Choushimaru Co.,Ltd. Q2 FY2026 earnings call

Existing Brand Refinement

• Deepening the core "Sushi Choushimaru" brand by enhancing its key differentiators: chef-handmade sushi, premium ingredients (specifically bluefin tuna and seasonal light fish), expert purchasing capabilities, and theater-style hospitality
• Planned a bluefin tuna butchering show paired with a Guinness World Record attempt on November 1 (National Sushi Day) to showcase technical skill externally; held hierarchical training and internal skills contests in H1 to pass technical knowledge to new staff
• Revised hygiene manuals and strengthened hygiene management systems after a food poisoning incident at the Kawasaki Nakahara store, implementing new prevention measures
• Refreshed the grand menu in June 2025, maintaining a three-pillar product strategy of core menu, monthly promotional events, and daily fresh fish delivery from Toyosu Market; built a flexible sourcing system to add small-batch premium products and work toward sustainable, stable raw material supply

New Store Opening and New Concept Development

• Opened 1 new core brand store in the Kanagawa area in H1, renovated 2 existing stores; renovations have delivered strong post-renovation sales, and the company sees remaining room for expansion in Kanagawa, continuing to actively source new locations
• Developing the new Standing Sushi Bar Yasuke standing sushi concept, targeting station locations in Tokyo that do not compete with core brand customers; currently operates 1 store and is actively searching for locations for 2nd and 3rd stores
• Testing new store formats beyond the standard surface parking lot format, including building-integrated locations and smaller footprint formats
• Mobile pop-up "outreach rotating sushi" service, which brings sushi to off-site customer locations, has shown steady growth in event volume including repeat customers, and the company will continue expanding this business to reach new customer groups

Digital Transformation (DX) Push

• Completed rollout of table-side checkout to nearly all stores to improve customer convenience; will continue optimizing operational systems to improve the in-restaurant experience
• Leveraging customer data from the company's "En" app (launched November 2023) to run targeted promotions, expand member-exclusive benefits, and drive higher visit frequency via direct store-to-customer marketing
• Building an integrated data platform to use full-order touch panel data to optimize product strategy, streamline operations, reduce food waste via improved inventory management, and maximize revenue and profit

Talent Acquisition and Retention

• Made securing talent a core priority to address Japan's long-term population decline, focusing on three pillars: recruitment, training, and retention
• Implemented rotational training to develop future leaders, rolled out career development programs and a new evaluation system to support long-term skill growth
• Focused on improving the workplace environment for women, increasing hiring of full-time female employees, and actively promoting women to store manager and management roles
• Building training environments to spread the company's mission across all stores, creating a culture that supports diverse talent and encourages internal innovation

US Market Expansion

• Established a 3-party joint venture with Royal Holdings and Sojitz in March 2024 to enter the US market; US Japanese restaurant demand is growing steadily, with California holding the largest number of Japanese restaurants in the US
• Plans to open the first US store in California in the 2025 fiscal year, with a focus on developing a market-adapted sushi concept, then will gradually expand the store footprint after building a successful operational foundation

This is a non-consolidated earnings report for Choushimaru, a Japanese sushi restaurant operator, with performance broken down by geographic operating area, the only segmentation provided. Total company 2nd quarter revenue is 11.615 billion yen, operating profit is 0.986 billion yen, and interim net profit is 0.548 billion yen. For the comparable same-day same-period year-over-year comparison (adjusted for the fiscal year end change):

• Tokyo: Revenue contribution is the highest across all regions, no comparable negative year-over-year impact reported
• Kanagawa: Added 2 new stores, resulting in higher total revenue contribution, with the two new stores excluded for adjusted same-store comparison that shows no material underperformance
• Saitama: Only region with a slight year-over-year revenue decline, driven primarily by a pullback effect from the 2024 renovation of the Kawaguchi store, which had boosted full-period revenue in the prior year comparison.

Pure play same-store performance (excluding new, closed, and renovated stores): Total same-store revenue +0.8% year-over-year, customer traffic -6.3% year-over-year (driven by a 2024 TV feature special demand pullback), and average customer check +7.5% year-over-year (driven by two 2024 price increases).

• Full-year 2026 February fiscal year guidance is maintained unchanged from prior releases
• As of the end of the 2nd quarter, budget progress is 47.9% for revenue, 68.2% for operating profit, and 60.2% for net income
• The full-year revenue budget remains an aggressive stretch target, and management will continue working toward achieving it; however, a large portion of planned H1 selling, general and administrative (SG&A) spending was shifted to H2, so operating profit progress is expected to slow slightly in the second half
• For the mid-term management plan, total 3-year operating income is projected at 4.709 billion yen, total depreciation expense at 1.864 billion yen, for total projected cash inflow of 6.573 billion yen
• Mid-term capital allocation plans balance growth investment across new store openings, existing store renovations, DX investment, overseas expansion, new concept development, and M&A, alongside consistent shareholder returns
• Choushimaru maintains a stable dividend policy, targeting a 2% shareholder equity dividend payout ratio; the company will review this target as ROE improves

• Food safety risk: A prior food poisoning incident at one store required a full overhaul of hygiene protocols and increased focus on prevention, highlighting ongoing operational risk in food service
• Raw material cost risk: H1 raw material costs came in ~1 percentage point above the company's target, and management expects continued upward cost pressure, with additional rice price increases from the 2025 harvest expected to create further headwinds in H2
• Consumer demand risk: Persistent consumer cost sensitivity from broader inflation has put pressure on customer traffic, which missed budget targets in H1
• Macro risk: Japan's long-term population decline creates ongoing headwinds for domestic same-store growth and talent acquisition

Q: How does management view current raw material cost trends?

A: In the first half, raw material costs were approximately 1 percentage point higher than the company's target. Management expects continued cost pressure in the second half, with additional rice price increases from the 2025 harvest creating further upward pressure. The company will discuss price and menu adjustments in the second half to offset higher costs and hit its target cost margin.

Q: What is behind the miss in existing store customer traffic, and what are the plans to improve this going forward?

A: Customer traffic missed the first half budget; the main contributing factor was tighter consumer spending amid broad inflation, plus the pullback from 2024's temporary TV feature-driven demand surge. For the second half, management will focus on rolling out new attractive product and promotion initiatives to attract new customers and increase visit frequency among existing app members and core fans.

Q: What is the planned store format for the first US location, given different local consumer preferences for sushi?

A: The first US store will not be a rotating sushi format; it will be a counter-style, course-based format with staff serving sushi directly to customers. The company is currently adapting menu composition and price points to fit local consumer preferences, and will share more details as the opening approaches.

Q: Are there specific numerical targets for the US expansion at this stage?

A: No specific numerical targets for store count, revenue, or profit impact to Choushimaru have been set at this stage, as the joint venture is still in the process of launching the first location.