Materials for Financial Results Briefing
Second Quarter, FY03/2016

SATO RESTAURANT SYSTEMS CO., LTD.
Listed on TSE 1st section: 8163

2Q FY03/2016

Table of Contents

Financial Results Overview: 2Q FY3/2016

Basic policy for corporate governance
２０Highlights

４Statement

Newly opening / Renovation

５Points of the basic policy

２１Issues/measures in newly opening

６２２

Profit & Loss sheet (PL)７

Establishing "Appointment andRemuneration Committee”

Balance Sheet (BS)Setting numerical management objectives

２３８Cash Flow Statement

９Human Resources Strategy

FY03/2016: Performance transitionof existing Washoku Sato restaurants

１０

Current situation: Progress in variousmeasures

１１No. 1 company in working environment

２５

Performance forecasts

１２

Point: Improved working environment

２６

Short-time regular employee system

２７

Minute-by-minute attendance management

２８

Most recent topics

２９

Branding document

３０Towards realization of "Sato Pyramid”

１４< SRS Group restaurants composition >１５

Current composition
Evolution phase 1: Near-future shape
Mid-term management plan
Mid-term management plan: Numerical targets

１６
１７１８Financial Results
Overview: 2Q FY03/2016

3Highlights
2QFY03/2016

１ revenues ↑HigherNet sales: 19,704 million yen

up 5.7% increase by 1,057 million yen

Gross proﬁt: 12,959 million yen

up 5.5% increase by 669 million yen

Increase in number of restaurants in operation and solid growth of salesof existing restaurants.

Lower
２ profit↓（YOY)

Operating income: 504 million yen down 9.5% decrease by 52 million yen
Ordinary income：428 million yen down 26.7% decrease by 156 million yen(YOY)This is due to increase in labor cost and expenses associated with capital expansion by
public oﬀering; but was better than the performance forecasts by virtue of reduction inutilities expenses and proper control over sales administrative expenses.

Newly
３ opened

12 restaurants【Washoku Sato】DM: 1【Santen】DM: 5【Katsuya】DM: 3 FC: 3

DM: directly-managed
FC: franchise chain

NOTE: In addition, contracts have been executed for opening 12
new restaurants. (as of Sep. 30, 2015)

Group total (domestic & overseas): 342 restaurants
DM restaurants: total 301
・Washoku Sato・Sushi-Han・Santen・Nigiri Chojiro・Miyakobito
・Nigiri Chujiro
・Katsuya

１９９１４
１７５２１３１５Group FC restaurants: total 34
・Miyakobito
・Katsuya

２０１４Overseas: total 7・Taiwan
・Indonesia
・Thailand３２２4

Newly opening / Renovation

2QFY03/2016

2Q actual Contracted Total

Planned46

Newlyopened１２

１２２４
Planned: 46

restaurants

Achieved

52.2%Planned

Washoku Sato
Newly opened

Santen３NC

１６NN

Contracted	  No.	  of	  contracts	  executed	  to	  open	  new	  restaurants	  as	  of	  2Q	  end

Achieved
66.7%
NNNCC CCC

68.8%

CRenovation

Santen (FC)

４Nigiri Chojiro
Nigiri Chujiro
Katsuya
Katsuya (FC)

４C３C

６N

N

N

１０N

NN

Planned４６52.2%

Planned

Achieved
100%
100%

Washoku Sato ６４
Nigiri Chojiro
Planned
１０0%
50.0%

C

33.3%
C

R

R

R

R

R

R

R

R

C

R

C:	  Contracted
N:	  Newly	  opened

R

R:Renova:on

83.3%
30.0%

100%

5

Issues/measures in newly opening
2Q FY03/2016

Efforts to accelerate opening new restaurants

Issue Shortage of staff engaged in group restaurants development division
Measure Since the previous term more staff have been assigned through, for example,

relocation to development division, and by the end of 2Q during this term 4 more
staff have been scouted, totaling 14 staff currently available.

Issue Insufficient information about Kanto area
Measure Tokyo office was established on October 1 in order to obtain much more information,
meanwhile anticipating enhanced development capabilities by means of having a
local base in Kanto area.

