Message from the President

Fiscal 2022, a Year for Adaptability

Fiscal 2022, my first year serving as president of Royal Holdings, was a year that required us to adapt to a variety of unexpected changes, including, in addition to COVID-19, growing risks regarding geopolitics and exchange rates, and rising prices. Amid these conditions, we embarked upon Medium-Term Management Plan 2022–2024, which aims to move us from “revitalization and transformation” to “growth.” Under this plan, we promoted measures according to a series of categories that I will explain further in this message. In addition to steady implementation of these measures, each and every employee worked with even greater solidarity with one another toward our goal of growth, striving to recover performance while tackling issues in both new and existing businesses. Thanks to these efforts, we achieved net sales of ¥104.9 billion and an operating income of ¥2.1 billion. What is more, we posted a positive ordinary income for the full fiscal year, the first time we have done so since the start of the COVID-19 pandemic. In Japan, restrictions aimed at preventing the spread of COVID-19 have been rolled back, meaning more and more customers are enjoying eating out, much like before the pandemic. Fiscal 2022 was a year in which people could once again enjoy highquality food and hospitality, much more so than the previous year when the pandemic had more power over our activities. We intend to ride this wave forward to further growth for the Royal Group.

A Strong Start for Medium-Term Management Plan 2022–2024

As I mentioned, fiscal 2022 was also the first year of Medium-Term Management Plan 2022–2024, which puts forth a vision of providing food and hospitality regardless of time and place. One of the major features of the plan is the division of our business segments into categories, each with its own strategies. In fiscal 2022, we rebuilt our business portfolio, based on the issues found in our previous portfolio, and implemented a variety of measures in the existing domains and business creation domains for each category. For more details, please refer to page 37 of this report.

Categories 1 and 2 cover the Restaurant Business, Contract Food Service, and Hotel Business segments. In the Restaurant Business segment, we responded to the recovery in demand at existing restaurants such as Royal Host and Tendon Tenya by offering menus with high added value alongside renovating these establishments and their kitchens. We also introduced tablet-based ordering and self-checkout systems to reduce the burden on employees while still acquiring more workers to respond to this rapid uptick in demand. We intend to keep utilizing digital technology as a means to increase productivity. In regard to the Contract Food Service segment, we expect an increase in customers using airports and service areas (SAs) as restrictions ease up, so we are actively working to renovate establishments and convert business formats in order to further recover sales.

As for the Hotel Business segment, recovery has been slowerthan in the Restaurant Business segment. This is partly due to border control measures restricting foreign tourists, which were not fully lifted until October 2022. Even so, we are currently in the process of reviewing the roles our hotels will need to fill post-pandemic. For instance, at the Richmond Hotel Premier Tokyo Schole, which was renovated and then reopened in December 2022, room interiors are categorized into four themes—art, travel, children, and food—and the facilities and atmosphere of each room are designed to match these themes.

In categories 3 and 4, which cover the Food Manufacturing segment, we have been working to expand sales channels and develop commercial products for Royal Deli, launched in 2019. In addition to expanding sales in the highly competitive frozen food market, in the future we intend to expand the functions of our outlet shops and utilize food trucks, both of which are challenges we will take on from the perspective of reducing food loss.

Overseas Business and Foodstuff Development segments comprise Category 5. In this category, we are building momentum for business expansion overseas, taking advantage of the overseas network of Sojitz Corporation, with whom we have entered into a capital and business alliance. As of March 2023, Tendon Tenya operates 32 overseas establishments spanning five countries and regions. We plan to accumulate know-how in overseas franchising, which we can then apply toward building a foundation for direct business management, eventually allowing us to manage overseas Royal Host establishments in the future.

Among our category-specific measures, we are also promoting a DX-based initiative aimed at developing establishments inspired by fresh, new ideas unbound by the restrictions of our existing businesses. We have other DX-based initiatives to be achieved by 2024 that include reviewing Group processes involving the procurement of raw materials, production control, logistics and sales, streamlining establishment operations, and developing services that can be used throughout the Group via a shared system. Please refer to page 47 of this report for details.

Formulation of Materialty Based on The Royal Credo

Drawing from the Royal Credo, we conduct sustainability management with the goal of being a company rooted in the local community and society, with the empathy and support of all stakeholders. In order to further promote this form of sustainability management, we gathered the opinions of experts, members of management, and a variety of stakeholders, while also referencing the GRI framework to determine our materiality, identifying five material issues in 2023: 1) human resources, 2) food and hospitality, 3) resources and the environment, 4) local communities, and 5)governance. Regarding human resources, we intend to invest actively, positioning employee growth as our top priority, while aiming to maintain and improve sound labor practices and work environments, normalize diversity and inclusion, and promote other initiatives. As for food and hospitality, we will focus on being health-conscious and improving the added value of food services as ways to help create a brighter society. In terms of resources and the environment, we aim to reduce CO2 emissions further by reducing food waste, promoting recycling, and implementing energy-saving measures. For local communities, we will promote social contribution activities in line with the diversifying local and social needs. Lastly, for governance, we will build a trustworthy system for food procurement, product labeling, and information management, and work to strengthen stakeholder engagement. Throughout working toward these materiality-based initiatives, we aim to achieve sustainable growth for the Group as a whole.

The Royal Group is committed to becoming a vital part of local communities by providing high-quality food and hospitality and by resolving social issues through its business. At the same time, it will also invest actively in its existing businesses and in the creation of new businesses as part of a dual-axis approach to management. Although we celebrated our 70th anniversary in 2021, Medium-Term Management Plan 2022–2024 lays the foundation for our 100th anniversary in the years to come. We will make effort after effort to solidify this foundation, and we aim to continue our contributions to local communities by providing high-quality food and hospitality, not only in Japan, but around the world.