
8

Progress Report on Restaurant Initiatives

9

FY3/18 Progress Report on Restaurant Initiatives#

1

Main Categories

Initiatives and Progress

和食さと Added Sato Bar/Sato Café at all restaurants New self-service beverage and alcoholic beverage bar offering all-you-can-drink service at a reasonable
price, creating new reason for people to visit a Washoku Sato restaurant Using a new, more refined design for a new Washoku Sato branding strategy→ Addition of a Sato Bar/Sato Café at 197 restaurants was completed at the end of the first ninemonths of FY3/18.
Sales continue to climb as this new bar/café format attracts more customers.
 Installed dispensers for udon noodle broth and soup stock Dispensers improve and stabilize quality, boost employee productivity and raise the gross margin.
→ Installation of dispensers at all restaurants was completed in March 2018.

Washoku Sato2
Santen Appointed a manager for the full-scale development of companies to operate franchised restaurants
 The Kansai, Kanto, Tokai, Sanyo and Shikoku areas are the primary regions for franchised restaurants.
→ There are currently two franchise partners (Aichi, Tokushima).
The second franchised Santen opened in January 25, 2018 in Tokushima city (first restaurant in
Shikoku).
 Further increase marketing activities and profitability→ Children’s menu, Negi Chashu (leek and roasted pork fillet) Tendon and other items wereintroduced to target families and young people.
→ The personnel expense ratio improved by controlling the timing of workforce use and taking otheractions.
 Started the Santen Step-up Project A Santen Step-up Project started for improving profitability and further refining the Santen businessmodel with the goal of making Santen a major source of growth for the SRS Group.
→ Trials started in February 2018 for new menu lineups and restaurant layouts at existing restaurants.
10

FY3/18 Progress Report on Restaurant Initiatives#

Main Categories

Initiatives and Progress New restaurants will be opened mainly in the Kansai area (retain position as the leading brand in Kansai forgourmet conveyor belt sushi)→ Opened the Itami Branch (Hyogo prefecture) on August 5

Nigiri Chojiro

3 Opened Chojiro Hozenji restaurant as the flagship restaurants for foreign tourists→ Attract foreign customers by placing Osaka sightseeing passes and other coupons in tourist magazines (morethan 100 visits by individuals/groups every month)
Third-floor dining room for tour groups (tie-ups with tour companies to bring groups to the restaurant)
Customer numbers continue to climb because of these marketing activities and other measures.

Chojiro A variety of marketing and promotional activities to attract more customers→ Special seasonal event menu items, TV commercials linked to SNS and other measures
 Redecorating restaurants to create a new look (bright, clean interiors to serve a larger range of customer segments)→ 29 restaurants redecorated as of the end of 1H FY3/18 (completed all redecorations planned for FY3/18); sales
up 5% to 7% at redecorated restaurants
 Adding new dishes with substantial added value (raises sales per customers and the gross margin)→ Added 19 menu items during the first nine months (hamburger cutlet, cheese chicken salsa and others)

4
Miyamoto Munashi Two new restaurants in Osaka→ Opened the Tenjinbashisuji 3-chome Branch on December 20 (first new directly operated restaurant in 8 years)→ Opened the JR Terada-cho Ekimae Branch on March 4 (the second new restaurant after Miyamoto Munashi
joined the SRS Group) Continuing to open directly operated and franchised restaurants in the Kansai area
→ Opened the Takarazuka Branch on December 22

5
Katsuya Increasing the profitability of existing restaurants→ Continuing to make menu items more appealing and serving food in a more timely manner11

FY3/18 Progress Report on Other Initiatives#

Main Categories

6

Optimized main
officeoperations

Initiatives and Progress

 Sale of the Sushi-han business made operations more efficient, primarily the merchandising department

 Established the Corporate Governance Department on April 1, 2017

7

Strengthened
governance Switched from a company with a board of corporate auditors to a company with an audit and supervisorycommittee on June 29, 2017
 Shifted to a holding company structure on October 1, 2017
 Speeding up decision-making by separating the management strategy and business operation functions

8

9Organization
restructuring

Overseasbusiness

 Established the Innovative Operation Development Department on October 1, 2017 Ending labor-intensive business activities and more effective restaurant operations (achieve both higher
productivity and effective labor management)→ Consider using artificial intelligence reception systems
 Taiwan→ The third restaurant is scheduled to open in June 2018 and the fourth in July 2018.
The third restaurant is planning to introduce a drink and dessert bar, touch screens and other amenities thatare used for the first time at an SRS Group overseas restaurant.
 Thailand→ Opened the first Sato-don restaurant at the end of April 2018. The restaurant specializes in rice bowl dishes,a new restaurant concept specifically for food courts.

