Core Insights - Sally's profitability is under pressure in the Chinese market despite overall growth in sales and net profit for the fiscal year 2025 [2][3][4] Group 1: Financial Performance - For the fiscal year 2025, Sally's total sales reached 256.71 billion yen, a year-on-year increase of 14.3%, with net profit at 11.16 billion yen, up 37% [2] - The Asian segment, primarily driven by the Chinese market, generated sales of 83.80 billion yen, a 7.4% increase, but operating profit declined by 12.8% [4] - In major cities like Shanghai, Guangzhou, and Beijing, sales were 21.90 billion yen, 24.50 billion yen, and 8.81 billion yen respectively, with growth rates of 2.4%, 6.6%, and 2.3% [7] Group 2: Market Challenges - Same-store sales in the Chinese market have been consistently declining, particularly in the North, East, and South regions [8][9] - Operating profits in Shanghai, Guangzhou, and Beijing fell by 23.6%, 27.3%, and 20.3% respectively, indicating a significant drop in profitability despite increased store openings [7] Group 3: Strategic Initiatives - Sally plans to continue its expansion strategy, with 40 new stores in Japan and 121 in overseas markets, including China and Southeast Asia, for the fiscal year 2026 [12] - The company is also investing approximately 30 million USD to build a new factory in Guangzhou to reduce ingredient costs and improve operational efficiency [16] - Sally has established a wholly-owned subsidiary in Wuhan to manage its restaurant operations, signaling a push into the central China market [14]

Core Viewpoint - SAIZERIYA, a Japanese Italian restaurant chain, is significantly increasing its investment in the Chinese market, establishing new subsidiaries and expanding its presence in various cities, particularly in Central China [4][5][6]. Group 1: Company Expansion - SAIZERIYA announced the establishment of a wholly-owned subsidiary in Wuhan with a registered capital of 3 billion yen (approximately 147 million yuan) to manage its restaurants in the city [4]. - The company is also setting up a new parent company in China, with a registered capital of about 300 million yen (approximately 15 million yuan), aimed at managing all SAIZERIYA outlets in China [4]. - As of now, SAIZERIYA has nearly 500 stores in China, with a significant concentration in Guangdong, where the Guangzhou branch manages 222 restaurants [6][8]. Group 2: Financial Performance - For the fiscal year 2025, SAIZERIYA reported a sales revenue of 188.34 billion yen (approximately 9.09 billion yuan), a year-on-year increase of 15.4%, with a net profit of 7.78 billion yen (approximately 376 million yuan), up 50.4% [9]. - The Asian segment, primarily driven by the Chinese market, generated sales of 63.06 billion yen (approximately 3.05 billion yuan), reflecting a 10.5% increase and accounting for over 30% of SAIZERIYA's total revenue [9]. Group 3: Market Strategy - SAIZERIYA is aggressively expanding into lower-tier cities, having opened its first stores in places like Zhaoqing and Jiangyin this year, and aims to penetrate the Central China market with the new Wuhan subsidiary [13]. - The company plans to invest approximately 30 million USD (about 215 million yuan) in a new factory in Guangzhou to support its expansion, with the goal of increasing its store count to 1,000 in China [15]. - Despite the expansion, SAIZERIYA has faced challenges in profitability, with a 5.4% decline in operating profit for the Asian segment, indicating that the push for growth may be impacting margins [15]. Group 4: Pricing Strategy - SAIZERIYA has begun to increase menu prices after previously stating it would not do so, with price hikes of 1-2 yuan on various dishes due to rising raw material costs [16]. - Specific price increases include the garlic chicken bacon cheese baked rice, which rose from 18 yuan to 19 yuan, and the truffle chicken cheese baked rice, which increased from 20 yuan to 21 yuan [16].