Message from the President

A year of record performance and a V-shaped post-pandemic recovery

In fiscal 2024, the final year of Medium-Term Management Plan 2022–2024, we achieved record highs of ¥152,150 million yen in net sales and ¥7,315 million yen in ordinary profit. Soaring prices for raw materials, electricity, and gas resulted in an increase in costs amounting to approximately ¥5.6 billion yen over the three-year period. However, the steady recovery of our existing businesses and higher sales prices resulting from our high-added-value strategy helped us absorb these higher costs and achieve our targets.

More than anything, over the course of Medium-Term Management Plan 2022–2024, we fully committed ourselves to improving the fundamental value put forth by the Royal Group, aiming for a V-shaped recovery from two consecutive years of losses that stemmed from the COVID-19 pandemic. The value we continually provide goes beyond simply delicious food; it comes from our high-quality service that is constantly being refined through our dedication to quality, service, cleanliness, and atmosphere (QSCA). Put another way, it comes from the provision of food and hospitality based on the Royal Credo. The past three years have been a time for the entire Group to reevaluate and develop the type of value that can only be created by human beings so that, in the wake of the COVID-19 pandemic, we were ready to welcome back customers and remind them of the joy of going out for a meal or taking a trip, making sure they left feeling satisfied.

As a result, we were able to achieve the numerical targets set out in our medium-term management plan—the most ambitious targets we have ever set. This is an outcome that has brought a sense of accomplishment and confidence to the entire Group, from management to front-line employees.

Focused investment in human capital to dispel in-Group concerns

I believe that one of the reasons we achieved record profits in fiscal 2024 is the emphasis we have placed on human capital investment. The poor business performance caused by the pandemic created a cloud of anxiety that permeated the entire organization, so in the previous medium-term management plan we worked with a strong focus on restoring employee confidence and pride.

The drop in sales led us to streamline our workforce, but this caused a temporary decline in organizational strength. This prompted us to restore personnel and improve working conditions, of course, but we went beyond these actions and also focused on enlivening employee education as a way to pass on and spread the idea of food and hospitality, which is deeply embedded in the management philosophy the Group has cultivated over time. Specifically, we redoubled efforts to secure human resources for our stores by raising employee wages and actively recruiting staff, including foreign nationals. This created an opportunity for employees to pass on know-how unique to the Royal Group to their new colleagues while giving these experienced employees the confidence of being able to teach the Royal approach to hospitality. These feelings of success inspire positive thinking, such as wondering “how can we teach this better?” By sharing their ideas within the organization, they help identify and solve education-related issues. In this way, the virtuous cycle of human resource development, set in motion by our investment in human capital, is spreading not only to the workplace but throughout the entire Group, including operating companies and indirect departments. Going forward, we will continue to promote investment in human capital while remaining respectful of diversity.

Co-creation with external partners

Aside from investing in human capital, I must acknowledge that co-creation with external partners has been another important initiative that has brought about change within the Group. Most notable is our capital and business alliance with Sojitz Corporation, established in 2021. Not only did this alliance enable us to take on challenges that would have been difficult to tackle on our own, it also gave us the chance to reaffirm the unique qualities and strengths that we within the Group had taken for granted.

Based on this alliance, Royal Holdings and Sojitz Corporation are strategic partners and are currently working on a variety of co-creation projects. Overseas expansion is also part of this equation and we opened up our first directly operated Royal Host in Singapore in June 2024. In April 2025 we opened “THE ROYAL”, our first restaurant in Vietnam, located in Ho Chih Minh City. We have also begun expanding into the U.S. market. By combining the know-how we built up by operating our restaurant chain with Sojitz Corporation’s domestic and international business network and business development capabilities, as well as the unique and expert approach to sushi championed by Choshimaru Co., Ltd, our additional partner, we aim to create new value that we could not achieve separately.

In addition, Royal Holdings, Sojitz Corporation, and SRE Holdings Corporation launched the restaurant opening support platform “Omise Craft” in May 2024. This provides one-stop support for opening small and medium-sized restaurants, which suffer from a high closure rate. This last initiative is one example of using co-creation with external partners to address industry issues with a practical approach.

During Profit and Growth for All (PGA) meetings, members of Sojitz Corporation and the Royal Group apply their respective points of view and knowledge to discuss ways to improve the Group’s performance and corporate value. We will continue to utilize co-creation as a means to better utilize the Group’s strengths and create new value in the future.

