■Main activities of SFP Holdings <3198>

1. Achievements in new store openings and format conversions

In the first half of the fiscal year ending February 2025, new store openings were carried out at 4 locations (including 2 franchise stores) and format conversion at 1 location. Notably, the expansion into untapped areas aimed at regional cities includes the first store opening in Kanazawa City (Ishikawa Prefecture) and the new store openings (2 locations) of the popular izakaya format ("Five of Five") focusing on as the second pillar. Particularly, the "Isomaru Suisan" Kanazawa store, which opened in July 2024, seems to have had a smooth start. Moving forward, in addition to store openings in regional cities, there are plans to seek opportunities for stores in areas with high inbound demand such as Tokyo, Osaka, Kyoto, etc. As for the third quarter and beyond, store openings for "Isomaru Suisan" (Ofuna store), "Five of Five" (Kawaguchi store, Moto-Atsugi store) are scheduled.

2. Attracting inbound tourists

Amid the favorable trend of inbound demand by tourists visiting Japan, the percentage of inbound tourists contributing to the overall sales of "Isomaru Suisan" (directly operated stores) has increased to 12.9% in the second quarter (compared to 10.2% in the same period of the previous year), significantly contributing to the improvement in performance. Successfully attracting inbound demand is evidence that the "Isomaru Suisan" style is perfectly in line with the preferences of inbound tourists, and it seems that in some locations, more than half of the revenue is from inbound tourists*. As for the characteristics of inbound tourists, dinner time usage is high, centered around meal needs, with a higher average spending per customer compared to Japanese customers, and a tendency to order items such as crab, eel, and seafood. The company is working on marketing enhancements for inbound tourists and developing high-priced products* to act as new revenue drivers.

*1 In some stores in the Osaka Namba area, it exceeds 80%.

*2 From June 2024, high-priced items targeting inbound tourists, such as the luxury crab bowl for ¥3,980 (incl. tax ¥4,378), and the "Treasure bowl" for ¥4,980 (incl. tax ¥5,478), have been introduced to the high inbound tourist ratio area of Namba.

3. Regarding personnel structure

In the industry as a whole, labor shortage is becoming a challenge, and in the company itself, measures such as wage increases and active recruitment of foreign staff have been taken in order not to hinder the resumption of late-night operations and future store expansion. The increase in personnel expenses due to the expansion of recruiting in the previous period became a factor squeezing profits, on the other hand, the number of employees increased by about 160 compared to the previous year (at the beginning of the period) and was strengthened, allowing for extended operating hours, and also became a positive factor for future new store openings. In particular, the proportion of foreign staff in recruitment has increased, and there are plans to enhance support systems considering long-term employment as valuable labor force.

A "International Human Resources Management Department" aimed at comprehensive employment support and development throughout the group was newly established in April 2024.

(Written by Fisco Guest Analyst Ikuo Shibata)