■Future direction

1. Future direction and progress so far

SFP Holdings (3198) announced a medium-term management plan for the next 3 years every year until the 2020/2 fiscal year, but since the 2021/2 fiscal year, the future was uncertain due to the effects of the COVID-19 pandemic, so no announcement was made. However, in anticipation of future environmental changes, etc., the short- and medium-term directions have been clarified, and they are working on (1) opening stores in regional cities, (2) expansion of the popular bar business type they are focusing on, (3) growth of existing stores (tourists visiting Japan, late-night business), (4) inflation countermeasures (price transfer, etc.), and (5) DX promotion (cashless, etc.).

(1) Opening new stores in regional cities

The development of the main business type “Isomaru Fisheries” is centered around 1 metropolitan area and 3 prefectures in the metropolitan area, and they have been searching for expansion into regional cities even before the COVID-19 pandemic, including other business categories. Looking back on the results up to the 2024/2 fiscal year, in addition to Kyoto/Osaka/Hyogo (total 21 stores in 3 areas), in addition to successfully opening* stores in Sendai (4 stores), Shizuoka (1 store), Nagano (2 stores), and Kumamoto (2 stores), it has covered Sapporo (1 store), Aichi (8 stores), and Fukuoka (5 stores) due to FC development. The company is looking at opportunities to open stores in untapped core cities, and positions it as one of the medium-term growth drivers. In particular, Hokuriku, China, and Kyushu are priority development areas, and the scale will be expanded by area by area by first solidifying a foothold and then opening additional stores.

*Among them, the opening of stores in Nagano and Kumamoto was due to the “Alliance Plan.”

(2) Expansion of the popular bar business

In order to respond flexibly to environmental changes triggered by the COVID-19 pandemic, we are focusing on the popular bar business type where stable income can be earned with low investment while utilizing the strengths of the main business category up until now. A popular bar is a business type (profit model) with features such as 1) residential/shopping district, 2) road surface, 3) small size, 4) business from 17:00 to 29:00 (5:00 the next morning), and 5) small number of people/high turnover, etc., and in the future, they will develop mainly under 4 brands: “5 of 5,” “Hamayaki Dragon,” “Torihira-chan,” and “Yaki Tonfukusuke.” Since it has multiple business categories within the popular bar genre, it is possible to select the business type that best matches and open a store by comparing it with the market location, customer base, and competitor status, and this point is also an advantage. In other words, it can be defined as a business type where stable income can be earned with low investment centered on housing/shopping districts while retaining advantages such as road surface location, day and night operation (capturing a wide range of demand according to usage scenes), and high rotation speed in the main business category. In the future, the plan is to increase the number of stores opened, mainly in areas where “Isomaru Fisheries” has established a foothold, including regional cities.

(3) Growth of existing stores (capture demand)

Since the increase in visitors to Japan, which drives current performance, can be expected as a further growth room for existing stores, it is a policy to establish a system (personnel system revisions, salary level increases) so that demand is not missed.

(4) Measures against inflation

While raw material prices and energy prices are expected to remain high in the future, while proceeding with the optimization of procurement costs that make use of economies of scale with the Create Restaurants Holdings Group, we will continue to maintain cost ratios through proper price transfer, etc., and also strive to suppress sales and administration costs.

2. Medium- to long-term focus

We are also paying attention to how far the company's main business category will recover in preparation for the post-COVID-19 pandemic, and whether expansion into regional cities and acceleration of store openings in the popular bar business will become a new axis of growth in the future. In particular, with regard to expansion into regional cities, regional stores (Isomaru Fisheries), which have been experimentally operated until now, have also generally remained steady, and full-scale development is expected at last. At that time, I am concerned about the development method, whether it is a directly managed store, FC, or M&A (alliance concept), but it is thought that having multiple options depending on the situation in terms of speed, profitability, investment burden (risk), etc. will also be a factor that increases the probability of success. Meanwhile, with regard to the popular bar business type, it is understood that the profit model of “Isomaru Fisheries” has been tuned in accordance with environmental changes, and since results have already been shown as expected, I would like to keep an eye on future trends as to what kind of evolution it will take in the future. Also, cooperation with Create Restaurants Holdings (group companies) will be a major advantage when it comes to inflation countermeasures and DX promotion. Both are fields where economies of scale are key points, and I see a high possibility that industry restructuring will progress from such movements.

(Written by FISCO Visiting Analyst Ikuo Shibata)