9 Aug. 2019
The consolidated financial results for the first quarter of FY 2019 were as follows:
連結経営成績
(百万円未満切り捨て、%表示は対前年同四半期増減率) During the first quarter of FY2019, we implemented various initiatives from the customer perspective, which led to an increase in the number of customers and sales as compared to the same period in the previous year. However, rising costs and personnel expenses affected profits, resulting in profits that were lower than the same period of the previous year. We project the environment surrounding the dining industry to become even more severe due to the continued labor shortage and the consumption tax rate hike planned in October 2019. We will work together as a team to proactively strengthen our Customer Impressive Satisfaction (CIS) and Employee Impressive Satisfaction (EIS) from the customer perspective and devote our efforts to improving our performance.Relocation of the Head Office for the centralization of all functions
On July 14 (Sunday), 2019, Sagami’s headquarters relocated to Yatsuragi, Moriyama ward, Nagoya city. For over 30 years, the headquarter functions and back office functions which had been located in two separate areas (Management Planning and Administration department in Moritaka, Moriyama ward, Nagoya city, and Purchasing and Product Development functions in Tobishima-mura, Ama-gun, Aichi prefecture) were relocated to one area and the functions were centralized at the new location. By encouraging closer communication and collaboration of all departments, we will develop new menus and improve issues with speed and efficiency which would allow us to move forward to actualize our management philosophy through the physical proximity of all departments.New Opening of Sagami
On May 24 (Friday), 2019, our 135th Sagami restaurant, Sagami Kanazawa Matsumura, opened in Kanazawa city, Ishikawa prefecture. The restaurant has rooms that cater to group dinners/ private parties and the multi-purpose bathrooms are universally accessible. A soba-making area located by the entrance allows customers to enjoy the soba-making process. Going forward we will be accelerating our openings of Sagami restaurants focusing on the Chubu and Kanto regions.Work-Style Reform Initiatives
From April 2019, certain provisions of the work style reforms bills will become effective with the rest taking effect subsequently. With regard to paid holiday leave, we have implemented a system that keeps a record of employee leave status. We will ensure that all our employees will take the legally entitled holidays.General Meeting of Shareholders
On June 27 (Thursday), we held our 49th Annual General Meeting of Shareholders at the Owariasahishi Community Hall located at Owariasahishi, Aichi prefecture. The items on the agenda for this year’s meeting were the following 9 items and we received approval on all bills. We appreciate the support of our shareholders.-
- *Appropriation of surplus
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- *Partial amendment to the Articles of Incorporation
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- *Election of 7 directors (excluding Directors who are Auditors)
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- *Election of 3 Auditors who are Directors
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- *Election of 1 Substitute Auditor who is a Director
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- *Determination of remuneration for Directors (excluding Directors who are Auditors)
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- *Determination of remuneration of Auditors who are Directors
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- *Determination of stock remuneration of Directors (excluding Directors who are Auditors)
- *Continuance of takeover defense measures with regard to large-scale purchase of our company’s shares
At the Shareholder’s meeting, we received many questions and comments from the customer perspective, such as regarding restaurant equipment and products, and this invaluable dialogue reaffirmed to us the immense support we continue to receive from our shareholders. Going forward, we will commit to undertaking further reforms to fulfill and exceed the expectations of our valued shareholders and customers.
Shuji Ito, President & COO
Aug. 9, 2019 (Reiwa 1)
10 May 2019
During the current consolidated fiscal year (April 1, 2018- March 31, 2019), the Japanese economy was in midst of the longest post-war recovery period in part due to the gradual growth of the global economy and steady improvements in employment situations and income environment underpinned by the recovery of domestic corporations and capital investment. However, due to concerns over overseas policy trends and the rising geopolitical risk as well as the occurrence of natural disasters domestically, the recovery was lacking in strength and speed. In the dining-out industry, conditions continued to be severe due to intensified competition for the acquisition of customers with competitors as well as across non-related businesses and industries. In addition, soaring material costs, and increase in personnel expenses as a result of persistent labor shortages, as well as increasing pressures from the consumers’ savings-oriented mindset added to the harsh conditions.
