Materials for Financial Results Briefing: FY03/2014

Sato Restaurant Systems Co., Ltd.
Listed on TSE 1st section: 8163

〜Towards completion of "Sato Pyramid"〜Table of Contents＜FY03/2014: Performance＞
p５
p６
p７
p８
p９
p１０
p１１
p１２

Topics of FY03/2014
Performance in FY03/2014: Highlights
Profit & Loss sheet (PL): FY03/2014
Profit & Loss sheet (PL): 5 years
5 years transition charts
Balance Sheet (BS): FY03/2014
Cash Flow Statement: FY03/2014
Transition of sales in existing restaurants

p１３ Sato-Shabu＜About "Sato Restaurant"＞

p３４
p３５
p３６
p３７
p３８
p３９
p４０
p４１
p４２
p４３

＜Mid-term management plan＞＜About our business categories＞

Management policy
p４９
Mid-term management plan/policy
p５０What is "Sato Pyramid"?
p５１
p５２
SRS group restaurants composition (current)
p５３
SRS group restaurants composition p５４
Evolution phase 1: Near-future shape
p５５
Sato Pyramid: Near-future shape
Sato Pyramid - Evolution phase 2: Evolved shape
Transition of household composition by income level
Sato Pyramid and Transition of householdcomposition by income level in Japan
Mid-term management plan: Numerical targets

Category ①: Washoku Sato
Category ②: Sushihan
Category ③: Santen
Category ④: Nigiri CHOJIRO
Category ⑤: Katsuya
Overseas business
Meotozenzai＜FY03/2015: Forecasts＞＜Appendix＞

p４５ Measures for FY03/2015
p１９ About "Sato Restaurant Systems"
p４６ Performance forecasts for FY03/2015
Features
p２１
p４７ Most recent topics
p２２ Ranking in number of Japanese foodfamily restaurants
p２４ Strength: Brand power
p２５ Strength: Restaurant development capabilities
p２６ Strength: High productivity (total cost reduction)
p２７ Strength: High productivity (kitchen capabilities)
p２８ Strength: Purchase & development capabilities
p２９ Strength: Price zone hedging capabilities
p３０
Position map by categories
p３１
History of transition (corporate development and number of restaurants)
p３２
Market environment

p５７
p５８
p５９
p６０
p６１

Corporate Profile
Risk factors and measures
Human resource education
Shareholder composition
Contact

FY03/2014
Actual Performance4Topics of FY03/2014

Expansion by M&A, and newly opened
13 directly-managed restaurants
１

Acquired 100% shareholding of Foodsnet Corporation

M&A

Management of "Nigiri CHOJIRO" (gourmet Sushi-go-round) and "Miyakobito" (home delivery Sushi chain restaurants)
and others.
Actual performance for 7 months from Sep. 1, 2013 to Mar. 31, 2014 is to be consolidated.

２

Washoku Sato：Adopted table order system (TOS) using tablet terminals

Productivity

３

From the current 4th quarter, this will be deployed sequentially to all of the 197 restaurants.
(As of Mar. 2014, this has already been deployed in 62 restaurants and the rest will be complete by Jul.
2014.)

Sushihan：Brand name was unified as "Washoku Nabedokoro Sushihan".

Branding
Newly opened restaurants

・Washoku Sato
・Santen (direct)
・Nigiri CHOJIRO・Katsuya (direct)
・Nigiri CHUJIRO・Washoku Sato・Washoku Sato

Closed1 restaurant (New-style resutautant) ・Nigiri CHOJIRO 1 restaurant
5 restaurants
Large-scale renovation
1 restaurant・Nigiri CHOJIRO 5 restaurants
5 restaurants
1 restaurant (New category of home delivery Sushi)
1 restaurant (1st in Indonesia)
1 restaurant (2nd in Taiwan)
5Performance in FY03/2014: Highlights

Increase in both revenues and earnings
Sales: 27.1%↑ Operating profit: 35.5%↑
Ordinary profit: 50.6%↑ Net profit: 60.3%↑