Issue

Area expansion to open Santen restaurants and integrating various
functions of development HQMeasure From the current FY, integration of restaurant development functions withSATO·ARCLAND FOODSERVICE CO., LTD. and area expansion to open Santen
restaurants are underway, aiming at having more candidate locations available andobtaining more abundant and accurate information about real estates.
6

Profit & Loss sheet (PL)2Q FY03/2016

in gross profit by 669 million yen
Higher revenues ↑ Increase"△"means	  decrease
due to increase in sales(million yen)

2Q FY03/2015
Amount2Q FY03/2016

Ratio tosales

AmountRatio to+/- (amount)sales+/- (%)

Net sales

18,647100.0%

19,704100.0%

1,057

5.7%

Cost	  of	  sales	  6,358

34.1%

6,745

34.2%

387

6.1%

Gross	  proﬁt

12,28965.9%12,959

65.8%

669

5.5%

Selling, general andadministrative expenses

11,732

62.9%

12,45563.2% ※1

722

6.2%

Operating income

556

3.0%

504

2.6%

△52

△9.5%

Ordinary income

584

3.1%

428

2.2% ※2△156△26.7%

Profit attributable to ownersof parent

305

1.6%

182

0.9%

△123

△40.3%※1 Expenses on opening new restaurants and increase in labor cost ※2Employees (unconsolidated): 619 (previous) → 910 (+291)

Non-operating income [foreign exchange gains:
62 (previous) → 0 (current)]
Non-operating expenses [share issuance cost: +28]

7

Balance Sheet (BS)2Q FY03/2016

Increase in shareholders' equity by 4,383 million yen
due to share issuance(million	  yen)"△"means	  decrease
End of FY03/2015(Mar. 31, 2015)

End of 2Q FY03/2016(Sep. 30, 2015)+/-

Total current assets

7,526

10,852

3,325

Total non-current assets

16,742

16,959216

24,272

27,813

3,541

Total current liabilities

7,284

6,752

△532

Total non-current liabilities

6,530

6,239

△291

Total liabilities

13,815

12,991△823

Total shareholders’ equity

10,707

15,091

4,383

10,456

14,821

4,365

24,272

27,813

3,541

Total assets

Total net assets
Total liabilities and net assets

8Cash Flow Statement
2Q FY03/2016"△"means	  decrease(million	  yen)

CF from operating activities

2Q FY03/2015

2Q FY03/2016

2014.4.1〜2014.9.30

2015.4.1〜2015.9.30

871

decrease in accrued consumption

49 taxes by 388 million yen

Expense to time deposits of 1,000

CF from investments△534△1,684 million yen

CF from financial activities

△867

3,713

Cash and cash equivalents
at the end of period

5,013

7,685

Proceeds from issuance ofcommon stock of 4,313 million yen

92Q FY03/2016

Performance transitionof existing Washoku Sato restaurants
Stable performance during the first half％ 110

Sales
Average	  spending

105

100

Number	  of	  customers
95

1Q

2Q

90

2015

Apr.

May

Jun.

Jul.

Aug.

Sep.

1Q

Due to public holidays, positive effect of about 4% was observed in May whereas negative effect of about
3.5 % in June. In such context, sales at existing restaurants showed solid performance with no significant
change in basic trends.

2Q

Although some weather impacts were observed such as Typhoons 11 (July), 15 (August) and 18(September), negative effects were insignificant as compared to the broken weather as seen in the previousyear. Public holidays in September gave positive effect of about 3.5%.

10Current situation:
Progress in various measures

2Q FY03/2016

Measurespurchasing power and1 Improvedfurther streamlining by using

2
3

foodstuff shared with FOODSNET
CorporationFull-blown operation of staff
attendance management system using
vein authentication terminals▶▶▶
ConGnued

Continued using shared foodstuff.About 20 % of foodstuff
used at Nigiri Chojiro has become procured as sharedones.

DoneThe system has been adopted at every restaurant since
Apr. 1 , with salaries calculated on minute-by-minutebasis.

Outsourcing payroll-related operations,
including those in response to theUnderway
forthcoming *My Number system*Japanese Social Security System

4

Updating the core system: to start
testing operation aiming for adoption
in FY03/2017

development of5 FC
Santen restaurants

Current progress (as of Sep. 30, 2015)

ConGnued
Underway

6

Carrying on experiment and store
development of "Home delivery Sushi Nigiri Chujiro"

7

Enhancing promotion activities making Underway
use of popular talents, official mascot
characters and SNS

8Opening new restaurants
more widely overseas

Underway

Underway

Payroll-related operations have been outsourced since lastOct.
As for the My Number system, collection/storage/administration system is being constructed according to thegovernmental guidelines.
System development completed and testing operation
will start in Nov.
Backstage tour inviting FC candidate companies (18companies) was organized and specific negotiations
started.
Structure of 1 unit comprising 3 stores wasestablished and experimental operations started on 1
unit basis.New unit started to be deployed since lastOct., and 2 units comprising 6 stores should beestablished.
New commercials featuring popular talents have beenbroadcasted since Oct.
"Wassho-kun" character items started to be offered sinceOct. 1.
Second store in Indonesia, "Washoku Sato MOI store"
opened in May.Second store in Thailand, "Washoku
11AMATA Home Pro store" opened in Sep.

