Evaluation of Results for 2024
In our financial results for fiscal 2024, we achieved increases in sales and profit. Net sales reached a record-high 401.1 billion yen. Operating profit of 24.2 billion yen and net income of 14.0 billion yen were roughly double their respective amounts in the previous year. Our gross profit margin of 67.4% was down 0.2 percentage points from the previous year, yet remained the highest level in the industry. ROE improved significantly from 3.0% in the previous year to 8.3%, exceeding our current target value of 8.0%. Our promotion of store-centered management and our
marketing and pricing strategies yielded effect, with same-store sales strong at 111.6% the level of the previous year. Brand conversions and new store openings, strategically conducted
under strict site selection, also contributed to increased profit. At the same time, under the ongoing environment of cost pressures, impacts of inflation in the past year amounted to 7.4 billion yen. In addition to growing same-store sales, we were able to combat inflation and increase profit by steadily implementing initiatives including improvement of company-wide productivity and cost reduction projects through the promotion of DX.
In May of last year, the company announced a MediumTerm Management Plan covering the years 2025 to 2027. I see
2024 as a year in which we were able to make a solid run-up toward the achievement of the same-store growth, new store openings, overseas expansion, M&A, and financial targets that are parts of our growth strategy.
Net sales and gross profit margin
Progress toward the Medium-Term Management Plan
Existing store growth
The growth of existing stores is an important theme in achieving the profit targets of our Medium-Term Management
Plan. For same-store sales, we have set growth targets for guest count and average check. In 2024, guest count increased 6.9% and average check increased 4.4% from the previous year, achieving growth in excess of our target values. The main reason behind our particularly high increase in guest count was the increase in turnover made possible by our successfully investing working hours during busy periods.
While the additionally invested working hours raised labor costs, the resulting growth in guest count increased sales. The labor cost ratio decreased accordingly, leading to higher profit margin. As an initiative to support greater turnover rate, through DX we measured and visualized the time required to bus and clean the tables of departing customers and welcome the next customers.
This led to awareness-raising and operations that achieve faster clean-up without causing customers to wait.
We continue to evolve our promotion strategies and achieve enhancements to our customer attraction power. Skylark app members numbered about 12 million in March of this year, and the effectiveness of our app coupons is growing. At Gusto, we have strategically introduced region-specific pricing. We are now able to more dynamically change coupon discount amounts, which until now had been uniform. Rising prices have resulted in the issue of decreased frequency of visits by customers in non-urban areas. We are working to recover guest count through greater coupon-based discounts in these areas. We intend to further upgrade our dynamic coupons to enable distribution according to prefecture, individual store, and even individual customer preferences, leading to more effective customer attraction strategies.
The increase in average check is the result of carefully precise pricing and improvements to the menu mix. In response to soaring prices of raw materials, we analyze sales trends, customer satisfaction, and competitive trends on a per-product basis, and implement the minimum pricing needed to control declines in guest count along with price increases that follow enhancements to product value. Our menus like Gusto Fit, which lets customers freely combine small dishes, encourage the order of added desserts or other dishes, resulting in higher average check.
Store remodelings and brand conversions are also vital strategies for the growth of existing stores. In 2024, we carried out 76 store remodelings. At the 69 stores of Skylark Restaurants, this increased guest count by 5%. In remodeling projects, we review standards for the target stores and make changes to management aimed at more efficient return on investment. We plan 230 to 240 remodelings in 2025 as we work to maximize investment efficiency. In 2024, we carried out brand conversions at 64 stores, achieving a 150% increase in sales. We also achieved a sales effect of +6% through reduction in cannibalization, which contributed to increased revenue in areas encompassing the converted stores and neighboring stores. We plan brand conversions at about 40 stores in 2025.
Existing Store Growth KPI
New store openings (Domestic)
In 2024, we opened 31 new stores. We carefully select sites primarily in urban and station-front areas, opening only stores that offer high investment efficiency. Skylark Restaurant’s new store performance in 2024 demonstrated 26% higher net sales and +7% profit margin compared to existing stores. We plan about 60 new store openings in 2025. Our Medium-Term Management Plan includes a target of 300 new stores over the three years from 2025 to 2027. However, in light of increases in construction material and other costs beyond expectations, we are examining a reduction in the number of new store openings through careful site selection aimed at ensuring profitability
New Store Openings KPI
Overseas expansion
Overseas, we have expanded to about 100 stores in Taiwan, Malaysia, and the U.S. In Taiwan, we currently have 80 stores in six brands, with performance strong. We began operation of a new factory in Taiwan in 2023, creating firmer footing for store expansion. We plan to open 10 stores every year, making steady progress with 12 openings in 2024 and 12 openings planned for 2025.