Sales：32,762 million yen (up 27.1% from previous FY)
factor: Good sales of "Sato-Shabu" (all-you-can-eat style Shabu-Shabu)
Operating profit：888 million yen (up 35.5% from previous FY)
factor: Downturn in gross profit margin rate associated with increased salesof "Sato-Shabu" has been alleviated by reconsidering any and all costs.
Net profit：513 million yen (up 60.3% from previous FY)

6

Profit & Loss sheet (PL): FY03/2014

Increase in both revenues and earnings
Sales: 27.1%↑ Operating profit: 35.5%↑
Ordinary profit: 50.6%↑ Net profit: 60.3%↑(million yen)

2013_3
AmountNet sales+/- (amount)

2014_3+/- (%)

25,783

Ordinary
profit△282△30%

6,979 27.1%

2.71%

233 35.5%846△236 △29.6%

320
1.24%

+/- (%)

888

561
2.18%

Net profit

1.6%

655
2.54%

+/- (amount)

32,762415

OperatingprofitAmount2.58%

285 50.6%513
3,145 △111.3%

percentages below each profit amounts are those relative to net sales
plus/minus amounts are those relative to previous year
percentages refer to plus/minus relative to previous year

1.57%

193 60.3%
7

Profit & Loss sheet (PL): 5 years

Increased revenue in 4 consecutive years ↑Operating profit & Ordinary profit achieved V-shaped recover(million yen)

2010_3
AmountNet sales+/(amount)

2011_3+/- (%)

23,924

Amount593

2.9%+/- (%)-

233 35.5%846△236 △29.6%

285 50.6%513

320△2,995+/- (%)

888△282 △30%

16.9%+/(amount)

6,979 27.1%

1.6%

561
115

Amount32,762415

8.2%△2,825△70 △29.2%+/(amount)655
71

284 71.4%

Amount2014_325,783797

170
961 △133%+/- (%)

937

682

240

+/(amount)722

273 46.0%

329 476.8%
Net
profit

3.0%

866

398

Amount2013_325,368722422 246.8%
Ordinary
profit+/- (%)

24,646△1,517 △6.0%

Operatingprofit+/(amount)

2012_3

3,145–

193 60.3%

plus/minus amounts are those relative to previous year
percentages refer to plus/minus relative to previous year

Continuous growth
Improved company quality to increase profit continuously

85 years transition charts
Sales increased in 4 consecutive years ↑Operating profit & Ordinary profit achieved V-shaped recovery; ROE increased ↑(million yen)

Net sales

33000(million yen)

1,000

Operating profit

750

22000

500
11000
250
0

2010_3 2011_3 2012_3 2013_3 2014_3(million yen)0

2010_3 2011_3 2012_3 2013_3 2014_3

(%)

900

6

675
4
450
2

225
0

2010_3 2011_3 2012_3 2013_3 2014_3

Ordinary profit0

2010_3 2011_3 2012_3 2013_3 2014_3

ROE9

Balance Sheet (BS): FY03/2014

Balance Sheet (BS)(million yen)Mar. 31, 2013 Mar. 31, 2014+/-

Total current assets

6,714

7,315

601

Total fixed assets

12,667

16,495

3,828

19,39023,816

4,426

Total current liabilities

5,194

6,851

1,657

Total fixed liabilities

5,074

7,397

2,323

Total liabilities

10,26814,2493,981

Total shareholders’ equity

9,494

9,951

457

Minority shareholders' equity

140

129

-11

Total net assets

9,121

9,567

446

Total liabilities and net assets

19,39023,816

4,426

Total assets

10Cash Flow Statement: FY03/2014

Cash Flow Statement(million yen)

FY03/2013

FY03/2014+/-2012.4.1〜2013.3.31

2013.4.1〜2014.3.31

Cash flow from operating activities

1,462

1,157

△305

Cash flow from investments△605△2,756△2,151

Cash flow from financial activities

△15

1,604

1,619

Balance of cash and cash equivalents

5,474

5,533

59

11

Transition of sales in existing restaurants

Sales in existing restaurants have kept high level
thanks to "Sato-Shabu" effect.
Sato

Familyrestaurants
in general
Restaurants
industry total

100%

100%

Oct.

Apr. 2013

Jan. 2014

Mar.

