Ohsho Food Service : 〔Delayed〕 Consolidated Financial Results for the First Quarter of the Fiscal Year Ended March 31, 2023

								July 29, 2022
		Summary of Consolidated Financial Results
	for the First Quarter of the Fiscal Year Ending March 31, 2023 (FY3/23)
		(Three Months Ended June 30, 2022)		[Japanese GAAP]
Company name:	OHSHO FOOD SERVICE CORP.			Listing: Tokyo Stock Exchange
Stock code:	9936					URL: https://www.ohsho.co.jp
Representative:	Naoto Watanabe, President
Contact:	Masahiro Inagaki, Managing Director, Executive Officer, General Manager of Administration
	Division Headquarters
	Tel: [phone]
Scheduled date of filing of Quarterly Securities Report:		August 12, 2022
Scheduled date of payment of dividend:				-
Preparation of supplementary materials for quarterly financial results:	None
Holding of quarterly financial results meeting:				None
				(All amounts are rounded down to the nearest million yen)
1. Consolidated Financial Results for the First Quarter (April 1, 2022 - June 30, 2022) of FY3/23
(1) Consolidated results of operations				(Percentages represent year-on-year changes)
		Net sales		Operating profit	Ordinary profit	Profit attributable to
			owners of parent
		Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%
Three months ended Jun. 30, 2022	22,617	11.9	2,185	28.1	3,044	(3.4)	1,872	(12.7)
Three months ended Jun. 30, 2021	20,213	11.4	1,706	309.1	3,151	430.7	2,144	546.1

Note: Comprehensive income (millions of yen)

Three months ended Jun. 30, 2022:

2,049

(down 8.0%)

Three months ended Jun. 30, 2021:

2,227

(up 540.8%)

Basic net income per share

Diluted net income per share

Yen

Yen

Three months ended Jun. 30, 2022

99.69

-

Three months ended Jun. 30, 2021

114.22

-

(2) Consolidated financial position

Total assets

Net assets

Equity ratio

Millions of yen

Millions of yen

%

As of Jun. 30, 2022

85,049

59,832

70.4

As of Mar. 31, 2022

89,405

59,098

66.1

Reference: Equity (Shareholders'

equity + Accumulated other

comprehensive income) (millions of yen)

As of Jun. 30, 2022: 59,832

As of Mar. 31, 2022:

59,098

2. Dividends

Dividend per share

1Q-end

2Q-end

3Q-end

Year-end

Total

Yen

Yen

Yen

Yen

Yen

Fiscal year ended Mar. 31, 2022

-

50.00

-

70.00

120.00

Fiscal year ending Mar. 31, 2023

-

Fiscal year ending Mar. 31, 2023 (forecasts)

60.00

-

60.00

120.00

Note: Revisions to the most recently announced dividend forecast: None

3. Consolidated Forecasts for the Fiscal Year Ending March 31, 2023 (April 1, 2022 - March 31, 2023)

(Percentages represent year-on-year changes)

									Profit attributable to	Basic net
	Net sales		Operating profit		Ordinary profit	income per
			owners of parent
									share
	Millions of yen		%	Millions of yen		%	Millions of yen	%	Millions of yen	%	Yen
First half	43,969		8.7	3,441		7.8	4,456	(25.5)	2,911	(31.9)	154.96
Full year	90,029		6.2	7,516		8.0	8,627	(33.8)	5,478	(37.8)	291.60

Note: Revisions to the most recently announced consolidated forecasts: None

* Notes

1. Changes in consolidated subsidiaries during the period (changes in specified subsidiaries resulting in changes in the scope of consolidation): None

Newly added: -

Excluded: -

1. Application of special accounting methods for presenting quarterly consolidated financial statements: None
2. Changes in accounting policies and accounting estimates, and restatements

1)	Changes in accounting policies due to revisions in accounting standards, others:	None
2)	Changes in accounting policies other than 1) above:	None
3)	Changes in accounting estimates:	None
4)	Restatements:	None

(4) Number of shares issued (common shares)

1)	Number of shares issued at the end of the period (including treasury shares)
	As of Jun. 30, 2022:	23,286,230 shares	As of Mar. 31, 2022:	23,286,230 shares
2)	Number of treasury shares at the end of the period
	As of Jun. 30, 2022:	4,498,356 shares	As of Mar. 31, 2022:	4,498,356 shares
3) Average number of shares issued and outstanding during the period
	Three months ended Jun. 30, 2022:	18,787,874 shares	Three months ended Jun. 30, 2021:	18,772,064 shares

• The current quarterly financial report is not subject to quarterly review procedures by certified public accountants or auditing firms.
• Explanation of appropriate use of earnings forecasts, and other special items
  Forecasts of future performance in this document are based on assumption judged to be valid and information currently available to the Company's management, but are not promises by the Company regarding future performance. Actual results may differ materially from the forecasts for a number of reasons. Please refer to "1. Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Forecasts and Other Forward-looking Statements" on page 5 for forecast assumptions and notes of caution for usage.