FY2018 Financial Results
The financial results for FY2018 are as follows. With respect to our consolidated performance for the fiscal year ended March 31, 2019, while sales, operating profits, ordinary profits exceeded our initial projections, net profit fell below our projections by a substantial margin due to valuation loss on investment securities and impairment losses. We expect that the environment surrounding the dining-out industry will become more severe with the consumption tax rate hike planned in October 2019, and to face such challenges, we will take a lead in proactively strengthening our Customer Impressive Satisfaction (CIS) and Employee Impressive Satisfaction (EIS) and thereby devote our efforts in improving our performance to ensure growth and profitability.Efforts made in FY2018
・Transition to a Holding Company Structure
On October 1st, Sagami Group transitioned its governance structure to a holding company structure. Along with this transition, Sagami Chain Co., Ltd. changed its trade name to Sagami Holdings Corporation, and D.D.A. Co., Ltd. changed to Sagami Restaurants Co., Ltd. The major objective behind this transition is to accelerate the decision making speed. In addition, by separating the management strategic functions and the operational execution functions, we will have in place a more agile and flexible decision-making system and a more efficient execution process.・Creating the Sagami Group Management Philosophy
We co-create the delights of “食(Shoku)” (eating) and “職(Shoku)” (working) to serve our communities ~For your smiles and life of abundance~ At the time of transitioning to a holdings structure on October 1, we created a new managkaement philosophy and aimed to be a 100-year company. In order to create unprecedented new value, we implemented a three-way satisfaction system (for customer, employer, and society) based on the keywords of CSV (Creating Shared Value) and ESG (Environmental, Social and Governance). Included in this is our aim to provide all our customers and employees with both tasty food and also an environment of fun and smiles, and thereby contribute to our stakeholders. Based on this new management philosophy, we will make a group-wide effort to strengthen our company as we move forward on our path to growth.・Acceleration in the Speed of New Restaurant Openings as the Sagami Group
In FY 2018, we accelerated the number of new restaurant openings and opened 11 outlets both domestically and overseas. Sagami Restaurants Co., Ltd. opened a total of 5 outlets, with the core brand, “Sagami“, opening 3 restaurants: Sagami Koshigaya Minami (April), Sagami Tokai (June), Sagami Toyohashi Hashira (July), and “Katsutani”, a specialty Tonkatsu (deep-fried pork cutlets) restaurant, opening 2 outlets: Apita Yokkaichi (May) and Aeon Mall Nagoya Dome-mae (November). Ajino Mingei Foodservice Co., Ltd. opened a total of 4 outlets, with 2 “Ajino Mingei” suburban-style outlets for the first time after a 16-year hiatus: Kasukabe Yurinoki Doori (March) and Across Plaza Higashi Kurume (March), and “Bubuka”, a specialty soup-less Ramen noodle restaurant, opening 2 outlets: Kichijoji Kita-guchi (April) and Shinjuku Kinokuniya (November). Overseas, we opened SAGAMI Milano Centrale in Milan, Italy (November) and SAGAMI Thonglor in Bangkok, Thailand (March).・Ajino Mingei records 26 consecutive periods of exceeding the sales of the same period of the previous year
For 26 consecutive quarter periods, the sales of Ajino Mingei Foodservice Co., Ltd. (President Hisashi Ohnishi) has exceeded the sales of the same 3-months of the previous year. This is attributable mainly to the leverage of Sagami Group’s strength, the “Nagoya Meshi (specialty food from Nagoya area) menu” as well as Ajino Mingei’s endeavors to embody healthy lifestyles such as a menu based on the theme of “feed your soul and body”, which was well received by customers.Efforts in FY2019
・Plan for Continuous Restaurant Openings
In FY 2019, Sagami Restaurants Co., Ltd opened Don Don An Toyota Aizuma (May) which was the first time after a 10-year hiatus to open a “Don Don An” outlet. The overseas business division opened SUIZAN Thai Van Lung (April) in Ho Chi Minh City, Vietnam. “Suizan” specializes in Tenobe Udon (hand-stretched type Udon). As a group, we will continue to open more restaurants especially in the Tokai and Kanto regions.・Simultaneous Closing of all Outlets in Group
In order to pay respects to the new emperor, beginning with our core brands “SAGAMI” and “Ajino Mingei”, all restaurants in our group (excluding some FC and outlets located within shopping malls) closed on Enthronement Day, May 1, 2019. We executed this as part of improving customer satisfaction by improving the work environment for our employees to promote their physical and mental health so that they can perform their job with even more energy and enthusiasm. This is one of our efforts executed as part of the “hataraki-kata kaikaku” (work-style reforms). Going forward, we will continue to promote efforts to improve customer as well as employee satisfaction so that we can link it to further enhancement of our corporate value in the future.・Strengthening of Corporate Governance
Since 2011, Sagami Group has been making efforts in “strengthening our business foundation”, “improving profitability”, and “promoting growth strategies”. As a result, we have had good news such as having moved out of deficit, opening overseas outlets mainly centered in the ASEAN countries, and “Sagami” and “Ajino Mingei” opening new outlets after a hiatus in openings. As the conditions surrounding the dining-out industry become more severe, in addition to directing our efforts on CSV and ESG, we will keep working even harder to strengthen our governance structure.In closing, we thank all our shareholders, and we kindly ask for your continued support and encouragement as we move ahead.
Shuji Ito, President & COO
May 10, 2019 (Reiwa 1)
12 Fab. 2019
Third Quarter Financial Report
Despite the severe environment, sales in the third quarter of 2018 increased slightly over the same period of the previous year, but due to increases in expenses, profits were slightly lower than that of the same period in the previous year. We project the severe conditions to continue moving forward but we will go back to basics and focus on strengthening the Customer Impressive Satisfaction (CIS) and Employee Impressive Satisfaction (EIS), the foundation to improving our business performance.