Sato："Washoku Sato" and "Sato Sushihan" (excluding “Santen")
Data for existing restaurants excludes the first 13 month (including opening month).
Data for closed restaurants excludes closing month.

2009
2010
2010年
2011
2011年
2012年
2012
2012年
2013
2013年

Source: Japan Foodservice Association

Jun.：Sato-Shabu started (all-you-can-eat meat/vegetables)
Mar.：Double taste of Sato-Shabu started
Oct.：Sato-Syabu premium course started (all-you-can-eat meat, vegetables and 44 items of a la carte dishes)
Jun.：Sato-Syabu premium course 60 items
Jul. ：Sato-Syabu premium course Kuroge Wagyu (Japanese black cattle) / Kurobuta (black pig) course
Oct.：Sato-Syabu premium course Aji-meguri (taste exploration)
Mar.：Sato-Syabu premium course 70 items
Oct.：Sato-Syabu premium course 75 items
Jun.：Sato-Syabu premium course Special sales for Father's Day
Oct.：Sato-Syabu premium course (sales enhanced) “Tempura" "Nigiri Sushi"(new line-up) "Yakitori (grilled chicken) series”"Suigyoza (dumpling in soup) series"

12

Menu book of
Sato-Shabu

all-you-can-eat
120 minute13

“Premium Course”
75 all-you-can-eat
dishes are available

Please choose the course you like.

30

hot pot
fillings

all-you-can-eat！

Sato-Shabu
Coursepot
30 hotfillings

all-you-can-eat！

Sato-Shabu
Premium Course

If you choose “Premium Course”, 75 all-you-can-eat dishes

Please choose 2 types of "Dashi" soup.

Please choose "Extra hot pot fillings" you like.

If you choose “Premium Course”, 75 all-you-can-eat dishesIf you choose “Premium Course”, 75 all-you-can-eat dishes

About "Sato Restaurant Systems"18About "Sato Restaurant Systems"

Succeeded in integrating Japanese food with chain store management
55 years in businessSucceeded１

once said difficult...

Western food category

techniques

Chain style Japaneserestaurants

accumulationJapanese foodintegrationacquisition

mass stores operation
Succeeded２

popularization
development

Familiar Japanese foodevolution

Traditional
Japanese cuisine
Mass merchandising system

Realized

３

Mass merchandisingsystemPromoting４

safe

affordable pricehigh quality

stable supply

active promotion

Mechanizationlaborsaving
Japanese foodtable restaurant

A mechanism in which, by designing andcontrolling whole range of process of products flowfrom raw material to eventual full consumption, it
becomes possible to purchase safer materials withmore cost merit, thereby providing customers withvarious dishes at affordable prices.

more profitability (up to the limit)

more stable quality

cooking professional is NOT required

We always aim for the lowest price zone.

19

Features

20

Features

Largest number of Japanese food family restaurants
Largest number ofJapanese food family restaurants

１

２

No.1
in the tradeGroup total: 310 restaurants (as of Mar. 2014)
Sato（197） Sushihan（13） Santen（6） Katsuya (direct)（11）Katsuya (FC)（7）
CHOJIRO(50) Miyakobito (direct)（1）Miyakobito (FC)（20） CHUJIRO（2） Overseas（3）specialized in Japanesefood

Major 5categories

Japanese food family
restaurant

３

M&A

４

Overseasdevelopment

５
６

197 restaurants

Kitchencapabilities

mainly Sushi & Nabe(pan)gourmetTendon & Sushi-go-roundTempuraKatsudon &Tonkatsu (porkcutlet)gourmet Sushi-go-round "Nigiri CHOJIRO" Foodsnet Corporation became asubsidiary.
（Jun.2013）
Joint ventures have been established with the largest
local companies (operating convenience stores).
TaiwanIndonesia

Seeking streamlined kitchen operations

Purchase & development
capabilities

By carrying out purchase & development activities on our own
accounts worldwide, a mechanism has been built up in whichsafer and carefully selected foodstuff can be obtained stably.

