■Company Features

1. Achieving both revenue stability and growth through unique brand management.

The diversity of owned brands (brand portfolio), leveraging strong business development capabilities, achieves the dual goals of revenue stability and sustainable growth by enabling agile responses to environmental changes and distributing the life cycles of core brands. Since 2020, during the COVID-19 pandemic, the industry has faced unprecedented impacts due to repeated states of emergency (business suspensions, shortened hours of operation, and restrictions on alcohol service). However, the extent of impact and recovery speed has varied by business type, such as cafe, amusement, and specialty dining establishments, which does not negate the effectiveness of optimizing the brand portfolio. Moving forward, the focus will be on restructuring the brand portfolio with a view towards the post-COVID era (including brand development outside the restaurant sector) as well as selecting and concentrating investments.

2. Improving efficiency and customer movement through dominant deployment.

DD Group <3073> is fundamentally based on a dominant deployment strategy that leverages the diversity of its owned brands. Concentrated openings in prime locations are advantageous for attracting customers, in addition to allowing for reduced logistics costs and enhanced efficiency. Specifically for this company, due to the differing roles and characteristics of its brands, it is possible to open stores with brands suited to the location with minimal brand competition (cannibalization), resulting in synergistic effects that enhance customer movement between brands. Following a series of M&A activities, the area of openings has expanded to major cities outside the metropolitan area, while maintaining a dominant store opening strategy. Although store development primarily in urban areas was heavily impacted by the pandemic, the return of foot traffic has renewed the advantage of such locations. Furthermore, the company's valuable store assets and knowledge of utilizing space are likely to become significant Weapons for launching new businesses and collaborating with other companies in the future.

3. Creating unique stores based on an original concept.

The development of unique business concepts and the creation of distinctive stores are also strengths of this company. The focus on 'concepts', 'spaces', and 'stories' in crafting unique dining experiences and the theatrical performances where staff sing to delight customers are differentiating factors from competitors. The company also emphasizes 'customer delight' in its corporate philosophy, and in addition to pursuing further differentiation from peers, it continues to seek new value creation through collaboration with external resources including different industries and other companies' intellectual properties (IPs) such as anime and gaming.

4. Organizational capability that has successfully led numerous M&A activities.

One of the factors supporting the company's growth has been M&A, which has played an important role. Not only expanding scale, but through the acquisition of Food Scope, the company has secured medium- to high-price customer segments; entering the amusement business through the acquisition of Bagus; and the expansion of the café business and IP business through the acquisition of Commercial Art and SLD. These moves provide a stepping stone for expanding the food and beverage business domain (optimizing the business portfolio), and the ability to share the company's management philosophy, management resources, and operational know-how within the group has enabled a unified value creation (synergy creation), which is highly valued. Additionally, the experience and organizational capabilities developed there are expected to be a significant advantage in future group restructuring and M&A strategies.

(Written by Fisco Guest Analyst Ikuo Shibata)