The evolution of our business portfolio

The COVID-19 pandemic uncovered various problems within the Group, including a portfolio dependent on the flow of people, rising fixed expenses, and a lack of resilience in each business segment. During our previous medium-term management plan, we divided our business portfolio into five categories based on these aforementioned problems and promoted measures within each business segment to target two priority issues: improving the profitability of existing businesses and creating strategic businesses.

In Category 1 and 3, we implemented a range of measures to fully accommodate revenge spending, which is when customers rush to spend money on something they were denied during an adverse economic event. These actions helped us recover profitability in existing businesses. This involved boosting our product development capabilities and supply chain management (SCM) to support producers and their consumers, executing high-value-added strategies such as Good JAPAN, a campaign that brings the best flavors out of each ingredient, opening new locations, and renovating existing ones. Notably, Richmond Hotels has been working to increase the value of its accommodations by updating its guest rooms and common areas, and by introducing breakfast menus that incorporate the local character. As a result, Richmond Hotels was rated by J.D Power as the number one hotel in Japan for hotel guest satisfaction in their mid-scale hotel category in fiscal 2024, the 12th time Richmond Hotels has received the award. In the Contract Food Service segment, we ramped up efforts to secure new business contracts and revitalized existing businesses, recovering profitability in this segment as well.

In Category 2, we promoted the creation of strategic businesses in the Business Creation Domain through the rebranding of Tendon Tenya and expansion of the Costa Coffee chain.

In Category 4, we advanced our repackaging strategy by strengthening sales of our Royal Deli brand of frozen meals. However, our efforts to achieve growth in Off-Premise Domains did not progress as expected, and we recognize this as an issue to be carried over to Medium-Term Management Plan 2025–2027.

In Category 5, as part of building a foundation for expanding our overseas franchise business and directly managed overseas business, we opened our first overseas directly managed Royal Host restaurant in Singapore in July 2024, offering the same level of service and cuisine as we do in Japan. We are also working to expand upon our joint ventures with Sojitz and Choshimaru, and expand Tendon Tenya’s overseas franchise business by deepening our presence in countries where we already operate and cultivating a presence in new countries. As we further promote the development of our directly managed, franchise, and joint venture businesses, I expect that the seeds we have sown through co-creation with Sojitz Corporation will bear fruit over the period of our new medium-term management plan.

DX initiatives

The DX initiatives under the previous medium-term management plan were implemented in six areas: 1) introduction of a management system for establishments, 2) SCM, 3) renewal of shared infrastructure, 4) development of a data-driven platform, 5) promotion of new businesses and digitalization, and 6) development of DX literate-personnel to provide support in these areas. As a result, Royal Holdings has been officially recognized as a DX-Certified Business Operator under the DX certification system established by the Ministry of Economy, Trade and Industry.

The approach to DX initiatives in the previous medium-term management plan was to produce a large number of initiatives to establish a series of dots on a map, so to speak, by concentrating on the many different aspects of digitalization that were appearing in front of our eyes. For the new plan, we will continue to explore ways to connect these dots to develop a route toward creating new value within the Group.

Formulating Management Vision 2035

In April 2025, the Royal Group celebrated its 75th anniversary. As we set our sights toward the next milestone—becoming a 100-year company—we have been working to weave the story of what we can achieve over the next 25 years. To guide us, we formulated Management Vision 2035 which looks to the next 10 years and sets out our goal: bringing joy to communities and society through food and hospitality. This vision was formulated through repeated exchanges of opinions across the Group, with the involvement of many employees who will carry the torch as future management. Opinions were given from the perspective of what kind of company we aspire to be when we reach our 100th anniversary, as well as what must change and what must not.

Since our founding, we have aimed to industrialize the food and beverage industry in Japan over the course of the country’s rapid economic growth, and worked to expand our business using a product-driven approach, based on the philosophy of creating establishments that are indispensable to people in the local community. However, with 70 years of operation behind us, we are shifting to a market-driven approach that focuses on our services in response to the growing voices of local residents who say; “We want the Royal Group to come to our community.” This determination to become a group indispensable to the local community is the central idea embodied in our new long-term vision. So, what does it mean to be indispensable? What elements are needed? We have broken down the answers to these questions into four priority areas: brand, global, sustainability, and human-centered management.