12

FY3/19 Changes in Net Sales and Operating Profit
 Higher sales and earnings due to opening new restaurants and improving profitability at existing
restaurants offset increases in personnel and other expenses(Millions of yen)
Net Sales
Operating Profit
HigherImprovements
personnel
Increase in in the grossexpenses
marginprofit due to

New
Closedrestaurants restaurants

higher sales

-505

200

740

1,650
Higher sales
from existing
restaurants

Others

1,100

700

301

46,00044,155

1,000

741

FY3/18

FY3/19FY3/18

FY3/1913

FY3/19 Earnings Forecasts

14

FY3/19 Earnings Forecasts(Millions of yen)

FY3/18 Results
Net sales

FY3/19 Forecast

YoY change

44,15546,000+1,845

Operating profit

741

1,000

+259

Ordinary profit

592

1,000

+408

Profit attributable to owners ofparent

108

200

+92

FY3/19 Main assumptions for the forecasts
Net sales (million yen)
Existing restaurants +¥700, New restaurants +¥1,650, Restaurant closings -¥505
Earnings
Operating margin of 2.1% (0.5 pct. point improvement)
New restaurants
Plan to add 37 stores
15

FY3/19 Restaurant Opening Plan
FY3/18

FY3/19No. of restaurants
at the end of period

OpenedNo. of restaurants
planned to open

No. of restaurants
planned to be closed

No. of restaurants
at the end of period

1

200

6

0

206

6 (1)

46 (2)6 (3)-

52 (5)

Meotozenzai

-

1

-

-

1

Nigiri Chojiro/Chojiro

1

57

6

1

62

Nigiri Chujiro

-

6

3

-

9

Miyakobito-

14 (13)-0

14 (13)

Miyamoto Munashi

2

66 (6)

5

2

69 (6)

Katsuya3*

36 (16)7 (2)0

43 (18)

New restaurant formats

-

0

1

-

1

Overseas restaurants

-

6 (4)

3 (1)

-

9 (5)

13 (1)

432 (41)37 (6)

3466 (47)

Washoku Sato
SantenGroup total

Note: Numbers in parentheses represent franchised restaurants (domestic) and joint venture restaurants (overseas).

*Two newly opened Katsuya restaurants were converted from franchised to directly managed.

16

FY3/19 Major Restaurant Initiatives#

Main Categories

1
Washoku Sato2
Santen3

Nigiri Chojiro

Initiatives
 Providing even more value by upgrading the core all-you-can-eat menu Continuing to open restaurants and experiment with new store concepts
 Developing and testing AI and mechanical systems for raising productivity
 Further refine the Santen business and raise profitability by using the Santen Step-up Project to improve menus,
promotions, sales systems and other aspects of operations
 Continuing to open new directly operated and franchised restaurants
 Continuing to open new restaurants in the Kansai area (retain position as the leading brand in Kansai forgourmet conveyor belt sushi)
 Expanding into new commercial areas such as the Chubu area

Chojiro4
Miyamoto Munashi

5
Katsuya Continuing to redecorate restaurants to create a new look (bright, clean interiors to serve a larger range ofcustomer segments)
 Continuing to add a limited-time-only menu with substantial added value (raises sales per customers and thegross margin)
 Continuing to open new restaurants
 Upgrading ordering systems used by restaurants for purchasing food and other supplies to reduce therestaurant workload
 Continuing to open new directly operated and franchised restaurants in the Kansai area
 Boosting the profitability of existing restaurants
 Considering opening new restaurant formats

6

Optimized main
office operations

7

Innovative operation  For restaurant operations with higher productivity and fewer workers, use AI and machines to end labordevelopment
intensive activities and improve efficiency

8

Taiwan business Lowering main office expenses by improving the efficiency of business processes Planning to open the third restaurant in June and the fourth in July

17

Review of the Previous Medium-term
Business Plan

18

The Previous Medium-term Business Plan
– Sales and Ordinary Profit
 Sales increased every year because of the acquisitions of FOODSNET (Chojiro), MIYAMOTO MUNASHI andother factors.
 Earnings were below the target because of the higher cost of personnel, food, utilities and other items aswell as delays in restaurant openings caused partly by restrictions on sites for new fast casual restaurants.
(Millionsof yen)（百万円）