We always
aim for thelowest price
zone.
21

Ranking in number of Japanese food family restaurants

Largest number of Japanese food family restaurants
１９７

restaurants

No.1 in the trade
197 restaurants

1st

as of end of Mar. 2014

2nd

Yumean

3rd

Hanayayohei

4thSagami5th

Tonden6th

Kagonoya

7th

Aji-no-mingei

160 restaurants
151 restaurants
127 restaurants
113 restaurants
71 restaurants
61 restaurants

as of end of Apr. 2014

as of end of Apr. 2014

as of end of Dec. 2013

as of Nov. 25, 2013

as of end of Dec. 2013

as of end of Dec. 201322

Strength23

Strength: Brand power

Sato is overwhelmingly famous in Kansai area
Brand Power

overwhelmingly
famous in Kansai area

24

Strength: Restaurant development capabilities

Specializing in Japanese food enables
multi-restaurant operation
Specializing
in JapanesefoodRestaurant
development
capabilities

Narrow-focusedcommodities
systemization
outsourcing

multirestaurants

multi・・・・・・・・
restaurants
・・・・・

restaurants

low breakeven point
We always
aim for thelowest pricezone.

multi・・・・・・
restaurants

・・・・・・

25

高いStrength: High productivity (total cost reduction)

Total cost reduction realized highproductivity
RealizedHigh
productivity

Total cost reduction

restaurant
operationbusinessreformcookingflow

by fewer staff

materials/
commodities/
logistics

Higherproductivity
26

Strength: High productivity (kitchen capabilities)

Seeking streamlined kitchen operations
Kitchencapabilities

Least waiting time means
maximum service

kitchen capability ①

Mechanization

Simplification

non-boiling noodle cooker
microwave rice cooker
miso-soup dispenser
soup stock dispenser

pre-processed foodstuff(knives are NOT required)

kitchen capability ②laborsaving
more profitability
streamlined kitchen
maximizing floor area

Systemization
updating POS/OES
adopting TOS(table order system)stabilization
cooking professional is NOT required
low labor costHigh
productivity
Japanese foodtable restaurant

We always
aim for thelowest pricezone.
craftsman is NOT
required
Supreme Tempura
cooked bynonprofessional
27

Strength: Purchase & development capabilities

Purchase & development
activities on our own accounts
By carrying out purchase & development activities on our own
accounts worldwide, a mechanism has been built up in which safer
and carefully selected foodstuff can be obtained stably.
(examples)
prawn
eel
Hijiki seaweed
grated radish

Purchase & development
capabilities

Vertical merchandisingworldwide

direct purchasecommodification plan
Steps of commodification plan

procure raw①
materials② process③ distribute④ sell at stores

centralized
in-house control

purchase/quality/pricestabledesigncontroltaking total risk

in-house safety control

safe

We deliver safe and delicious
foods stably at affordable prices.
28

Strength: Price zone hedging capabilities

Risk hedge at low to middle price zone
specializing inJapanese foodinsusceptible to economic
fluctuation

Various choices among SRS grouprestaurants meeting customers' needs

averagespendingaround ¥2,300

averagespending¥1,900 ~ ¥2,000

averagespending¥1,100 ~ ¥1,200

averagespending¥700 ~ ¥800

averagespendingaround ¥550

over ¥2,000¥1,000 ~ ¥2,000¥1,000¥500 ~ ¥1,000¥500

covering each price zone

¥2,000Price zone hedging
capabilities

29

Position map by categories

Promoting mechanization
to reduce labor burden of cooking at each restaurant

Realizedlabor-intensive
services with least waiting time
more stable quality lower prices

cooking

low price

fast-casual

methodenhancinghigh pricemechanization/systemization
30

History of transition (corporate development and number of restaurants)
１９６０

１９７０

１９８０

１９９０ ２０００ ２００４

Start-up Established→ Growth ①

Growth ②

２００５〜２０１３

２０１４

Business reform / newcategory development

Growth ③ and the future

2014
Abandoned Western food andfocused on Japanese food

300店

310
restaurants

Outsourced manufacturing

2005
252
restaurants

2013
211
221
restaurants

1990年

2006
1991
211
1998
restaurants
209
restaurants Renamed to Sato Restaurant
Systems Co., Ltd.

