Genki Global Dining Concepts Corporation Q2 FY2026 earnings call

Core Strategic Priority: Upstream Strategy & Procurement Capability Enhancement

• The company has identified procurement capability as its key weakness to address, shifting from third-party sourcing to direct procurement close to production origins, including launching in-house aquaculture operations, to counter rising seafood and commodity costs. Recent completed M&As added two 100% subsidiaries: Godack, a specialist imported seafood trading firm that handles high-end products such as "Angel Shrimp" and will manage the company's cross-border seafood trade, and Kobe Marukan, which owns a manufacturing plant that now acts as the group's in-house production base for menu items.
• The company launched a 7-year onshore salmon and ikura aquaculture project in Yatsushiro, Kumamoto, which uses stable-temperature salt groundwater to grow salmon twice as fast as conventional aquaculture, and will eventually scale to 1,000 tanks for annual production of 1,000 tons of salmon and 40 tons of ikura.
• The company entered a joint sea bream aquaculture collaboration with Takasui in Mie Prefecture, where stable water temperatures are ideal for sea bream farming. The partnership includes a full contract buyback agreement to stabilize fishermen incomes and the company's procurement costs, enabling nationwide distribution of sea bream at competitive prices matching industry peers.
• The company is collaborating with Shinmei Holdings on drone direct-seeding rice cultivation to lower production costs, expanding cultivation area to offset lower per-area yield and create a stable, low-cost rice supply to counter rising producer prices.

Domestic Expansion & New Business Development

• The company targets doubling the number of stores centered on its core "Uobei" brand, with a focus on accelerating expansion in Western Japan, where expansion has been slow historically, supported by already established logistics networks in Osaka and Kyushu.
• The company is entering the yakiniku (Korean grilled meat) new business segment, leveraging its existing 1.3 million LINE members from Uobei to share customer traffic. The first store is planned for Tochigi Prefecture near a popular Uobei location to leverage existing brand trust and shared logistics/labor, targeting casual affordable high-quality meat with an average customer spend of 3,000 to 5,000 yen. The existing unagi restaurant concept is being put on hold due to poor performance.

Global Expansion Strategy

• The company currently operates 242 overseas franchise stores, and will continue expansion in Southeast Asia while expanding to new markets. The planned Texas, US rotation sushi entry is scrapped after an on-site assessment confirmed low feasibility, and the company will first test a new fast-casual concept: the "GENKI DINER" brand, opening in Waikiki, Hawaii next year, which will offer a casual, alcohol-friendly menu with a wide selection of hand-roll sushi to match local market preferences. Texas expansion will be re-evaluated only after the Hawaii concept succeeds. M&A is also on the table for overseas growth.

1. Domestic Business: Total sales increased 5.3% year-over-year; operating profit decreased 22.2% year-over-year. 2. Global Business: Total sales decreased 1.1% year-over-year; operating profit decreased 6.3% year-over-year. Overall consolidated sales increased 4.2% year-over-year to 35.2 billion yen, and consolidated operating profit for the half period came in at 3.09 billion yen, 79.6% of the prior year level, resulting in a higher revenue but lower profit result.

• 10-year long-term target (fiscal 2035 March): Reach 300 billion yen total system-wide sales, 1,000 total stores, with reported revenue of 150 billion yen and operating profit of 12 billion yen, doubling the current 131.8 billion yen total system-wide sales size. Growth will come from simultaneous domestic and overseas expansion.
• Full-year fiscal 2026 March guidance: Revenue is projected at 72.3 billion yen, in line with original plans. Operating profit is projected at 5.1 billion yen, a 27.1% year-over-year decrease, coming in below original budget, with net profit projected at 4.1 billion yen, a 14.6% year-over-year decrease. The downward revision to profit is driven by unforeseen commodity price increases, particularly for rice.

• Climate change-driven water temperature rise is shrinking viable production areas for core sushi ingredients, including salmon, ikura, sea bream, and yellowtail, leading to growing supply shortages globally that threaten the company's core rotating sushi business.
• Seafood producer market prices have risen far faster than underlying production costs, creating severe margin pressure that has reduced operating profits despite growing sales. Rice prices also rose far more than industry expectations in the current harvest year, leading to a lower full-year profit outlook.
• The company currently cannot sufficiently supply raw materials to its 242 overseas franchise stores, which also face the same global procurement challenges, limiting overseas growth. The company's historic underdevelopment of in-house procurement capability has left it exposed to these market price shocks.

No Q&A section was included in the provided transcript.