Net sales
売上高(Millionsof yen)（百万円）

Ordinary profit
経常利益50,0002,500

43,35440,00037,96944,15540,061

2,000

30,000

1,500

1,330
20,000

1,000

592

10,000

361

416

0

500

0

47期
FY3/15Results
2015/3期
th term)(47実績

48期
FY3/16
Results
2016/3期
th term)(48実績

49期
FY3/17
Results
2017/3期
th term)(49実績

50期
FY3/18Results
2018/3期
th term)(50
実績
19

The Previous Medium-term Business Plan (continued)– Major Initiatives
Business

No. of Restaurants(FY3/14 → FY3/18）

Major initiatives

197 → 200

 Added Sato Bar/Sato Café
 Started using a system for placing orders at tables
 Improved Sato-Shabu and added Sato-Suki

6 → 46

 Succeeded in expansion to many locations by examining conditions for new restaurantsites, menu selections and other items after the first Santen opened in 2012

50 → 57

 Targeted foreign tourists in Japan, particularly at Shijo
Kiyamachi and Hozenji Branches
 Consistently increased the number of restaurants

18 → 36

 Number of restaurants doubled despite a reexamination of conditions for new restaurants
and moves to revitalize underperforming restaurants.
 Accumulated expertise for the operation of fast casual restaurants- → 66

 Acquired MIYAMOTO MUNASHI CO., LTD. in September 2016
 Resumed opening new restaurants in December 2017 after restoring the soundness ofexisting restaurant operations

3 → 6

 Opened the first Washoku Sato restaurant in Thailand in September 2014
 Made the Taiwan subsidiary for Washoku Sato a wholly owned subsidiary in December
2016-

 Shifted to a holding company structure in October 2017 for speeding up decision-making
 Sold the Sushi-han business in April 2017
 Improvements in the working environment

Washoku Sato

SantenNigiri Chojiro

ChojiroKatsuyaMiyamoto Munashi

Overseas business

Others20

The New Medium-term Business plan
- Project MIRAI (FY3/19 to FY3/23)

21

Management Philosophy, Policy and Vision
Philosophy“Contributing to society through food”
PolicyThe SRS Group aims to be the restaurant thatbrings the highest customer satisfaction






Looking beyond the pursuit of sales and profit
Enriching people’s lives
Improving the work environment
Responding to social and economic needs
Becoming a company that is an integral part of society

Vision The SRS Group aims to be an essential social infrastructure and prosper over 100
years to come

 The SRS Group aims to be a respected industry leader by providing Japanese foodto people around the world
22

Business Climate for the New Medium-term Business Plan
Restaurant industry changes

Social changeMore working women and more dual-income
households- 11.88 million households in 2017, 1.75 million morethan 10 years earlier
More single households and seniors living alone- Share of single households is forecast to increase from
34.5% in 2015 to 39.3% in 2040.
Japan’s declining and aging population- Share of households led by a person age 65+ is forecast
to increase from 36.0% in 2015 to 44.2% in 2040.
- The pct. of people age 65+ is forecast to increase from
27.3% in 2016 to 38.4% in 2065.

More increases in labor costs and prices for raw
materials- The job openings-to-applicants ratio was 1.5 in 2017.

More people with IT skills, increasing use of AI- Increasing use of electronic, smartphone and othernew payment systems

More increase in demand for restaurant services fromforeign tourists in Japan

Growth of the home-meal replacement- Japan’s home-meal replacement market, which
includes bento boxes, prepared food and other items,
is growing and competition among restaurants is
becoming fierce.