Opening of Small-Scale Restaurants “Ramen Bubuka” and “Katsutani”
On November 23, Ramen Shop BUBUKA Shinjuku Kinokuniya opened in the basement 1F of the Shinjuku Kinokuniya Building, and on November 28, Katsutani Aeon Mall Nagoya Dome opened in the food court on the 2f. of the Aeon Mall Nagoya Dome located in Higashi ward, Nagoya city. Both brands are small-scale restaurants with mid-term goals of “FC ratio 20%”. Since the openings, sales performance have been strong, and we are working towards the early achievement of the mid-term goal for further openings. In March 2019 we will take part in the franchise show to further accelerate the speed of openings.Promotional Tie-up Campaign with Idol Group “SKE48”
From December 1, 2018 to February 28, 2019, we collaborated in a promotional tie-up campaign with an idol group, SKE48, which actively performs in Aichi prefecture, the place of origin of the Sagami Group. We hosted a SNS photo campaign called “The 10 things SKE48 wants to do at Sagami”. By posting the same hashtag as SKE48 on Twitter and Instagram, customers were eligible to win meal vouchers for use at the Sagami group or admission tickets to SKE48 collaboration events. Going forward, we would like to utilize new marketing methods such as sales promotions using the internet and continue to strengthen our promotional activities to a wider range of audience.Collaborating with the Tokyo2020 Olympics and Paralympics
On December 19, we entered into the “Tokyo 2020 Olympic/ Paralympic Agreement on Pre-games Training Camp” with Okazaki city, Aichi prefecture. We have had restaurants in the city from 40 years ago and have been sourcing our Hatcho Miso (fermented miso (soybean) paste traditionally made of 100% soybeans from the Hatcho village of Okazaki city) that we use for our main winter menu “Miso Nikomi” (dishes simmered in miso) from a long-standing prestigious company in the city. Because of our long-term and close-knit connection to the city, we will be cooperating with the city to introduce Japanese food culture to the Mongolian archery team when in Okazaki city for the pre-games training camp, as well as assisting with the management of athlete’s physical conditions related to food issues. During the first pre-games training camp to be held February 20-March 9, 2019, our nutritionist will cooperate with the team staff to come up with menus and offer food at restaurants around the city.In closing, we thank you and request for your continued support and encouragement.
Shuji Ito, President & COO
February 12, 2019
13 Nov. ,2018
Second Quarter Financial Results
While sales slightly increased in the second quarter of 2018, profits were slightly below that of the previous year due to the effect of increases in material and labor costs. It can be said that the economic conditions remain severe. In addition to the progression of the aging and declining population, the government has formally announced that the consumption tax will be raised from October 2019, which would increase the severity of the environment surrounding the dining-out industry. In order to combat this, we will take proactive actions to strengthen CIS (Customer Impressive Satisfaction) and EIS (Employee Impressive Satisfaction).Change to a Holding Company Structure
Sagami Group has transferred its business structure to a holdings structure as of October 1, 2018. Sagami Chain has changed its name to Sagami Holdings Corporation and D.D.A Co., Ltd. has changed its name to Sagami Restaurants Corporation. The main reason to change to a holdings structure is for the “acceleration of the speed of decision making”. The management strategy functions will also be separated from the business operation functions and thus the company operations will be more efficiently pursued.Our group management philosophy has been changed to the below following our transfer to the new organizational structure.
-all for your smile and life of abundance -
Based on this new management philosophy, all employees of the group will work together as one for our continued growth.
Opening of SAGAMI Milano Centrale
In 2015, we participated in the Milan Expo, Japanese pavilion, and from 2016 to 2017 we conducted two test marketing cases in Milan. Following the success of the Expo and our test marketing, we opened our first restaurant in Europe, SAGAMI Milano Centrale on November 10th. The restaurant is located in front of Milano Central station, which is the second busiest station in Italy with the highest number of people getting on and getting off the train, and is thus a very convenient location.Before the actual opening, an opening ceremony was held at the restaurant on November 3rd. Many people from the media as well as many other different industries attended the ceremony, and we felt the deep support and encouragement and have a strong resolve to make the restaurant one that would be loved by the community. There are very few Japanese noodle restaurants operated by Japanese companies in Italy, the home of pasta. As a restaurant offering authentic Japanese food and Nagoya meshi to the people of Milan, we will work hard to meet the expectations of all our guests.
Regarding our ESG Initiatives
We are proactively pursuing ESG initiatives for the promotion of CSV (Creating Shared Value).With regard to Environment, we have changed to LED lighting for less CO2 emission and have experimentally introduced the use of LIMEX (a newly created limestone based material) in our menus, and promoted the use of “eco-chopsticks” to decrease garbage discharge.
With regard to Social, we have taken initiatives for the promotion of women’s participation and advancement, and have received recognition as the “Company where Aichi ladies shine”. As a restaurant company in the dining-out industry with headquarters in the Aichi prefecture, we are the first to receive such recognition.
With regard to Governance, we have gradually dissolved the Compensation Advisory Committee in order to strengthen governance, and instead established a nominating compensation advisory committee that has the additional function of being able to decide the appointment and dismissal of board members.