The first area, brand, is a crucial element of becoming a needed presence in a community or in greater society. We believe that our brand is the name Royal Group, which gives people a sense of security and trust when they hear it. When we become a familiar part of our customers’ daily lives, that name gives them a feeling of exclusivity, brings smiles to their faces, and makes them feel rich in their hearts. From individual brands such as Royal Host and Richmond Hotel to our food establishments at highway service areas, airports, stadiums, and arenas, our goal is to be seen as a presence that conjures up joy and prosperity, with value in simply being present in a variety of settings. We understand that it is essential for us to provide each customer with their Royal Group, the version that matches their particular lifestyle, and feel the value in that brand.

The second area, global, is based on the idea that being indispensable to the local community is not just limited to communities in Japan, but instead refers to communities around the world. Outside of Japan there is a high level of trust in the deliciousness of Japanese cuisine and the quality of its ingredients, and we want to meet the expectations that customers will have with an authentic Japanese culinary experience that also includes service infused with the spirit of Japanese hospitality. We will promote a strategy that takes into account the movement of people, so that when overseas customers return to their home countries, they will be able to find the same food they experienced in Japan. Conversely, customers who encounter authentic Japanese cuisine in their home country may be inspired to try and experience the food and find work in Japan as well.

With regard to sustainability, the third area, I believe that mounting a flexible response to changing times and providing what those times require will serve as a foundation of sustainable economic activities in our quest to become a 100-year company. Sustainability may sound like a daunting concept, but we understand that helping to resolve a variety of social issues is fundamental as a principle and a matter of course as we continue our economic activities.

And finally, to achieve any and all of this, we need people who share the Group’s values. In particular, for the Group to keep providing value in the form of high-quality food and hospitality—a kind of value only people can provide—we must cultivate human resources who can adhere to QSCA to deliver food with both safety and delicious flavor, as well as hospitality and thoughtfulness that relies on the human touch. We intend to increase the number of people who can offer this type of hospitality through education and succession, bringing joy to even more customers and initiating a virtuous cycle that will establish an indispensable presence in the local community and greater society.

Strategies within Medium-Term Management Plan 2025–2027: From Transformation, to Growth, to Flight

Medium-Term Management Plan 2022–2024, our previous plan, highlighted the word revitalization, embodied by the V-shaped recovery we achieved following the losses caused by the COVID-19 pandemic. Over this short term, hard-fought phase, we also sowed the seeds for the growth to come. Our current plan, Medium-Term Management Plan 2025–2027, will see us move past the stage of recovery to continue our growth story, which we have developed from a medium- to long-term perspective. As those seeds I mentioned begin to sprout, we will transition to phase in which we aim to take flight as a 100-year company, and will move forward with strategies tied to the four priority areas outlined in Management Vision 2035.

In terms of brand strategy, we aim to review and establish individual and Group brands as part of business-specific strategies. We also established a new Marketing Department to promote dialogue with customers, collect market surveys, and analyze external evaluations, centering on the Groupwide app “MyROYAL”, which was launched in June 2024. Efforts like these will accelerate data-driven management. Our Group has aimed to become an indispensable presence for customers, and during the period of Japan’s rapid growth we promoted a product-driven approach to achieve this. However, in today’s world, a world connected by information, we can no longer say that companies are the ones that determine food trends and control who knows what. Going forward, we will utilize digital technology to provide market-driven services rooted in what the customers want to rebuild our brand value.

Our global strategy is to achieve growth overseas similar to what we achieved through our growth process during Japan’s own period of strong economic growth, which amounted to a history of taking on challenges through the lens of high-quality food and hospitality. In this case, we plan to explore what people in different countries and regions enjoy and what kinds of restaurants we should operate in these places by establishing a diverse range of restaurants that meet the specific needs of each area, regardless if they are directly managed or franchises. By providing authentic Japanese culinary experience to Vietnam, Singapore, and other Asian countries, each with its own growth pattern, we hope to help move this growth even a little further along. We also see the increase in inbound demand as an opportunity to build a fanbase overseas. We want to give people who came to Japan the joy of being able to re-experience the flavors and service they experienced here by opening stores in their home countries. It is our hope that these efforts will create a cycle in which people see one of our establishments, either while they are traveling in Japan or at home, and say; “I know that store, I think I’ll stop by,” and, by doing so, grow our fanbase around the world.

For our sustainability strategy, we will continue to promote sustainability management with the goal of being a company rooted in the local community and society, with the empathy and support of all stakeholders, and the Royal Credo as our cornerstone. To develop sustainability management further, we will heighten our efforts to address the five material issues identified in fiscal 2023: 1) human resources, 2) food and hospitality, 3) resources and environment, 4) communities, and 5) governance.

