Business Performance Reports

Business Progress and Results
(from April 1, 2017 to March 31, 2018)

During the consolidated fiscal year under review, Japan’s economy experienced a gradual recovery as government stimulus and monetary easing by the Bank of Japan helped to improve corporate earnings and the employment situation, which led to increase in individual consumption.

The food service industry saw a second consecutive year of increased overall annual sales. Primary segments such as Fast Casual and Casual Dining, saw increase in the average customer spend due to increase in sales of products with relatively high value, such as special and limited-time offer items. As a result, sales have increased for nineteen consecutive months.

Given this environment, the Group pursued a management policy that emphasizes earnings. In Japan, the Company worked to boost earnings by improving customer satisfaction and raising visibility through proactive product promotions and a nationwide TV ad campaign, among other initiatives. The Company continued to actively pursue M&As and new restaurant openings both nationally and internationally.

Outside Japan, the Company continued with M&As and new restaurant openings, but also closed unprofitable ones, with an eye on markets in countries where the Company does business, which helped to improve the profitability of overseas businesses.

During the fiscal year under review, the Company opened eighteen new MARUGAME SEIMEN restaurants and 126 other outlets after working to expand into new business areas, with new business models such as BUTAYA TONICHI. Outside of Japan, the Company continued an aggressive expansion, while also emphasizing profitability, by opening 121 new directly owned outlets. For franchises and other restaurants (Note1), the Company expanded operations by opening 111 outlets.

As a result, the number of restaurants operated by the Group at the end of the consolidated fiscal year under review increased by 329 year on year (of which 88 were franchise restaurants) to 1,540 restaurants (of which 379 were franchise restaurants).

Regarding the Company’s business performance during the fiscal year under review, consolidated total trading transactions continued to see robust growth, increasing 14.5% year on year to ¥116,504 million. Operating profit dropped 11.4% to ¥7,635 million and profit before tax declined 15.2% to ¥7,175 million. Profit for the year attributable to owners of the parent company totaled ¥4,665 million, down 17.2% year on year.

Additionally, EBITDA declined 3.5% year on year to ¥11,745 million, while adjusted EBITDA declined 4.4% year on year to ¥12,362 million (Note2).

Notes:
1.Restaurants other than those directly owned and operated by the Company or its subsidiaries are referred to as franchise restaurants.
2. The Group now discloses EBITDA and adjusted EBITDA starting with the current fiscal year under review as useful comparative information for the Group’s performance.
EBITDA excludes the effects of non-cash expenditure items (depreciation and amortization, etc.) from operating profit.
In addition, adjusted EBITDA excludes the effects of impairment losses and extraordinary expenses (advisory fees concerning stock acquisitions, etc.) from EBITDA.
EBITDA and adjusted EBITDA are calculated as follows.
・EBITDA = Operating profit + Other operating expenses – Other operating income + Depreciation and amortization
・Adjusted EBITDA = EBITDA + Impairment losses + Extraordinary expenses