	OHSHO FOOD SERVICE CORP. (9936) Consolidated Financial Results for the First Quarter of FY3/23
Contents of Attachments
1. Qualitative Information on Quarterly Consolidated Financial Performance	2
(1)	Explanation of Results of Operations	2
(2)	Explanation of Financial Position	5
(3)	Explanation of Consolidated Forecasts and Other Forward-looking Statements	5
2. Quarterly Consolidated Financial Statements and Notes	6
(1)	Quarterly Consolidated Balance Sheet	6
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income	8
	Quarterly Consolidated Statement of Income
	For the Three-month Period	8
	Quarterly Consolidated Statement of Comprehensive Income
	For the Three-month Period	9
(3)	Quarterly Consolidated Statement of Cash Flows	10
(4)	Notes to Quarterly Consolidated Financial Statements	11
	Going Concern Assumption	11
	Significant Changes in Shareholders' Equity	11

1

OHSHO FOOD SERVICE CORP. (9936) Consolidated Financial Results for the First Quarter of FY3/23

1. Qualitative Information on Quarterly Consolidated Financial Performance

(1) Explanation of Results of Operations

Summary of consolidated results of operations for the first three months of FY3/23 (April 1, 2022 to June 30, 2022)

	Amount		Changes vs.	Changes vs.
	% to sales	First three months of	First three months of
	(millions of yen)
		FY3/22		FY3/20
Net sales	22,617	100.0%	Up	11.9%	Up	8.5%
Operating profit	2,185	9.7%	Up	28.1%	Up	16.0%
Ordinary profit	3,044	13.5%	Down	3.4%	Up	52.5%
Profit attributable to	1,872	8.3%	Down	12.7%	Up	43.6%
owners of parent

During the first three months of the fiscal year ending March 31, 2023 (the "period under review"), the Japanese economy saw a personal consumption recovery thanks in part to the various governmental measures amid the declining trend of new COVID-19 cases and the ongoing normalization of socio-economic activities. However, given a heightened risk of economic setback caused primarily by the restriction of economic activities due to the prolonged Ukrainian crisis and China's zero-COVID policy, the economic outlook is becoming increasingly uncertain in anticipation of a further spike in food and energy prices.

The restaurant industry's business saw a return of customer traffic mainly of family dinners due to the nationwide lifting of restrictions on restaurants on March 22, 2022, allowing restaurants to open during the "Golden Week," a series of national holidays from late April to early May, for the first time in three years. However, the life-style changes due to the pandemic restricted the customer traffic at night and the challenging environment has been continued for the dinner time demands.

Under such circumstances, the Group has been making every effort for quality, service and cleanliness (QSC) improvement to achieve our mission to serve safe, secure and delicious food to the customers and implement the medium-term management plan.

As a result of such efforts, we attracted more customers than before, and successfully recovered in-store sales while keeping strong takeout and delivery sales. Consequently, the results of operations during the period under review exceeded those for the same period in the fiscal year ended March 31, 2020, which was before the outbreak of COVID-19.

The following is an overview of our initiatives and achievements during the period under review. They are described in line with four items consisting of sales strategy, restaurant opening strategy, and franchise chain promotion strategy, which are the three primary strategies in our medium-term management plan entering its second year since the restart, as well as sustainability initiatives.

