DISCLAIMER
This English translation is only for reference purpose. When they are any discrepancies between
original Japanese version and English translation version, the original Japanese version always prevails.

Financial Results Explanatory Materials
for the First Half of the Fiscal Year Ending March 2019
November 16, 2018
SRS HOLDINGS CO., LTD.
(Securities Code: 8163)

SRS HOLDINGS marked the 50th anniversary of its foundation on August 27, 2018.

©SRS HOLDINGS CO., LTD. All rights reserved.

Contents
1H FY3/19 Overview of Financial Results

Efforts for Improving Productivity

Consolidated Financial Highlights

4

Changes in Net Sales

5

Changes in Operating Profit

6

Existing Restaurant Sales

7

SRS Group Restaurants
Progress Report on Consolidated
Business Plan

8

Sato Bar/Sato CaféNabeichi – A Restaurant Specializing in
Shabu-Shabu

16

Development of Dish Washing Robot
Washoku Sato – the Parent-Child Discountfor Employees

21

Washoku Sato Sales Per Man Hour

23

18

22

9

Progress Report on Restaurant Measures

Appendix

Washoku Sato

11

Consolidated Balance Sheet (BS)25

Santen, Nigiri Chojiro/Chojiro,

12

Cash Flow Statement (CF)26

Miyamoto Munashi, Katsuya/Karayama

13

New Restaurants Opened in FY3/19

27

Other Measures

142

1H FY3/19 Overview of Financial Results3Consolidated Financial Highlights♦ Net sales: ¥21,908 million

Up¥213 million YoY• Sales increased along with the increased number of restaurants due to newly
opened locations and strong sales at existing locations while there was a negative
effect on sales caused by natural disasters.

♦ Operating profit: ¥510 million Up ¥249 million YoY
Ordinary profit: ¥483 million Up ¥227 million YoY• Operating profit and ordinary profit increased due to higher sales and proper
management of SG&A expenses while there was a negative effect on profits
caused by higher personnel expenses.

♦

Profit attributable toowners of parent: ¥216 millionUp¥1 million YoY• Profit attributable to owners of parent was about the same as one year earlier
because there was a gain on the sale of the shares of a subsidiary following thesale of the Sushi-han business in the first quarter of FY3/18.
4Changes in Net Sales
Restaurants Restaurants
openedclosed

+606

(396)

(Millions of yen)

Existing
restaurants,
etc.

+86

Consolidation Supply ofof Taiwan ingredients tobusiness Sushi-han

+93

(167)
Others

(9)

260

213

21,90821,6951H
FY3/181H
FY3/195

Changes in Operating Profit

Higher sales
Improved grossmarginDecrease in taxes
and dues+51

Decrease insupplies expenses(Sato Bar related)+24

Increase inpersonnel
expenses(114)(Millions of yen)
50th
anniversary
relatedexpenses

(45)
+351

Others

(17)
249

260

1H
FY3/18

260

510

1H
FY3/196

Existing Restaurant Sales• Sales at existing restaurants were strong despite the negative effect of heavy rain, earthquakes, typhoons and othernatural disasters.
• At Washoku Sato, sales per customer were higher than one year earlier due to higher sales of seasonal menu items,
more use of Sato Bar/Sato Café, and an increase in the price of the Sato-Shabu (all-you-can-eat shabu-shabu) premium
course from June.
• At Nigiri Chojiro, the number of customers was higher than one year earlier because of TV commercials, SNS campaigns
and other activities. In June, limited-quantity menu items and a Father’s Day fair produced a big increase in customer
traffic.

◎Washoku Sato: YoY change at existing restaurants adjusted
for characteristics of day of week

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

110.0

110.0

105.0

105.0

100.0

100.0

95.0

95.0

90.0

%

90.0

Apr.

May

Jun.

Sales

Number of customers

Jul.

Aug.

Sep.

Average sales per customer

%

Apr.

May

Jun.

Sales

Number of customers

Jul.

Aug.

Sep.

