Looking ahead to the next quarter century, a time when taking on challenges and achieving integration will intersect, with the unchanging Royal Credo as our guide.
Creating new value through strategic alliances and accelerating our growth in Japan and overseas through food and accommodation.
Digitally driven evolution alongside value that only people can provide. Together, they open the way to a future that brings joy to society.
A Strong Start to Medium-Term Management Plan 2025–2027
In fiscal 2025, despite a challenging external environment marked by persistent inflation, our existing businesses, including Royal Host and Richmond Hotels, steadily drove earnings. As a result, we achieved record highs in net sales and ordinary profit for the second consecutive year, ensuring a highly valuable start for the first year of Medium-Term Management Plan 2025–2027. In addition, in the off-premises Business Creation Domain, TABISUL Co., Ltd., which we converted into a wholly owned subsidiary, achieved profitability in its first year. This achievement provides support for the validity of our M&A strategy. We will therefore continue to examine a wide range of opportunities that align with Royal’s approach to M&A to ensure business and cultural continuity in both Japan and overseas.
In fiscal 2026, we plan to further accelerate our growth momentum, raising the profitability of all Group businesses. We will continue striving to strengthen the earnings structure of the Restaurant Business while transitioning to a new growth phase in the Hotel Business, which achieved its profit target for the entire medium-term management plan in its first year and in which we aim for even greater heights, without allowing ourselves to become complacent. In the Contract Food Service, we will solidify our business foundation by maintaining our strategy of dominating areas, expanding from single locations to clusters. With this series of initiatives, we are committed to realizing ordinary profit of ¥8.8 billion and a fifth consecutive year of increases in earnings and ordinary profit in fiscal 2026, thereby taking a solid step toward achieving ordinary profit of ¥10.0 billion, our target for fiscal 2027.
Pursuing an Alliance Strategy for Becoming a 100-Year Company, Guided by the Unchanging Royal Credo
In 2025, the Royal Group celebrated its 75th anniversary. Looking back on the Group’s history, the first 50 years were a period of taking on challenges and the following 25 years were a period of pursuing integration. I am convinced the next 25 years, when we aim to become a 100-year company, will be a phase of further growth in which we combine taking on challenges and pursuing integration to a high degree through our alliance strategy.
Since our founding, we have diversified our business activities by taking on challenges for the development of the restaurant industry and pursuing integration through co-creation with other companies, expanding the domains in which we provide food and hospitality. Although the companies that have joined the Royal Group span a wide range of business domains and categories, all have undoubtedly been united by a shared affinity with the Royal Credo. As we work toward becoming a 100-year company over the next 25 years, we will endeavor to create new value through alliances guided by this unchanging credo.
In the Restaurant Business, we will promote overseas business expansion through development centered on both directly managed and franchised stores under a global strategy, at the same time maintaining our business foundation in Japan. In highly uncertain overseas markets, we will aim to further expand directly managed businesses in key areas, including Vietnam, Singapore, and North America, by fully leveraging the network of Sojitz Corporation. Furthermore, in addition to developing new markets for TENYA, which has been expanding overseas since 2013, we will maintain an aggressive approach to franchise developments with other brands.
Although the Restaurant Business (Overseas) incurred an ordinary loss in fiscal 2025, we view this setback as growing pains on the road to growth over the medium to long term. We believe that we must make investment decisions and monitor progress overseas with even greater caution and care than we do in Japan while minimizing the risk of losses. In Japan, on the other hand, we view the Contract Food Service Business and the Hotel Business as core elements of our growth. Our strength lies in our ability to combine the know-how we have cultivated in the Restaurant Business to create new value. In fiscal 2025, we established an extensive service provision structure centered on combining food and accommodation. For example, the Contract Food Service Business concluded contracts to operate high-value-added lounges and the Hotel Business entered into the luxury domain through a joint venture with Minor Hotels. Building on this strength, the Group will deliver its value propositions to a more diverse range of customers by expanding the scope of its provision of food and hospitality across the full spectrum from existing to luxury domains and promoting an alliance strategy.