 Adapt to social changes by adding value to current restaurant formats
 Overcome fierce competition in the market of home-meal replacement by
developing new restaurant formats
 Use innovation to realize labor saving and become more efficient

23New Medium-term Business Plan Policies
Vision The SRS Group aims to be an essential social infrastructure and prosper over 100 years to come
 The SRS Group aims to be a respected industry leader by providing Japanese food to people aroundthe world

Positioning of the New Medium-term Business Plan We will look beyond the pursuit of sales and profit. We will enrich people’s lives, improve the work
environment, and respond to social and economic needs in order to become a company that is an
integral part of society The five-year period ending in FY3/23 is positioned as a critical time for building a sound foundation
for the SRS Group to become an essential component of the social infrastructure of the future

Basic Policies of the New Medium-term Business Plan Aim to provide places where people can enjoy meals that are inexpensive, delicious and enjoyable
 Establish a presence that enables us to function as part of the social infrastructure = Aim for 100
restaurants for each restaurant format
 Continue taking on challenges for the full-scale development of overseas business operations
24

Main Themes of the New Medium-term Business Plan

VisionChanges in
Business Climate

Main Themes of the New Medium-term Business Plan
I. Add value, improve profitability and increase market presence at existing restaurant formats inorder to adapt to changes in society and the needs of customers
II. Develop innovative operations that will allow consistent recruiting of the required number ofpeople as the labor costs in Japan rise
III. Use alliances and M&A to establish a prominent presence in regions where we are strong, increase
efficiency in areas where we are dominant, and benefit from a larger scale of operations
IV. Develop new business formats that reflect to social changes
V. Continue taking on challenges for the full-scale development of overseas business operations
25

Main Themes of the New Medium-term Business Plan
(Explanations)I. Add value, improve profitability and increase market presence at existing restaurant formats in order to adapt
to changes in society and the needs of customers
 At high/mid-price range restaurants, increase sales by providing more value (quality, services, etc.), userevised new restaurant models (for other-than roadside sites and many other types of locations) to continue
opening restaurants, and develop and introduce equipment that raises productivity

 At low price range restaurants (under ¥1,000 – Santen, Miyamoto Munashi, Katsuya), continue increasing thepace of restaurant openings
 For all restaurant brands, establish a stronger position in areas to the west of the Kansai and Chubu regions,which are the main markets of the SRS GroupII. Develop innovative operations that will allow consistent recruiting of the required number of people as thelabor costs in Japan rise

- Using the start of full-scale operations at Innovative Operation Development Department to dramatically lower
the volume of work at restaurants Reform restaurant administrative operations like reservations, pre-orders, electronic settlements and customer
management by creating a mobile app for the entire group and an ordering system linked to this app
 Use AI customer interaction technology for self-payment/efficiency for restaurant guest reception services andpayments
 Use advanced IT technologies for labor-saving machines and robots for cooking, dishwashing and other tasks
and operate trial restaurants to test these ideas
26

Main Themes of the New Medium-term Business Plan
(Explanations) (continued)
III. Alliances and M&A
 Increase our presence in regions where we are strong and build deeper ties withcustomers in order to succeed as competition in the restaurant industry grows
 Move faster to cut distribution and promotional expenses and increase efficiency inareas where we are dominant Aim for more benefits from a large scale of operations in order to reduce exposure
to the risk of an increase in the cost of foodIV. Develop new business formats that reflect to social changes
 Examine new business models that respond to demands in eating-out and homemeal replacement. They should reflect trends of using restaurants for more meals,
including in the growing lunch market, and eating alone, and match a diverse rangeof life styles and working styles. (creation of pleasant stores that people can easily
use as a substitute to their kitchen, either for eating in or out)

V. Continue taking on challenges for the full-scale development of overseas business
operations
 Open restaurants in Taiwan faster Aim for growth of a new restaurant format in Thailand (a Sato-don restaurant
specializing in rice bowl dishes opened at the end of April 2018)
 Open restaurants in Indonesia by using new types of locations
27

New Medium-term Business Plan Numerical Targets
 In FY3/23 (55th term), the fifth and final year of the new plan, our goals are sales of ¥100 billion, including¥30 billion from alliances and M&A, and ordinary profit of ¥3.5 billion.
 Our current ROE target is 5% and we plan to raise this to 8%.

(Millions of yen)

Net sales
売上高

M&A
M&A分

(Millions of yen)

Ordinary profit
経常利益100,000

5,000

100,000
80,0004,000
3,500
70,00060,0003,000

57,00040,00046,00051,0002,000
1,700

20,000

1,000

1,100

1,000

0

No. ofrestaurants
at end ofperiod0

FY3/1951期
Forecast
2019/3期
st term)(51
業績予想

FY3/2052期
Plan
2020/3期
(52nd
term)
計画

FY3/2153期
Plan
2021/3期
rd term)(53計画

FY3/2355期
Plan
2023/3期
th term)
(55計画

466

522

590

745
(does not include M&A)
28

I. Add value, improve profitability and increase market presence at existing restaurant formats

The Current Restaurant Portfolio of the SRS Group
・Nigiri Chojiro/Chojiro: Gourmet conveyor belt sushi
Average sales per customer ¥2,350
The leading brand in Kansai in this category with quality that surpasses that of conventional
conveyor belt sushi