Average sales per customer

7

SRS Group Restaurants
No. of restaurants
No. of contracts forNo. of restaurants opened/closed during No. of restaurants No. of restaurants
Restaurant
new restaurants
at the end of
at the end of 1H
planned to open
opening progress
1H FY3/19
signed during 1H
FY3/18
FY3/19during FY3/19
vs. plan
FY3/19Opened(Mar. 31, 2018)(Sep. 30, 2018)(B)((A) + (C)) / (B)Closed(C)(A)

Washoku
Sato/Nabeichi

200

Santen46

Nigiri
Chojiro/Chojiro

57

Miyamoto Munashi

66

Katsuya/Karayama

36

Meotozenzai

1

Home Delivery Sushi(Nigiri
Chujiro/Miyakobito)

20

Overseas
restaurants
Group total

3

1

202

2

2

46

1

1

57

(6)

-

2

64

(16)

1

-

37

-

-

1

(13)

-

-

20

6

(4)

3

2

432

(41)

10

8

(2)

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

4

100%

-

16%

6

4

83%

(6)

5

1

20%

(16)

7

3

57%

-

-

-

(13)

3

-

-

7

(4)

3

(1)

2

166%

434

(40)

37

(6)

14

7
(1)

6

(3)

(2)

(-)

62%

* One newly opened Santen restaurant is not included in the calculation of restaurant
opening progress ratio because it was converted from franchised to directly managed.

8

Progress Report on Consolidated Business Plan
(Millions of yen)

FY3/18Results

Net sales

FY3/19Forecast

Vs. FY3/18
Results

1H FY3/19
Results

Progressratio

44,15546,000+1,844

21,908

47.6%

Operating profit

741

1,000

+258

510

51.0%

Ordinary profit

592

1,000

+407

483

48.3%

Profit attributable toowners of parent

108

200

+91

216

108.3%

Progress of FY3/19 Consolidated Business Plan
• Sales were 1.6% below the plan mainly because of natural disasters.
• Operating profit was 39.6% higher than the plan as SG&A expense controls and othermeasures more than offset the negative effect of the sales shortfall.
• The FY3/19 earnings forecasts are unchanged considering higher personnel expenses and thepossibility of higher prices of key ingredients for menu items.
9

Progress Report on Restaurant Measures

10Progress Report on Restaurant Measures#

Main Categories

Initiatives and Progress Regularly upgrading the core all-you-can-eat menu
→ August: Southern Kyushu Fair
→ September: Added black hair wagyu (Japanese beef) course (+ ¥500)
 Conducting campaigns to increase the number of customers→ July: Summer campaign(half-price shaved ice/¥200 discount for Sato Café (all-you-can drink beverage bar) when ordering
Sato-Shabu)→ September: Autumn campaign(reduced prices for desserts, Sato Café and draft beer when ordering akiwazen)→ September: A campaign to celebrate the SRS Group’s 50th anniversary(reduced prices for the Sato-Shabu premium course and Sato Bar)

1

Washoku Sato

Nabeichi Continuing to open restaurants→ Opened three restaurants (Toyota-higashi IC, Aichi Pref. on June 5, Kuise, Hyogo Pref. on June 15 andNisshin, Aichi Pref. on August 23)
 Developing new restaurant formats→ Formed a project team and planning to start tests for the new Nabeichi restaurant format (refer to p.18)
 Developing AI and robotic systems for more efficient restaurant operations→ Planning to start using an automatic ordering system
 No smoking at all restaurants→ All restaurants became completely smoke-free on April 1, 2018; ads announcing this new policy withcoupons were placed in four Japan’s morning newspapers
11Progress Report on Restaurant Measures#

Main Categories

Initiatives and Progress Further refining the Santen business and raising profitability by improving menus, promotions,sales systems and other aspects of operations→ Revised core menu items, such as by adding noodle meal sets and providing teishoku (set meal)
items with more value→ Used short cycles for eel dishes as a seasonal item and for limited-time-only selections liketendon with pork and long sausage→ Strengthened promotional activities using LINE@, Internet commercials and other media

2
Santen Continuing to open new directly operated and franchised restaurants→ Opened a restaurant in Yonohonmachi (Saitama Pref.) on May 4
 Developing AI and mechanical systems for improving productivity→ Planning to start using an automated AI robot dish washing system (refer to p.21)
 Continuing to open new restaurants in the Kansai area (retain position as the leading brand in
Kansai for gourmet conveyor belt sushi)→ Opened a restaurant in Kitatatsumi (Osaka) on April 13

Nigiri Chojiro

3
Chojiro Opening restaurants in new commercial areas→ Planning to open one restaurant in the Chubu region (November) A Chojiro restaurant in Shijokiyamachi has received a Trip Advisor Certificate of Excellence forfive consecutive years, which qualifies it for the Trip Advisor Hall of Fame
12

Progress Report on Restaurant Measures#

Main Categories

Initiatives and Progress Continuing to redecorate restaurants to create a new look (bright, clean interiors to serve a larger
range of customer segments)→ Renovated 14 restaurants during first half of FY3/19