1. Sales strategy
   Under 2022 slogan "The power of delicious meals will change the future," the Group kept improving QSC as one team.
   Specifically, recipes and manuals for the 14 most popular dishes were reviewed for further quality improvement. We reopened Ohsho Cooking Dojo (an in-house training program) for cooking trainings and cooking skill tests while continuing to provide online training programs to ensure that all the employees can participate in the program to make delicious meals taste even better.
   We implemented the sales promotion campaign of Renewed Super Dry Launch Sale discounting 50 yen per mug (including tax) to offer excellent paring of the Asahi Super Dry Beer and our food. This campaign was very well accepted and the planned campaign period of April 1 to 30 was swiftly extended to the end of May.
   In addition, the Gyoza Club Customer Appreciation Campaign for 2022 started in January had a "double stamp campaign" period from May 16 to 31, followed by the 2023 version of the Gyoza Club Customer Appreciation Campaign starting on June 24. Customers who collect 35 stamps will receive either a ramen bowl or a cushion blanket, and those who collect 50 stamps will receive either a pair of earbuds or a shogi game set. Those are new gifts originally designed to offer more fun to the customers.

2

OHSHO FOOD SERVICE CORP. (9936) Consolidated Financial Results for the First Quarter of FY3/23

For the delivery service that we successfully expanded during the pandemic, we have increased the number of stores that can provide the delivery service from 546 at the end of March 2022 to 574 including franchised stores at the end of the period under review. Sales from the delivery service retained strong even after the infection calmed down.

Due to rising costs such as raw material prices, labor costs, and logistics costs, prices of certain menu items were raised on May 14, 2022. About 20% of items on the main menu had 20 to 30 yen increase in price excluding tax. At the same time, we reviewed the recipes to further our pursuit of better taste.

Since we raised the prices, however, we saw an increase rather than a decrease in both sales per customer and customer traffic. We attribute this to the above mentioned improvement in the QSC level and aggressive sales promotion measures as well as coverage by major media and a new CM featuring an actor Taiga Nakano and an original CM song performed by Ketsumeishi (a popular hip hop group). We believe all of these endeavors helped appeal for our tasty foods and convey our messages: "We have gone through a lot, but let's have tasty meals and move forward to a bright future." and "The power of delicious meals will change the future."

As a result, we achieved the record high monthly sales of all stores for five consecutive months from February to June 2022. In May 2022, sales of all directly operated stores was 7,384 million yen, which was the record high not just as May sales but the largest ever as a single month sales amount since the foundation.

1. Restaurant opening strategy
   During the period under review, we opened one directly operated store and converted two franchised stores to direct operation.
   The new store was opened at a shopping complex COTOE Nagareyama Otakanomori in April 2022. The store opened in time with the opening of this shopping complex as the first store in Nagareyama City, Chiba Prefecture, where population continues to grow with an increasing number of young families. The complex is attracting all generations, especially families with kids and the store has been reporting favorable sales.
   Regarding the two franchised stores which were converted to direct operation, one is located at Kuzuha in Hirakata City in Osaka Prefecture, and the other is at Kaminokura in Nagoya City, Aichi Prefecture, converted in May and June, respectively. These two stores had difficulty in continuing business as franchisees due to aging of the owners. However, they have been focusing on community-based store operations for many years and enjoyed strong patronage from local customers. Also, they have potential of acquiring new customers. In view of these reasons, we took over the stores to operate them directly.
   Effective from July 2022, we reorganized the Restaurant Opening Department responsible for opening of directly operated stores and the FC Promotion Department responsible for the FC business to establish the Restaurant Opening & FC Contract Management Department. Through the centralized management of property information and lease contracts of directly operated and franchised stores, we will further strengthen the store development including franchised stores.
2. Franchise chain promotion strategy
   Continuing from the previous fiscal year, we have strengthened our efforts in improving the QSC of franchised stores by helping them improve cooking skill through trainings at Ohsho Cooking Dojo, and reinforcing franchise consultants' periodical rounds of franchised stores to strengthen a hygiene management based on a daily hygiene report, inspections of cleaning status of stores, and contamination prevention measures based on the contamination prevention manual. Also, upon the price revision mentioned above, we reviewed recipes and cooking procedures mainly of our 14 most popular items.
   For the sales promotion activities, we have put in place the system to implement campaigns at franchised stores in consistent with those at directly operated stores. Specifically, we enhanced in-store announcement of all-store campaigns such as the draft beer campaign or the Gyoza Club Customer Appreciation Campaign 2023.
   As a result, sales of the FC stores continued to be strong as in the previous fiscal year. Accordingly, sales of products shipped from our factories to franchised stores significantly exceeded those in the same period of the previous fiscal year.
   As mentioned above, the FC Sales Department was established by separating an FC contract management function from the FC Promotion Department in July 2022. Through the establishment of the new department, we

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