High
Nigiri Chojiro

57
・Washoku Sato: Family restaurants Average sales per customer ¥1,300
Japan’s largest chain of Japanese food restaurants featuring the very popular
Sato-Shabu (all you can eat)
Washoku Sato

200 (+6 overseas)

PricesSato-Shabu

・Katsuya: Specializes in pork cutlet dishes

Average sales per customer ¥700

Katsudon and Tonkatsu meals at the lowest prices

Miyamoto Munashi

36
Katsuya66

Fast-casual total:

149

46
Santen・ Miyamoto Munashi: Specializes in teishoku (set meal)
Average sales per customer ¥650
A low-priced teishoku restaurant chain located near railway stations

・Santen: Specializes in tendon and tempura

Average sales per customer ¥550

Specialty tendon and tempura restaurant quality at remarkable prices (only ¥390 for
Prawn Tendon)

Low
Number of restaurants

29

I. Add value, improve profitability and increase market presence at existing restaurant formats

The Near-future Goal for the SRS Group Restaurant Portfolio

SRS Pyramid

In the nearfeatureNigiri Chojiro

Washoku SatoBusiness formats with average sales per
customer of under ¥1,000 have the potential
to become large restaurant chains.

Katsuya(See page 37 for enlargement)
Miyamoto Munashi

SantenExpand lower-priced business formats
30

I. Add value, improve profitability and increase market presence at existing restaurant formats

Activities at Current Restaurant Formats

Washoku Sato

Strengths

Issues

Initiatives during
next 5 years

 Japan’s largest chain of Japanese food restaurants
 The SRS Group’s core brand and largest restaurant
chain Preparations completed for full-scale operation in
TaiwanSanten Positioned as the primary source of growth for the
SRS Group The lowest prices among fast-casual tendon
restaurants

 Improve gross profit and productivity to cover the Improve profitability of existing restaurants
rising personnel expenses
 Enter new markets and revise business formats to Enter new markets and develop business formats tocontinue increasing the number of restaurants
continue increasing the number of restaurants
 Start full-scale operations in Taiwan

 Develop business formats to open restaurants
faster – Formats for tenant restaurants at station
shopping buildings, specialty restaurant format, etc.
 Outsourcing of home delivery Further increase productivity – Restaurant guest
reception robots, automated payment system,
more efficient dishwashing, etc.
 Internet reservation system Increase the pace of restaurant openings in Taiwan

 Improve and confirm the model used for new
restaurants  Resume opening restaurants
 Renovate existing restaurants to match the projectmodel Consider restaurant models for building interiorsites and food courts
 Start opening restaurants in Chugoku and Shikoku
31

I. Add value, improve profitability and increase market presence at existing restaurant formats

Activities at Current Restaurant Formats (continued)

Nigiri Chojiro

Strengths

Retain position as the leading brandin Kansai for gourmet conveyor belt
sushi
Increase measures to attract foreign
tourists








Issues

Initiatives
during next 5
years




KatsuyaMiyamoto Munashi

Redecorate restaurants to create a
new look (bright, clean interiors toserve a larger range of customer
segments)
Add new dishes with substantial
added value (raises sales per
customers and the gross margin)
Resume opening restaurants

A growth business format for fastcasual restaurants
Directly operated and franchised
restaurants are both performing wellEnter new markets to continue
increasing the number of restaurants
Expand the home delivery businessEnter new markets and revisebusiness formats to continue
increasing the number of restaurants Further improve productivity

Increase the speed of restaurant
openings
Take on the challenge of creating
new business models

Open restaurants in new areas (thewest of Chubu and Kansai)
Continue opening Chojiro restaurants in the Kansai area
Consider ways to expand the homedelivery business
Consider a compact conveyor belt
sushi format and other new businessformats
Continue opening restaurants in the Kansai area
Resume opening restaurants inNagoyaOpen restaurants in shopping centers
and at shopping center food courts
Install next-generation meal ticket
machines
Consider a new type of payment unitthat replaces meal ticket machines

Continue opening Katsuya
restaurants
Start operations for the new
Karayama restaurant format

32

II. Develop Innovative Operations
Japan’s labor shortage will become more severe and the labor costs will continue to climb as the country’s
working-age population declines.
We will “develop innovative operations,” which will be the key to our success in the future, to create
innovative ideas for every category of restaurant operations.