Responding to Uncertain Conditions and Making Decisions with the Interests of All Stakeholders in Mind
Remaining flexible as an organization is essential to addressing changes in the environment, such as recent rising inflation and geopolitical risks. The Royal Group has built a structure capable of responding agilely to changing conditions by optimizing the role of each of its operating companies.
For example, while establishments are focusing exhaustively on enhancing frontline operations and training functions, we have separated upstream operational roles, including product development, planning, and procurement, into their own specific divisions. This distinction clarifies focus domains for each division even under volatile conditions, enabling the Group to enhance both its overall response speed and organizational agility.
When confronted with difficult management decisions, I view matters from the perspective of whether they will satisfy all stakeholders. In other words, I ask whether the decision benefits all parties involved. For example, the strong relationships we have built over many years with business partners have enabled us to realize the stable year-round supply of domestically produced rice, even under unstable conditions in the supply and demand balance. As a result, we have been able to honor our pledge to customers to continue serving domestically produced rice, without using imported or older rice. At the root of this stance is the Royal Credo, which has been passed down since our founding. It serves not only as a guide for management but also as a touchstone to which all employees can return.
Group Branding and Maximizing the Value That Only People Can Provide
The essential value embodied in the Royal Credo is the pursuit of delicious food, attentive service and cleanliness, and a comfortable space for customers; namely, quality, service, cleanliness, and atmosphere (QSCA).
Although this credo will never change, we must revise the way we apply it to be in step with the times. We are currently redefining the essential value we offer to customers and advancing Group branding that incorporates this value into the behaviors to be practiced by employees in each of our businesses. Helping employees perceive our starting point as their personal responsibility will ensure it becomes a value shared across the Group. To highlight this to customers, we are focusing on rebranding, including renovations of existing stores, and on improving our brand recognition through MyROYAL, our Groupwide app.
At the heart of this value are service and culinary skills that only people can provide, those which cannot be replaced by digital technology or AI. We prioritize personal interactions with customers, such as greeting them on arrival, carefully presenting dishes, and offering a word as they leave. The essential value we offer lies not simply in delicious food but in providing an experience that makes customers feel glad they came, including attentive service grounded in hospitality and the warm atmosphere of our restaurants. We have positioned refining and passing on this value at the core of our human-centered management.
For this reason, Group training is primarily focused on ensuring that frontline members, who engage directly with customers, examine their own roles while also embodying and instilling the Royal Credo through putting it into practice at establishments. Such a mindset and approach will only spread when passed from one member to another on the front lines. Staff members can learn about the Credo and acquire skills at the newly established Royal Academy, while ultimately completing their training on these front lines.
At the same time, we are proactively aiming to improve efficiency by promoting data-driven management for store management and back-office operations. Establishing new marketing and brand divisions and conducting data analysis internally has enabled quicker decisionmaking. We will use the time saved through more efficient non-face-toface operations to enable frontline members to engage more with customers. We believe that this is the best way to maximize our value propositions.
Sustainability Management That Brings Joy to Communities and Society
In fiscal 2025, the Royal Group identified the overarching concepts of the activities it must pursue to realize its management vision for 2035 of “bringing joy to communities and society through food and hospitality.” For example, we have clarified our course for coexisting with local communities through activities such as children’s cafeterias at Royal Host and the “Classic Live for 1,000,000 People” (an initiative for holding classical music concerts at a variety of venues) at Richmond Hotels. We have also advanced our initiatives in the environmental field by including the planet as one of our stakeholders. To reduce greenhouse gas (GHG) emissions and food loss, we are promoting initiatives that transform the characteristics of our business model into strengths, such as building a recycling loop to utilize food residues and using renewable energy generated through food recycling.
Our history, which began with food, has expanded to also include contract food service, hotel, and overseas businesses. Although we will continue to venture into new domains through our alliance strategy, all these efforts are evolutions of providing food and hospitality based on the Royal Credo. By continuously refining our value propositions, we will aim to bring joy to all the communities and societies we engage with.