4

Miyamoto Munashi

 Continuing to add a limited-time-only menu with substantial added value (raises sales per
customers and the gross margin)→ Continuing to use short cycles for limited-time-only menu items like tsuke-udon (udon with adipping sauce), hamburger, yakiniku, beef tongue and other dishes→ Conducted trial sales of a choi-nomi (quick and easy drink) menu and oden in order to increase
sales per customer and attract new customer segments
 Continuing to open new restaurants→ Opened one restaurant on November 1
 Continuing to open new directly operated and franchised restaurants in the Kansai area
→ Opened a restaurant in Nara-kashiba (Nara Pref.) on May 11

5

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

Karayama

 Considering opening new restaurant formats→ Planning to open Karayama restaurant (November)

13

Progress Report on Restaurant Measures#

6

7

Main Categories

Optimized
operations

Innovative
operation
development

Initiatives and Progress Integrated accounting system for the entire SRS Group→ In April, the FOODSNET CORPORATION (Nigiri Chojiro and other brands) accounting system was
integrated with the SRS Group system to improve efficiency of accounting operations

 Planning to reduce expenses for deliveries and the oversight of logistics operations by
optimizing logistics for the entire group
 For restaurant operations with higher productivity and fewer workers, use AI and machines to
end labor-intensive activities and improve efficiency→ Planning to start using an automatic ordering system→ Planning to start using an automated AI robot dish washing system
 Starting studies for sharing of a single app for the entire SRS Group, a QR payment system andother innovations
 Taiwan→ Opened the third restaurant in Taiwan (Washoku Sato in Tucheng, on June 27)→ Planning to open the fourth restaurant (December)

8

Overseasbusiness◆ Thailand→ Opened the first Sato-don restaurant specializing in rice bowl dishes, a new restaurant concept
specifically for food courts (on April 29)→ Opened the second Sato-don restaurant (on September 12)◆ Indonesia→ Relocated the first restaurant in Indonesia (on November 2)
14

Efforts for Improving Productivity

15

Sato Bar/Sato Café
The addition of Sato Bar/Sato Café at all restaurants was completed
in November 2017 *excluding 2 restaurants

Sato Bar

Sato Café・A self-service all-you-can-drink alcohol beverage bar(with a 2 hour time limit)
・Customers can prepare their own drinks as preferred
Weekdays all day¥998 + tax *Price for a set
Saturdays from open to 15:00 ¥998 + tax
Saturdays from 15:00 to close¥1,198 + tax
Sundays and Holidays¥1,198 + tax
・A self-service all-you-can-drink non-alcoholic beverage bar
・One button for more than 50 types of beverages; a full line ofnon-alcoholic beverages including mixed drinks
Adults¥238 + tax *Price for a set
Children (elementary school age and younger) ¥100 + tax

Benefits of Sato Bar/Sato Café
(1) Customers can enjoy the drinks they want at any time
→ Creating a new reason for people to use Sato Bar/Sato Café to increase sales and attract more customers(2) Using self-service format to reduce volume of work (reducing work to serve drinks, etc.)→ Productivity is higher because restaurant personnel can spend time on tasks that add more value(3) Improving standards of service (not keeping customers waiting, shortening the time of food delivery, etc.)

Sato Bar/Sato Café improves productivity while achieving the Washoku Sato goals of providing
services without keeping customers waiting and increasing customer satisfaction

16

Sato Bar/Sato Café
Sato Bar/Sato Café Sales Growth・Order Rate vs. Prior Year

Sato Bar
Pct. of all
5.0%
customers

1.0%

4.5%

0.5%

4.0%

0.0%

3.5%

-0.5%

3.0%

-1.0%

20,000

2.5%

-1.5%

0

2.0%

Sales volume
100,000(customers)

Sales volume (customers)

80,000Pct. of all customers(sales per 100 customers)

60,00040,000

Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep.
2017

Sato Bar
Sato Café

-2.5%
-3.0%

2018

-3.5%

Sato CaféPct. of all
28%

500,000
Sales
volume

-2.0%

2018

Apr.

May

Jun.

Jul.

Aug.

customers(customers)

27%

400,000

26%
300,000

25%

200,000

24%
23%

100,000

22%

0

21%
Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep.
2017

2018

・The Sato Bar order rate is increasing steadily.
→ The goal is more growth in the number of customers by using measures like selling Sato Bar as a set witha single-dish all-you-can-eat menu.
・The Sato Café order rate initially increased but has been declining.
→ The goal is to give students and other new customers a reason to spend idle time at a Sato Café, such as
by selling Sato café as a set with a soft-serve ice cream bar, which is to be newly added soon.
17

Sep.