We will continue with our efforts with ESG and through such efforts, we will proactively contribute to helping solve the challenges of society.
IR Activities
For the promotion of dialogue between our company and our shareholders/ investors, we participated in the Nagoya Stock Exchange Expo held in July at the Fukiage Hall in Nagoya city. Although our time was limited, we were able to explain our current situation and our future strategies and receive valuable feedback and opinions from our shareholders and investors. In order to achieve our group vision as the “No. 1 Noodle Restaurant Company”, and to increase the Sagami brand recognition beyond the Chubu region, we will commit to continuing further IR activities.
Shuji Ito, President and COO
November 13, 2018
09 Aug. ,2018
First Quarter Financial Report
The business environment still remains severe due to continuing savings-oriented trends, surging food prices, and persisting difficulties in hiring. Amid such harsh conditions, however, sales have slightly increased over the past year. However, the rise in personnel costs, capital investment in equipment for new outlets, led to a decrease in profits, and we are working as a group to combat this.
New Openings of Sagami Restaurant
Sagami has opened 3 new outlets.-April 27 (Friday) Koshigaya Minami outlet (134th outlet) Koshigaya city, Saitama prefecture
-June 29 (Friday) Tokai outlet (135th outlet) Tokai city, Aichi prefecture
-July 13 (Friday) Toyohashi Hashira outlet (136th outlet) Toyohashi city, Aichi prefecture
These 3 outlets have rooms that cater to group dinners/ private parties for a capacity of 2-40 persons. They are universally accessible rooms equipped with multi-purpose bathrooms. There is a millstone placed at the entrance of the restaurant and guests can see the soba-making process. We plan to accelerate our outlet roll-out in the Chubu (central region of Japan’s Honshu island) and Kanto (Greater Tokyo Area and surrounding prefectures) regions.
The Franchise Business
D.D.A. Co. Ltd. opened a specialty tonkatsu restaurant, Katsutani, within APiTA shopping mall in Yokkaichi city, Mie prefecture. This is the model prototype within a commercial facility for future franchisees.Ajino-Mingei Food Service Co., Ltd. entered the Ramen Championship match with Bubuka, a specialty ramen store, and finished 3rd place at the preliminary qualifying contest held in July. Bubuka will be competing in the finals in October and is preparing to recruit for franchisees at that time. We will be taking proactive action for the roll-out of the franchise operations.
Induction into the Tebasaki Summit Hall of Fame
The 5th Tebasaki (Chicken Wing) Summit 2018 was held from June 8 for 3 days at the Nagoya Hisaya Odori Park to which approximately 99,000 people attended. We have won the gold prize twice, and the Grand Prix once, and based on our past awards, we were inducted into the Hall of Fame and were welcomed as a special guest to this years’ summit. With pride in Nagoya specialty foods, we will continue to improve our brand going forward.General Meeting of Shareholders
On June 28 (Thursday), we held our Annual General Meeting of Shareholders at the Moriyama Bunka Shogekijo (Moriyama Cultural Playhouse) located in Moriyama ward, Nagoya city, Aichi prefecture. The 5 items on the agenda for this years’ meeting included the appropriation of surplus, amendments to the Articles of Incorporation, election of 9 directors, election of 1 corporate auditor, election of 1 substitute corporate auditor, and we received approval on all bills. We appreciate the support of all our shareholders. We now have 13 executive officers, of which 6 members are external officers (3 Board of Directors, 3 Auditors), raising the ratio of external officers from 36.3% to 46.1%. From October we will be transferring to a holding company structure, and by separating the management supervision and business execution, we will work to establish a more transparent management structure. At the Shareholders’ Meeting, we received many questions and opinions from a management perspective, such as regarding our company’s fund management situation, and this invaluable dialogue reaffirmed to us the immense support we continue to receive from our shareholders. Going forward, we will commit to undertaking further reforms to fulfill and exceed the expectations of our valued shareholders and customers.
Shuji Ito, President and COO
(August 9, 2018)
11 May ,2018
With regard to the dining-out industry, the industry recorded monthly sales that exceeded the previous years’ sales for 19 consecutive months through March 2018. Despite the strong performance however, weakness was seen in consumption and consumers still continued to have a strong preference for low prices. Furthermore, the rise in personnel costs due to the shortage of workers and the rise in logistic costs led to a heightened competition within our brands and restaurants, and we continue to be challenged by the difficult economic and management conditions.
FY2017 Financial Results
The financial results of FY 2017 are as follows.Efforts in FY2017
・New Openings of Sagami Restaurant after a 9-year hiatusAfter opening Sagami Mizunami Chuo (Mizunami city, Gifu prefecture) in 2008, we were on a hiatus and refrained from opening new outlets. However, after seeing that all existing outlets were performing well, we decided to restart opening new outlets. Thus, as the end of March 2018, we have opened 3 new outlets in the Tokai region (area in central Japan comprising 5 prefectures: Yamanashi, Shizuoka, Aichi, Gifu, Mie): Seki Mago in October, Gifu Kitaisshiki in December and Toyokawa Ushikubo in March. We plan to accelerate the speed of our outlet openings in the Tokai and Kanto (Tokyo metropolitan) regions.