Finally, for our human resources strategy, we believe our top priority is to cultivate the spirit of hospitality within our employees, which is at the heart of the value the Group provides. Although the specific way to make our customers happy may differ according to the industry, business format, and job type, our goal as an organization is to be a collection of people who believe that the customer’s happiness is their happiness, and can live out that belief. This is a value system nurtured through daily interactions with customers on site. When employees with the spirit of hospitality work with an enriching attitude, it becomes possible to provide enriching service that gets passed on to the customer, which then comes back to the employee. This positive feedback loop is the essence of the Group’s human resource development. Employees who can live out this aforementioned value system need to have an intrinsic understanding of the richness that can be obtained from food and hospitality from the customer’s perspective, and why that matters. To that end, we encourage our employees to use pay increases and performance-linked bonuses not just to save money, but to spend it on experiences that will build and reaffirm this understanding, such as eating delicious food or staying in a nice hotel, and then pay this understanding forward to their own customers, continuing the cycle.Our intention is to keep working to develop such thoughtful human resources. Over the course of our new medium-term management plan, we will continue to improve profitability to advance this investment in human capital.

Our approach to store openings and M&As

The Group’ plans for store openings are not focused solely on increasing the number of stores, but also emphasize investing in stores with an eye toward becoming a 100-year company, and will include store relocation. For Royal Host, we will update its restaurant environments to better suit the times through redevelopment projects, which involve relocating restaurants that have been in operation for over 50 years and need to be rebuilt. We will continue to open new Tendon Tenya locations, primarily in urban areas, and will also work on re-branding. In the Hotel Business segment, we will continue to expand our business through collaboration with external partners such as Minor Hotels, in order to provide accommodation experiences that are suited to a wider variety of usage scenarios and price ranges. In the Contract Food Service segment, we will approach areas undergoing regional revitalization and redevelopment to provide sustainable services in places where people gather.

Regarding M&As, we will focus on facilitating business succession for brands that are being lost in Japan’s restaurant industry due to the lack of successors and labor shortages. I believe that our particular style of M&A involves inheriting and preserving the brand and value of a store that is considering closing, and I aim for the Royal Group to be an organization that people can pass on their company to and trust that it is in good hands. Japan has cultivated a diverse and fascinating food culture over many years. I personally feel a deep sense of duty when we take over a business and as we carry out our mission to ensure that the value of such food does not disappear, contributing to the sustainability of food culture.

R-Sessions—a chance to reintroduce ourselves to the unchangeable Royal Credo

As part of formulating Management Vision 2035, we began holding R-Sessions, roundtable discussions meant to exchange opinions from across the Group, in 61 locations across Japan, every six months. These were led primarily by executive officers. These sessions serve as ongoing forums for discussing the Group’s future, with previous sessions being attended by approximately half of the Group’s total employees. These regular R-sessions enable us to confirm and re-confirm the unchangeable strengths of the Royal Group, and we have created an ongoing back and forth in which the voices of those on the front lines are reflected in management. The two-way dialogue between management and the boots-on-the-ground workers has enabled us to reacquaint ourselves with the kinds of value that only we can provide, in a way people can empathize with. I feel this has helped us build a solid foundation to provide even more value under our new medium-term management plan.

Times may change, but hospitality will remain

The Royal Group championed hospitality even before it put forth its Declaration to be a Hospitality-Based Company in 1995,and has been committed to practicing it for the past 75 years. As a result, food and hospitality have become deeply rooted in our corporate culture. Even as times change, our delicious food and the hospitality in our services—services that can only be provided by human beings—will never be lost. We will continue to pass on this spirit as we go forward.

At the same time, to deliver services with value, it is also important to identify areas where we need to reduce our workforce and to utilize the power of digital technology to improve efficiency. By investing in people, our Group will foster a cycle of abundance and joy that comes from people treating each other with hospitality. We want to be an organization in which employees who empathize with this cycle can continue to work while feeling pride in doing it. Therefore, we will continue to cultivate an environment where we can ensure that each and every person truly wants to work here.

Since our founding, we have treasured the idea of creating a restaurant that is indispensable to the local community and, guided by the Royal Credo, we have promoted the industrialization of the food and beverage industry, aiming to contribute to society. Based on this unshakable philosophy, our Group aims to become a 100-year company under Management Vision 2035, and will continue to challenge ourselves to achieve further evolution and global growth. We work hard every day to contribute to the local community and remain a company that stakeholders need and trust. Going forward, we will continue to value our connections with customers, employees, shareholders, business partners, and the local community, and aim for sustainable growth while bringing joy to society.