Performance forecasts for FY03/201
2Q FY03/2016

FY03/2016 Increase in income and in operating income are anticipated"△"means	  decrease(million	  yen)

FY03/2015 (actual)
Amount+/- (amount)

Y03/2016 (forecast)+/- (%)

Amount+/- (amount)+/- (%)Net sales

37,969

5,206

15.9%

40,900

2,930

7.7%

Operating income

1,183

294

33.1%

1,26076

6.5%

Ordinary income

1,330483

57.2%

1,220

△110

△8.3%

Net profit attributable toowners of parent

840

326

63.5%

490

△350 △41.7%

12

Mid-term management plan13

Towards	  realiza:on	  of	  "Sato	  Pyramid"

14

SRS group restaurants composition (current)
diamond shapehighcurrent

diamond	  shape

price
low

Number	  of	  restaurants

15

SRS Group restaurants composition
Evolution phase 1: Near-future shape
Diamond shape to pyramid shape
Evolu:on	  phase	  1current

high

Near-­‐future	  shapepricebroader-­‐based	  pyramid	  shapediamond	  shapepyramid	  shape

Number	  of	  restaurants

fast-­‐casualfast-­‐casual

low	  price	  zone	  fast-­‐casual

more	  restaurants	  newly	  opened
16Mid-term management plan
FY03/2019

Sales: 52 billion yen Number of restaurants: 600(billion yen)

FY03/2016 (as planned)

600

60

(billion yen)100

600 restaurants

382 restaurants

Sales:52 billion yen

40.9

329

FY03/2019billion yen

restaurants

310

37.9

restaurants

221

32.7
billion yen

SalesNet	  sales

restaurantsbillion yen

25.7

5

billion yen

billion yen

Ordinary	  proﬁt

0.56

1.33

0.84
billion yen

billion yen

0

NOTE:	  Number	  of	  restaurants	  include	  FC	  and	  overseas02013_3
actual2014_3
actual2015_3
actual2016_3plan

2017_3

2018_3

2019_317

Mid-term management plan: Numerical targets
2Q FY03/2016

FY03/2019
51st Period
Net Sales:

52 billion yen

Number of restaurants:

600

Newly disclosed items
Ordinary income rate

５％

ROE

８％

Equity ratio

over 50%

18

Basic policy
for corporate governance19

2Q FY03/2016

Basic policy for corporate governance
Point

Statement

In the Company's viewpoint, this should be
an excellent opportunity for the directors tofulfill their accountabilities and to make theBoard evolve into an effective one.
SATO RESTAURANT SYSTEMS CO., LTD. shall, in accordance with
the Corporate Governance Code which came into force on June 1, 2015
and the revised Securities Listing Regulations, proactively comply with
the implementation of the principles of the Code (draft) and will createand surely implement its basic policy about corporate governance.

20

2Q FY03/2016

Basic policy for corporate governance

Points of the basic policy
Establishing "Appointment and Remuneration Committee"① Policy concerning selection criteria for directors/
executives and determination of compensation
Setting numerical management objectives② Formulation and disclosure of the mid-term management plan
which officers of the Company commit to the shareholders
Other points③ Analysis/evaluation of functional improvement and effectivenessof the Board④ Policy concerning cross-shareholdings⑤ Planning for future successors to the CEO or others21

2Q FY03/2016

Basic policy for corporate governance
Policy concerning selection criteria for directors/
executives and determination of compensation
Establishing "Appointment and Remuneration Committee"
In order to realize higher level of corporate governance, theCompany will establish, as an advisory body reporting to the Board,
voluntary"Appointment and Remuneration Committee" consistingof external board members being independent officers having nopotential to create any conflict of interest against generalshareholders, and will put its efforts to enhance objectivity andtransparency of proposals from candidates for directors andexecutives as well as internal compensation system and suggestedcompensation.
(external directors)
Harumasa Sato
Professor, Hirao School of Management,
Masao Watanabe

Konan University
Former Representative Chief Executive Oﬃcerand President, KFC Holdings Japan, Ltd.