The monthly sales of the existing Ajino-Mingei outlets of the Ajino-Mingei Food Service Co., Ltd. (Hisashi Ohnishi, President & CEO) which is one of our group companies, have exceeded the previous years’ sales by over 100% since March 2014. This can be attributed to incorporating “Nagoya Meshi menus”, a strength of Sagami, into Ajino-Mingei, as well as adopting new menus based on themes such as “delicious for the heart and body” which were very popular amongst our guests.
At the Milan Expo held in Milan in 2015, our booth at the Japanese pavilion was able to capture more guests than we had initially forecasted. The success at the Expo led us to conduct test marketing in Milan, the efforts of which were featured on a Japanese T.V. program called Mirai Seiki Jipangu, aired on January 8, 2018. Based on the results and success of our test marketing efforts, we would like to link it to the next step.
Our Efforts in 2018
・Acceleration in the speed of opening new outlets as the Sagami GroupAfter opening Sagami Mizunami Chuo (Mizunami city, Gifu prefecture) in 2008, we were on a hiatus and refrained from opening new outlets. However, after seeing that all existing outlets were performing well, we decided to restart opening new outlets. Thus, as the end of March 2018, we have opened 3 new outlets in the Tokai region (area in central Japan comprising 5 prefectures: Yamanashi, Shizuoka, Aichi, Gifu, Mie): Seki Mago in October, Gifu Kitaisshiki in December and Toyokawa Ushikubo in March. We plan to accelerate the speed of our outlet openings in the Tokai and Kanto (Tokyo metropolitan) regions.
The monthly sales of the existing Ajino-Mingei outlets of the Ajino-Mingei Food Service Co., Ltd. (Hisashi Ohnishi, President & CEO) which is one of our group companies, have exceeded the previous years’ sales by over 100% since March 2014. This can be attributed to incorporating “Nagoya Meshi menus”, a strength of Sagami, into Ajino-Mingei, as well as adopting new menus based on themes such as “delicious for the heart and body” which were very popular amongst our guests.
Since 2012, Sagami group has been directing efforts on the management pillars of “strengthening the business base”, “improvement of profitability” and “promotion of growth strategy”. As a result, we have had good news such as moving out of the red into revenue surplus, opening new overseas outlets (especially in the ASEAN region), and also restarting the opening of Sagami restaurants.
On the other hand, the conditions surrounding the dining-out industry and our company have been increasing in severity. In order to respond to such severe conditions, in addition to our measures for ESG (Environment, Social, Governance), we are further strengthening our governance structure. In particular, we plan to welcome an external female director and external female auditor into our Board of Directors from this year to include female perspectives to our management. In addition, we plan to establish Sagami Holdings Company in October to separate the management strategy functions and business operation functions in order to accelerate the speed of our decision making and to increase the ratio of external board members.
Shuji Ito, President & COO
May 11, 2018
09 Feb. ,2018
【Third Quarter Financial Report】
Operating profits fell below that of last year, due to factors such as the rise in personnel expenses. In the domestic market, the shortage of labor is especially growing in the service industry and has even begun to affect our company, which has had a low employee turnover rate. Such severe conditions are projected to continue, but we are determined to move forward to optimize operations and retain our employees for future growth and improvement.
New Opening of Sagami
Last year on December 14, we opened Sagami Gifu Kitaisshiki, the 133rd Sagami outlet, in Gifu city, Gifu prefecture. The Sagami Seki Mago outlet which opened in the same year on October 28, has been performing extremely well with the number of guests exceeding our forecasts.The 2 newly opened outlets have private rooms that allow for dinner meetings and banquets from 2-40 persons, and equipped with a multi-purpose accessible toilet. We also have a noodle-making facility with a millstone by the entrance and our guests can enjoy watching the noodle-making process.
The 2 newly opened outlets have private rooms that allow for dinner meetings and banquets from 2-40 persons, and equipped with a multi-purpose accessible toilet. We also have a noodle-making facility with a millstone by the entrance and our guests can enjoy watching the noodle-making process.
Promotional Tie-up Campaign with Idol Group “SKE48”
From December 1, 2017 to February 19, 2018, we collaborated in a promotional tie-up with an idol group, SKE48, which has deep roots in Aichi prefecture, the place of origin of the Sagami Group, and hosted a “Tebasaki (chicken wing) showdown” campaign. Customers who had purchased the Tebasaki were eligible to take part in a gift drawing to win SKE48 merchandise. During the campaign period, the outlets participating in this campaign competed against one another on the number of “salt flavor” and “tare (sauce) flavor” Tebasaki sold, and posted the number of sales on the homepage with frequent updatesIt was the first time for us to conduct a promotional tie-up campaign with an idol group and by appealing to the fans and supporters of SKE48, we aimed to capture a new customer base.