Nabeichi – A Restaurant Specializing in Shabu-Shabu
NabeichiA restaurant format centered on Sato-shabu and Sato-suki, the core menu items of Washoku
SatoNabeichi basic policy

Exciting, delicious, reliable
Nabeichi development concept
Achieve the three goals below by taking Sato-shabu and Sato-suki, the core menu items of
Washoku Sato, to a higher level

1. Higher
productivity

2. Greater Nabeichi 3. Smaller
investment
locationand higher
flexibility
profitability

1. Higher productivity
Reduce labor needed at restaurants by switching to a self-service format→Goal is sales per man hour of ¥6,000
2. Greater location flexibility
Restaurants require smaller sites because kitchens are smaller and sales per
customer are higher; this allows placing Nabeichi restaurants in shopping
centers, near railway stations and in many other types of locations
3. Smaller investment and higher profitability
Small number of menu items reduces the initial investment required for kitchenequipment and other items→A shorter investment recovery period
18

Nabeichi – A Restaurant Specializing in Shabu-Shabu
Positioning of Nabeichi*Based on information obtained by SRS HOLDINGS

Price
(Yen)

Prices and networks of other major restaurant
companies

Company A

4,500*Adult price for all-you-can eat beef/pork course for
Sunday/holiday dinner

4,000

CompanyB
3,500

CompanyC

3,000

Company E

Washoku Sato

2,500

2,000

Company
CompanyF
G

Price

Menu items No. of restaurants

Company A¥4,480

About 30

24

Company B¥3,690

About 40

102

Company C¥2,980

About 20360

Company D¥2,980

About 50

62

Washoku Sato ¥2,790

About 50

202

Company E¥2,600-19

Nabeichi¥2,299About 30-

Company F¥2,199-48

Company G¥2,099About 15

202

Nabeichi

Degree of self-service
Low

CompanyD

Name

Degree of full service
High

Low

Sales method/Selection of menu items

30

50

High

19

Nabeichi – A Restaurant Specializing in Shabu-Shabu
Comparison of Washoku Sato, Nabeichi and a Competitor *Based on information obtained by SRS HOLDINGS

Main products

Washoku Sato(premium course)

NabeichiCompeting buffet restaurant

Shabu-shabu and Sukiyaki

Shabu-shabu and Sukiyaki

Only Shabu-shabu

Price

Beef/pork premium course ¥2,790
Discounts for seniors and children
Alcohol bar ¥1,198
Drink bar ¥238

Beef/pork course ¥2,299
Discounts for seniors and children
Minimum price with sushi ¥1,899
Alcohol bar ¥1,299
Drink bar ¥199

Beef/pork course ¥2,099
Discount for children but not for seniors
Minimum price with sushi ¥1,999
Alcohol bar ¥1,500
Drink bar ¥220

Meat

Choice grade beef
6 types

Choice grade beef
Beef is sliced at the restaurant
Uses premium sangenton pork
7 types, including tsukune

Meat is sliced at the restaurant
Uses premium sangenton pork
6 types plus 1 special promotion option

Hot pot/
vegetables

All ingredients grown in Japan
14 types

All ingredients grown in Japan
About 17 types, including regular, seasonal
and local vegetables

No statement about locally grown ingredients
17 types

Other menu
items

Cooked to order, full service
More than 50 items, including sushi, tempura,deep-fried items and other dishes

Buffet format
Sushi, curry, seasonal rice, chirashizushi,
tempura, deep-fried items, potatoes, handmade tofu and other items

Buffet format
Sushi, curry, wakame rice, chirashizushi andother items
No side dish selections

Kitchen is not visible from dining area

Customers can see meat slicing, deep-frying
and other kitchen activities
An active atmosphere, a restaurant people
can use with confidence

Kitchen is not visible from dining area
Sushi is made behind the bar at somelocations2 types of dashi (selected from 6 options)
Dipping sauce is only ponzu or sesame2 types of dashi (1 fixed and 1 chosen from 5
options)
5 regular dipping sauces plus 1 special
promotion option

2 types of dashi (1 fixed and 1 chosen from 5
options)
5 regular dipping sauces plus 1 special
promotion option

Atmosphere

Dashi (Japanesesoup
stock)/Dipping
sauce

20

Development of Dish Washing Robot
Timetable for innovative restaurant operations

2018

2020

2019

2021

◉Start of automated dish washing system testing at Santen◉ Updated the Table
Ordering System◉Automated tempura cooking system at Santen◉Automated table service at Santen◉Automated dish washing system at Washoku Sato◉Start of automated ingredient ordering system at Santen◉Start of automated ingredient ordering system at Washoku Sato

Conceptual drawing of a dish washing system for Santen
・Using AI and robots will allow restaurant personnel to spend more time ontasks that add value
・Lowering the volume of cleaning tasks performed by people will reduce
recruiting challenges created by Japan’s tight labor market and hold down thegrowth of personnel expenses.