22

2Q FY03/2016

Basic policy for corporate governance
Formulation and disclosure of the mid-term management plan
which officers of the Company commit to the shareholders
Setting numerical management objectives
The Board and the top management will recognize that the mid-term management
plan is one of the commitments directed to the shareholders,formulate plans foreach fiscal year aiming at comprehension and analysis of progress in those plans
and accomplishing them, and put their efforts to make easily understandable
explanation about the plans by means of, for example, financial results briefing.
As its goal for FY03/2019, the final year of the "mid-term management plan", theCompany aims at achieving net sales of 52 billion yen and 600 restaurants inoperation. Overview of business strategies and mid-term management plan will be
disclosed in the Company's IR information provided on its website.

23

Emphasizing Sato's attractiveness

Human Resources Strategy

24

Emphasizing Sato's attractiveness2QFY03/2016

Human Resources Strategy

Sato aims at becoming
No.1 company
in working environment
in the food-service industry
25

Emphasizing Sato's attractiveness
2Q FY03/2016

Point

Human Resources Strategy

Improved working
environment

Short-time regular employee system
Minute-by-minute attendance management
short-termlong-term

cost increase

more	  proﬁtability

26

Emphasizing Sato's attractiveness
2Q FY03/2016

humanresources
flowing out

working
Human Resources Strategy improved
environment

recruitment cost II education cost

cost increase

Stop humanresources
flowing out
effect on cost
reductionBIGshort-time regular
employee systemcommunitybased
management

wage (cost)
increasehighermotivation

A company that is
comfortable and stable foremployees

more	  proﬁtabilityoutstanding
performanceby FEMALE
staff

leveraging FEMALE talents
80% of employees having shifted to short-time regular employees
are[FEMALE].
It is planned that by the end of this term, 8 [FEMALE] short-time
27
regular employees would be appointed as store managers.

Emphasizing Sato's attractiveness
2Q FY03/2016

working
Human Resources Strategy improved
environment

if no arrangement

wage (cost)
increaseminute-by-minuteattendance management＜issues for store managers＞

efficient
restaurant
operationcultivation of store managers

cultivating morethoughtful andtalented storemanagers

store managers and restaurants
with more excellencein revenue management

more	  proﬁtability

increase28

2Q FY03/2016

Topics

Newly	  opened	  restaurants	  <domesGc>
Jul.
Jul.
Jul.

Newly	  opened	  restaurants	  <overseas>

Katsuya: Osaka-Kashiwara branch (Osaka pref.)Santen: Sotokan-Zenkonji branch (Osaka pref.)Santen: Kadoma-Ohashi branch (Osaka pref.)Jul. Katsuya: Suminoe-Kitakagaya branch (Osaka pref.)Jul. Santen: Kongou branch (Osaka pref.)Aug. Katsuya: Akashi-Kokubo branch (Hyogo pref.)Aug. Santen: Minoo-Nishijuku branch (Osaka pref.)Oct. Santen: Nara-Sanjou branch (Nara pref.)May Second branch in Indonesia"Washoku Sato MOI branch"
Sep. Second branch in Thailand"Washoku Sato AMATA Home Pro branch”
Oct. Third branch in Thailand"Washoku Sato Sriracha AEON branch"

Oct. Santen: Sakai-Otori branch (Osaka pref.)TopicsSep. Branding document titled"Winning strategies for restaurant business learning from
'Sato', the No.1 Japanese food family restaurant company with the highest number ofrestaurants" was published.
Sep. Chojiro: Shijou-Kiyamachi branch was introduced for the second consecutive year
in the TOP 20 of "Japanese restaurants getting popularity among foreigners"presented
by TripAdvisor website.
Oct. Washoku Sato started to offer new menu(including Oyako-don (rice bowl topped withchicken and egg) made available by installation of programmable IH cooker).
Oct. Tokyo office was establishedOct. New commercials started to be broadcasted.

29

Branding document"Winning strategies for restaurant businesslearning from 'Sato', the No.1 Japanese food family restaurant company
with the highest number of restaurants"

30

Listed on TSE 1st section: 8163

Contact
SATO RESTAURANT SYSTEMS CO., LTD.
Management Planning HQ. (Tanaka, Okamoto, Okada)
TEL: +81-6-7709-9977
email: 873@sato-rs.jp

Earnings forecasts and other descriptions concerning the future contained in this document are based on
information currently available to the Company. This includes largely uncertain elements and therefore
actual business performance and other elements may differ substantially due to various factors. We wouldappreciate that you should understand the abovementioned presumptions and make decisions on any
investment according to your own judgement.