Sagami Booth at Oedowaen
During the 4 days from November 23-26, 2017, Sagami Group participated in the “2nd Oedowaen” (Soba and Japanese sake exposition). This exposition was held at the event site of Yoyogi Park in Tokyo, and is the largest Soba and Sake exposition held in Japan. This was a perfect occasion for us to exhibit our vision as the “No.1 Noodle Restaurant Company”. We sold 9 items at our booth, including “2-colored Soba: Chakkiri and Dattan (Tartary) Soba” (a dish with green (green tea color) Soba and brown (Tartary buckwheat color) Soba).Ajino-Mingei
The sales of the existing Ajino-Mingei outlets have exceeded that of last year (as of the end of January) for 47-months consecutively. With regard to the menu, we focused our attention on bringing forth seasonality in the “fair menu” which we believe was very well received by our guests.We are currently hosting a fair called the “Kyushu Aji Meguri Fair” (Kyushu Food Tasting Fair). We offer Motsu Nabe Udon (hot pot stew with offal and Udon) with Mentaiko (spicy cod roe) from Hakata, Unaju (broiled eel served over rice in a lunch box) using Unagi (eel) from Kagoshima, so please stop by should you be in the nearby vicinity.Our Company’s vision is “500 outlets, sales of JPY40 billion, ordinary profits of JPY3 billion, FC ratio of 20%, and 10 overseas countries with our outlets” and we are committed towards an early achievement of this future vision. In closing, we thank you and request for your continued support and encouragement as we move forward.
Shuji Ito, President and COO
February 9, 2018
11 Nov. ,2017
Second Quarter Financial Report
The food service industry is faced with rising cost burdens and increasing personnel expenses caused by difficulties in hiring, and such severe economic conditions are projected to continue going forward. In midst of such conditions, however, we are strengthening our group management and making strides in improving our performance.
New Opening of Core Brand “Sagami” after a 9-year hiatus
On October 28, we opened Sagami Seki “Mago” outlet in Seki city, Gifu prefecture, after a 9-year hiatus in opening new outlets to focus on reform initiatives to deliver strong and sustainable profits. During the 2nd year of such reform initiatives in the fiscal year of 2012, all Sagami outlets achieved a revenue surplus at the outlet level, and we achieved a positive consolidated net income and resumed dividend payments for the first time in 5 years. In January 2014 of the following fiscal year, 55 Ajino-Mingei outlets joined the Sagami Group, all of which have also achieved a revenue surplus at the outlet level in the 2nd full year of reforms (2015 fiscal year).Thereafter, in April 2016, 6 “Hamacho” outlets also joined the Sagami Group, of which 4 outlets have been rebranded into Sagami, and 2 outlets continue to operate as Hamacho. Concurrently with these expansion undertakings, 3 professionals joined our site development department to search for locations for new Sagami outlets. Thus, for the first time in 9 years, we opened the new outlet in Seki city.
Two new openings of Sagami are scheduled for this fiscal year, and the outlet roll-out plans are steadily moving forward. We plan to continue to expand our growth in areas we have designated as the key outlet opening areas, such as the Tokai region (central Japan region where Sagami’s HQ is located) and Tokyo metropolitan (or Kanto) region.
Opening of “Binmugi Celeo Hachioji”, small-scale Tenobe-Udon brand
On September 1, we opened Binmugi in the JR Hachioji station building Celeo. This is the second outlet of the brand, following the outlet in the food court of the “Karuizawa Prince Shopping Plaza”.The Celeo outlet features 16 Udon (Japanese wheat noodle) dishes, double that of the Karuizawa outlet, and we will continue to pursue the innovative and unique texture of “Tenobe-Udon” (hand-stretched type Udon) as well as offer creative Udon dishes with particular insistence on ingredients and dashi (aromatic broth). Revenues have had strong performance in the 2 months after opening. We will continue to offer a wide array of unique dishes and create outlets that can be enjoyed by many customers.
Ajino-Mingei
Ajino-Mingei has received a lot of support from its customers, which has led to a performance exceeding that of the previous year (as of the end of October) for 44-months consecutively. Ajino-Mingei has had no new openings for the last 10 years, but a new outlet opening is scheduled for spring 2018. We have employed the reform examples of Sagami and have implemented changes in customer service and menu offerings, which have garnered favorable support from our customers. As an example of customer service reform, we have worked on “strengthening Omotenashi (Japanese hospitality)” by reflecting customers’ voices through the use of mystery shoppers.With regard to examples of reform on the food-side, all outlets participated in sales contests, and in August we offered new menu items in collaboration with Fuefuki city, Yamanashi prefecture. Amongst them, the dessert menu using the very sweet “Shine Muscat” grapes was particularly popular.
From the end of September, we held the “Nagoya-Meshi” (specialty food from Nagoya area) fair which is one of our areas of specialty. Ajino-Mingei mainly operates its outlets in metropolitan areas. We will continue to implement reforms for the continued patronage by our customers, and we ask that in the case that you are in the close vicinity, to please drop by.
