[G-FACTORY FY12/2026 Q2] A Turning Point in Profit Structure Driven by Structural Reform and Overseas Growth: The Full Scope of the Restaurant Platform Strategy via the 'Omise Craft' Acquisition

Introduction: A Transitional Phase Balancing Structural Reform and Growth Investment

In the second quarter (interim period) of the fiscal year ending December 2026, G-FACTORY Co., Ltd. (Securities Code: 3474) navigated a period of drastic structural reform , including the reorganization of its domestic store network and the closure of unprofitable locations, while steadily executing upfront investments in high-growth overseas restaurant operations and new business areas such as human resources placement.

This report provides an in-depth analysis based on the Q&A session from the Q2 earnings disclosure, covering performance trends, detailed segment analysis, the roadmap to profitability in the second half, and mid-to-long-term growth strategies, including the business succession from Sojitz Foods Corporation.

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1. Earnings Highlights and Profit/Loss Structure

For the first half of the fiscal year ending December 2026, consolidated net sales were 3,238 million yen (+0.7% YoY) , with an operating loss of 49 million yen (an improvement of 6 million yen from the 56 million yen loss in the same period last year) .

The modest increase in net sales reflects the revenue impact of closing and reorganizing unprofitable stores within the domestic restaurant business. However, the accumulation of recurring revenue in the management support business and the rapid growth of overseas restaurant operations, particularly in Vietnam, offset the domestic decline, maintaining a trend of revenue growth.

Regarding operating profit/loss, while the cost-reduction effects from closing unprofitable domestic stores began to materialize, the company remains in an upfront investment phase due to active expenditures in exploring new sectors and countries for its foreign human resources placement service, as well as investments in human capital.

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2. Segment Trends and Profitability Details

① Management Support Business: Steady Recurring Revenue and Upfront Investment in HR

Revenue in the management support business remained solid at 1,529 million yen (+2.5% YoY) , with recurring revenue from core store opening/closing support services expanding steadily. Conversely, operating profit was 187 million yen (down 13.0% YoY) . This decline is attributed to intentional upfront investments aimed at cultivating future profit pillars.

• Expansion of HR Placement Support : Responding swiftly to changes in the external environment—specifically the suspension of new acceptances for specified skilled workers in the food service sector—the company is expanding into peripheral fields related to "food," such as food processing, nursing care, and hospitality .
• Diversification of Target Countries : Beyond existing frameworks, the company is exploring new markets including Myanmar, Indonesia, and Nepal .
• Launch of Domestic HR Placement : The company has launched a placement service for Japanese personnel, aiming to leverage its existing customer base to expand into comprehensive human resource solutions.
• Increase in SG&A Expenses : SG&A expenses rose by 15 million yen due to the recruitment of specialized personnel and organizational strengthening, which is positioned as foundational building for future profit contributions.

② Restaurant Business: Progress in Domestic Reorganization and Rapid Growth in Vietnam

In the restaurant business, the strategy has shifted significantly from pursuing sales volume to "concentrating resources on profitable stores and growth markets."

• Domestic Store Reorganization : Although the first half saw a 0.8% year-on-year decline in revenue, the exit from unprofitable stores led to a 2.1% year-on-year increase in revenue for Q2 alone .
• Breakthrough in Overseas Markets : The Vietnam business recorded exceptionally high growth of +39.2% YoY , providing a strong foundation for overall performance.
• Support for Licensees : To address rising raw material costs, the company continues to provide royalty reductions for "Nadai Unatoto" licensed stores, maintaining partnerships that support the sustainable operations of franchisees.

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3. Roadmap to Second-Half Profitability and Progress Evaluation

The progress rate for full-year net sales at the end of the first half is 46.9% . This is largely in line with historical first-half progress rates (generally 47–50%), and the full-year forecast remains unchanged.

To achieve a full-year profit against the first-half operating loss of 49 million yen, the company must generate approximately 115 million yen in operating profit during the second half . The company expects to achieve this through the following factors:

1. Realization of Fixed Cost Reductions : The full impact of fixed cost savings from domestic unprofitable stores closed by the end of the previous period will materialize in the second half.
2. Capture of Seasonal Demand : The arrival of peak seasons, including the "Day of the Ox" demand for "Unatoto" in Q3 and year-end party demand in Q4.
3. Profit Improvement in Overseas Bases : In addition to the continued growth in Vietnam, profit improvements at the Singapore base are expected to materialize in the figures.
4. Monetization of HR Placement : An increase in successful placements due to the expansion of target sectors and countries.

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4. Strategic Business Succession to Accelerate Mid-to-Long-Term Growth

Synergies from the "Omise Craft" Succession

The succession of the restaurant opening support service "Omise Craft" from Sojitz Foods Corporation, effective September 1, 2026, is a key strategic move to solidify the company's mid-to-long-term positioning.

• Acquiring Customer Touchpoints at the Earliest Stage : While previous approaches via property sites like "e-Tenpo" focused on the "property search stage," acquiring "Omise Craft's" opening guides and financial simulation functions allows for relationship building with prospective customers from the "initial stage of considering opening a business."
• Acquisition of Customer Base and Alliances : This succession adds a robust network of approximately 13,000 members and 120 partner companies to the group.
• Platforming the Entire Restaurant Lifecycle : This completes a "comprehensive support" system that covers the entire lifecycle of a restaurant: from initial planning, property search, interior construction, and financing, to post-opening operations, multi-store expansion, overseas entry, and eventually store closure or business succession.

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5. Summary and Future Outlook

While G-FACTORY's interim results for the fiscal year ending December 2026 clearly reflect the impact of upfront investments and structural reforms on short-term earnings, they also demonstrate that the transformation of the business structure is progressing steadily.

Key points to watch moving forward include:

• The probability of achieving 115 million yen in operating profit by capturing second-half seasonal demand
• The sustainability of growth in the overseas restaurant business, led by Vietnam
• The speed at which synergies from the "Omise Craft" integration materialize within the opening support platform
• The timing of profit contributions from the diversified HR placement business

Whether the company can successfully cultivate next-generation growth drivers while protecting its existing stable revenue base will be the focal point for future corporate valuation.