200店

CHOJIRO increased
by 50 restaurants

M&A

1989

Designated as 1st section
brand of the Osaka
Securities Exchange

2012
1981

137
restaurants

100店

Listed on 2nd section of the
Osaka Securities Exchange

1958
Started "Hozenji
Sushihan"Renamed to Sato Co., Ltd.

1968
Established Amagasaki"Sushihan Honten"

7 Acquired 100% of outstanding shares ofFoodsnet Corporation(Nigiri CHOJIRO and others)
7 Moved to 1st section of the Tokyo
Securities Exchange
9 Opened 1st restaurant in Indonesia

New category
8 1st restaurant of
Tendon & Tempura Honpo "Santen"
10 Outsourced manufacturing
11 Head office moved to Chuo-ku, Osaka-City

1984

2010

1974

2013

FC business
10 Established Sato-Arcland Food Service Co., Ltd.
(running "Katsuya")
11 1st restaurant of Katsuya

10 Opened 1st restaurant in Taiwan
NOTE: Numbers include FC and overseas

31Market environment"Fast-casual" category is the promising one
Market size

Today Food service industry as a whole: at the level of 23 trillion yen
restaurants: about 12.5 trillion yen
Source: Foodservice Industry Research Institutepromising category

Fast-casual restaurants
An intermediate category between fast-food restaurants and family
restaurants, which realizes equivalent level of taste as conventional
restaurants while delivering quick and affordable commodities

Future32

Mid-term management
plan
Towards completion of "Sato Pyramid"

33

Management policy
Management policy

SRS※ aims to be the restaurantthat brings the highest customer satisfaction※SRS：SATO RESTAURANT SYSTEMS GROUP

・Looking beyond the pursuit of sales and profit
・Enriching people's lives
・Improving the work environment
・Responding to social and economic needs
・Becoming an integral part of society

Mid-term management vision
prosper over 100 years
to comeSocial infrastructure

essential

34Mid-term management plan/policy

Towards completion of "Sato Pyramid"
Mid-term management plan/policy
SRS aims to be an essential social infrastructure
and prosper over 100 years to come
VisionSRS aims to be a respected industry leader
by providing Japanese cuisine to people around the world.

overseas・more rapid
restaurant development

・Taiwan and Indonesia business・expansion to third countries
・turning to positive figure

・increasing profitability

・more profitability
・restaurant developmentwith lower investment・enhanced integration
with CHOJIRO・continuous restaurant development
35

What is "Sato Pyramid"?

Mid-term management plan

Towards completion of "Sato Pyramid"

What isSato Pyramid？？？
36

SRS group restaurants composition (current)

SRS group restaurants composition:
Diamond shapehighdiamondshapecurrent

price
low

number ofrestaurants

37

SRS group restaurants composition - Evolution phase 1: Near-future shape

Diamond shape to pyramid shape
Evolution phase 1

high

Near-future shapecurrent

pricebroader-based pyramid shapediamondshapepyramid shapenumber ofrestaurants

fast-casualfast-casual

low price zone
fast-casual

more restaurants
38

Sato Pyramid: Near-future shape

Pyramid Near-future shape39

Sato Pyramid - Evolution phase 2: Evolved shape

Further broader-based Sato Pyramid
low price zone
fast-casualfast-casual

more restaurants
Evolution phase 2
Near-future shape

Evolved shapeno change in price zone
Sato Pyramid

fast-casualbroader-based pyramidshapemore restaurants

further broader-based pyramid shape40Transition of household composition by income level

annual income
over¥20,000,000¥19,000,000 ~ ¥20,000,000

Shift in average household income
annual income
over ¥5,000,000

mid/high-income groupdecreased

annual income¥2,000,000~4,000,000

low-income groupincreased¥18,000,000 ~ ¥19,000,000¥17,000,000 ~ ¥18,000,000¥16,000,000 ~ ¥17,000,000¥15,000,000 ~ ¥16,000,000¥14,000,000 ~ ¥15,000,000¥13,000,000 ~ ¥14,000,000