Change to Direct Import of U.S. Pork
From October 2017, we started importing U.S. pork directly from the world’s largest pork processing company. In April we executed a test import and after inspecting the local factory and monitoring the quality of the products, we entered into a direct contract. It is the usual practice in the food service industry to go through an intermediary trading company or wholesaler for the purchase of foreign food products. It is easier to control the quality of the products and also lower purchase costs through direct imports.The severe conditions surrounding the food service industry is projected to continue, and by increasing the direct import of food supplies, we seek to maintain a high level of quality as well as to improve our cost savings.
IR Activities
We participated in the Nagoya Stock Exchange IR Expo held in July at the Fukiage Hall in Nagoya city. At the information sessions held at the booth and the special meeting room, we had a high level of interest from many participating investors and there is growing anticipation for our company.We also hold information sessions for private investors in Tokyo metropolitan region. We feel the need to continue strengthening our brand awareness in the Kanto region and such sessions are held as a part of the measures to enhance awareness. We will continue to hold precious opportunities for dialogue with our investors through IR activities going forward.
Shuji Ito, President and COO
(November 10, 2017)
10 Aug. ,2017
First Quarter Financial Report
Amid such harsh conditions, however, our core brands Sagami and Ajino-Mingei have had a strong net sales performance, increasing by 1.3% from the previous fiscal year. Operating and ordinary profits fell below that of the previous year due to an increase in personnel costs, but the quarterly net profits increased as we reduced cross-shareholding.
20th Anniversary of Company’s Listing on the Tokyo Stock Exchange and Nagoya Stock Exchange, First Section
On July 13th, we held a reception at the Hotel Castle Plaza located in Nagoya city to celebrate the 20th Anniversary of our Company’s Listing on the Tokyo Stock Exchange, First Section and the Nagoya Stock Exchange, First Section. In July 1997, our company’s stocks were moved to the First Section of both stock exchanges and to celebrate our 20th year of our listing, many distinguished guests attended our commemorative event, reaffirming to us that the Sagami Group is supported by many people.At the ceremony we received many messages from our distinguished guests, and presented a slideshow of our 20 year history. “A superior Sagami Group for the next generation” has been the slogan amongst the management team, but we have made a resolution to pursue this with an even stronger determination going forward.
Ajino-Mingei
At the end of the first quarter, all existing outlets of Ajino-Mingei, which joined our group in January 2014, had exceeded the net sales of the previous year for 40 months consecutively, and even in July 2017, it continues to exceed 100% and will set a new record for 41 consecutive months.Ajino-Mingei has implemented the reform examples undertaken at Sagami for customer service and menu offerings, and this has been very successful. Since most Ajino-Mingei outlets are located in the Tokyo metropolitan region, there are probably less opportunities for our shareholders in the Chubu region to dine at the outlets, but we offer a wide variety of dishes with “tsuru tsuru mochi mochi” Udon (“smooth but glutinous and chewy” Japanese wheat noodles) in a specially made broth from extracts. It is blended daily at each outlet with a golden ratio of Rishiri Kelp from Hokkaido and Bonito Flakes from Makurazaki, Kagoshima prefecture and Yaizu, Shizuoka prefecture. When in Tokyo, please stop by and enjoy the dishes.
Grand Prix Winner at the Tebasaki (Chicken Wing) Summit
We participated in the 4th Tebasaki Summit 2017 held from June 9 (Friday) for 3 days. The venue had been changed to Nagoya Hisaya Odori Park from Nagoya Kanayama Sogo Station which hosted the past 3 summits, and this year, the number of attendees was a record high. Our company has won the “Gold Prize” 2 times out of 3 summits, and this year, we sold “Premium Tebasaki” and “Shichimencho (Turkey) Wing (limited quantity)” at the Summit and a long queue had formed in front of our booth even before actual opening. We received Grand Prix, the top award, this year.General Meeting of Shareholders
On June 29 (Thursday), we held our Annual General Meeting of Shareholders at the Owariasahi City Community Hall in Owariasahi city in Aichi prefecture. This year’s agenda included “appropriation of surplus”, “election of 8 directors”, “election of 1 corporate auditor”, “election of 1 substitute corporate auditor”, and we received approval on all bills. To all our shareholders, we thank you. We currently have 11 board members, of which 4 members (2 directors, 2 corporate auditors) are external board members. We will work on improving the speed of our business execution and further strengthen our corporate governance.During the Annual General Shareholders’ Meeting, we received many comments and questions from the customer perspective on issues such as outlet facilities and menus, etc., and this invaluable dialogue reaffirmed to us the immense support we continue to receive from our shareholders. Going forward, we will commit to undertaking further reforms to fulfill and exceed the expectations of our valued shareholders and customers.
Shuji Ito, President and COO
(August 10, 2017)
11 May ,2017
Review of FY2016
The global economy showed signs of a modest recovery in part due to the stable growth of the U.S. economy, but it was a year of tumultuous changes, such as seen in the surge in crude oil prices. With regard to the Japanese economy, the decline in personal consumption, the tight supply and demand in the labor market leading to increased personnel costs etc., continued to challenge the food service industry.