The goal is to improve productivity at restaurants and provide
new added value to customers
21

The Parent-Child Discount for Employees
Discount eligibility
Employees who dine at the restaurant where they work with one or more child not older than juniorhigh school age receive a 50% discount.

PurposeThis new employee benefit was established for Washoku Sato restaurant employees who are raisingchildren, including those in part-time positions. This benefit reduces the amount of meal preparationneeded at home, thereby making it easier to work at the restaurant.
All Washoku Sato
restaurants

Employees andtheir children

50% discountSummary◎Washoku Sato employees with children up to junior high school age
are eligible◎The discount applies to meals at the restaurant where employees
work (or a designated restaurant near the employee’s home)◎Discount is not available during busy time periods and on weekends
and holidays◎Discount is 50% of the total amount but not more than ¥5,000◎Discount applies to all eat-in or take-out meals

・Easier to work at restaurants
・Easier to remain for many years
By providing this environment, Washoku
Sato aims at increasing employee
satisfaction, which will result inproviding high-quality services tocustomers and improving productivity.

Eligible employees use this Family Passport toreceive the discount22

Washoku Sato Sales Per Man Hour
Sales Per Man Hour at Washoku Sato (12-month moving average)
3600
2008年4月

3700

3800

3900

4000

4100

4200

4300

4400

Apr. 2008

・Sales per man hour have been steadily increasing
after starting Sato-shabu.
Started providing Sato-Shabu・Big increase when restaurants started using
microwave rice cooking units and the TOS.
Started using microwave
・Salesper man hour are recently increasing again due
fried rice cooking units
to the addition of Sato Bar/Sato Café and hot pot
Started providing
Sato-Shabu premium course
soup dispensers.
Started operational reforms

2009年8月
Aug.
20092010年12月
Dec.
2010

May
2012
2012年5月

2013年9月
Sep.
2013

Feb.
2015
2015年2月

2016年6月
Jun.
2016

Started using dispensers forsoup stock
Updated POS system, started
using meal tickets

Started using restaurant
support system
Started using the Table
Ordering System
・Washoku Sato’s goal is to develop a more
Started the short-time regular
comfortable working environment that makes it
employee systemeasy for people to work at restaurants so they canStarted using induction
cooktops with program
remain for many years.
functions
Added Sato Bar/Sato Café

2017年10月
Oct.
2017

・Washoku Sato will continue to use investments
and other measures for less work at restaurants
and consistently high quality of menu items

・While shifting people to tasks where theirproductivity is higher, Washoku Sato aims tofurther improve productivity by combining added
value produced by AI and robots with services
provided by people in order to create new types ofadded value.

Started using dispensers for
hot pot soups
Started the employee parentchild discountPlanning to add soft-serve ice cream
bars

23

Appendix24

Consolidated Balance Sheet (BS)(Millions of yen)

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

1H FY3/19(As of Sep. 30, 2018)

Current assets

13,148

11,176(1,972)

Non-current assets

17,51317,360(153)

Current liabilities

7,648

6,341

(1,306)

Non-current
liabilities

8,905

7,982

(922)

Net assets

14,214

14,311+96

Total assets

30,76828,636(2,132)

Change25

Cash Flow Statement (CF)(Millions of yen)

1H FY3/18

1H FY3/19

ChangeCash flows fromoperating activities

495

518

+22

Cash flows frominvesting activities

1,103

(642)

(1,745)

Cash flows fromfinancing activities(525)(1,606)(1,080)Cash and cash
equivalents at endof period

9,617

8,998

(619)

26

New Restaurants Opened in FY3/19

Washoku Sato Toyota-higashi IC, Aichi
Pref. opened on June 5, 2018

Santen Yonohonmachi,
Saitama Pref. opened
on May 4, 2018

Washoku Sato Kuise, Hyogo Pref.
opened on June 15, 2018

Katsuya Nara-kashiba,
Nara Pref. opened on
May 11, 2018

Washoku Sato Tucheng,
Taiwan, opened on June 27,
2018

Washoku Sato Nisshin, Aichi Pref.
opened on August 23, 2018

Sato-don Mega Bangna,
Thailand, opened on April 29,
2018

Chojiro Kitatatsumi, Osaka opened
on April 13, 2018

Sato-don, Central Rama 9,
Thailand, opened on
September 12, 201827

Contact InformationSRS HOLDINGS CO., LTD.
Corporate Planning Dept. (Okamoto, 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.

28