2012
2002

(Source) Health, Labor and Welfare Ministry,"Comprehensive Survey of Living Conditions"Average household income
has decreased by ¥540,000
in 10 years¥12,000,000 ~ ¥13,000,000¥11,000,000 ~ ¥12,000,000¥10,000,000 ~ ¥11,000,000¥9,000,000 ~ ¥10,000,000¥8,000,000 ~ ¥9,000,000¥7,000,000 ~ ¥8,000,000¥6,000,000 ~ ¥7,000,000¥5,000,000 ~ ¥6,000,000¥4,000,000 ~ ¥5,000,000

average annual
income in 2002

¥6,020,000

average annual
income in 2012

Proportion ofhouseholds with income
less than ¥3,000,000 has
expanded¥5,480,000
2012¥3,000,000 ~ ¥4,000,000

32%

less than¥3,000,000

2002

28%
41

Sato Pyramid and Transition of household composition
by income level in Japan

Sato Pyramid is an adapted strategy
It is predicted that in Japan proportion of low-income group would continue
to increase.

Sato Pyramid

today
householdcomposition by
income level in Japan

adaptationJapanin thefuturelow-income
group

Sato Pyramid
Adaptation strategy forJapan in the future

low-income
group
42

Mid-term management plan: Numerical targets
5 years later (FY03/2019)

Sales: 52 billion yen

Aiming for total 600 restaurants(billion yen)

Sales: 52 billion
100 yen600

600 restaurants(billion yen)

Sales

Sales

Sales: 32 billion yen
310 restaurants

Ordinary
profit5

Ordinary profit

00

2013_3

2014_3

2015_3

2016_3

2017_3

2018_3

2019_3

NOTE: Numbers include FC and overseas

43Forecast for
FY03/201544

Measures for FY03/2015

Establishing revenue base and taking onchallenges for growing phase
A period of growth and development
Planning to open 35 new restaurants

to be opened

Measures・Washoku Sato
3 restaurants
11 restaurants
・Santen
2 restaurants
・Santen (FC)・Nigiri CHOJIRO 3 restaurants
6 restaurants
・Katsuya
10 restaurants
・Katsuya (FC)to be renovated・Nigiri CHOJIRO

9 restaurants

NOTE: Washoku Sato stores had alreadybeen renovated during the previous year.

1. Integration of logistics with Foodsnet Corporation: to be started in October
2. Full-blown operation of restaurant support system
3. Table order system: to be completely adopted to every Washoku Sato restaurants by
the end of July
4. Updating the core system: to start the project aiming for adopting in the 49th term
5. Making complete Santen FC format
6. Carrying on experiment of the new category "Home delivery Sushi - Nigiri CHUJIRO"
7. Sales promotion measures using image characters of Washoku-Sato and Santen
8. Sales promotion making use of LINE application: in effect since April in Shizuoka area45

Performance forecasts for FY03/2015

Increase in both revenues and earnings isanticipated also for FY03/2015(million yen)

2015_3 (forecast)

2014_3
AmountNet sales+/- (amount)+/- (%)

1,000
112 12.61%

35.57%

950

846
285

Net profit+/- (amount)

4,738 14.46%

27.07%

888
233

Ordinary
profitAmount37,50032,762
6,979

Operatingprofit+/- (%)

104 12.29%

50.80%

600

513
193

60.31%

87 16.96%
46

Most recent topics

Information about newly opened
restaurants
3/29 Nigiri CHUJIRO: Saga-Tokiwa restaurant
5/02 Nigiri CHOJIRO: Nishimuko restaurant
5/31 Tendon & Tempura Honpo "Santen"
Amagasaki-Tachibana restaurant (planned)

Other information
4/01 Menu renewal at every restaurant
4/10 Experiment on Santen FC format started
6/27 Wassho-kun & Koromon(symbolic mascots) debut !?

47

About our businesscategories

48

Category ①: Washoku Sato
The largest brand of SRS group
Extremely popular for its "Sato-Shabu"(all-you-can-eat style Shabu-Shabu)
Features• One of Japan's largest chains of family restaurants forJapanese food
• Many are located on main roads in the suburbs; someare in shopping centers• Serving Japanese meals, such as nabe (hot pot), ricebowl dishes, and noodles at reasonable prices• Realizing low-cost operation
Number of restaurants 197 restaurants(118 in Kansai, 39 in Chubu,
40 in Kanto areas)
Average spending ¥1,100 ~ ¥1,200
Strategies• Further cost reduction in opening new restaurants• Scrap & build to enhance profitability• Further evolution of "Sato-Shabu" and establishinganother core menu following "Sato-Shabu"• Adopting "table order system" at every restaurant