In Malaysia, we have opened six SHABU-YO stores. In January of this year, we acquired Suki-Ya, a shabu-shabu brand that is popular with the Muslim community in Malaysia. While the income level of the country’s Malay population is rising, few restaurants cater to Muslims. We see great potential here for market expansion, and estimate room for over 70 stores in Malaysia alone. We also expect synergies that include the integration of supply chain and headquarters functions with our Malaysian subsidiary that operates SHABU-YO, along with efficiency afforded by the increased number of stores. In 2025, we plan to open six stores across both brands. For the SukiYa brand, we plan to expand stores into Muslim markets in
neighboring countries such as Indonesia.
Pursuit of M&A
Sukesan Udon joined our Group in October last year, contributing greatly to our sales. In 2024, we recorded revenue from the brand for the October-December period only, but this alone contributed 4.3 billion yen in net sales and 100 million yen in operating profit. We opened the brand’s first Kanto region store in December 2024, expanding to four stores by the end of April 2025. All of these stores have exceeded our initial expectations for customer attraction and sales. In the current fiscal year, we plan to open 21 stores through new store openings and brand conversions. At the same time, we are fortifying the brand’s operations and supply chain as a part of our preparations to accelerate store openings from next year.
As in our acquisition of the Suki-Ya chain in Malaysia in January 2025, we will continue to actively advance projects that offer strong synergies with our business, both in Japan and overseas.
「M&A」KPI
Addressing Management Issues
The addition of Sukesan Udon fills a low-priced area that had been left blank in our brand portfolio. With the acquisition, we have readied a group of brands that can respond to increasingly polarized dining-out needs and meet diverse customer motivations.
Under Japan’s low birthrate and aging population, we recognize a major issue in the declining profitability of our roadside stores, particularly in non-urban areas. Taking advantage of the strength we hold in our multiple brands, we plan to eliminate cannibalization of surrounding stores and improve the profitability of individual stores through conversions to Sukesan Udon and Syabu-Yo stores, which have high customer attraction power. At the Gusto stores that we operate nationwide, we have introduced regionspecific pricing. We will continue implementing pricing strategies that motivate regional customers to visit our stores. We are also making every effort to boost our profitability through means that include reducing labor costs by outsourcing home delivery work and operational streamlining that enables the development of human resources capable of both food preparation and service.
Toward Management with an Awareness of Cost of Capital and Stock Price
Our company places importance on ROE as a management indicator for medium- to long-term growth. Regarding the cost of capital, our company estimates a value of 7.0% on the basis of CAPM. However, as global investors’ expectations tend to be around 8%, we use a conservative estimate of 8%. We will continue to raise ROE with the cost of capital as our minimum target, aiming for 9-10% in 2027, the last year of our MediumTerm Management Plan.
Many methods exist for raising ROE, including purchase of a company’s own shares from a standpoint of capital efficiency. Instead of reducing capital, however, our policy is to increase returns through active investment in high-growth areas in our main business.
Our company also offers substantial shareholder benefits. Our stock price is relatively high, with PBR significantly greater than 1. Stock price reflects future growth prospects in addition to current earning power. In the same way, we use PBR as an indicator that reflects return on capital and expected growth rate, and will continue to provide investors with detailed discussions of our growth story
ROE（%）
Our Approach to Shareholder Return Policy and Cash Allocation
Regarding our shareholder return dividend, in fiscal 2024 we paid a dividend of 18.5 yen per share following positive performance. In fiscal 2025, we expect to increase the dividend to 20.0 yen. We will continue aiming for a stable dividend with a payout ratio of 30%, balanced against profit. We recognize that our shareholder benefits are at a high level compared to competitors. Our stock is very popular with individual shareholders, and we plan to continue the current program.
In cash allocation, our policy is to allocate 30% to dividends and the rest to growth investments. We will systematically make use of interest-bearing debt as a means of raising funds for growth investments. In 2024, we obtained an A- credit rating. This allows us to raise funds through the issuance of corporate bonds. We raised 20 billion yen last year and 9.3 billion yen in April of this year. We intend to continue diversifying our methods of raising funds and to further stabilize our finances. Regarding the risk of rising interest rates, we expect limited impact as we engage in systematic procurement at fixed interest rates.
From a standpoint of financial discipline, our policy is to maintain net debt-to-equity ratio, a key financial indicator, at its current appropriate level. The indicator was stable at 0.51 in 2024. We plan to continue pursuing an optimal capital structure and promoting growth investment while maintaining financial soundness.
In an increasingly uncertain business environment, we will work to strengthen our financial standing and business foundation and to continuously enhance our corporate value by addressing management issues and steadily executing growth strategies.
Net debt-to-equity ratio (multiple)
I ask for the continued support of all of our stakeholders.