In order to respond to the stringent business environment surrounding our business, we prepared a new medium-term business plan with FY2016 as the first year of the 3 year rolling plan.
With regard to consolidated results, although both operating profits and ordinary profits were lower than the previous fiscal year, net sales and net profits exceeded that of the previous year. Net sales, operating profits, ordinary profits were below budget, but due to efforts made to decrease costs, the current net profits achieved target budget. Even amid the increasing pressures of the consumers’ savings-oriented mindset, the net sales of our existing outlets of the core brands Sagami and Ajino-Mingei have been increasing, and so we will make efforts for the trends to continue into the new fiscal year. With regard to Ajino-Mingei, net sales have exceeded the previous year results for 38 consecutive months (as of end of April 2017), and it continues to renew the record.
Regarding our domestic activities, we participated in the G7 Ise-Shima Summit held in May and presented Soba (buckwheat noodle) and Tempura to journalists from around the world at the international media center, opened Sukoyaka-Shokudo (“healthy menu” restaurant) in the Obu City Hall, Sagami Tei in Hotel Castle Plaza located 5 minutes by foot from Nagoya station, and a SAGAMI with a soba-making facility for children to experience soba-making by hand in Maker’s Pier, adjacent to Legoland in Nagoya.
We also converted 3 Hamacho outlets which joined our group last year into Sagami brand and changed one Don Don An into a specialized Tonkatsu outlet Katsutani with future franchise options. Further, we received the “Kon Ninsho” (Navy Blue Certification) which is the highest form of certification from the Omotenashi (Japanese Hospitality) Standard Certification System for Soba Atelier Sagami, a workshop facility to experience soba-making by hand, located in Tobishima village, Ama-gun, Aichi prefecture.
Overseas, we opened SAGAMI, a long-term experimental outlet in Milan, Italy, and opened Tenobe Udon (hand-stretched type Udon) outlet Suizan and fresh pasta outlet JINJIN in Vietnam, a country with highly anticipated economic growth and on friendly terms with Japan. Currently, our overseas outlets include 1 outlet in Italy, 2 in Vietnam, 2 in Thailand, 1 in Indonesia, and 2 in China- a total of 8 outlets in 5 countries. We will strive to enhance our brand awareness overseas as the leading Soba company.
With regard to our efforts towards providing a higher level of “Safety and Reliability”, 2 of our factories- Iruma Factory and Bisai Factory- obtained ISO22000, the international standard certification for Food Safety Management. We will continue to provide the highest level of assurance for safety and reliability.
Efforts in FY 2017
While the gradual recovery of the recent economic conditions is projected to continue, we assess that the sluggish personal consumption arising from the decrease in real income will continue. Under such conditions, our group has reviewed the medium-term management plans (rolling plans) in order to make relevant improvements to the factors that have caused the unachieved targets of our business plans, and based on our management pillars of “strengthening our business base”, “improvement of profitability”, “promotion of growth strategy”, we will commit ourselves to further improving our corporate value.
With regard to our growth strategies, we have signed for openings of 3 outlets of our core brand Sagami and 1 outlet of Binmugi (small sized outlet serving hand-stretched type Udon). Although under different brand names, Suizan and Binmugi have the same concept and we are planning on recruiting franchise partners for this concept.
As we move forward, we are strengthening our corporate structure to handle the expanded business, and following the 3 professionals who joined our site development department and 1 professional who joined our franchise development department, 1 professional joined our overseas department this year. In addition, in preparation for the new openings, we recruited graduates for the first time in 8 years, and welcomed 23 new employees in April 2017.
In response to an increase in demand for home-meal replacements, we are expanding the number of outlets offering delivery services and all outlets with the said services have had a strong sales performance. Healthy menu items such as Dattan (Tartary) Soba and foods with reduced salt as well as original dishes created by each outlet that use local produce of the areas are highly popular, and we will continue to work on efforts to raise our customers’ motivations for dining with us.
We will continue to aim to achieve our group vision to be the “No. 1 Noodle Restaurant Company” and expand our businesses both domestically and internationally. The company and each outlet will make dedicated efforts to raise the awareness of Soba and Nagoya Meshi (specialty food from Nagoya), both of which are Sagami’s strengths, to people around the world.
20th Anniversary of Company’s Listing on the Tokyo Stock Exchange and Nagoya Stock Exchange, the 1st Section
With your continued support and patronage, we were able to celebrate our 20th year as a public company on the Tokyo Stock Exchange 1st section and the Nagoya Stock Exchange 1st Section in July. We hereby express our sincere gratitude for your long-term support and while the matter will be approved at the annual general meeting of shareholders, the end-of-year dividend will be 6 yen, consisting of ordinary dividend per share of 5 yen and commemorative dividend of 1 yen.
In closing, we thank you and request for your continued support and encouragement as we move ahead.
Toshiyuki Kamada, Chairman and CEO
Shuji Ito, President and COO
(May 11, 2017)
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