49

Category ②: Sushihan
Starting brand of SRS groupServing traditional Japanese cuisine
mainly in Osaka City

Features• Focused on Nabe & Sushi, making full use of
seasonal materials, taste of Dashi soup stock andcraftsmanship• Every restaurant provides Zashiki (Japanese styleroom), useful for large & small parties, Buddhist
memorial service and celebration• Fresh centers enable more stable quality of raw
materials• More freshness of foodstuff and more on-site
productivity• Home delivery service
Number of restaurants Houzenji Sushihan main
restaurant: 1
Sushihan: 12 restaurants
Average spending ¥1,900 ~ ¥2,000

Strategies

More on-site productivity by making
use of fresh centers

50

Category ③: Santen
Tendon & Tempura Honpo"Santen"Supreme Tempura
cooked bynonprofessional

While committing to genuine Tempura, realizing
thorough systemization to provide"Quick, Low-price and Sizzling"
Tendon & Tempura

1st restaurant opened in August,2012
Features• Fast-casual restaurants, a growing category• New category that is developed internally• Prawn Tendon (Tempura Bowl), the principal item, is served at 390
yen• Thorough systemization and low-cost operation

Number of restaurants Directly-managed:
6 restaurants
Average spending around ¥550
Strategies• Building up brand value• Actively opening new
directly-managed
restaurants• FC development
51

Category ④: Nigiri CHOJIROGenuine-oriented gourmet
Sushi-go-round

July, 2013
Foodsnet Corporation became awholly-owned subsidiary.
Features• Established brand image mainly in Kansai area
• Top brand of Kansai area as gourmet Sushi-go-roundrestaurants• Wide variety of restaurant development(large, mid-size, small-size and roadside restaurants)• Home delivery style Sushi restaurants are also
developing

Number of restaurants Nigiri CHOJIRO: 50
restaurants
Home delivery style Sushi: 23
restaurants
Average spending around ¥2,300
Strategies• Continuously opening new restaurants• Creating synergies with other categories of SRS groupfor purchase/logistics• Craftsman training (Omotenashi Dojo (hospitality
training))

52

Category ⑤: Katsuya

October, 2010
Sato Arcland Food Service Co., Ltd. wasestablished by joint investment with Arcland
Service Co., Ltd. (SRS 51%, ALS 49%).

Crispy, tender and big portion of pork
cutletFeatures• Developing direct restaurants and FC restaurants in Kansai area
• Simple operation (narrow-focused foodstuff, cooking method andnumber of commodities)
Serving total 17 menu items made of principal 5 items of foodstuff• Fair: Fair items are promoted monthly
Price cut campaign of regular menu items once in 2 months• Overwhelming volume impression

Number of restaurants Directly-managed: 11 restaurants
FC : 7 restaurants
Average spending
Strategies¥700 ~ ¥800

• Actively developing takeout items
and delivery service• Accelerated opening newrestaurants• Full-blown FC development

53

Overseas business
Aiming for "realizing Japanese restaurants where as many people as possible
worldwide
could enjoy genuine Japanese cuisine at reasonable prices."
TaiwanIndonesia
Joint venture
President ChainStore Corporation

Joint venture
PT.INDOMARCOPRISMATAMA

October, 2010: 1st restaurant started up
in Hankyu department store (Taipei)
April, 2013: 2nd restaurant started up in Danshui
District (newly-established residential area)

September, 2013: 1st restaurant started up(Jakarta)
Strategies

・Establishing business base in Indonesia
・Expanding sales network for lunchbox inIndonesia

Strategies

・More restaurants operated in Taiwan

Expansion to third
countries54

Meotozenzai
Founded in 1883
A famous brand inheriting culinary tradition of ordinary people of Osaka,located on the 1st floor of Houzenji main restaurant
Now rapidly gaining popularity,
thanks to the same-named NHK drama program "Meotozenzai"(August - September, 2013)55

Appendix

56

Corporate Profile

Registered Name
Headquarters
Established
Paid in Capital
Employees
Stock Listing
Subsidiary
Affiliates