AI robot for meal preparation
AI robot for taking orders

AI robot for serving and table clearing

Restaurant reception AI robot33

III. Alliances and M&A･Growth west of Kanto, especially west of the Kansai/Chubu regions where SRS has a strong
market position･Move faster to increase efficiency in areas where SRS is dominant･Benefits from a larger scale of operations in order to reduce exposure to the risk of anincrease in the cost of procuring food
Japan
Kyoto

NagoyaTokyo
Yokohama

Nigiri Chojiro

Osaka
Miyamoto Munashi

Fukuoka

Nagasaki

Kita-Kyushu

Kumamoto

Kagoshima

Washoku Sato

KatsuyaSantenM&A and overseas growth

By growing west of Kansai/Chubu, including the use of M&A, the goal
is to raise sales to ¥100 billion
34

Shift to a Holding Company Structure
Shifted to a holding company structure in October 2017 for speeding up decision-making
SRS HOLDINGS CO.,LTD.

Operating companies
SATO FOODSERVICE CO.,LTD.

MD(Merchandising)
Washok Sato

SantenCentralized procurement to benefit
synergies resulting from a larger scale ofoperations (for example, shrimp for
tempura)Plan to centralize logistics operations later

Meotozenzai

Customers

FOODSNET CORPORATION

Nigiri Chojiro

Restaurant
development

Chojiro(location and construction)
Nigiri Chujiro

Centralized management of information on
potential locations, selection of the best
restaurant format for each site, combined
openings of two or more formats

Miyakobito

MIYAMOTO MUNASHI CO., LTD.

Miyamoto Munashi

SATO·ARCLAND FOODSERVICE
CO.,LTD.

KatsuyaSupport for
procurementof food

Administration(Personnel, accounting,management)
Consolidation of administrative divisions
for higher efficiency
Provision of guidance for management ofsubsidiaries
Mergers and acquisitions

35

Appendix

36

Major Companies and Size of Chain for Different Formats

77
620

Yakiniku

224

136

212

50

166

Higher prices

89
Gourmetconveyor belt
sushi
restaurants

57

218
14

235

495

More
specialized
1304

Conveyor belt
sushi restaurants

344

1335

1451
764

1157

Cafes

625

486

666

519

Japanese
fast
food

345

410

927

1197

Westernfast food

1124

1941

197

47

Lower prices

718

193

200

1076

804

467

*Restaurant numbers are totals for eachizakaya group; no specialization or pricecomparisons.

Lessspecialized
1368

735

Rapid growth in recent years
High level of specialization

353 Teishoku

More than 1,000 restaurants

356(set meal)
restaurants

957

685
2898

389

Familyrestaurants

426

2150

Izakaya(Japanese pub)

587

187

504

66

440
124

SRS Group study(May 2018)37

Consolidated Balance Sheet (BS)(Millions of yen)

FY3/17(As of Mar. 31, 2017)

FY3/18(As of Mar. 31, 2018)

ChangeCurrent assets

10,906

13,358+2,451

Non-current assets

20,44917,303(3,145)Current liabilities

7,592

7,648

+55

Non-current
liabilities

9,565

8,905

(660)

Net assets

14,284

14,214(70)

Total assets

31,44330,768(674)

38

Cash Flow Statement (CF)(Millions of yen)

FY3/17(As of Mar. 31, 2017)

FY3/18(As of Mar. 31, 2018)

Cash flows fromoperating activities

1,637

1,970

+333

Cash flows frominvesting activities(4,333)

1,039+5,372

Cash flows fromfinancing activities

2,697

(984)

(3,682)

Cash and cash
equivalents at end of
period8,532

10,732+2,200Change39

Contact InformationSRS HOLDINGS CO.,LTD.
Corporate Planning Dept. (Sawahara, Furube, Mizobuchi)
TEL: +81-6-7709-9977
E-mail: 873@sato-rs.jp
The business performance forecast in this material is based on information that was available at the time of this presentation. Contained within
are many uncertain elements and due to various factors may differ substantially from the earnings outlook presented. Please understand thatyour decision to invest in our company is based upon your judgment.

40