Sato Restaurant Systems Co., Ltd.
30F Osaka Kokusai Building,
2-3-13, Azuchi-machi, Chuo-ku, Osaka-City, OSAKA, 541-0052
August 27, 1968
¥6,361,750,000854 (consolidated),Part-time and temporary employees: 9,086(consolidated)(as of end of Mar. 2014)
Listed on Tokyo Securities Exchange, First Section
Shareholders: 16,394(as of end of Sep. 2013)
Foodsnet Corporation(Nigiri CHOJIRO, Miyakobito)
Sato Arcland Food Service Co., Ltd. (Katsuya)
Space Supply Co., Ltd. (real estate management)
President Sato Co., Ltd. (Taiwan)
PT. Indosato Jaya Makmur Co., Ltd. (Indonesia)

57

Risk factors and measures
SRS group makes use of risk management for our day-to-day
corporate management.
Sales fluctuation
MeasureAccelerated opening new restaurants of "Katsuya" and "Santen", both of which are fast-casual restaurants
insusceptible to economic fluctuation.
"Washoku Sato" aims for enhancing its profitability up to the limit and for the lowest price zone.

MeasureTaking customers satisfaction as a motto, while planning affordable commodities in terms of price, quality andquantity.
Stable capabilities of procuring principal raw materials and kitchen capability always seeking streamlining.

Competition

Profit dispersion
MeasureSales dependency on the main category "Washoku Sato" declined from 90% to around 65%, due to acquisition ofFoodsnet Corporation.
Actively developing the fast-casual restaurants of "Santen" and "Katsuya", thereby facilitating further dispersion.

Food safety
MeasureChecking safety based on our own safety and health standards, on top of those set by the Health, Labor andWelfare Ministry.
Ensuring hand-washing and health status check at every restaurant, and safety/health control by voluntary
sanitation check.

Purchase price and stable procurement
MeasurePromoting purchase & development capabilities (e.g. direct purchase of foodstuff) and "vertical merchandising".
(examples) prawn, eel, Hijiki seaweed and grated radish

58

Human resource education

Manpower makes a company
SRS group has put its effort into fostering/reinforcing humanresource as its paramount agenda.
Recommencing the educator scheme
With respect to education plan for the entire company organization, to assign a
responsible person for supervising the plan in a centralized manner and, under a uniform
education scheme, to promote fostering human resource with focus on educating
candidates for executive positions.
Enhancing internal/external seminars
For discovering talented personnel and utilizing human resource, actively making use of
in-house seminar inviting outside lecturer and of various external seminars, according tosuch as hierarchy, age and roles.
Considering dispatching employees to graduate schools
Depending on the educational objective, fostering professional staff and candidates for
executive positions by making use of external education curriculum, beyond inheriting
internal know-how.
Enhancing job-rotation
Towards accomplishing the new mid-term management plan, and under a uniform
education scheme, carrying out well-planned staff assignment with a long-range
viewpoint, with an aim to foster a large number of specialists.
59

Shareholder composition

Total number of outstanding shares: 28,209,080
sharesShareholders: 16,394(as of Sep. 30, 2013)(thousandshares)％Yoshitaka Shigesato

2,530

8.97

Yuriko Shigasato

2,500

8.86

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

1,199

4.25

Japan Trustee Services Bank, Ltd.

807

2.86

Kirin Brewery Co., Ltd.

600

2.13

Key Coffee, Inc.

308

1.09

Sato Restaurant Systems Employees Stock Ownership

254

0.90

Mizuho Bank, Ltd.

235

0.84

Designated Securities Trust
Societe Generale Private Banking (Japan) Ltd.

231

0.82

Sompo Japan Nipponkoa Insurance, Inc.

210

0.74

OthersNumber of foreign-owned shares:
596,300 shares 2.1%
Number of shares owned by the special few:
8,951,107 shares 31.7%
Number of floating shares:
16,649,470 shares 59.0%

Others
68.53%

19,335 68.54

60

Contact
Sato Restaurant Systems Co., Ltd.
Corporate Planning Division.(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 would appreciate thatyou should understand the above mentioned presumptions and make decisions on any investment according to your61
own judgement.